Mr. Greg Crawford reports

QUIPT ANNOUNCES MULTI-STATE ACQUISITION ADDING APPROXIMATELY $9 MILLION IN ANNUALIZED REVENUES, AND ANTICIPATED $2 MILLION IN ADJUSTED EBITDA POST INTEGRATION

Quipt Home Medical Corp. has acquired a business with operations in Mississippi, Texas and Louisiana reporting unaudited annual revenues (12 months ending June 30, 2023) of approximately $9-million with anticipated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $2-million postintegration. As a reminder, all financial figures stated are in U.S. dollars.

Acquisition details

The acquisition adds scale with 10 locations across three states, 17,500 active patients, 1,900 unique referring physicians, important insurance contracts and decades of operating experience in the markets served. This acquisition allows the company to further penetrate key sales touch points in major target markets across Mississippi, Texas and Louisiana, and is expected to assist with organic growth initiatives in those markets postintegration. Moreover, the business has a diverse payor mix and a heavily weighted respiratory product mix.

The operating footprint aligns closely with regions that have a high prevalence of chronic obstructive pulmonary disease (COPD), a key target patient group. According to National Institutes of Health (NIH), about 1.5 million people across the three states have COPD. As a growing leader in clinical respiratory care, the favourable demographics, additional insurance contracts and infrastructure afford Quipt the ideal conditions to accelerate its national expansion efforts.

The company is pleased to share the following updated metrics on a consolidated basis taking into consideration the acquisition disclosed herein:

• 287,500 current active patients;
• 34,400 referring physicians;
• 125 locations across 26 U.S. states.

Additionally, the acquisition adds significant opportunity to increase resupply revenue once sleep patients are onboarded to Quipt's robust resupply program and the acquisition footprint is expected to create additional opportunities to expand Quipt's access for accretive tuck-in acquisitions.

The acquisition increases Quipt's current annual revenues by approximately $9-million and is expected to increase Quipt's adjusted EBITDA, postintegration, by $2-million. The acquisition purchase price is at historical multiples paid by the company.

Management commentary

"The completion of this transaction demonstrates our ongoing patience and discipline as it relates to our capital allocation approach. At favourable terms, we were able to significantly expand in three attractive existing states. Given that there are more than 1.5 million COPD patients residing in Mississippi, Texas and Louisiana, we increase our footprint in those three states," said Greg Crawford, chairman and chief executive officer of Quipt. "Our team of operators will once again utilize our tried-and-true integration approach to efficiently integrate this business onto our existing platform, continuing to build scale across the organization. Moreover, we believe there is an opportunity to leverage our resupply program immediately, creating actionable revenue synergies for us. Additionally, the substantial patient base and excellent referral network we have built up in these three states allow us to take a land-and-expand approach to future growth, which will support our organic growth goals."

Chief financial officer Hardik Mehta added: "This accretive transaction checks all the boxes for us, as we were able to acquire respiratory-focused business in attractive markets at favourable terms. The acquisition adds $9-million in annual revenue and $2-million of adjusted EBITDA postintegration, which represents a very strong margin profile. We are very excited about the growth opportunities that will open as a result of this acquisition. Postclosing, we continue to possess a very strong balance sheet with significant flexibility to go after accretive acquisition targets that fit our stringent criteria. We anticipate a smooth integration process, which has served as the cornerstone of our consistently strong financial and operational results. As we look ahead, we will continue to expand our ability to serve critical geographic areas with our full range of respiratory care products and services."

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.

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