CALIFORNIA, MISSOURI, ARKANSAS, AND MISSISSIPPI CONTINUE THE NATIONAL EXPANSION.
ANNUALIZED REVENUES OF $5.5 MILLION, 10% ADJUSTED EBITDA MARGIN PRIOR TO INTEGRATION, AND ACTIVE PATIENT COUNT OF MORE THAN 10,000
12 July 2021, Cincinnati, Ohio – Quipt Home Medical Corp. (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 the acquisition of three separate entities with combined operations in California, Missouri, Arkansas, and Mississippi, reporting combined unaudited trailing 12-month annual revenues of approx. As a reminder, all figures are in US dollars.
Quipt is pursuing a nationwide expansion strategy with the goal of expanding its operating footprint and establishing itself as a leader in respiratory homecare across the United States. Quipt has developed a substantial infrastructure platform that is extremely scalable and helps the company to efficiently integrate acquired businesses, resulting in considerable cost synergies and revenue growth prospects.
Quipt’s acquisition strategy focuses on companies that are either: I heavily respiratory weighted, with gross revenue ranging from $5 to $20 million and annual EBITDA margins of 10% to 20% or more; or (ii) under $5 million revenue targets with the strategic goal of diversifying our payer mix and expanding our geographic footprint across new states.
Information on the Purchase
Following integration, Quip will operate each of the newly acquired firms under the Quipt brand. This is the first step in a longer-term strategy to move certain local market brands to Quipt, which will help the company build brand equity and recognition. This, according to Quipt, will be a key driver of future organic development.
Quipt can expand into four additional states by combining these newly acquired entities (California, Missouri, Arkansas, and Mississippi). Six locations, over 10,000 active patients, substantial insurance contracts, and decades of operating experience will be added to the united organizations. Each company has a track record in the areas they serve, as well as a diverse product mix that includes 66 percent respiratory and 33 percent standard DME. Quipt now has direct access to enticing new markets, where it plans to use its existing infrastructure to drive considerable cross-selling and patient growth. Quipt will be able to add patients to its existing subscription-based resupply program as a result of the combined businesses, and Quipt expects excellent revenue synergies from this project. The combined firms have a broad payor mix, with no single payor accounting for more than 10% of total revenues.
The following revised metrics, which take into account the three newly acquired firms, are provided by the Company:
There are currently 130,000 active patients, 17,000 unique referrals, and 57 locations throughout 15 states in the United States.
Quipt bought the three combined entities for a total cash consideration of roughly $4.2 million under the provisions of the formal purchase agreements. The combined organizations are expected to boost Quipt’s annual gross revenues by about $5.5 million, while Adjusted EBITDA (as defined below) will normalize to match the company’s overall margin profile. Quipt plans to generate additional income through organic growth, cross-selling, and corporate synergies by using existing infrastructure and payor contracts.
Management Remarks
“The completion of three acquisitions covering four states marks the start of what we expect to be a busy second half of the year at Quipt, as we seek to strategically expand our operating footprint into both new and existing regions. With our acquisition strategy and solid organic development platform, we are focused on economically scaling the firm “Quipt’s Chairman and CEO, Greg Crawford, stated. “We’re excited to expand our brand into local markets as a provider of great patient care, and we anticipate a straightforward integration process that will allow us to immediately capitalize on the many synergies available. With these acquired organizations providing us with considerable infrastructure in these new areas of operation, we are able to add six new sites, over 10,000 active patients, and $5.5 million in gross revenue.”
Hardik Mehta, Chief Financial Officer, commented, “Our acquisition strategy remains focused on firms with a strong respiratory product mix, a diverse payor mix, and a secure platform for Quipt to expand its operations while leveraging existing infrastructure. Our goal is to double the Adjusted EBITDA margin after the combined firms are fully integrated, bringing it closer to our total margin profile. We’re pleased to have the chance to expand into these new states organically as well as through smart bolt-on possibilities that arise. We anticipate this is only the beginning of what will be a robust acquisition pace for us throughout the remainder of 2021, with roughly $37 million in cash and a $20 million untapped credit facility.”
QUIPT HOME MEDICAL CORPORATION.
In the US healthcare sector, the company delivers in-home monitoring and disease management services, as well as end-to-end respiratory solutions. It plans to expand its services to cover the management of a variety of chronic illness states, with an emphasis on patients with heart or pulmonary disease, sleep disturbances, restricted mobility, and other chronic health problems. The Company’s principal business goal is to increase shareholder value by expanding the spectrum of services available to patients who require in-home monitoring and chronic disease management. Offering numerous services to the same patient, integrating the patient’s services, and making life easier for the patient are all part of the company’s organic growth strategy.
There is no guarantee that any of the potential purchases now under discussion will be finalized as envisaged or at all, and no definitive agreements have been signed. Any transaction will be subject to the necessary approvals from the board of directors, shareholders, and regulators.
The TSX Venture Exchange and its Regulation Services Provider (as defined in the TSX Venture Exchange’s rules) accept no responsibility for the adequacy or accuracy of this release.
? Statements with a Forward-Looking Aspect
Certain comments in this press release are “forward-looking information,” as defined by applicable Canadian securities legislation. “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 strategy; the Company’s plan to transition certain local market brands to Quipt; the Company’s belief that brand equity and recognition will be a driver of future? organic growth, combined with ongoing efforts; the Company creating significant cross-selling and?patient growth opportunities in the new markets; the new entities allowing the Company to add?patients to Quipt’s existing subscription-based resupply program, with the Company expecting strong?revenue synergies from this initiative; the amount the Company expects to recoup from this initiative; the amount the Company expects to recoup from this initiative; the amount the Company expects to recoup from this initiative As a result of the combined entities’ acquisitions, adjusted EBITDA will increase; the company expects to generate?additional revenue from organic growth, cross-selling, and corporate synergies; the company anticipates 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 expects a smooth integration. All remarks, with the exception of historical facts, may be considered forward-looking information. Such statements are based on the Company’s current views and intentions with respect to future events, as well as current information available to the Company, and are subject to a number of risks, uncertainties, and assumptions, including: the acquisition targets achieving results at least as good as historical performances; and the Company successfully identifying, negotiating, and closing additional acquisitions. Should one or more of these risks or uncertainties materialize, many factors could cause the actual results, performance, or achievements that may be expressed or inferred by such forward-looking?information to differ from those discussed below. 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 aforementioned risk factors; the aforementioned risk factors; the aforementioned risk factors; the aforementioned risk factors; the aforementioned risk factors; the aforementioned risk factors; the aforementioned risk factors; the aforementioned risk factors; the aforementioned risk/n
