Posted on November 23, 2021 by Aaron Warwick
Quipt Home Medical (NASDAQ:QIPT; TSXV:QIPT), a U.S. based leader in the home medical equipment industry, focused on end-to-end respiratory care, made two important announcements within the past two weeks. These announcements were made each in tandem with an acquisition. Both of these announcements were also discussed in-depth on a 10-Minute Podcast on Breakout Investors.
The first announcement came on November 16. In addition to signing a letter of intent (LOI) to purchase a $13M annual revenue company, QIPT management issued guidance for calendar year 2022 (their fiscal year differs). For CY ’22, the company believes they will end the year on a revenue run rate of $180-190M, with run-rate adjusted EBITDA of $38-43M. Based upon the mid-point of that guidance, the stock is currently trading at just over 5x forward EBITDA, relatively low for most companies. We discussed this announcement on Episode 38 of the Breakout Investors’ 10-Minute Podcast series.
The second announcement was made on November 22, and should address investor concern related to the possibility of QIPT funding future acquisitions via equity raises (which is likely a main reason why the stock currently trades at a low valuation multiple). Specifically, in addition to executing an LOI to buy another company with $14M of annual revenue, QIPT announced the expansion of their line-of-credit (LOC). The LOC has been expanded from $20M to now $100M, giving the company significant flexibility to fund accretive acquisitions through low-rate debt instead of via equity, as they have done in the past. Because of the significance of this news, we recorded another QIPT 10-Minute Podcast, Episode 40.
Disclosure: I am long QIPT shares and may buy or sell at any time.
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