QUIPT
ENTERS FOUR NEW STATES WITH CLOSINGS OF STRATEGIC
ACQUISITIONS
NATIONAL
EXPANSION CONTINUES WITH ENTRANCE INTO CALIFORNIA, MISSOURI,
ARKANSAS AND MISSISSIPPI
$5.5
MILLION IN ANNUALIZED REVENUES, 10% ADJUSTED EBITDA MARGIN PRIOR TO
INTEGRATION, AND INCREASES ACTIVE PATIENT COUNT BY MORE THAN
10,000
Cincinnati,
Ohio
–
July
14, 2021
–
Quipt
Home
Medical
Corp.
("Quipt"
or
the
"Company")
(NASDAQ:QIPT; TSXV:QIPT), a U.S. based leader in the home medical
equipment industry, focused on end-to-end respiratory care, is
pleased to announce that it has recently acquired three separate
entities with combined operations in California, Missouri, Arkansas
and Mississippi, reporting combined unaudited trailing 12-month
annual revenues of approximately $5.5 million, and Adjusted EBITDA
(defined below) of $550,000 prior to integration. As a reminder all
figures stated are in USD.
Quipt is
undertaking an ongoing national expansion effort with the goal of
economically growing its operating footprint to serve as a leader
in respiratory homecare across the United States. Quipt has built
out a significant infrastructure platform which is highly scalable
and allows the opportunity for the Company to efficiently integrate
acquired businesses resulting in meaningful cost synergies and
revenue growth opportunities.
Quipt's
acquisition approach
generally targets companies that are either: (i) heavily respiratory
weighted companies with gross revenue in the range of $5 to $20
million, and consistent annual EBITDA margins between 10% and 20%
or more; (ii) sub $5 million revenue targets with the strategic
goal of expanding our payer mix and expanding our geographical
footprint across new states to be become a national DME provider;
or (iii) targeting substantially larger opportunities that would be
more meaningful in terms of revenue, EBITDA, active patient base
and geographical operating footprint.
Acquisition Details
Quip will
operate each of the newly acquired entities under the Quipt brand
name post-integration. This marks the start of a longer-term plan
to transition certain local market brands to Quipt, as it
strengthens its brand equity and recognition. Quipt believes this
will be a driver of future organic growth.
Combining
these newly acquired entities provides Quipt a pathway to grow into
four new states (California, Missouri, Arkansas, and Mississippi).
The combined entities will add six locations, over 10,000 active
patients, important insurance contracts and decades of operating
experience. Each business has a proven track record in the markets
they serve and has diversified product mixes, which combined is
comprised of 66% respiratory and 33% traditional DME. Quipt has
immediate access to attractive new markets in which it intends to
leverage its existing infrastructure to create significant cross
selling and patient growth opportunities. In addition, the combined
entities give Quipt the opportunity to add patients to Quipt's
existing subscription-based resupply program, and Quipt expects to
derive strong revenue synergies from this initiative. The combined
entities have a diverse payor mix with no more than 10% in sales
coming from any one particular payor source.
The
Company is pleased to share the following updated metrics taking
into consideration the three newly acquired entities:
-
130,000
current active patients;
-
17,000
unique referrals; and
-
57
locations across 15 U.S. States.
Under the
terms of the definitive purchase agreements, Quipt acquired the
three combined entities for total consideration of approximately
$4.2 million in cash. It is expected that the combined entities
will increase Quipt's annual gross revenues by approximately $5.5
million and Adjusted EBITDA (as defined below) will normalize to be
in-line with the Company's overall margin profile. Leveraging
existing infrastructure and payor contracts, Quipt
expects
to
achieve additional revenue generated from organic growth, cross
selling, and corporate synergies.
Management Commentary
"The
closing of three acquisitions with operations spanning over four
states represent the beginning of what we anticipate will be a busy
second half of the year at Quipt, as we strategically aim to expand
our operating footprint into attractive new and existing markets.
We are focused on economically scaling the business, with our
acquisition strategy, and robust organic growth platform," said
Greg Crawford, Chairman and CEO of Quipt. "We are excited to build
our brand into local markets, dedicated to exceptional patient
care, and expect a smooth integration process that will allow us to
move quickly to capture the many synergies available to us. We are
able to add six new locations, over 10,000 active patients, and
$5.5 million in gross revenue through these acquired entities
providing us meaningful infrastructure in these new areas of
service."
Chief
Financial Officer, Hardik Mehta added, "Our acquisition focus
continues to be on companies with a heavily weighted respiratory
product mix, diversification of payor mix, and a stable foundation
for Quipt to build out its operations, utilizing existing
infrastructure. Our goal is to double the Adjusted EBITDA margin
post integration of the combined entities, aligning more closely
with our overall margin profile. We are excited to have the
opportunity to penetrate these new states both organically and
through strategic bolt-on opportunities that present themselves.
With approximately $37 million in cash and untapped credit facility
of $20 million, we believe this is just the beginning of what will
be a strong acquisition pace for us over the remainder of
2021."
ABOUT
QUIPT HOME MEDICAL CORP.
The Company provides
in-home monitoring and disease management services including
end-to-end respiratory solutions for patients in the United States
healthcare market. It seeks to continue to expand its offerings to
include the management of several chronic disease states focusing
on patients with heart or pulmonary disease, sleep disorders,
reduced mobility and other chronic health conditions. The primary
business objective of the Company is to create shareholder value by
offering a broader range of services to patients in need of in-home
monitoring and chronic disease management. The Company's organic
growth strategy is to increase annual revenue per patient by
offering multiple services to the same patient, consolidating the
patient's services, and making life easier for the
patient.
There
can be no assurance that any of the potential acquisitions in
advanced negotiations will be completed as proposed or at all and
no definitive agreements have been executed. Completion of any
transaction will be subject to applicable directors, shareholder
and regulatory approvals.
Neither
the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the
TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-Looking Statements
Certain
statements contained in this press release constitute
"forward-looking information" as such term is defined
in applicable Canadian securities legislation. The words "may",
"would", "could", "should", "potential", "will",
"seek", "intend", "plan", "anticipate", "believe", "estimate",
"expect" and similar expressions as they relate to
the Company, including: the Company's acquisition approach; the
Company's plan to transition certain local market brands to Quipt;
the Company
strengthening its brand equity and recognition and the Company
believing this will be a driver of future organic
growth, combined with the ongoing efforts to date; the Company
creating significant cross selling and patient
growth opportunities in the new markets; the new entities giving
the Company the opportunity to add patients
to Quipt's existing subscription-based resupply program and the
Company expecting to derive strong revenue
synergies from this initiative; the amount the Company expects its
annual revenues and Adjusted EBITDA
will increase as a result of the acquisitions of the combined
entities; the company expecting to achieve additional
revenue from organic growth, cross selling and corporate synergies;
the Company anticipating a busy second
half of the year at Quipt, as it strategically aims to expand its
operating footprint into new and existing markets;
the Company expecting a smooth integration process and that
anticipated results; the Company believe this
is just the beginning of what will be a strong acquisition pace for
it over the remainder of 2021; are intended to identify
forward-looking
information. All statements other than statements
of historical
fact may be forward-looking
information.
Such statements reflect the Company's current views
and intentions
with respect to future events,
and current
information available to the Company, and are subject
to certain
risks, uncertainties and assumptions,
including: the acquisition targets
achieving results at least as good as historical performances; and
the Company successfully identified, negotiating and completing
additional acquisitions, including accretive acquisitions.
Many
factors could
cause
the actual results, performance or achievements that may be
expressed or implied
by such forward-looking
information
to vary from those described herein should one or more of these
risks or
uncertainties materialize.
Examples
of such risk factors include, without limitation: credit; market
(including equity,
commodity, foreign
exchange
and interest rate); liquidity; operational (including technology
and infrastructure);
reputational;
insurance;
strategic; regulatory; legal; environmental; capital adequacy;
the general
business and economic
conditions
in the regions in which the Company operates; the ability of
the Company
to execute on key priorities,
including
the successful completion of acquisitions, business retention,
and strategic
plans and to attract,
develop and
retain key executives; difficulty integrating newly acquired
businesses; the
ability to implement
business strategies
and pursue business opportunities; low profit market segments;
disruptions
in or attacks
(including cyber-attacks)
on the Company's information technology, internet, network
access
or other voice
or data communications
systems or services; the evolution of various types of fraud or
other criminal
behavior
to which the
Company is exposed; the failure of third parties to comply with
their obligations to the
Company
or its affiliates;
the impact of new and changes to, or application of, current laws
and regulations; decline
of reimbursement
rates; dependence on few payors; possible new drug discoveries; a
novel business model; dependence
on key suppliers; granting of permits and licenses in a highly
regulated business; the overall difficult litigation
environment, including in the U.S.; increased competition; changes
in foreign currency rates; increased funding
costs and market volatility due to market illiquidity and
competition for funding; the availability of funds and
resources to pursue operations; critical accounting estimates and
changes to accounting standards, policies, and
methods used by the Company; the occurrence of natural and
unnatural catastrophic events and
claims resulting
from such events; and risks related to COVID-19 including various
recommendations, orders and
measures
of governmental authorities
to
try to limit the pandemic, including travel restrictions, border
closures, non-essential
business closures,
quarantines,
self-isolations, shelters-in-place and social distancing,
disruptions to
markets,
economic activity,
financing,
supply chains and sales channels, and a deterioration of
general economic
conditions
including
a possible
national or global recession;
as well as those risk factors discussed or referred
to in the
Company's disclosure
documents
filed with United States
Securities and Exchange Commission and available at
www.sec.gov, and with the securities regulatory authorities
in certain provinces of Canada and available
at www.sedar.com. Should
any factor affect the Company in an unexpected manner,
or should assumptions
underlying
the forward-looking information prove incorrect, the actual results
or events
may differ materially
from
the results or events predicted. Any such forward-looking
information is expressly
qualified in its entirety
by this
cautionary statement. Moreover, the Company does not assume
responsibility
for the accuracy or completeness
of such forward-looking information. The forward-looking
information
included in this press release is
made
as of the date of this press release and the Company
undertakes no
obligation to publicly update or revise any
forward-looking
information, other than as required by applicable law.
Non-GAAP Measures
This
press release refers to "Adjusted EBITDA" which is a non-GAAP and
non-IFRS financial measure that does not
have a standardized meaning prescribed by GAAP or IFRS. The
Company's presentation of this financial measure
may not be comparable to similarly titled measures used by other
companies. This financial measure is intended
to provide additional information to investors concerning the
Company's performance. Adjusted EBITDA is
defined as EBITDA excluding stock-based compensation. Adjusted
EBITDA is a Non-IFRS measure the Company uses
as an indicator of financial health and excludes several items
which may be useful in the consideration of the financial
condition of the Company, as applicable, including interest
expense, income taxes, depreciation, amortization,
stock-based
compensation, goodwill impairment and change in fair value of
debentures and financial derivatives.
For
further information please visit our website at
www.Quipthomemedical.com,
or
contact:
Cole
Stevens
VP of
Corporate Development
Quipt
Home Medical Corp.
859-300-6455
cole.stevens@myquipt.com
Gregory
Crawford
Chief
Executive Officer
Quipt
Home Medical Corp.
859-300-6455
investorinfo@myquipt.com
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