Full Press Release Details
Quipt Home Medical Corp.
(formerly, Protech Home Medical Corp.)
Condensed Consolidated Interim Financial Statements
For the Three and Six Months Ended
March 31, 2021 and 2020
(Expressed in US dollars)
| Condensed Consolidated Interim Statements of Financial Position | Page 1 | ||
| Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) | Page 2 | ||
| Condensed Consolidated Interim Statements of Changes in Shareholders' Equity | Page 3 | ||
| Condensed Consolidated Interim Statements of Cash Flows | Page 4 | ||
| Notes to the Condensed Consolidated Interim Financial Statements | Pages 5-23 |
Quipt Home Medical Corp. (formerly, Protech
CONDENSED CONSOLIDATED INTERIM STATEMENT OF
FINANCIAL POSITION (UNAUDITED)
(Expressed in thousands of US Dollars, except
| Notes | As at March 31, 2021 | As at September 30, 2020 | As at October 1, 2019 (Restated) | |||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Cash | $ | 27,158 | $ | 29,227 | $ | 9,708 | ||||||||||
| Accounts receivable, net | 4 | 10,870 | 9,089 | 9,357 | ||||||||||||
| Inventory | 5 | 9,851 | 6,415 | 3,578 | ||||||||||||
| Prepaid and other current assets | 822 | 552 | 604 | |||||||||||||
| Total current assets | 48,701 | 45,283 | 23,247 | |||||||||||||
| Long-term assets | ||||||||||||||||
| Property, equipment, and right of use assets, net | 6 | 18,635 | 16,667 | 14,723 | ||||||||||||
| Goodwill | 7 | 11,485 | 3,895 | 1,420 | ||||||||||||
| Intangible assets, net | 7 | 10,337 | 5,579 | 2,198 | ||||||||||||
| Deferred financing costs | 11 | 486 | 556 | - | ||||||||||||
| Deposits | 84 | 85 | 71 | |||||||||||||
| Total long-term assets | 41,027 | 26,782 | 18,412 | |||||||||||||
| TOTAL ASSETS | $ | 89,728 | $ | 72,065 | $ | 41,659 | ||||||||||
| LIABILITIES | ||||||||||||||||
| Current Liabilities | ||||||||||||||||
| Accounts payable | $ | 8,831 | $ | 7,434 | $ | 6,134 | ||||||||||
| Accrued liabilities | 2,802 | 3,488 | 1,750 | |||||||||||||
| Current portion of equipment loans | 11 | 6,197 | 4,311 | 6,176 | ||||||||||||
| Current portion of leases | 11 | 2,481 | 2,037 | 421 | ||||||||||||
| Government grant | 8 | 3,308 | 2,599 | - | ||||||||||||
| Deferred revenue | 9 | 2,023 | 1,804 | 1,438 | ||||||||||||
| Purchase price payable | 3 | 1,969 | 857 | - | ||||||||||||
| Derivative warrant liability | 10 | 6,728 | 1,855 | - | ||||||||||||
| Total current liabilities | 34,339 | 24,385 | 15,919 | |||||||||||||
| Long-Term Liabilities | ||||||||||||||||
| Debentures | 11 | 17,327 | 12,930 | 10,547 | ||||||||||||
| Equipment loans | 11 | 937 | 439 | 1,130 | ||||||||||||
| Lease liabilities | 11 | 3,321 | 3,230 | 1,040 | ||||||||||||
| Government grant | 8 | 1,577 | 2,286 | - | ||||||||||||
| Long-term purchase price payable | 3 | 133 | 560 | - | ||||||||||||
| TOTAL LIABILITIES | 57,634 | 43,830 | 28,636 | |||||||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||||||
| Share capital | 12 | 186,063 | 171,405 | 151,963 | ||||||||||||
| Contributed surplus | 16,188 | 16,519 | 16,177 | |||||||||||||
| Shares to be issued | 657 | - | - | |||||||||||||
| Accumulated deficit | (170,814 | ) | (159,689 | ) | (155,117 | ) | ||||||||||
| TOTAL SHAREHOLDERS' EQUITY | 32,094 | 28,235 | 13,023 | |||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 89,728 | $ | 72,065 | $ | 41,659 |
The accompanying notes are
an integral part of these consolidated financial statements
Quipt Home Medical Corp. (formerly, Protech
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(Expressed in thousands of US Dollars, except
| Notes | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Sales of medical equipment and supplies | $ | 10,401 | $ | 7,492 | $ | 20,803 | $ | 14,585 | ||||||||||||
| Rentals of medical equipment | 13,839 | 10,369 | 26,192 | 19,824 | ||||||||||||||||
| Total revenues | 24,240 | 17,861 | 46,995 | 34,409 | ||||||||||||||||
| Inventory sold | 6,122 | 4,763 | 12,194 | 9,361 | ||||||||||||||||
| Operating expenses | 14 | 12,734 | 8,999 | 24,263 | 19,894 | |||||||||||||||
| Depreciation | 6 | 3,603 | 3,233 | 6,969 | 6,601 | |||||||||||||||
| Amortization of intangible assets | 7 | 337 | 151 | 652 | 345 | |||||||||||||||
| Stock-based compensation | 12 | 12 | 68 | 27 | 101 | |||||||||||||||
| Acquisition-related costs | 3 | 16 | - | 72 | - | |||||||||||||||
| Gain on sale of property and equipment | (2 | ) | (8 | ) | (29 | ) | (68 | ) | ||||||||||||
| Other expense (income) | - | (41 | ) | - | (146 | ) | ||||||||||||||
| Income from continuing operations | 1,418 | 696 | 2,847 | (1,679 | ) | |||||||||||||||
| Financing expenses | ||||||||||||||||||||
| Interest expense on convertible debenture | 235 | 223 | 465 | 450 | ||||||||||||||||
| Interest expense on leases | 11 | 127 | 105 | 252 | 225 | |||||||||||||||
| Interest expense on loans | 97 | 133 | 182 | 243 | ||||||||||||||||
| Amortization of financing costs | 11 | 36 | - | 70 | - | |||||||||||||||
| Other interest (income)/ expense | 18 | - | 30 | - | ||||||||||||||||
| (Gain) loss on foreign currency transactions | 98 | (981 | ) | 100 | (596 | ) | ||||||||||||||
| Change in fair value of derivative warrant liability | 10 | 6,043 | - | 6,391 | - | |||||||||||||||
| Change in fair value of debentures | 11 | 7,254 | (1,895 | ) | 7,889 | (1,364 | ) | |||||||||||||
| Income (loss) from continuing operations before taxes | (12,490 | ) | 3,111 | (12,532 | ) | (637 | ) | |||||||||||||
| Provision for (recovery of) income taxes | - | 33 | (1,407 | ) | 33 | |||||||||||||||
| Income (loss) from continuing operations | (12,490 | ) | 3,078 | (11,125 | ) | (670 | ) | |||||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Income (loss) from discontinued operations | 17 | - | - | - | (869 | ) | ||||||||||||||
| Net income (loss) | $ | (12,490 | ) | $ | 3,078 | $ | (11,125 | ) | $ | (1,539 | ) | |||||||||
| Net income (loss) per share (Note 15) | ||||||||||||||||||||
| Basic earnings per share | $ | (0.43 | ) | $ | 0.15 | $ | (0.39 | ) | $ | (0.07 | ) | |||||||||
| Diluted earnings per share | $ | (0.43 | ) | $ | 0.14 | $ | (0.39 | ) | $ | (0.07 | ) | |||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||
| Basic | 29,294 | 20,914 | 28,803 | 20,897 | ||||||||||||||||
| Diluted | 29,294 | 22,124 | 28,803 | 20,897 |
The accompanying notes are an integral part of these consolidated
financial statements
Quipt Home Medical Corp.
(Formerly, Protech Home Medical Corp.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
CHANGES IN SHAREHOLDERS'
(Expressed in thousands of US Dollars, except
| Notes | Number of Shares (000's) | Capital stock | Contributed surplus | Shares to be Issued | Accumulated Deficit | Total shareholders' equity | ||||||||||||||||||||||
| Balance September 30, 2019 | 20,897 | $ | 151,963 | $ | 16,177 | $ | - | $ | (155,117 | ) | $ | 13,023 | ||||||||||||||||
| Net loss | - | - | - | - | (1,539 | ) | (612 | ) | ||||||||||||||||||||
| Stock-based compensation | 12 | - | - | 101 | - | - | 101 | |||||||||||||||||||||
| Stock options exercised | 12 | 24 | 44 | (25 | ) | - | - | 19 | ||||||||||||||||||||
| Balance March 31, 2020 | 20,921 | $ | 152,007 | $ | 16,253 | $ | - | $ | (156,656 | ) | $ | 11,604 | ||||||||||||||||
| Balance September 30, 2020 | 28,069 | $ | 171,405 | $ | 16,519 | $ | - | $ | (159,689 | ) | $ | 28,235 | ||||||||||||||||
| Net loss | - | - | - | - | (11,125 | ) | (11,125 | ) | ||||||||||||||||||||
| Stock to be issued from acquisition | 3 | - | - | - | 3,033 | - | 3,033 | |||||||||||||||||||||
| Issuance of stock to be issued | 3 | 629 | 2,376 | - | (2,376 | ) | - | - | ||||||||||||||||||||
| Conversion of debentures | 11 | 619 | 4,349 | - | - | - | 4,349 | |||||||||||||||||||||
| Stock-based compensation | 12 | - | - | 27 | - | - | 27 | |||||||||||||||||||||
| Stock options exercised | 12 | 20 | 98 | (47 | ) | - | - | 51 | ||||||||||||||||||||
| Compensation options exercised | 12 | 263 | 1,311 | (311 | ) | - | - | 1,000 | ||||||||||||||||||||
| Exercise of warrants, including transfer of derivative warrant liability of $1,725 | 10,12 | 968 | 6,524 | - | - | - | 6,524 | |||||||||||||||||||||
| Balance March 31, 2021 | 30,568 | $ | 186,063 | $ | 16,188 | $ | 657 | $ | (170,814 | ) | $ | 32,094 |
The accompanying notes are an integral part of these
consolidated financial statements
Quipt Home Medical Corp.
(Formerly, Protech Home Medical Corp.)
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of US Dollars, except
| Notes | Six months ended March 31, 2021 | Six months ended March 31, 2020 | ||||||||||
| Operating activities | ||||||||||||
| Loss from continuing operations | $ | (11,125 | ) | $ | (670 | ) | ||||||
| Loss from discontinued operations | - | (869 | ) | |||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 6,7 | 7,621 | 6,946 | |||||||||
| Amortization of financing costs | 11 | 71 | - | |||||||||
| Interest expense on leases and loans | 11 | 434 | 468 | |||||||||
| Loss (gain) on foreign currency transactions | 100 | (596 | ) | |||||||||
| Loss on fair value of derivative warrant liability | 11 | 6,391 | - | |||||||||
| Loss on (gain) on fair value of convertible debentures | 11 | 7,889 | (1,364 | ) | ||||||||
| Gain on disposal of property and equipment | (29 | ) | (67 | ) | ||||||||
| Stock-based compensation | 12 | 27 | 101 | |||||||||
| Bad debt expense | 4 | 4,289 | 3,628 | |||||||||
| Change in inventory reserve | 185 | 49 | ||||||||||
| Deferred income taxes | (1,407 | ) | - | |||||||||
| Change in working capital: | ||||||||||||
| Net increase in accounts receivable | (4,816 | ) | (2,583 | ) | ||||||||
| Net increase in inventory | (2,366 | ) | (716 | ) | ||||||||
| Net increase in prepaid and other current assets | (260 | ) | (115 | ) | ||||||||
| Net increase in deferred revenue | 35 | - | ||||||||||
| Net increase in accounts payables and accrued liabilities | (415 | ) | 953 | |||||||||
| Net cash flow provided by operating activities | 6,624 | 5,165 | ||||||||||
| Investing activities | ||||||||||||
| Purchase of property and equipment | 6 | (1,178 | ) | (35 | ) | |||||||
| Cash proceeds from sale of property and equipment | 153 | 127 | ||||||||||
| Cash paid for acquisitions | 3 | (7,670 | ) | (3,318 | ) | |||||||
| Net cash flow used in investing activities | (8,695 | ) | (3,226 | ) | ||||||||
| Financing activities | ||||||||||||
| Repayments of long-term debt | 11 | (6,236 | ) | (7,282 | ) | |||||||
| Payments of purchase price payable | 3 | (576 | ) | - | ||||||||
| Proceeds from exercise of warrants | 12 | 4,799 | - | |||||||||
| Proceeds from exercise of options | 12 | 1,051 | 20 | |||||||||
| Net cash flow used in financing activities | (962 | ) | (7,262 | ) | ||||||||
| Net decrease in cash | (3,033 | ) | (5,323 | ) | ||||||||
| Effect of exchange rate changes on cash held in foreign currencies | 964 | (8 | ) | |||||||||
| Cash, beginning of period | 29,227 | 9,708 | ||||||||||
| Cash, end of period | $ | 27,158 | $ | 4,377 |
The accompanying notes are an integral part of these consolidated
financial statements
Quipt Home Medical Corp.
(Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Tabular dollar amounts expressed in thousands
of US Dollars, except per share amounts)
Quipt Home Medical Corp. ("Quipt"
or the "Company") was incorporated under the Business Corporations Act (Alberta) on March 5, 1993. On December 30,
2013, the Company was continued into British Columbia, Canada. The address of the registered office is 666 Burrard St, Vancouver, British
Columbia, V6C 2Z7. The head office is located at 1019 Town Drive, Wilder, Kentucky, United States. The Company is a participating Medicare
provider that provides i) nebulizers, oxygen concentrators, and CPAP and BiPAP units; ii) traditional and non-traditional durable medical
respiratory equipment and services; and iii) non-invasive ventilation equipment, supplies and services. The Company has embarked on an
acquisition strategy for additional revenue and profit growth.
The Company changed its name from Protech
Home Medical Corp. to Quipt Home Medical Corp. on May 13, 2021.
The Company's shares are traded
on the TSX Venture Exchange under the symbol QIPT. The stock is also traded on the OTCQX Best Market in the United States under the symbol
PTQQF. Effective May 13, 2021, the Company consolidated its issued and outstanding common shares based on one post-consolidation
common share for every four pre-consolidation common shares. Unless otherwise stated, the share, options and warrants along with corresponding
exercise prices and per-share amounts have been restated retrospectively to reflect this share consolidation.
Basis of measurement
These consolidated financial statements
have been prepared on a going concern basis that assumes that the Company will continue its operations for the foreseeable future and
be able to realize its assets and discharge its liabilities and commitments in the normal course of operation.
Change in Presentation Currency
Effective October 1, 2020, the
Company changed its presentation currency to US dollars from Canadian dollars. Since the Company operates in the United States and
its functional currency is US dollars, the Company believes that the change in presentation currency will provide stakeholders with a
better reflection of the Company's business activities and enhance the comparability of the Company's financial information. The change
in presentation currency represents a voluntary change in accounting policy, which is accounted for retrospectively. The consolidated
financial statements for all periods presented have been translated into the new presentation currency in accordance with IAS 21 - The
Effects of Changes in Foreign Exchange Rates.
The consolidated statements of operations
and comprehensive income (loss) and the consolidated statements of cash flows have been translated into the presentation currency using
the average exchange rates prevailing during each reporting period. In the consolidated statements of financial position, all assets and
liabilities have been translated using the period-end exchange rates, and all resulting exchange differences have been recognized as a
foreign currency gain (loss) in the condensed consolidated interim statements of income (loss) and comprehensive income (loss). Asset
and liability amount previously reported in Canadian dollars have been translated into US dollars as at October 1, 2019 and September 30,
2020, using the period-end exchange rates of 1.3242 C$/US$ and 1.3339 C$/US$, respectively. The statements of income (loss) and comprehensive
income (loss) and statement of cash flows have been translated at an exchange rate of 1.3453 and 1.3332 C$/US$ for the three and six months
ended March 31, 2020, respectively.
In prior reporting periods, the translation
of the Company's US entities, which had a US dollar functional currency, into the Company's presentation currency of the Canadian
dollar, gave rise to a translation adjustment which was recorded as a cumulative translation adjustment ("CTA"), a separate
component of shareholders' equity. With the retrospective application of the change in presentation currency from the Canadian dollar
to the US dollar, the CTA was eliminated.
On March 11, 2020, the World Health
Organization declared the outbreak of a novel strain of coronavirus ("COVID-19") a global pandemic. In response
to the outbreak, governmental authorities in the United States and internationally have introduced various recommendations and measures
to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations,
shelters-in-place, and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are
having a significant impact on the private sector and individuals, including unprecedented business, employment, and economic disruptions.
Quipt Home Medical Corp.
(Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Tabular dollar amounts expressed in thousands
of US Dollars, except per share amounts)
Although the Company has taken steps
to mitigate the impact of COVID-19, the continued presence and spread of COVID-19 nationally and globally could have a material adverse
impact on the Company's business, operations, and financial results and position, including through employee attrition, disruptions
to the Company's supply chains and sales channels, restrictions of operations at our retail stores, changes in the number of Americans
with health insurance resulting in a change in demand for the Company's products, as well as a deterioration of general economic
conditions including a possible national or global recession. Due to the speed with which the COVID-19 situation is developing