Quipt Home Medical Corp. (NASDAQ:QIPT) Q3 2025 Earnings Call Transcript

Quipt Home Medical Corp. (NASDAQ:QIPT) Q3 2025 Earnings Call Transcript August 12, 2025

Operator: Thank you for standing by. This is the conference operator. Welcome to the Third Quarter 2025 Earnings Results Conference Call for Quipt Home Medical Corp. [Operator Instructions] The conference is being recorded. [Operator Instructions] We remind you that the remarks today will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please see the reader advisory at the bottom of the company’s results news release. The company’s actual performance could differ materially from these statements. At this point, I’d like to turn the conference over to Chairman and Chief Executive Officer, Greg Crawford.

Gregory J. Crawford: Thank you, operator, and thank you to everyone joining us today. I’m Greg Crawford, Chairman and CEO of Quipt Home Medical. I’m pleased to be joined today by our Chief Financial Officer, Hardik Mehta; and our Chief Accounting Officer, Tom Roehrig. Let me begin by expressing our appreciation to the entire Quipt team for their continued execution and commitment and to our shareholders for their support. Quipt Home Medical is a health care services company delivering a comprehensive range of home medical equipment and services to patients across the United States. We operate with a mission to deliver high-quality technology-enabled care that allows patients to remain in the comfort of their homes with a particular focus on chronic respiratory conditions.

As we look at the improved results for fiscal third quarter, we saw clear revenue stabilization across the business and a return to positive organic growth, driven by strength in our core therapies, consistent activity in our sleep resupply channel after the seasonal weakness experienced in fiscal Q2 and a return to more balanced overall referral volumes. We believe the most difficult period is behind us, and our operating engine is well positioned to scale again. During the quarter, we continued to demonstrate a strong and consistent adjusted EBITDA margin performance coming in at 23.5%. Despite a dynamic environment, we have delivered steady margin results quarter after quarter, a direct outcome of the structural improvements we began implementing in late 2024.

Subsequent to quarter end, we made significant strategic progress on our health care system expansion strategy. Following the end of the quarter, we announced a milestone transaction with Ballad Health, a prominent integrated health system comprised of 20 hospitals serving 29 counties of the Appalachian Highlands in Tennessee, Virginia, North Carolina, and Kentucky. This transaction embeds Quipt directly into Ballad’s discharge pathway, positioning us as their preferred provider across their network. While it’s early, the operational momentum coming out of the deal has been promising, and it validates our broader strategy to scale through value-based relationships. Then earlier this morning, we announced a definitive agreement to form a joint venture anchored by 3 powerhouse health systems, Henry Ford Health, McLaren Health and Blanchard Valley Health.

These partnerships embed us into the discharge process of a significant number of hospitals and affiliated care sites, giving us the ability to serve patients at the exact point their care transitions to the home. That’s an incredibly valuable position in today’s health care environment. This joint venture strengthens our Midwest presence and formally launches us into Michigan, one of the most important markets in our expansion strategy. Just as important, it creates a scalable blueprint for future health system partnerships across the country. Hart’s 2-decade reputation for clinical excellence and their alignment with health system care coordination perfectly complement our mission of delivering high- quality respiratory and home medical equipment solutions nationwide.

Hart has built a best-in-class reputation for quality patient care and operational excellence with over 60,000 patients served monthly and direct alliances with some of the Midwest’s largest integrated health systems. These partnerships are deeply embedded in Hart’s operation and hospital discharge processes, providing a steady and reliable flow of patient referrals. This joint venture with 3 major health systems marks Quipt’s formal entry into Michigan, extending our geographic footprint into one of the Midwest’s most attractive and strategically important health care markets. Moreover, the transaction expands us in Ohio and surrounding markets. This joint venture exemplifies our strategy of scaling through health care system integration, and we see tremendous opportunity to leverage Hart’s infrastructure.

With its 29 branch locations, highly experienced management team and a strong culture alignment with Quipt, Hart will serve as a cornerstone in our evolution as a national leader in the respiratory-focused home medical equipment. We have entered the second half of 2025 with confidence backed by the firming of our operating metrics, recent health care system transaction and a clear road map for growth. Revenue stabilization is evident across our business, underpinned by resilient demand in our core rental segment and resupply program, which remains the foundation of our recurring revenue profile. As the environment normalizes, we are seeing referral activity return to more predictable patterns and setup activity rise accordingly. Importantly, our product portfolio has proven durable.

Demand for our core offerings, particularly oxygen, sleep therapy, ventilator services and sleep resupply continues to be stable and well diversified. Our infrastructure is purpose-built for scalability and efficiency, allowing us to support a growing patient population while preserving operational leverage. The structural improvements we implemented in late 2024 are yielding results. We are now positioned with a more agile cost structure, a reinvigorated sales effort and a broader base of health care relationships. These factors reinforce our confidence in delivering consistent operating performance. Before I turn the call over to Hardik, I want to reiterate that the Board and management remain laser-focused on making thoughtful decisions that we believe are in the best interest of maximizing long-term shareholder value.

With that, I’ll turn the call over to Hardik to walk through our fiscal third quarter 2025 financial results.

Hardik Mehta: Thanks, Greg. On Monday evening, we announced our fiscal third quarter 2025 financial results for the 3 and 9 months ended June 30, 2025. Please note that all financial values are in U.S. dollars and are reported under GAAP accounting principles with comparison periods also restated under GAAP for consistency. This quarter marks a return to positive organic growth and signals clear revenue stabilization across our business. Here are the key highlights from the quarter. The company’s customer base decreased modestly, serving 151,000 unique patients as of June 30, 2025 compared to 153,000 unique patients as of June 30, 2024. The company completed 210,000 unique setups/deliveries in Q3 2025 compared to 216,000 in Q3 2024.

Respiratory resupply setups/deliveries totaled 119,000 in Q3 2025, a change from 120,000 in the prior year quarter. Revenue for fiscal Q3 2025 came in at $58.3 million compared to $60.8 million in Q3 2024, a decrease of 4.1%. This compares to revenue of $57.4 million in Q2 2025, reflecting a return to positive quarter-over-quarter organic growth of 1.6%. Revenue for 9 months ended June 30, 2025 was $177 million compared to $184.6 million for the 9 months ended June 30, 2024, a decrease of 4.1%. Recurring revenue for Q3 2025 continues to be strong at 81% of total revenue. Adjusted EBITDA for Q3 2025 was $13.7 million or 23.5% of revenue compared to $14.2 million or 23.4% of revenue for Q3 2024, representing a 3.6% decrease. Adjusted EBITDA of $41 million or 23.2% of revenue for the 9 months ended June 30, 2025 compared to $44 million or 24% of revenue for 9 months ended June 30, 2024, a decrease of 7.7%.

Net loss for Q3 2025 was $3 million or $0.07 per diluted share compared to $1.6 million loss or $0.04 per diluted share for Q3 2024. Cash flow from operations was $27.9 million for the 9 months ended June 30, 2025 compared to $25.4 million for the 9 months ended June 30, 2024. The company reported $11.3 million of cash on hand as of June 30, 2025 as compared to $17.1 million of cash on hand as of March 31, 2025. Approximately $5 million of change in cash compared to the previous quarter was used to pay down the line of credit balance. Total credit availability was $35.3 million as of June 30, 2025, with $14.3 million available on our revolving credit facility and $21 million available pursuant to the delayed draw term loan facility. Operating expenses as a percentage of revenue came in at 53.3% in Q3 2025 compared to 50.4% in the corresponding period in 2024.

CapEx also known as rental equipment transferred from inventory for the 9 months ended June 30, 2025 was 15.2% of revenue compared to 13.3% of revenue for the same period in 2024. As previously mentioned, current Philips recall on its ventilators has contributed to the increase in our rental equipment CapEx. Our net debt to adjusted EBITDA leverage ratio was 1.5x, well within our target range. We are pleased with the important progress we made during the fiscal third quarter. Our results indicate we are seeing clear revenue stabilization in the business with a return to positive organic growth quarter-over-quarter. These outcomes are direct results of the operational initiatives we have executed over the past 3 quarters. Moreover, we delivered a strong and consistent adjusted EBITDA margin of 23.5%, underpinned by structural efficiency improvements initiated in late 2024.

Following quarter end, we executed our first acquisition of a health care system-owned DME provider, generating $6.6 million in annualized revenue in a strategic transaction completed with Ballad Health. This transaction includes a preferred provider agreement covering 20 hospitals across 4 states. Moreover, as Greg mentioned earlier, this morning, we announced that we have entered into a joint venture to acquire 60% ownership stake in Hart Medical Equipment, nationally accredited provider of home medical equipment and supplies based in Michigan. This joint venture adds immediate scale to our platform. Hart generated approximately $60 million in revenue and $7 million in adjusted EBITDA as of June 30, 2025. And once the transaction closes, which we expect to occur by the end of fiscal Q4 2025, we anticipate reaching an annualized run rate revenue of roughly $300 million company-wide.

Quipt will acquire a 60% ownership interest for total consideration in the range of $17 million to $18 million. This structure allows us to preserve balance sheet flexibility while adding a strategically aligned asset. Hart’s 29 location across Michigan and Ohio, along with its embedded partnership with Henry Ford Health, McLaren Health and Blanchard Valley Health System, Wood County Hospital and The Bellevue Hospital create direct access to a recurring patient base of more than 67,000 patients each month. Once closed, we expect Hart’s adjusted EBITDA margin to align with our historical corporate averages within 3 quarters, driven by operational integration, shared best practices and cost efficiencies. This transaction fits squarely into our disciplined capital allocation strategy, is health system aligned and reputable as a template for future partnership.

This is a clear validation of our strategy to partner with leading health care systems in the United States that are aligned in mission and values. As we progress to calendar 2025, we are energized by the opportunity before us to drive a consistent growth path. Our commitment to operational excellence, disciplined growth and patient-focused care remains the cornerstone of our approach, positioning us for long-term success. With that, I’ll now turn the call back over to Greg.

Gregory J. Crawford: Thank you, Hardik. Today, Quipt now operates over 160 locations across 27 states, serving over 325,000 active patients. Our scalable infrastructure and growing national presence enable us to deliver consistent, high-quality service while expanding our reach across both established and emerging markets. Our go-to-market strategy is rooted in providing an integrated end-to-end respiratory care solution, complemented by a diverse portfolio of durable medical equipment. As a trusted partner for patients and health care providers, we have developed a scalable model that addresses the complexities and evolving demands of the durable medical equipment ecosystem. At this time, respiratory care comprises over 75% of our product mix, and this strategic emphasis aligns with critical macro trends, including an aging population, rising chronic respiratory disease rates and sustained demand in sleep care.

These long-term drivers, coupled with our execution, reinforce our confidence in the future. Moving to our sleep business. Recent real-world data shared by the leading sleep device manufacturer involving 1.6 million patients underscores the positive effects of GLP-1s on treatment adherence. The study found that individuals with an obstructed sleep apnea diagnosis who were prescribed a GLP-1 were 11% more likely to start positive airway pressure compared to those not on GLP-1s. Additionally, these patients exhibited higher CPAP resupply order rates at both the 1-year mark, showing a 300 basis point increase, and at the 2-year mark, showing a 500 basis point marked increase post-setup. This data now tracking nearly 1.6 million patients have been steady with some positive trends.

Moreover, there is a growing use of wearables for sleep tracking that is also driving awareness and funneling patients into diagnostics. GLP-1 drugs are increasing engagement with sleep health, not displacing CPAP demand. As we look at our growth road map, we’ve made targeted progress on several fronts. During the year, we have successfully opened 2 de novo locations in Florida and Alabama. And we expect to continue expanding our de novo footprint in the months ahead as part of a focused national market expansion strategy. In parallel, we are deepening our referral networks across both new and existing markets by reinforcing relationships with physicians, hospitals and other health care verticals. We are positioning Quipt to capture a larger share of patient volume at the point of discharge.

This is already contributing to improved setup activity and a more consistent pipeline of recurring patients. We’ve also continued to evolve our product portfolio with a specific focus on respiratory care. Most recently, we introduced a new Medicare-approved respiratory device designed to enhance airway clearance and secretion mobilization, particularly relevant for our higher acuity patients. This fits seamlessly into our strategy of expanding care offerings while serving more complex clinical needs. To support our sales productivity, we also launched the Quipt sales academy, a formal program to accelerate onboarding, improve rep performance and strengthen referral conversion. This is a direct investment in our front-end commercial capabilities.

Taken together, with the recent transactions announced with major health care systems, this truly is a transformative time for Quipt. We are embedding ourselves directly into some of the most influential patient care networks in the country. These transactions are not just incremental, they fundamentally enhance our competitive positioning, open the door to large, consistent patient volumes and create a scalable blueprint for future health care system collaborations nationwide. When combined with our expanding geographic reach, deeper referral integration, operational optimization and an increasingly diversified product mix, we are building a durable engine capable of delivering consistent organic expansion while protecting and enhancing margins.

Backed by a strong balance sheet, a stable and growing recurring revenue base and an execution-focused leadership team, Quipt is exceptionally well positioned to accelerate growth, deepen health care system partnerships and create substantial long-term shareholder value. On the capital market front, we will continue to engage actively with investors across North America. Given the company’s low valuation, important business progress, return to organic growth and the backdrop of significant recent health care system-focused transactions, we are excited to tell our story. In closing, we remain committed to maximizing long-term shareholder value for all shareholders. The Board and management team are actively evaluating all ways to enhance the company’s strategic position while advancing growth and operational performance.

As we look ahead, we’re confident in the strength of our business and our positioning in the market and our ability to execute on initiatives that support sustained value creation. And with that, operator, we are now ready to take questions.

Q&A Session

Operator: [Operator Instructions] Our first question is from Doug Cooper with Beacon Securities.

Doug Cooper: I guess, nice work on sort of stabilizing the business. Hardik or Greg, first question, when I track what I would call adjusted EBITDA, call it EBITDA minus patient CapEx, by my calculation, that ticked up to — that margin ticked up to 8% in the quarter, which is the best in about a year, I guess, since it was over 12.5% in Q2 ’24. Can you just talk a little bit about what do you think you can target on that to get that moving back, continue to move in the right direction?

Hardik Mehta: Doug, thanks for the call and the question. Look, I think you would expect for us to kind of continue improvements on our EBITDA margins. Patient CapEx has been a drag. As we have kind of mentioned in our previous calls, we are continuing to see our investments in replacing ventilators due to the Philips recall. So if anything, I would say as long as we can maintain our EBITDA margins to some revenue growth and stabilization of the expenses, which we have demonstrated we can, we kind of look forward to keeping this EBITDA less CapEx margin steady or kind of expand.

Doug Cooper: Okay. Greg, can you just talk a bit about the — so the JV, congratulations on that. Looks like an interesting transaction. EBITDA margin for that Hart right now at $7 million. How do you — you mentioned in your speech there that you anticipate it moving back up to Quipt’s average, which has implied, obviously, over a doubling of that EBITDA from $7 million to $14 million or whatever the number is. How do you do that?

Gregory J. Crawford: Yes. So we expect over the next few quarters once we get that business fully integrated and get it under similar cost structures that Quipt has historically seen, that we’ll be able to do that. And that’s what we’ve historically done in the past with most acquisitions. I mean, that’s going to come from multiple levers from cost structures that are kind of totally related.

Doug Cooper: Okay. Maybe just walk through me. It sounds interesting to get these patients at source when they’re being discharged. What are they being discharged for? What is that — what do they actually go into those health centers for, hospitals for?

Gregory J. Crawford: Yes. Well, I mean, hey, that could be a whole various types of diagnosis and treatment but primarily we’re treating respiratory conditions. So the majority of what we would see out of the new JV and that would be respiratory-related. So that would be your ventilation, your oxygen. And then you move kind of into the sleep department and that’s doing the sleep testing and things and then also providing that complementary equipment solutions for those patients. So that’s kind of the primary drivers. We don’t expect the product mix to kind of change or anything there. We do expect to see an increase in the respiratory referrals. So we’ve got some programs that we would like to implement throughout that — those systems that we believe will help drive additional referrals that are maybe going to other providers in the marketplace.

Operator: We seem to have lost our caller in queue so I will announce, the next caller is Bill Sutherland with Benchmark Company.

William Sutherland: The JV that you just announced, is there any financial aspect to it? Any stake that you put up?

Hardik Mehta: Bill, this is Hardik. Not sure I completely understand your question. Could you rephrase that a little bit differently, please?

William Sutherland: Is there any financial component to the JV or is it just an agreement?

Hardik Mehta: Yes, it’s a true investment so yes, we are going to take equity position in the JV alongside the hospital systems that we mentioned in our earnings call and the press release that we gave out. So it’s almost like an acquisition, for a lack of a better word, except for the fact that we are kind of not only just equity holders, but we are going to work very closely with these hospital systems to further enhance their discharge processes and then how do we capture most of those patients that are getting discharged from these hospital systems. So it’s also a lot of alignment at the C level to make sure that there are the seamless discharges that we could — Hart, as an operating entity, would be able to service, which they have been.

They have $60-plus million in top line revenue so they have been really doing well and successful at doing it. Being a classic health care system DME, they tend to have some inefficiencies. They saw us as a good partner that runs good DME and we are fortunate to partner with them. And again, the JV is a classic financial JV where we’re going to be an equity partner.

William Sutherland: I didn’t see the press release, forgive me, but did you talk about kind of what the level of investment is? And any other…

Hardik Mehta: Yes.

William Sutherland: Okay, I’ll take a look at that. Do you all think — you’ve made a lot of progress with the plan for improving operating efficiencies starting a year ago. Is there more to go there or have you pretty much completed what you set out to do?

Gregory J. Crawford: Well, I think we set out to do with what was in our core business. But now with the recent acquisitions, as you’ve historically seen with us is that we’ve been able to increase the margins on those acquired assets. And I think we’ve kind of clearly laid that out is that we expect both of those to be up the corporate average in the coming quarters, especially for the larger $60 million one, we think that’s going to take us a few quarters. And then from there, I think there could be further margin improvement, but we’ll be laser-focused on integrating those assets and continue to work on our organic growth initiatives throughout the rest of the business.

William Sutherland: Great. And then Greg, maybe just update us now that you’ve gotten — you’ve been completing a couple of deals. How should we think about the M&A pipeline right now?

Gregory J. Crawford: Yes. Our M&A pipeline remains strong so we continue to work through the pipeline of kind of what’s the best strategic fit for us. There’s certainly no shortage of acquisitions right now, I’ll say. We’re starting to receive a lot of inbounds, especially now that we’ve been a little more active in the marketplace. So we’ve got a full pipeline and expect to continue to evaluate those and work towards closing the best one that’s going to create the most value for us long term.

William Sutherland: Do you think you’re going to lean, just basically focus primarily on the kind of things you’ve just done or you have a partnership?

Gregory J. Crawford: No, I think it will be a combination. We’ve got both in our current pipeline.

William Sutherland: Okay. And then last thing, I don’t think — I heard most of your prepared commentary. Did you talk about the One Big Beautiful Bill and any impact at all from that?

Gregory J. Crawford: We did not, no. We don’t have anything that we anticipate that would affect our operational or anything along those lines.

William Sutherland: Okay. That’s what I was figuring, but I just wanted to double check.

Operator: The next question is from Justin Keywood with Stifel GMP. This concludes the question-and-answer session. I’d like to turn the conference back over to Mr. Crawford for any closing remarks. Sorry, Mr. Crawford. Your line was muted. I’ll conclude the call. Thank you for participating, and have a pleasant day.