Mr. Gregory Crawford reports

QUIPT HOME MEDICAL REPORTS STRONG OPERATING PERFORMANCE WITH RECORD FIRST QUARTER FISCAL 2024 FINANCIAL RESULTS POSTING REVENUE GROWTH OF 60% AND ADJUSTED EBITDA GROWTH OF 71%

Quipt Home Medical Corp. has released its first quarter fiscal 2024 financial results and operational highlights. These results pertain to the three months ended Dec. 31, 2023, and are reported in U.S. dollars and have been rounded to the nearest 100,000.

Quipt will host its earnings conference call on Thursday, Feb. 15, 2024, 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:

• Revenue for Q1 2024 was $65.4-million, compared with $40.8-million for Q1 2023, representing a 60-per-cent increase. The company reported 2-per-cent sequential organic growth compared with Q4 2023:
  • The company expects solid organic growth patterns for the balance of fiscal 2024, with the continuing objective of achieving cent annualized organic revenue growth of 8 per cent to 10 per cent.
• Recurring revenue (a non-IFRS (international financial reporting standards) measure) for Q1 2024 was very strong and exceeded 83 per cent of total revenue, driven by overall growth in new equipment set-ups, which is the initial delivery of equipment to a patient.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (a non-IFRS measure) for Q1 2024 was $15.3-million (23.5 per cent of revenue), compared with $9.0-million (22.0 per cent of revenue) for Q1 2023, representing a 71-per-cent increase.
• Net income (loss) for Q1 2024 was $600,000, or one cent per diluted share, as compared with $0.3-million, or one cent per diluted share, for Q1 2023.
• Cash flow from operations was $11.7-million for the three months ended Dec. 31, 2023, compared with $4.8-million for the three months ended Dec. 31, 2022.
• For Q1 2024, bad debt expense as a percentage of revenue improved to 4.3 per cent, compared with 5.6 per cent for Q1 2023.
• The company reported cash on hand of $18.3-million as of Dec. 31, 2023, compared with $17.2-million as of Sept. 30, 2023. The company had total credit availability of $41-million as of Dec. 31, 2023, with $20-million available on its revolving credit facility and $21-million available pursuant to a delayed-draw term loan facility.
• The company maintains a conservative balance sheet with net debt to adjusted EBITDA leverage of 1.3 times.

Operational highlights:

• The company's customer base increased 56 per cent year over year to 155,434 unique patients served in Q1 2024 from 99,420 unique patients in Q1 2023.
• Compared with 146,350 unique set-ups/deliveries in Q1 2023, the company completed 215,370 unique set-ups/deliveries in Q1 2024, an increase of 47 per cent. This includes 123,190 respiratory resupply set-ups/deliveries for the three months ended Dec. 31, 2023, compared with 69,482 for the three months ended Dec. 31, 2022, an increase of 77 per cent, which the company credits to its continued use of technology and centralized intake processes.
• The company's resupply program is a major proponent of the company's 83-per-cent recurring revenue base as the company has significantly scaled, now representing 49 per cent of the recurring revenue mix, driving higher-margin revenue. The program now consists of approximately 172,000 patients as of Dec. 31, 2023, compared with approximately 100,000 patients as of Dec. 31, 2022.
• The company continues to experience very strong demand trends for respiratory equipment, including CPAPs (continuous positive airway pressure machines), BiPAPs (bilevel positive airway pressure machines), oxygen concentrators and ventilators, as well as the CPAP resupply and other supplies business.
• The company has continued expanding its sales reach, driving organic growth, which spans across 26 U.S. states, with the addition of experienced sales personnel.
• The company has 287,500 active patients, 34,400 referring physicians and 125 locations.

Management commentary

"We continued experiencing robust demand trends in the first quarter across our diverse product offering and are very pleased with the continued record financial and operational results we have posted. Our commitment to scaling our operations efficiently is evident in our margin profile, which has shown remarkable consistency. Moreover, we saw steady sequential organic growth, reduced our bad debt expense year over year and significantly improved our net operating cash flow. To maintain our positive momentum and competitive edge, we will continue putting a high priority on strategic investments in both inorganic and organic growth opportunities, including penetrating our key sales touch points, with the continued expansion into continuum markets, which has been very successful to date," said chief executive officer and chairman Gregory Crawford.

"We are actively expanding our patient-centric ecosystem across 26 states, offering specialized clinical respiratory programs, to provide efficient and tailored home treatment. Our strategic initiatives are concentrated in regions with a high COPD prevalence, with a concerted sales effort aimed at penetrating targeted markets to fuel our organic growth trajectory. A significant driver of our growth is our proven diversified business model, which has increased our overall performance by extending a patient's lifetime relationship with us and generates higher recurring revenue. Our healthy balance sheet, well-timed organic growth initiatives, and strategic acquisition and integration strategy provide us with ample opportunity to capitalize on the expanding market for at-home clinical respiratory care.

"We take great pride in our continued cost discipline and capital allocation prudency, which are the cornerstones of our consistent financial and operating results. Our fiscal Q1 results underscore this with an adjusted EBITDA margin of 23.5 per cent of revenue and net cash flow from operations, which came in at 18 per cent of revenue," said Hardik Mehta, Quipt's chief financial officer. "We are thrilled to surpass the milestones of $261-million in run-rate revenue and $61-million of run-rate adjusted EBITDA (both defined in non-IFRS measures below). Our strategic capital management approach has endowed us with a conservative balance sheet characterized by a low leverage ratio of 1.3 times net debt to adjusted EBITDA, bolstered by over $59-million in available credit and cash on hand. Despite the challenges posed by higher interest rates, our strong financial foundation ensures we are well equipped to pursue our strategic objectives. With our flexible capital structure, we continue to explore diverse avenues to enhance shareholder value. The structure of our operations, coupled with our solid financial position, which includes the ability to increase the size of our senior credit facility, equips us with all the necessary tools to successfully drive our growth strategy forward."

From time to time, the company is involved in various legal proceedings arising from the ordinary course of business. The company received a civil investigative demand from the U.S. Attorney's Office for the Northern District of Georgia pursuant to the False Claims Act regarding an investigation concerning whether the company may have caused the submission of false claims to government health care programs for CPAP equipment. The company is cooperating with the investigation and the Department of Justice (DOJ) has not indicated to the company whether it believes the company engaged in any wrongdoing. No assurance can be given as to the timing or outcome of the DOJ's investigation.

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.

Non-IFRS measures

This news release refers to recurring revenue, adjusted EBITDA, run-rate revenue, Run-rate adjusted EBITDA and leverage ratio, which are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. The company's presentation of these financial measures may not be comparable with similarly titled measures used by other companies. These financial measures are intended to provide additional information to investors concerning the company's performance.

Recurring revenue for Q1 is calculated as rentals of medical equipment of $27.4-million plus sales of respiratory resupplies of $26.8-million for a total of $54.2-million, divided by total revenues of $65.4-million, or 83 per cent.

Adjusted EBITDA is calculated as net income (loss), and adding back depreciation and amortization, interest expense, net, provision for income taxes, stock-based compensation, professional fees related to civil investigative demand, acquisition-related costs, share of loss of equity method investment, and loss (gain) on foreign currency transactions. An attached table shows the company's non-IFRS measure, adjusted EBITDA, reconciled to its net income (loss) for the indicated periods (in millions of dollars).

Run-rate revenue is calculated as revenue for Q1 2023 of $65.4-million times four quarters equals $261.6-million.

Run-rate adjusted EBITDA is calculated as adjusted EBITDA for Q1 of $15.3-million times four quarters equals $61.2-million.

Leverage ratio is calculated as long-term debt less cash, divided by run-rate adjusted EBITDA, and is reconciled as shown in an attached table (in millions of dollars).

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