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 very pleased to announce it has
executed a non-binding letter of intent (the
“
LOI”) today to acquire an arm’s length private
respiratory care company in the Midwestern United States reporting
unaudited trailing 12-month annual revenues of approximately $13
million, $1.6 million in net income, and positive Adjusted EBITDA.
The Company is also pleased to provide an outlook for 2022 calendar
end.
Acquisition
Details
The target has a heavily weighted respiratory
product mix, serving as a leader in the respiratory home care
services space for over 25 years in a major metropolitan hub within
a Midwestern U.S. state. The target has several difficult to obtain
insurance contracts and would significantly enhance Quipt’s
presence in the Midwest with a new location, covering an entire
service area of a major metro hub. The target would be expected to
increase Quipt’s active patient count by over 15,000, which would
bring Quipt’s total to approximately 170,000 active patients. The
target has a strong management team in place, and like Quipt, the
target offers high-quality service, equipment, and supplies.
Moreover, the target has great diversification
amongst referral sources, and a very strong and diversified payor
base resulting in long recurring revenue cycles which fit hand in
hand with Quipt’s business model. Furthermore, the target does not
have current exposure to ventilation therapy, providing Quipt a
significant growth opportunity to introduce its clinical
ventilation therapy program as well as complimentary clinical
respiratory products and services. In addition, the target would
add patients to Quipt’s existing subscription-based resupply
program, and Quipt expects that it would derive strong revenue
synergies from this initiative.
According to the LOI, Quipt expects to close the
acquisition for cash at a reasonable multiple that would
immediately be accretive to Quipt’s Adjusted EBITDA and net income.
As part of the proposed acquisition the Company would not assume
any long term debt of the target. Closing of the acquisition is
subject to final due diligence, final negotiation and execution of
a definitive purchase agreement, all closing conditions being
satisfied or waived and all necessary approvals and is expected to
occur within the next 60 days.
The acquisition would be expected to increase
Quipt’s annual revenues by approximately $13 million and $1.6
million in net income. Leveraging existing infrastructure, Quipt
would expect to achieve additional revenue generated from organic
growth, cross selling and corporate synergies.
Outlook for Calendar End 2022 (Fiscal Q1
2023)
Based on the current business, market trends and
completed and prospective acquisitions, the Company is providing
guidance for its run-rate revenue for end of calendar 2022 (fiscal
Q1 2023) of $180 to $190 million with $38-$43 million in Adjusted
EBITDA (defined below).
Management
Commentary
“This is an extremely exciting growth period for
Quipt as we see continued acceleration within the existing business
and a plethora of strategic acquisition opportunities that we hope
will help us scale into attractive markets across the United
States,” said Greg Crawford, Chairman and CEO of Quipt. “This
acquisition target is very powerful as it services a significant
metro hub in the Midwest and after closing, we plan on quickly
integrating their business operations and leveraging the Company's
payor contracts across our existing Midwest locations. We
anticipate that this acquisition would be immediately accretive to
Quipt’s Adjusted EBITDA, overall profitability and would add
approximately $13 million to the top-line and $1.6 million in net
income. Additionally, we expect to see cross-selling growth from
lathering on our clinical ventilation therapy program as an
extension to their existing respiratory product mix. We expect to
remain very active as we close out 2021 and enter 2022 and look
forward to sharing our progress.”
Chief Financial Officer, Hardik Mehta added,
“This target is a prime example of our ability to execute on our
stated three-tiered acquisition strategy and we look forward to a
potential closing on this exciting respiratory care company that
strategically assists us in further penetrating the favorable
Midwest region. We are also taking this opportunity to
significantly increase guidance of our run-rate revenue by end of
calendar 2022. This considerable increase stems from the ongoing
strength of the business, favorable industry dynamics and robust
acquisition pipeline. As a reminder our balance sheet remains very
solid with over $30 million in cash and an untapped $20 million
credit facility, giving us ample flexibility as we continue on our
strategic path.”
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.
Reader Advisories
Readers are cautioned that the financial
information regarding the target disclosed herein is unaudited and
derived as a result of the Company’s due diligence, including a
review of the target’s bank statements and tax returns.
There can be no assurance that any of the
potential acquisitions in the Company’s pipeline or in 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 director, shareholder and regulatory
approvals.
Unless otherwise specified, all dollar amounts
in this press release are expressed in U.S. dollars.
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",
"outlook", and similar expressions as they relate to the Company,
including: post integration financial results (revenue and Adjusted
EBITDA) of the acquisition target; the Company’s acquisition
approach; the Company adding patients to its existing
subscription-based resupply program; the Company being extremely
optimistic that it will maintain momentum in closing additional
targets; the Company’s outlook for calendar 2022; the Company being
extremely confident in its acquisition pace staying strong through
the remainder of 2021 and into 2022; Quipt expecting that it would
derive strong revenue synergies from the acquisition; Quipt
expecting to achieve additional revenue generated from organic
growth, cross selling and corporate synergies with the
acquisition; Quipt anticipating that this acquisition would be
immediately accretive to Quipt’s Adjusted EBITDA, overall
profitability and would add approximately $13 million to the
top-line and $1.6 million in net income; Quipt expecting to see
cross-selling growth from lathering on our clinical ventilation
therapy program as an extension to their existing respiratory
product mix; and Quipt expecting to remain very active as it closes
out 2021 and enters 2022; 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; the financial information regarding the
target being verified when included in the Company’s consolidated
financial statements prepared in accordance with generally accepted
accounting principles in Canada as set out in the CPA Canada
Handbook – Accounting under Part I, which incorporates
International Financial Reporting Standards as issued by the
International Accounting Standards Board; the Company successfully
identified, negotiating and completing additional acquisitions,
including accretive acquisitions; the Company organically growing
at a rate of 10% and completing acquisitions that add at least $45
million in new revenue in order to meet 2022 outlook. 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 StevensVP of Corporate Development
859-300-6455cole.stevens@myquipt.com
Gregory CrawfordChief Executive OfficerQuipt Home Medical
Corp.859-300-6455investorinfo@myquipt.com
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