Full Press Release Details
Quipt Home Medical Corp.
(Formerly, Protech Home Medical Corp.)
Condensed Consolidated Interim Financial Statements
For the three and nine months ended
June 30, 2022 and 2021
(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 Home Medical Corp.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of US Dollars, except per share amounts)
| As at | As at | |||||||
| June 30, | September 30, | |||||||
| Notes | 2022 | 2021 | ||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 18,538 | $ | 34,612 | ||||
| Accounts receivable, net | 4 | 14,864 | 11,938 | |||||
| Inventory | 13,239 | 9,253 | ||||||
| Prepaid and other current assets | 694 | 1,430 | ||||||
| Total current assets | 47,335 | 57,233 | ||||||
| Long-term assets | ||||||||
| Property, equipment, and right of use assets, net | 5 | 29,666 | 23,506 | |||||
| Goodwill | 6 | 34,576 | 12,456 | |||||
| Intangible assets, net | 6 | 18,498 | 14,874 | |||||
| Other assets | 9 | 403 | 504 | |||||
| Total long-term assets | 83,143 | 51,340 | ||||||
| TOTAL ASSETS | $ | 130,478 | $ | 108,573 | ||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 13,191 | $ | 9,842 | ||||
| Accrued liabilities | 2,520 | 3,202 | ||||||
| Current portion of equipment loans | 9 | 5,158 | 6,992 | |||||
| Current portion of lease liabilities | 9 | 3,348 | 2,981 | |||||
| Government grant | 6 | 631 | 4,885 | |||||
| Revolving credit facility | 9 | 12,000 | - | |||||
| Deferred revenue | 2,758 | 2,452 | ||||||
| Purchase price payable | 3 | 6,873 | 2,383 | |||||
| Total current liabilities | 46,479 | 32,737 | ||||||
| Long-term Liabilities | ||||||||
| Debentures | 9 | 9,648 | 11,784 | |||||
| Equipment loans | 9 | 323 | 392 | |||||
| Lease liabilities | 9 | 6,183 | 4,784 | |||||
| SBA Loan | 9 | 120 | 121 | |||||
| Long-term purchase price payable | 3 | - | 133 | |||||
| TOTAL LIABILITIES | 62,753 | 49,951 | ||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Capital stock | 10 | 204,443 | 202,827 | |||||
| Contributed surplus | 25,419 | 21,001 | ||||||
| Shares to be issued | 3 | 657 | 657 | |||||
| Accumulated deficit | (162,794) | (165,863) | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 67,725 | 58,622 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 130,478 | $ | 108,573 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Quipt Home Medical Corp. (formerly, Protech Home Medical Corp.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(Expressed in thousands of US Dollars, except per share amounts)
| Three Months | Three Months | Nine Months | Nine Months | |||||||||||
| Ended June 30, | Ended June 30, | Ended June 30, | Ended June 30, | |||||||||||
| Notes | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Revenue | ||||||||||||||
| Rentals of medical equipment | $ | 18,106 | $ | 13,751 | $ | 50,953 | $ | 39,942 | ||||||
| Sales of medical equipment and supplies | 18,586 | 12,487 | 48,816 | 33,291 | ||||||||||
| Total revenues | 36,692 | 26,238 | 99,770 | 73,233 | ||||||||||
| Cost of inventory sold | 8,906 | 7,747 | 23,919 | 19,938 | ||||||||||
| Operating expenses | 12 | 16,926 | 11,502 | 46,597 | 31,477 | |||||||||
| Bad debt expense | 3,404 | 1,682 | 8,983 | 5,970 | ||||||||||
| Depreciation | 4,602 | 4,313 | 14,159 | 11,282 | ||||||||||
| Amortization of intangible assets | 6 | 761 | 455 | 1,676 | 1,107 | |||||||||
| Stock-based compensation | 10 | 1,325 | 1,597 | 4,596 | 1,624 | |||||||||
| Acquisition-related costs | 3 | 156 | 92 | 223 | 164 | |||||||||
| (Gain) loss on disposal of property and equipment | (7) | (37) | (10) | (65) | ||||||||||
| Other income from government grant | 7 | - | - | (4,254) | - | |||||||||
| Operating income (loss) from continuing operations | 619 | (1,113) | 3,881 | 1,736 | ||||||||||
| Financing expenses | ||||||||||||||
| Interest expense on convertible debenture | 159 | 190 | 499 | 655 | ||||||||||
| Interest expense on leases and loans | 9 | 270 | 236 | 798 | 672 | |||||||||
| Other interest expense, net | 93 | 53 | 210 | 153 | ||||||||||
| Loss on foreign currency transactions | (44) | 36 | 82 | 170 | ||||||||||
| Change in fair value of warrants | - | (4,127) | - | 2,110 | ||||||||||
| Change in fair value of debentures | 9 | (177) | (3,295) | (1,235) | 4,594 | |||||||||
| Income (loss) before taxes from continuing operations | 318 | 5,794 | 3,527 | (6,618) | ||||||||||
| Provision (benefit) for income taxes | 155 | (535) | 458 | (1,941) | ||||||||||
| Net income (loss) | $ | 163 | $ | 6,329 | $ | 3,069 | $ | (4,677) | ||||||
| Net income (loss) per share (Note 13) | ||||||||||||||
| Basic earnings (loss) per share | $ | 0.00 | $ | 0.20 | $ | 0.09 | $ | (0.16) | ||||||
| Diluted earnings (loss) per share | $ | 0.00 | $ | 0.19 | $ | 0.08 | $ | (0.16) | ||||||
| Weighted average number of common shares outstanding in thousands: | ||||||||||||||
| Basic | 33,559 | 30,893 | 33,449 | 29,500 | ||||||||||
| Diluted | 37,863 | 33,754 | 38,109 | 29,500 |
The accompanying notes are an integral part of these condensed consolidated interim 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 per share amounts)
| Number of | Total | ||||||||||||||||||
| Shares | Capital | Contributed | Shares to | Accumulated | shareholders' | ||||||||||||||
| Notes | (000's) | stock | surplus | be Issued | Deficit | equity | |||||||||||||
| Balance September 30, 2020 | 28,069 | $ | 171,405 | $ | 16,519 | $ | - | $ | (159,689) | $ | 28,235 | ||||||||
| Net loss | - | (4,677) | (4,677) | ||||||||||||||||
| Stock-based compensation | 10 | - | 1,624 | 1,624 | |||||||||||||||
| Exercise of warrants, including transfer of derivative warrant liability of $4,140 | 10 | 3,390 | 21,614 | 21,614 | |||||||||||||||
| Shares to be issued for acquisition | - | 3,033 | 3,033 | ||||||||||||||||
| Issuance of stock to be issued | 629 | 2,376 | (2,376) | - | |||||||||||||||
| Conversion of debentures | 663 | 4,714 | 4,714 | ||||||||||||||||
| Stock options exercised | 10 | 92 | 239 | (65) | 174 | ||||||||||||||
| Compensation options exercised | 10 | 368 | 1,717 | (316) | 1,401 | ||||||||||||||
| Balance June 30, 2021 | 33,211 | $ | 202,065 | $ | 17,762 | $ | 657 | $ | (164,366) | $ | 56,118 | ||||||||
| Balance September 30, 2021 | 33,350 | $ | 202,827 | $ | 21,001 | $ | 657 | $ | (165,863) | $ | 58,622 | ||||||||
| Net income | - | 3,069 | 3,069 | ||||||||||||||||
| Conversion of debentures | 9 | 160 | 884 | 884 | |||||||||||||||
| Stock options exercised | 10 | 22 | 204 | (25) | 179 | ||||||||||||||
| Compensation options exercised | 10 | 115 | 528 | (153) | 375 | ||||||||||||||
| Stock-based compensation | 10 | - | 4,596 | 4,596 | |||||||||||||||
| Balance June 30, 2022 | 33,647 | $ | 204,443 | $ | 25,419 | $ | 657 | $ | (162,794) | $ | 67,725 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of US Dollars, except per share amounts)
| Nine months | Nine months | |||||||
| ended June 30, | ended June 30, | |||||||
| Notes | 2022 | 2021 | ||||||
| Operating activities | ||||||||
| Net income (loss) | $ | 3,069 | $ | (4,677) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 15,835 | 12,389 | ||||||
| Amortization of financing costs | 9 | 105 | 105 | |||||
| Accretion of purchase price payable | 3 | 63 | 19 | |||||
| Interest expense, net of amortization and accretion | 1,339 | 1,356 | ||||||
| Cash paid for interest | (1,520) | (1,593) | ||||||
| Loss on foreign currency transactions | 82 | 170 | ||||||
| Loss on fair value of warrants | 8 | - | 2,110 | |||||
| (Gain) loss on fair value of convertible debentures | 9 | (1,235) | 4,594 | |||||
| Gain on disposal of property and equipment | (10) | (65) | ||||||
| Stock-based compensation | 10 | 4,596 | 1,624 | |||||
| Other income from government grant | 7 | (4,254) | - | |||||
| Provision (benefit) for income taxes | 458 | (1,941) | ||||||
| Cash paid for income taxes | (468) | (343) | ||||||
| Change in working capital net of assets acquired and liabilities assumed: | ||||||||
| (Increase) decrease in accounts receivable | 497 | (529) | ||||||
| Increase in inventory | (1,081) | (2,308) | ||||||
| (Increase) decrease in prepaid and other current assets | 801 | (1,077) | ||||||
| Increase (decrease) in deferred revenue | (117) | 317 | ||||||
| Increase (decrease) in accounts payables and accrued liabilities | 1,273 | 1,098 | ||||||
| Net cash flow provided by operating activities | 19,433 | 11,249 | ||||||
| Investing activities | ||||||||
| Purchase of property and equipment | 5 | (6,020) | (2,254) | |||||
| Cash proceeds from sale of property and equipment | 283 | 638 | ||||||
| Cash paid for acquisitions | 3 | (28,687) | (10,963) | |||||
| Net cash flow used in investing activities | (34,424) | (12,579) | ||||||
| Financing activities | ||||||||
| Repayments of loans | 9 | (9,214) | (7,337) | |||||
| Repayments of leases | 9 | (2,857) | (2,377) | |||||
| Payments of purchase price payable | 3 | (1,468) | (783) | |||||
| Proceeds from borrowings on the revolving credit facility | 9 | 12,000 | - | |||||
| Proceeds from exercise of warrants | 10 | - | 10,633 | |||||
| Proceeds from exercise of compensation options | 10 | 375 | - | |||||
| Proceeds from exercise of options | 10 | 179 | 1,575 | |||||
| Net cash flow (used in) provided by financing activities | (985) | 1,711 | ||||||
| Net (decrease) increase in cash | (15,976) | 381 | ||||||
| Effect of exchange rate changes on cash held in foreign currencies | (98) | 986 | ||||||
| Cash, beginning of period | 34,612 | 29,227 | ||||||
| Cash, end of period | $ | 18,538 | $ | 30,594 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2022 AND 2021
(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. On May 27, 2021, the stock began trading on NASDAQ in the United States under the symbol QIPT. 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 operations.
Certain reclassifications have been made to the prior period presentation in order to conform to the current presentation.
Unreserved statement of compliance
These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting", using accounting policies consistent with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. These condensed consolidated interim financial statements do not include all the disclosures required in annual consolidated financial statements and should be read in conjunction with the Company's audited consolidated financial statements for the years ended September 30, 2021 and 2020.
The Company has followed the same basis of presentation, accounting policies and method of computation for these condensed consolidated interim financial statements as disclosed in the annual audited consolidated financial statements for the years ended September 30, 2021 and 2020.
The unaudited consolidated financial statements were approved and authorized for issue by the Board of Directors on August 15, 2022.
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2022 AND 2021
(Tabular dollar amounts expressed in thousands of US Dollars, except per share amounts)
Acquisition of Thrift Home Care, Inc.
On October 1, 2021, the Company, through PHM Logistics Corporation, entered into a purchase agreement to acquire all the shares of Thrift Home Care, Inc. ("Thrift"), a Mississippi-based company in the same industry as the Company. The purchase price was $2,169,000 of which $1,804,000 was paid in cash at closing, with remaining holdbacks due on the six- and twelve-month anniversaries of the acquisition discounted at 3.31% for a fair value of $365,000. The Company has determined that the transaction is an acquisition of a business under IFRS 3, and it has been accounted for by applying the acquisition method. The Company expensed $26,000 of professional fees in conjunction with the acquisition.
The revenues and net loss for Thrift for the nine months ended June 30, 2022 was approximately $1,600,000 and $(30,000), respectively.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to: property and equipment, intangible assets acquired, deferred tax liabilities, working capital adjustments, and purchase price. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company's consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected. The fair value of the acquired assets that is provisional pending final valuations of the assets and liabilities is as follows:
| Cash | $ | 452 | |
| Accounts receivable | 165 | ||
| Inventory | 107 | ||
| Property and equipment | 270 | ||
| Right of use assets | 888 | ||
| Goodwill | 540 | ||
| Intangibles | 770 | ||
| Accounts payable | (140) | ||
| Accrued liabilities | (33) | ||
| Deferred revenue | (40) | ||
| Lease liabilities | (810) | ||
| Net assets acquired | $ | 2,169 | |
| Cash paid at closing | $ | 1,804 | |
| Cash to be paid after closing, included in purchase price payable | 365 | ||
| Consideration paid or payable | $ | 2,169 |
The goodwill is attributable to expected synergies from the combined operations. None of the goodwill is deductible for income tax purposes.
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2022 AND 2021
(Tabular dollar amounts expressed in thousands of US Dollars, except per share amounts)
Acquisition of Heckman Healthcare Services & Supplies, Inc.
On November 1, 2021, the Company, through PHM Logistics Corporation, entered into a purchase agreement to acquire all the shares of Heckman Healthcare Services & Supplies, Inc ("Heckman"). Heckman is an Illinois-based company in the same industry as the Company. The purchase price was $2,435,000, of which $2,103,000 was paid in cash at closing, with remaining holdbacks due on the six- and twelve-month anniversaries of the acquisition discounted at 3.31% for a fair value of $332,000. The Company has determined that the transaction is an acquisition of a business under IFRS 3, and it has been accounted for by applying the acquisition method. The Company expensed $28,000 of professional fees in conjunction with the acquisition.
The pro forma revenues and net income for Heckman for the nine months ended June 30, 2022 as if the acquisition had occurred on October 1, 2021 was approximately $1,700,000 and $150,000, respectively, of which approximately $1,500,000 and $140,000 were recognized in the period from November 1, 2021 to June 30, 2022.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to property and equipment, working capital adjustments, and purchase price. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company's consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected. The fair value of the acquired assets is provisional pending final valuations of the assets and liabilities is as follows:
| Cash | $ | 169 | |
| Accounts receivable | 170 | ||
| Inventory | 280 | ||
| Property and equipment | 1,111 | ||
| Right of use assets | 54 | ||
| Goodwill | 843 | ||
| Intangibles | 90 | ||
| Accounts payable | (159) | ||
| Accrued liabilities | (96) | ||
| Deferred revenue | (27) | ||
| Net assets acquired | $ | 2,435 | |
| Cash paid at closing | $ | 2,103 | |
| Cash to be paid after closing, included in purchase price payable | 332 | ||
| Consideration paid or payable | $ | 2,435 |
The goodwill is attributable to expected synergies from the combining operations. None of the goodwill is deductible for income tax purposes.
Acquisition of Southeastern Biomedical Services, LLC
On November 9, 2021, the Company, through newly-created entity SE Biomedical Holdco, LLC ("Southeastern Bio"), a Kentucky limited liability company, entered into a purchase agreement to acquire substantially all of the assets of Southeastern Biomedical Services, LLC. Southeastern Bio provides repair parts and service, calibration, and electrical safety for the durable medical equipment industry, and was a vendor of the Company. The purchase price was $697,000, of which $600,000 was paid in cash at closing, with remaining holdbacks payable on the six- and twelve-month
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2022 AND 2021
(Tabular dollar amounts expressed in thousands of US Dollars, except per share amounts)
anniversaries of the acquisition at a fair value of $97,000. The Company has determined that the transaction is an acquisition of a business under IFRS 3, and it has been accounted for by applying the acquisition method. The Company expensed $18,000 of professional fees in conjunction with the acquisition.
The pro forma revenues and net loss for Southeastern Bio for the nine months ended June 30, 2022 as if the acquisition had occurred on October 1, 2021 was approximately $1,600,000 and $(140,000), respectively, of which approximately $1,400,000 and $(120,000) were recognized in the period from November 9, 2021 to June 30, 2022.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to: property and equipment, intangible assets acquired, deferred tax liabilities, working capital adjustments, and purchase price. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company's consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected. The fair value of the acquired assets is provisional pending final valuations of the assets and liabilities and is as follows:
| Accounts receivable | $ | 112 | |
| Inventory | 53 | ||
| Property and equipment | 14 | ||
| Right of use assets | 292 | ||
| Goodwill | 225 | ||
| Intangibles | 270 | ||
| Accounts payable | (131) | ||
| Lease liabilities | (138) | ||
| Net assets acquired | $ | 697 | |
| Cash paid at closing | $ | 600 | |
| Cash to be paid after closing, included in purchase price payable | 97 | ||
| Consideration paid or payable | $ | 697 |
The goodwill is attributable to expected synergies from the combining operations. All of the goodwill is deductible for income tax purposes.
Acquisition of At Home Health Equipment, LLC
On January 1, 2022, the Company, through PHM Logistics Corporation, entered into a purchase agreement to acquire all the shares of At Home Health Equipment, LLC ("At Home"). At Home is an Indiana-based company in the same industry as the Company. The purchase price was $13,266,000, of which $11,978,000 was paid in cash at closing, with remaining holdbacks due on the six- and twelve-month anniversaries of the acquisition discounted at 3.41% for a fair value of $1,288,000. The Company has determined that the transaction is an acquisition of a business under IFRS 3, and it has been accounted for by applying the acquisition method. The Company expensed $31,000 of professional fees in conjunction with the acquisition.
The pro forma revenues and net income for At Home for the nine months ended June 30, 2022 as if the acquisition had occurred on October 1, 2021 was approximately $9,700,000 and $700,000, respectively, of which approximately $6,300,000 and $700,000 were recognized in the period from January 1, 2022 to June 30, 2022.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to property and equipment, working capital adjustments, and purchase price. The Company expects to continue to obtain information to assist in
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2022 AND 2021
(Tabular dollar amounts expressed in thousands of US Dollars, except per share amounts)
determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company's consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected. The fair value of the acquired assets is provisional pending final valuations of the assets and liabilities is as follows:
| Cash | $ | 495 | |
| Accounts receivable | 1,346 | ||
| Inventory | 1,211 | ||
| Prepaid expenses | 71 | ||
| Property and equipment | 775 | ||
| Right of use assets | 1,310 | ||
| Goodwill | 6,035 | ||
| Intangibles | 4,170 | ||
| Accounts payable | (600) | ||
| Accrued liabilities | (345) | ||
| Deferred revenue | (135) | ||
| Lease liabilities | (1,067) | ||
| Net assets acquired | $ | 13,266 | |
| Cash paid at closing | $ | 11,978 | |
| Cash to be paid after closing, included in purchase price payable | 1,288 | ||
| Consideration paid or payable | $ | 13,266 |
The goodwill is attributable to expected synergies from the combining operations. All of the goodwill is deductible for income tax purposes.
Acquisition of Good Night Medical, LLC
On April 1, 2022, the Company, through PHM Logistics Corporation, entered into a purchase agreement to acquire all the shares of Good Night Medical, LLC ("Good Night") and its subsidiaries. Good Night is an Ohio-based company in the same industry as the Company. The purchase price was $6,168,000, of which $4,361,000 was paid in cash at closing, with remaining holdbacks due on the six- and twelve-month anniversaries of the acquisition discounted at 3.41% for a fair value of $1,807,000. The Company has determined that the transaction is an acquisition of a business under IFRS 3, and it has been accounted for by applying the acquisition method. The Company expensed $34,000 of professional fees in conjunction with the acquisition.
The pro forma revenues and net income for Good Night for the nine months ended June 30, 2022 as if the acquisition had occurred on October 1, 2021 was approximately $6,900,000 and $300,000, respectively, of which approximately $1,700,000 and $30,000 were recognized in the period from April 1, 2022 to June 30, 2022.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to property and equipment, working capital adjustments, and purchase price. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company's consolidated financial statements and, depending on the nature of the adjustments, other periods
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2022 AND 2021
(Tabular dollar amounts expressed in thousands of US Dollars, except per share amounts)
subsequent to the period of acquisition could be affected. The fair value of the acquired assets is provisional pending final valuations of the assets and liabilities is as follows:
| Cash | $ | 42 | |
| Accounts receivable | 730 | ||
| Inventory | 369 | ||
| Property and equipment | 250 | ||
| Right of use assets | 261 | ||
| Goodwill (provisional) | 6,838 | ||
| Accounts payable | (1,100) | ||
| Accrued liabilities | (166) | ||
| Deferred revenue | (39) | ||
| Equipment loans | (756) | ||
| Lease liabilities | (261) | ||
| Net assets acquired | $ | 6,168 | |
| Cash paid at closing | $ | 4,361 | |
| Cash to be paid after closing, included in purchase price payable | 1,807 | ||
| Consideration paid or payable | $ | 6,168 |
The goodwill is attributable to expected synergies from the combining operations. All of the goodwill is deductible for income tax purposes.
Acquisition of Access Respiratory Home Care, LLC
On June 1, 2022, the Company, through PHM Logistics Corporation, entered into a purchase agreement to acquire all the shares of Access Respiratory Home Care, LLC ("Access"). Access is a Louisiana-based company in the same industry as the Company. The purchase price was $6,616,000, of which $5,347,000 was paid in cash at closing, with remaining holdbacks due on the six- and twelve-month anniversaries of the acquisition discounted at 3.41% for a fair value of $1,269,000. The Company has determined that the transaction is an acquisition of a business under IFRS 3, and it has been accounted for by applying the acquisition method. The Company expensed $75,000 of professional fees in conjunction with the acquisition.
The pro forma revenues and net income for Access for the nine months ended June 30, 2022 as if the acquisition had occurred on October 1, 2021 was approximately $4,900,000 and $700,000, respectively, of which approximately $600,000 and $150,000 were recognized in the period from June 1, 2022 to June 30, 2022.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to property and equipment, working capital adjustments, and purchase price. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company's consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected. The fair value of the acquired assets is provisional pending final valuations of the assets and liabilities is as follows:
Quipt Home Medical Corp. (Formerly, Protech Home Medical Corp.)