Quipt Home Medical Corp. (QIPT Q2 FY2024 earnings call

• Initiated a share repurchase program through a Normal Course Issuer Bid (NCIB) for up to 10% of public float, reflecting confidence in the business model. - Fiscal Q2 2024 revenue $64M, up 10% YOY, adjusted EBITDA $14.9M, up 14% with margin 23.3%. - Challenges included end of Medicare 75-25 relief, withdrawal of Medicare Advantage members, and cyber incident; however, positive trends like strong equipment setups and referral patterns. - Work on organic growth initiatives, including expanding into diabetes with CGM and supplies. - Transitioning from IFRS to US GAAP effective October 1, 2024.

Respiratory care accounts for approximately 80% of the product mix. In fiscal Q2 2024, revenue was $64 million, marking a 10% year-over-year increase. Adjusted EBITDA was $14.9 million, representing a 14% growth with a margin of 23.3%. The customer base increased 8.1% year-over-year to 148,874 unique patients served. Unique setups and deliveries were 210,279, an increase of 6.1%, with respiratory resupply setups up 9% to 116,023.

• Primary objective of 8%-10% annualized organic growth. - Initiated share repurchase program. - Expected free cash flow 6%-8% going forward, prior to debt service and acquisitions. - Confident in navigating high interest rates and pursuing organic and inorganic growth with robust balance sheet.

• End of Medicare 75-25 relief negatively impacted Q2. - Withdrawal of Medicare Advantage members in certain regions. - Cyber incident on Change Healthcare hindered claims processing. - Potential supply chain slowdowns affecting deliveries.

Q: Can you quantify the impact of Medicare 75-25 relief ending?

A: Estimated impact around 1.5% of total revenue, with actual quantification challenging due to claims issues.

Q: Thoughts on supply chain environment?

A: No major supply chain issues on devices, but some slowdown in disposable supplies delivery times.

Q: Timing of cash flow normalization from Change Healthcare cyber incident?

A: Expect to resolve claim issues in 15-35 days, with hopes of normalizing by June.

Q: Details on diabetes initiative?

A: Starting to provide CGM and supplies in certain territories, rolling out to sales team, margin expected around 15%-16%.

Q: Market share opportunity with DME headwinds?

A: Seeing increased inbound sell-side inquiries, but not commenting on valuation impact.