Quipt Home Medical (US:QIPT)2022-08-16 18:13Financial Data and Key Metrics Changes - The company reported revenue of $36.7 million for Q3 2022, a 40% increase from Q3 2021 and a 2% sequential growth from Q2 2022 [23][18] - Adjusted EBITDA for Q3 2022 was $7.7 million, up 44% year-over-year, with an adjusted EBITDA margin of 21% [25][19] - For the nine months ended June 30, 2022, revenue increased to $99.8 million, a 36.2% increase compared to the same period in 2021 [26] - Operating expenses as a percentage of revenue increased to 46.7% from 43% in the same period last year, attributed to higher wages and fuel costs [28] Business Line Data and Key Metrics Changes - The company completed 133,704 unique setups in Q3 2022, a 40% increase from the previous year, with respiratory resupply setups increasing by 55% [27] - Recurring revenue now represents approximately 77% of total revenue, indicating a stable revenue base [28][34] Market Data and Key Metrics Changes - The backlog of patients waiting for sleep device setups was approximately 6,000, down from a peak of over 8,000 [14] - The company has expanded its operational footprint to over 90 locations across 19 states, serving over 200,000 active patients [43] Company Strategy and Development Direction - The company aims to expand as a national provider of at-home respiratory services, focusing on organic and inorganic growth through acquisitions and enhancing its healthcare network [6][20] - A national contract with UnitedHealthcare has been secured, significantly expanding patient accessibility and supporting growth initiatives [12] - The company is also pursuing a supply contract with Cardinal Health to enhance cross-selling opportunities and improve buying power [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the improving supply chain dynamics and regulatory environment, which is expected to positively impact margins [14][16] - The company anticipates continued strong demand for its respiratory products, particularly as the supply chain stabilizes [19][20] - Management expects to maintain adjusted EBITDA margins in the range of 20% to 21.5% over the next few quarters [65] Other Important Information - The company has closed four acquisitions since April 2022, adding over 30,000 active patients and contributing approximately $25 million in revenue [36][44] - A new credit facility of up to $80 million has been committed, which will support future growth and acquisitions [39][40] Q&A Session Summary Question: Can you talk about the Cardinal relationship and its expected sales impact? - Management is optimistic about the Cardinal contract and expects it to contribute to organic revenue growth starting in 2023 [62] Question: What operating leverage will the recent acquisitions add? - Management indicated that while there may be a slight initial impact on margins from new acquisitions, they expect to maintain EBITDA margins around 20% to 21.5% [64][65] Question: How quickly can you integrate acquisitions into the resupply program? - Integration typically takes three to six months, and management expects growth in the resupply program as device setups increase [67] Question: Will new de novo locations be in existing or new states? - New locations will primarily be in states where the company already operates to maximize operational leverage [70] Question: How will the CMS inflation adjustments impact margins? - Management believes the inflation adjustments will positively impact margins, with expectations of remaining stable despite potential vendor price increases [80] Question: What are the potential new service verticals? - Management is exploring expansion into supply businesses and technology for remote monitoring [94] Question: How does the company view the economic sensitivity of private pay patients? - Historically, the company has not seen significant impacts on this segment during recessionary periods [90]