Full Press Release Details
Quipt Accelerates National Expansion Efforts
with Acquisition of Multi State Operator - Good Night Medical - Significantly Bolstering Commercial Contract Portfolio
Acquisition Adds $7.5 Million in Annualized
Revenues, 20% Adjusted EBITDA Margin Post Integration, and Over 10,000 Active Patients
Ohio - April 19, 2022 - 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
that it has acquired Good Night Medical, LLC ("Good Night Medical"), a business with operations across seven U.S. states,
reporting unaudited trailing 12-month annual revenues of approximately $7.5 million and with anticipated Adjusted EBITDA (defined
below) of $1.5 million (20% margin) post integration. As a reminder all figures stated are in USD.
The acquisition encompasses locations across seven
U.S. states including Arkansas, Georgia, Massachusetts, North Carolina, Ohio, Texas and California. The acquisition provides Quipt an
expansionary opportunity into Massachusetts, North Carolina and Texas, which are new U.S. states for Quipt's coverage sphere including
important new commercial insurance contracts. The other four U.S. states are current areas of service for Quipt, which provide for actionable
revenue and cost synergy opportunities as further scale is created in each operating region. The expansionary operating footprint aligns
closely with regions that have a high prevalence of Chronic Obstructive Pulmonary Disease ("COPD"), a key target patient
group; cumulatively the seven states Good Night Medical operates in contain some of the highest prevalence U.S. states. According to the
National Institutes of Health (NIH), about 5 million people between the seven states have COPD1. The favorable demographics,
additional insurance contracts, and infrastructure provides Quipt with the right set of circumstances to further accelerate its national
expansion efforts as a leader in clinical respiratory care.
The integration process will include Quipt applying
its proven subscription-based resupply program to each acquired business unit, as well as the highly intensive service model Quipt is
known for. Consistent with the transactions Quipt has completed to date, Good Night Medical brings an experienced operational team.
Good Night Medical has been a leader in the respiratory
home care services space for over 9 years and has several difficult to obtain insurance contracts that significantly enhance Quipt's
presence in each of Good Night Medical's regions. Good Night Medical has 10,000 active patients, bringing Quipt's total to
approximately 180,000 active patients, and like Quipt, Good Night Medical offers high-quality service, equipment, and supplies.
Moreover, Good Night Medical has strong diversification
amongst referral sources, and a payor base, with exposure to less than 30% from Medicare. Furthermore, Good Night Medical has no exposure
to ventilation therapy, which provides Quipt an opportunity to grow as well as other complimentary clinical respiratory products and services.
In addition, Good Night Medical provides Quipt the opportunity to add patients to Quipt's existing subscription-based resupply program,
and Quipt expects that it can derive strong revenue synergies from this initiative.
Under the terms of the definitive purchase agreement,
Quipt acquired Good Night Medical for approximately $7 million in cash. It is expected the acquisition will increase Quipt's annual
revenues by approximately $7.5 million, and, post integration, Adjusted EBITDA by $1.5 million (20% margin).
Reiteration of Outlook for Calendar End
2022 (Fiscal Q1 2023)
Based on the current operations, market trends
and completed and prospective acquisitions, the Company is reiterating its outlook for its annual run-rate revenue by the end of calendar
2022 (Fiscal Q1 2023) to be $180-$190 million with $38-$43 million in run-rate Adjusted EBITDA.
Management Commentary
acquisition of Good Night Medical is a prime example of the quality respiratory businesses we have in our robust pipeline. Good Night
Medical strengthens our healthcare network across multiple states, enhancing our national coverage sphere over an area that includes about
5 million COPD sufferers in the United States. Furthermore, I believe that this acquisition will help us achieve long term cost saving
goals that will drive our future margin acceleration by giving us increased scale across the organization," said Greg Crawford,
Chairman and CEO of Quipt. "We see several actionable synergies and believe our strong sleep re-supply business presents us with
significant upside as we deploy our technology therein. Integration is the key to our ongoing financial and operating success as it allows
us to continue the strong pace of closing strategic acquisitions, alongside the stringent approach to our due-diligence process
that provides us acquisition opportunities that work towards our long-term strategic objectives. We are extremely encouraged about the
growth path we are on, carving out a special segment of the homecare industry and we are well positioned to seize the growth opportunity
"Additionally, I want to take a moment
to provide an update on our sleep therapy business unit. As noted in our fiscal Q1 2022 financial news release, we have seen significant
backlog, with nearly 8,000 patients waiting for a sleep device. It is important to understand that this backlog is extremely sticky with
the entire industry experiencing supply constraints, and we view the revenue impact as delayed not lost. Furthermore, I am pleased
to share that we began the month of April with the largest on hand inventory of CPAP devices since the recall commenced and I am
cautiously optimistic as we move through the second half of the year that the supply pressures will continue to alleviate."
Chief Financial Officer, Hardik Mehta added, "This
acquisition allows us to build out our operating footprint within existing and new markets as we reach approximately 180,000 active patients,
add $7.5 million in revenue, a meaningful EBITDA contribution, as well as providing us significantly enhanced infrastructure across seven
states. We are pleased with the consistent performance across our entire operation year to date and are very well positioned as we move
through 2022 and beyond to grow into a leader in respiratory homecare across the United States. The bullish regulatory environment, industry
tailwinds, and need for respiratory homecare, gives us an incredible runway in strategically gaining market share in favorable geographies.
Looking at our current pipeline, it remains very exciting, and we expect to remain very active over the near term with exciting targets
that meet our stringent criteria and are thrilled to continue to execute on our growth pillars over the course of the year."
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.
Readers are cautioned that the financial information
regarding the acquisition disclosed herein is unaudited and derived as a result of the Company's due diligence, including a review
of the acquisition'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
Forward-Looking Statements
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 Good Night Medical; Quipt accelerating its national expansion efforts as a leader in clinical
respiratory care; Quipt's growth opportunities as a result of the acquisition of Good Night Medical; Quipt adding patients to its
subscription-based resupply program; Quipt expecting that it can derive strong revenue synergies; the Company's outlook for calendar
2022; the acquisition helping Quipt achieve long term cost savings that will drive future margin acceleration; Quipt's acquisition
pipeline and pace of further acquisitions; Quipt believing that supply pressures will continue to alleviate; and Quipt remaining
very active with acquisitions over the near term; 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 achieving results at least as good as historical performances; the financial information
regarding the acquisition 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