Mr. Gregory Crawford reports

QUIPT HOME MEDICAL REPORTS RECORD SECOND QUARTER FISCAL 2023 FINANCIAL RESULTS POSTING REVENUE GROWTH OF 73% AND ADJUSTED EBITDA GROWTH OF 86%

Quipt Home Medical Corp. has released its second quarter fiscal 2023 financial results and operational highlights. These results pertain to the three and six months ended March 31, 2023, and are reported in United States dollars.

Quipt will host its earnings conference call on Tuesday, May 16, 2023, at 10 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.

Financial highlights:

• Revenues for fiscal Q2 2023 were $58.1-million compared with $33.6-million for fiscal Q2 2022, representing a 73-per-cent increase year-over-year:
  • Compared with Q1 2023, the company experienced very strong sequential organic growth of 2.5 per cent;
  • The company anticipates organic growth continuing to meet or surpass historical levels of 8 per cent to 10 per cent annually as calendar 2023 progresses.
• Revenues for the six months ended March 31, 2023, increased to $98.9-million, representing an increase of 56.8 per cent from the six months ended March 31, 2022.
• Recurring revenue for fiscal Q2 2023 continues to be strong and exceeded 78 per cent of revenues.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for fiscal Q2 2023 was $13.1-million (22.5 per cent of revenues), compared with adjusted EBITDA for fiscal Q2 2022 of $7-million (21 per cent of revenues), representing an 86-per-cent increase year-over-year. The company expects to continue to see strong margin performance throughout fiscal 2023.
• Adjusted EBITDA for the six months ended March 31, 2023, increased to $22.1-million, representing an increase of 69 per cent from the six months ended March 31, 2022, and represented 22.3 per cent of revenues.
• For fiscal Q2 2023, bad debt expense was at 4.2 per cent of revenues compared with 9.4 per cent in fiscal Q2 2022. This decrease is primarily due to improved collections, and is attributable to the company's ability to scale and add revenue through add-on acquisitions without compromising billing capabilities.
• Cash flow from continuing operations was $14.8-million for the six months ended March 31, 2023, compared with $11.8-million for the six months ended March 31, 2022.
• The company reported $2.1-million of cash on hand and $28-million available on its senior credit facility as of March 31, 2023, with $7-million available on the revolving line of credit and $21-million available on the delayed-draw term loan:
  • Subsequent to March 31, 2023, on April 25, 2023, the company completed a bought-deal public offering and concurrent private placement of common shares for net proceeds of $28.9-million (the April offering). The company's pro forma balance sheet, taking into consideration the April offering, contains $18-million of cash and $41-million available on its senior credit facility.
• The company maintains a conservative balance sheet with net debt to adjusted EBITDA of 1.5 times on a pro forma basis, taking into consideration the April offering.

Operational highlights:

• The company's customer base increased 76 per cent year-over-year to 137,748 unique patients served in fiscal Q2 2023, compared with 78,273 unique patients in fiscal Q2 2022.
• Compared with 118,878 unique set-ups/deliveries in fiscal Q2 2022, the company completed 198,101 unique set-ups/deliveries in fiscal Q2 2023, an increase of 67 per cent. There were 106,486 respiratory resupply set-ups/deliveries during fiscal Q2 2023, compared with 50,713 during fiscal Q2 2022, an increase of 110 per cent, which the company credits to its continued use of technology and centralized intake processes.
• The company's product mix is 79 per cent respiratory as of March 31, 2023.
• The company continues to experience robust demand for respiratory equipment, such as oxygen concentrators, ventilators, as well as the CPAP (continuous positive airway pressure) resupply and other supplies business.
• The company has expanded its sales reach, which now spans across 26 U.S. states with the addition of experienced sales personnel.

Subsequent highlights:

• On April 4, 2023, the company announced the execution of an additional national insurance contract with a top five health insurer based on membership in the United States. This represents the second national insurance contract the company has signed since April, 2022.
• On May 2, 2023, the company announced that it has received conditional approval from the Toronto Stock Exchange to graduate its listing from the TSX Venture Exchange to the TSX. Final approval of the listing is subject to the company meeting certain customary conditions required by the TSX. The company is working diligently to satisfy such listing conditions. Further details and a timeline for graduation will be announced in due course.

Management commentary on Q2 2023

"We are thrilled to announce robust financial results that have come in ahead of expectations for the second quarter of fiscal 2023, and are delighted to report that we continue to observe significant and continued momentum throughout the organization. This past quarter has seen our supply chain return to normal, stronger organic growth, an increase in our adjusted EBITDA margin, and the seamless integration of our largest acquisition, Great Elm, to date. We are extremely delighted that our team's focus on operational excellence has produced such outstanding results and believe that our continued focus therein will yield increased margins as we move into the second half of 2023. Additionally, we have a strong acquisition pipeline and will continue to use our tried-and-true approach to integration and our focused acquisition strategy to execute on our long-term vision," said Greg Crawford, chief executive officer and chairman.

"By focusing on areas with a high prevalence of chronic obstructive pulmonary disease (COPD), we were able to expand our patient-centric ecosystem across the United States. Our success is a direct result of our dedication to improving patient care by offering a full range of respiratory and equipment solutions. As the need for efficient and timely home health care increases and in an effort to help ease the strain on the traditional health care system, we take our role as a major provider of these services very seriously and will always focus on providing superior patient care. Due to favourable demographic trends, the bullish regulatory environment, the continued strong demand for respiratory equipment and our consistent operational performance across the entire organization, I truly believe that Quipt is in the strongest position it has ever been."

Hardik Mehta, chief financial officer, added: "We have a lot to be proud of because of our outstanding financial and operational performance in the second quarter of fiscal 2023. This is a remarkable accomplishment for the team because we exceeded our revenue and adjusted EBITDA targets, raised our adjusted EBITDA margin to 22.5 per cent, and showed excellent 2.5-per-cent sequential organic growth. We also announced the completion of our largest acquisition to date at the start of the year, and I am happy to report that integration has gone very well, and that we were able to realize the $2-million in annualized cost savings and synergies previously anticipated roughly a quarter ahead of schedule. Moreover, we closed a bought-deal offering and concurrent private placement after the quarter ended to further fortify our already strong balance sheet, giving us more room to carry out our aggressive strategic expansion plan. This success has allowed us to maintain a very low net leverage ratio of 1.5 times and a high degree of financial flexibility. We think we are in an excellent position to take decisive action as soon as the right opportunity presents itself."

At-the-market equity program

Quipt is also pleased to announce that it has filed a prospectus supplement establishing a new at-the-market equity program (the ATM). Canaccord Genuity and Beacon Securities Ltd. are acting as agents for the ATM. The ATM will allow the company to offer for sale and issue up to $40-million (or the equivalent in Canadian dollars) of common shares of the company from time to time, at the company's discretion. Any sales of common shares under the ATM will be made through at-the-market distributions as defined in Regulation 44-102 respecting shelf distributions, including sales made directly on the TSX-V (or the TSX if, as previously announced, the company successfully graduates to the TSX), the Nasdaq Capital Market or on any other trading market for the common shares in Canada or the United States. The common shares will be distributed at the market prices prevailing at the time of the sale, and, as a result, prices may vary between purchasers and during the period of the ATM. The company is not obligated to make any sales of common shares under the ATM.

The company has adequate liquidity resources and does not currently intend to use the ATM, however the company believes it is prudent to have this program in place in order to access capital to ensure the company maintains sufficient liquidity and capital resources in the future. The company intends to use net proceeds from the ATM, if any, for repayment of debt, potential future acquisitions, working capital and general corporate purposes.

Distributions of the common shares through the ATM will be made pursuant to the terms of an equity distribution agreement dated May 15, 2023, by and among the company and the agents, pursuant to which the company may distribute common shares under the ATM from time to time through the agents, in accordance with the terms of the distribution agreement.

A prospectus supplement to the company's short form base shelf prospectus dated Nov. 11, 2021 has been filed with the securities commissions or securities regulatory authorities in each of the provinces of Canada, and a prospectus supplement, dated May 15, 2023, related to the ATM has also been filed with the United States Securities and Exchange Commission (SEC) as part of the company's registration statement Form F-10 (file No. 333-26036) under the United States/Canada multijurisdictional disclosure system. The prospectus supplement, the base shelf prospectus, the U.S. prospectus supplement and the registration statement contain important detailed information about the company and the ATM.

Prospective investors should read the prospectus supplement, the base shelf prospectus, the U.S. prospectus supplement and the registration statement, and the other documents the company has filed for more complete information about the company and the ATM before making an investment decision.

The prospectus supplement filed in Canada (together with the related base shelf prospectus) and the distribution agreement will be available on SEDAR. The U.S. prospectus supplement and the distribution agreement filed in the United States (together with the registration statement) will be available on the SEC's website on EDGAR.

Management commentary on ATM

"Given our sustained strong expansion and future goals, the company is dedicated to diversifying its sources of capital to fund its long-term acquisition strategy," said Mr. Crawford, CEO of Quipt. "The ATM will allow the company to opportunistically raise equity in a more timely and cost-effective manner."

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 health care 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.

We seek Safe Harbor.