Quipt Home Medical Corp. (the “
Company”)
(NASDAQ:QIPT; TSXV:QIPT), a U.S. based home medical equipment
provider, focused on end-to-end respiratory care, today announced
its fourth quarter and fiscal year 2022 financial results and
operational highlights. These results pertain to the three months
and year ended September 30, 2022 and are reported in U.S.
Dollars.
Quipt will host its Earnings Conference Call on
Thursday, December 22, 2022 at 10:00 a.m. (ET). The dial-in number
is 1 (800) 319-4610 or 1 (604) 638-5340. The live audio webcast can
be found on the investor section of the Company’s website through
the following link: www.quipthomemedical.com.
Financial
Highlights:
- Revenue for fiscal year 2022 was $139.9 million compared to
$102.4 million for fiscal year 2021, representing a 36.6%
increase.
- Recurring Revenue (as defined below) for fiscal year 2022
continues to be strong and exceeded 77% of total revenue.
- Adjusted EBITDA (defined below) for fiscal year 2022 was $29.2
million (20.9% margin), compared to Adjusted EBITDA for fiscal year
2021 of $21.4 million, representing a 36.5% increase. Adjusted
EBITDA margin remained very stable despite the inflationary
operating environment.
- Net Income for fiscal year 2022 was $4.8 million or $0.13 per
fully diluted share, compared to net income for fiscal year 2021 of
a loss of $(6.2) million or $(0.20) per fully diluted share.
- Revenue for Q4 2022 was $40.1 million compared to $29.1 million
for Q4 2021, representing a 37.7% increase.
- Adjusted EBITDA for Q4 2022 was $8.4 million (21% margin)
compared to $5.6 million (19% margin) for Q4 2021, representing a
51% increase.
- Cash flow from operations was $26.3 million for the year ended
September 30, 2022 compared to $17.8 million for the year
ended September 30, 2021.
- For fiscal year 2022, bad debt expense remained consistent
at 8.7%. This exemplifies the Company’s ability to scale and add
more revenue through add-on acquisitions without compromising
billing capabilities.
- On September 19, 2022, the Company announced the closing of
$110,000,000 in senior secured credit facilities with CIT Bank, a
division of First-Citizens Bank & Trust Company. The senior
secured credit facilities are comprised of a term loan facility in
an aggregate principal amount of $5 million, a delayed draw term
loan facility in an aggregate principal amount of $85 million and a
revolving credit facility in an aggregate principal amount of $20
million.
- The Company reported $8.5 million of cash on hand and total
credit availability of $96.5 million as of September 30, 2022
with $11.5 million available towards the revolving credit facility
and $85 million available pursuant to the delayed draw term loan
facility.
Operational and Acquisition
Highlights:
- The Company’s customer base increased 23% year over year to
173,203 unique patients served in fiscal year 2022 from 140,996
unique patients in fiscal year 2021.
- Compared to 364,367 unique set-ups/deliveries in fiscal year
2021, the Company completed 516,328 unique set-ups/deliveries in
fiscal year 2022, an increase of 41.7%. This includes 231,495
respiratory resupply set-ups/deliveries which increased to 231,495
for the year ended September 30, 2022, compared to 158,072 for
the year ended September 30, 2021, an increase of 46.4%, which the
Company credits to its continued use of technology and centralized
intake processes.
- The Company continues to experience robust demand for
respiratory equipment, such as oxygen concentrators, ventilators,
as well as the CPAP resupply and other supplies business.
- On April 26, 2022, the Company announced the execution of a
national insurance contract with a top five health insurer in the
United States 1, which has expanded accessibility for our patients
across the country. The Company will continue to work towards
agreements with other sizable commercial payors in an effort to
convince them of the advantages of the Company’s robust
patient-centric strategy for both patients and payors.
- The Company completed eight acquisitions during fiscal year
2022. In fiscal Q4 2022, the Company acquired Hometown Medical,
LLC, a business with operations in Mississippi, reporting unaudited
trailing 12-month annual revenues of approximately $7 million and
with anticipated Adjusted EBITDA of $1.4 million post
integration.
- The Company has expanded its sales reach which now spans across
19 U.S. states with the addition of experienced sales
personnel.
- The Company has reached 200,000 active patients, 21,500
referring physicians and 94 locations.
Management
Commentary:
“The record results seen in the fourth quarter
and fiscal year 2022 are directly attributable to the expansion of
our patient-centric ecosystem into favorable geographies across the
United States through our strategic growth initiatives. Despite an
ambitious acquisition pace and inflationary operating environment,
I am very pleased with our ability to grow our revenue by 37% and
maintain above 20% margins for fiscal year 2022 by continuing to
implement our steady operating processes and integration
activities. As a healthcare organization with a concentration on
respiratory treatment, we feel well protected from potential
economic challenges given the nature of our business and sector,”
said CEO and Chairman Greg Crawford.
“Quipt is in the best position in its history,
with continued growth in revenue and Adjusted EBITDA, continued
margin expansion, a strong balance sheet, and a provider of in-home
clinical respiratory care, now providing services to 200,000 active
patients in 19 U.S. states. We anticipate continued growth in 2023
due to favorable regulatory conditions, persistently high demand
for respiratory products and services, robust demographic trends,
and our continued operating performance seen throughout the
business. Moreover, our current acquisition pipeline and our robust
balance sheet provides us with significant opportunity focused on
the expanding demand for at-home clinical respiratory care.”
Chief Financial Officer Hardik Mehta added, “We
are extremely proud of our record financial and operating
performance in fiscal year 2022, and our ability to sustain an
Adjusted EBITDA margin above 20% is a tremendous accomplishment
given the current operating climate. We surpassed $160 million in
Run-Rate Revenue (defined below) in fiscal Q4 and our continued
progress in strategically building scale utilizing the
infrastructure we have in place is producing consistent financial
results, inclusive of over 77% of our revenue being classified as
recurring. In real time, we see very positive trends as it relates
to our ongoing hiring initiatives with a focus on our sales force
and significant easing of existing supply chain constraints. Our
strong financial position enables us to focus on strategic
acquisition candidates that can expand our company into favorable
geographic areas in the United States, and we continue to remain
confident in our continued growth and financial performance.”
The Company also announces that on December 2,
2022, a wholly owned subsidiary of the Company, entered into five
separate seven-year lease agreements expiring on September 30,
2029 with Mr. Gregory Crawford, an officer (CEO) and director of
the Company, renewing leases originally entered into in 2015
(prior to Mr. Crawford being a non-arm’s length party of the
Company). The market rate leases are for an aggregate of 60,468
square feet of office, warehouse and retail space for an aggregate
of $53,916 per month, with annual increases equal to the greater of
(i) the Consumer Price Index for All Urban Consumers (CPI-U), and
(ii) 3%, and have been consistently disclosed in prior disclosure
documents (financials, MD&A, AIF’s and management information
circular’s) of the Company on SEDAR.
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 Hometown Medical, LLC is unaudited and
derived as a result of the Company’s due diligence, including a
review of Hometown Medical, LLC’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 Hometown Medical, LLC; and the Company anticipating
continued growth in 2023; 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: Hometown Medical, LLC achieving results at least as
good as historical performances; the financial information
regarding Hometown Medical, LLC 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; 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.
Pre-Released Financial
Metrics
This press release contains certain pre-released
fourth quarter and full year financial metrics. The fourth quarter
and full year financial metrics contained in this press release are
preliminary and represent the most current information available to
the Company's management, as financial closing procedures for the
three months and year ended September 30, 2022 are not yet
complete. The Company's actual consolidated audited financial
statements for such period will be filed with the 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, on or before
the filing deadline of December 29, 2022, and may result in
material changes to the financial metrics summarized in this press
release (including by any one financial metric, or all of the
financial metrics, being below or above the figures indicated) as a
result of the completion of normal quarter and year end accounting
procedures and adjustments, and also what one might expect to be in
the final consolidated financial statements based on the financial
metrics summarized in this press release. Although the Company
believes the expectations reflected in this press release are based
upon reasonable assumptions, the Company can give no assurance that
actual results will not differ materially from these
expectations.
Non-GAAP Measures
This press release refers to “Run-Rate Revenue”,
“Recurring Revenue” and “Adjusted EBITDA”, which are non-GAAP and
non-IFRS financial measures that do not have standardized meanings
prescribed by GAAP or IFRS. The Company’s presentation of these
financial measures may not be comparable to similarly titled
measures used by other companies. These financial measures are
intended to provide additional information to investors concerning
the Company’s performance.
Run-Rate Revenue as used in this press release
is calculated as total revenues for the three months ended
September 30, 2022 of $40 million multiplied by four, or $160
million.
Recurring Revenue as used in this press release
is calculated as rentals of medical equipment of $69.2 million plus
sales of respiratory resupplies of $38.5 million for a total of
$107.7 million, divided by total revenues of $139.9 million, or
77%.
Adjusted EBITDA is defined as net income (loss),
excluding interest, income taxes, depreciation, amortization,
change in fair value of derivative financial liabilities,
stock-based compensation, other income from government grant, loss
on extinguishment of debt, loss on settlement of shares to be
issues, and acquisition-related costs. 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, including
interest expense, income taxes, depreciation, amortization,
stock-based compensation, goodwill impairment and change in fair
value of debentures and financial derivatives. The following table
shows our Non-IFRS measure (Adjusted EBITDA) reconciled to our net
income for the following indicated periods:
|
Year ended |
|
Year ended |
|
September |
|
September |
|
30, 2022 |
|
30, 2021 |
Net income (loss) from continuing operations |
$ |
4,839 |
|
|
$ |
(6,174 |
) |
Add back: |
|
|
|
|
|
Depreciation and
amortization |
|
23,040 |
|
|
|
17,786 |
|
Interest expense, net |
|
2,079 |
|
|
|
1,853 |
|
(Recovery of) provision for
income taxes |
|
(1,904 |
) |
|
|
(3,155 |
) |
EBITDA |
|
28,054 |
|
|
|
10,310 |
|
Stock-based compensation |
|
5,493 |
|
|
|
4,952 |
|
Acquisition-related costs |
|
797 |
|
|
|
233 |
|
Gain (loss) on foreign
currency transactions |
|
144 |
|
|
|
173 |
|
Other income from government
grant |
|
(4,885 |
) |
|
|
— |
|
Loss on extinguishment of
debt |
|
281 |
|
|
|
— |
|
Loss on settlement of shares
to be issued |
|
442 |
|
|
|
— |
|
Transaction costs |
|
— |
|
|
|
— |
|
Change in fair value of
debentures and warrants |
|
(1,150 |
) |
|
|
5,703 |
|
Adjusted EBITDA |
$ |
29,176 |
|
|
$ |
21,371 |
|
Management uses each of these non-IFRS measures
as a key metric in the evaluation of the Company’s performance and
the consolidated financial results. The Company believes that these
non-IFRS measures are useful to investors in their assessment of
the operating performance and the valuation of the Company. In
addition, these non-IFRS measures address questions the Company
routinely receives from analysts and investors and, in order to
assure that all investors have access to similar data, the Company
has determined that it is appropriate to make this data available
to all investors. However, non-IFRS financial measures are not
prepared in accordance with IFRS, and the information is not
necessarily comparable to other companies and should be considered
as a supplement to, not a substitute for, or superior to, the
corresponding measures calculated in accordance with IFRS.
For further information please visit our website
at www.Quipthomemedical.com, or contact:
Cole StevensVP of Corporate DevelopmentQuipt Home Medical
Corp.859-300-6455cole.stevens@myquipt.com
Gregory CrawfordChief Executive OfficerQuipt Home Medical
Corp.859-300-6455investorinfo@myquipt.com
1 https://healthpayerintelligence.com/news/top-5-largest-health-insurers-in-the-us-by-national-market-share
Condensed Statements of Income (Loss)
(Unaudited, in $000s)
|
Three
months ended Sep
30, 2022 |
|
Three months ended Sep
30, 2021 |
|
Year ended Sep
30, 2022 |
|
Year ended Sep
30, 2021 |
Revenues |
$ |
40,092 |
|
|
$ |
29,118 |
|
|
$ |
139,862 |
|
|
$ |
102,351 |
|
Inventory sold |
|
9,294 |
|
|
|
8,234 |
|
|
|
33,213 |
|
|
|
28,172 |
|
Operating expenses |
|
18,606 |
|
|
|
13,328 |
|
|
|
65,203 |
|
|
|
44,805 |
|
Bad debt expense |
|
3,242 |
|
|
|
1,987 |
|
|
|
12,225 |
|
|
|
7,957 |
|
Depreciation |
|
6,294 |
|
|
|
4,930 |
|
|
|
20,453 |
|
|
|
16,212 |
|
Amortization of intangible
assets |
|
911 |
|
|
|
467 |
|
|
|
2,587 |
|
|
|
1,574 |
|
Stock-based compensation |
|
897 |
|
|
|
3,328 |
|
|
|
5,493 |
|
|
|
4,952 |
|
Acquisition-related costs |
|
574 |
|
|
|
69 |
|
|
|
797 |
|
|
|
233 |
|
Loss (gain) on disposals of
property and equipment |
|
55 |
|
|
|
(29 |
) |
|
|
45 |
|
|
|
(94 |
) |
Other income from government
grant |
|
(631 |
) |
|
|
— |
|
|
|
(4,885 |
) |
|
|
— |
|
Operating income |
|
850 |
|
|
|
(3,196 |
) |
|
|
4,731 |
|
|
|
(1,460 |
) |
Interest expense, net |
|
572 |
|
|
|
515 |
|
|
|
2,079 |
|
|
|
1,993 |
|
Loss on extinguishment of
debt |
|
281 |
|
|
|
— |
|
|
|
281 |
|
|
|
— |
|
Loss on settlement of shares
to be issued |
|
442 |
|
|
|
— |
|
|
|
442 |
|
|
|
— |
|
Loss on foreign currency
transactions |
|
62 |
|
|
|
37 |
|
|
|
867 |
|
|
|
173 |
|
Change in fair value of
debentures and warrants |
|
85 |
|
|
|
(1,155 |
) |
|
|
(1,150 |
) |
|
|
5,703 |
|
Income (loss) before income
taxes |
|
(592 |
) |
|
|
(2,593 |
) |
|
|
2,212 |
|
|
|
(9,329 |
) |
Recovery of income taxes |
|
(2,362 |
) |
|
|
(1,214 |
) |
|
|
(1,904 |
) |
|
|
(3,155 |
) |
Net income (loss) |
$ |
1,770 |
|
|
$ |
(1,379 |
) |
|
$ |
4,839 |
|
|
$ |
(6,174 |
) |
Income (loss) per share |
|
|
|
|
|
|
|
Basic |
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
0.14 |
|
|
$ |
(0.20 |
) |
Diluted |
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
0.13 |
|
|
$ |
(0.20 |
) |
Condensed Statements of Financial
Position (Unaudited, in $000s)
|
Year ended September
30, 2022 |
|
Year ended September
30, 2021 |
Cash |
$ |
8,516 |
|
$ |
34,612 |
Accounts receivable, net |
|
16,383 |
|
|
11,938 |
Inventory |
|
15,585 |
|
|
9,253 |
Prepaid and other current
assets |
|
1,052 |
|
|
1,430 |
Property and equipment |
|
33,497 |
|
|
23,506 |
Other assets |
|
57,181 |
|
|
27,834 |
Total assets |
$ |
132,214 |
|
$ |
108,573 |
|
|
|
|
Accounts payable and other
current liabilities |
$ |
41,740 |
|
$ |
32,737 |
Long-term debt and other
long-term liabilities |
|
10,927 |
|
|
17,214 |
Total liabilities |
|
52,667 |
|
|
58,622 |
Shareholders’ equity |
|
79,547 |
|
|
108,573 |
Total liabilities and
shareholders’ equity |
$ |
132,214 |
|
$ |
167,195 |
Condensed Statements of Cash Flows
(Unaudited, in $000s)
|
Year endedSeptember
30, 2022 |
|
Year endedSeptember
30, 2021 |
Operating activities |
|
|
|
Net income (loss) |
$ |
4,839 |
|
|
$ |
(6,174 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operating activities |
|
20,747 |
|
|
|
25,121 |
|
Change in working capital (net
of acquisitions) |
|
758 |
|
|
|
(1,186 |
) |
Net cash flow provided by
operating activities |
|
26,344 |
|
|
|
17,761 |
|
|
|
|
|
Investing activities |
|
|
|
Purchase of property and
equipment, net of proceeds |
|
(8,968 |
) |
|
|
(4,948 |
) |
Cash paid for
acquisitions |
|
(33,525 |
) |
|
|
(12,890 |
) |
Net cash flow used in
investing activities |
|
(42,493 |
) |
|
|
(17,838 |
) |
|
|
|
|
Financing activities |
|
|
|
Repayments of loans, leases,
purchase price payable, and other |
|
(20,639 |
) |
|
|
(14,237 |
) |
Proceeds from credit facility,
net of issuance costs |
|
10,221 |
|
|
|
— |
|
Proceeds from exercise of
warrants and options |
|
567 |
|
|
|
19,077 |
|
Net cash flow (used in)
provided by financing activities |
|
(9,851 |
) |
|
|
4,840 |
|
|
|
|
|
Net increase (decrease) in
cash |
|
(26,000 |
) |
|
|
4,763 |
|
Effect of exchange rate
changes on cash held in foreign currencies |
|
(96 |
) |
|
|
622 |
|
Cash, beginning of year |
|
34,612 |
|
|
|
29,227 |
|
Cash, end of year |
$ |
8,516 |
|
|
$ |
34,612 |
|
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