Q4 2021 Quipt Home Medical Corp Earnings Call
[music].
Speaker 1: Thank you for standing by. This is the conference operator. Welcome to the fourth quarter and year-end 2021 Financial Results Conference Call and Webcast for Quipped Home Medical Corp. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions.
Thank you for standing by this is the conference operator, welcome to the fourth quarter and year end 2021 financial results conference call and webcast for equipped home Medical Corp. As a reminder, all participants are in listen only mode and the conference is being recorded after.
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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 Companys results news release as well as the company's M. DNA, which you can find on the website SEDAR.
Speaker 1: For more information on these risks and uncertainties, please see the Reader Advisory at the bottom of the company's results news release, as well as the company's MDNA, which you can find on the website, Cedar, and is may be included on Edgar. The company's actual performance could differ materially from these states.
And this may be included on Edgar.
Company's actual performance could differ materially from these statements at this point I'd like to turn the call over to Chairman and Chief Executive Officer, Greg Crawford.
Speaker 1: At this point, I'd like to turn the call over to Chairman and Chief Executive Officer Greg Cross.
Speaker 2: Thank you, operator, and thank you all for joining us today on the call. My name is Greg Crawford, and I'm the Chairman and Chief Executive Officer of Quick Tom Medical. Joining me today is Hardick Mehta, our Chief Financial Officer.
Thank you operator, and thank you all for joining us today on the call. My name is Greg Crawford and I'm, The Chairman and Chief Executive Officer of quick told medical joining me today is Hardick Nader, our chief Financial Officer.
Speaker 2: I would like to begin by praising the over 700 equipped employees for their continued dedication to providing superior patient care to improve the quality of life for all our patients serve.
I would like to begin by praising the over 700 quipped employees for their continued dedication to providing superior patient care to improve the quality of life for all of our patient served quit specializes in India and respiratory care utilizing our interconnected health care platform, which leverages a.
Speaker 2: Quick specializes in in-and-and restatory care utilizing our interconnected health care platform, which leverages a sophisticated technology infrastructure and strong regional distribution footprint to streamline all phases of the delivery process.
<unk> technology infrastructure and strong regional distribution footprint to streamline all phases of the delivery process known for our service intensive model ongoing patient education and in home respiratory therapy services, we are able to operate a successful patient centric ecosystem throughout the.
Speaker 2: known for our service intensive model ongoing patient education and in-home restatory therapy services, we are able to operate a successful patient-centric ecosystem throughout the organization.
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Speaker 2: Healthcare providers such as hospitals, physicians, long-term care facilities are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control costs.
Health care providers, such as hospitals physicians long term care facilities are seeking partners that can offer a range of products and services that improve outcomes reduce hospital readmissions and help control cost.
Speaker 2: QUIP fills this need by delivering a growing number of specialized products and services to achieve these goals.
Quit fills this need by delivering a growing number of specialized products and services to achieve these goals.
Speaker 2: The quit motto is exceeding expectations in riching lives. As providing exceptional service isn't just something we do, it's who we are and it's who we will always be. It is the clinical services we provide that if allowed us to grow our market share and begin to implement our strategic vision of growing into a national home care provider in the United States.
The quip auto is exceeding expectations enriching lives as providing exceptional service isn't just something we do it's who we are and have to we will always be it is the clinical services. We provide that's allowed us to grow our market share and begin to implement our strategic vision of growing into our NAV.
Home care provider in the United States that.
Speaker 2: that continued compassionate care, coupled with secular tailwinds of healthcare being delivered and monitored in the home has fostered continued robust growth, including impressive organic growth of 10% as compared to physical 2020.
That continued compassionate care, coupled with secular tailwind of health care being delivered and monitored in the home has fostered continued robust growth, including an impressive organic growth up 10% as compared to fiscal 2020, we.
Speaker 2: We continue to focus on expanding our organizational capabilities, including the addition of talented new team members and have made significant strides on this front through 2021.
We continue to focus on expanding our organizational capabilities, including the addition of talented new team members and have made significant strides on this front through 2021.
Speaker 2: with a best-in-class service model in place and all the tools needed to position our organization to capitalize on our increased scale. It is the execution of our robust team that will continue to drive growth forward and allow us to take advantage of the opportunities across our product categories and our markets.
With a best in class service model in place and all the tools needed to position our organization to capitalized on our increased scale.
It is the execution of a robust team that will continue to drive growth forward and allow us to take advantage of the opportunities across our product categories and our markets as President quipped operates out of 76 locations in 15 states across the United States concentrated in the mid <unk>.
Speaker 2: As present, Quipt operates out of 76 locations in 15 states across the United States, concentrated in the Midwest and the Southeast and East Coast regions, completing hundreds of thousands of deliveries each year to more than 170,000 active patients with over 19,000 referring physicians.
West and the southeast and East coast regions, completing hundreds of thousands of deliveries each year to more than 170000 active patients with over 19000 to referring physicians.
Speaker 2: We have seen continued momentum throughout the year as we executed on our Strategic Reprome Growth Strategy through a focus on technology utilization, improved workflow processes to improve our operating efficiency and the build-out of our robust resupply program, all of which continue to yield consistent performance across the business.
We have seen continued momentum throughout the year as we executed on our strategic three pronged growth strategy through a focus on technology utilization improved workflow processes to improve our operating efficiency and the build out of our robust resupply program all of which continue to yield consistent performer.
Across the business.
Speaker 2: With the financial flexibility we have, the operational resilience and strongest regulatory environment we have had in well over a decade behind us, there is plenty of opportunity to expand our geographical footprint into attractive markets throughout 2022.
What's the financial flexibility, we have the operational resilience and strongest regulatory environment, we have had in well over a decade behind us there is plenty of opportunity to expand our geographical footprint into attractive markets throughout 2022.
Speaker 2: On this call, I will provide an update on the supply chain that continued bullish regulatory landscape and update our core business, which continues to be very strong with a focus on our record breaking fourth quarter and full year physical 2021 results.
On this call I will provide an update on the supply chain that continued bullish regulatory landscape and update our core business, which continues to be very strong with a focus on our record breaking fourth quarter and full year fiscal 2021 results.
Speaker 2: As many of you are aware, in June , Phil's Respironics announced the voluntary recall of certain respiratory devices related to polyurethane foam used in those devices.
As many of you are aware in June Philips Respironics announced a voluntary recall of certain respiratory devices related to polyurethane foam used in those devices in September that lets began the remediation process for CPAP and bipap units and the process of repairing <unk>.
Speaker 2: In September , Phillips began the remediation process for CPAP and BIPAP units, and the process of repairing and or replacing those units is well underway.
Replacing those units is well underway.
Speaker 2: The recall amongst other factors has created supply chain challenges industry-wide. Despite the recall, we have not experienced significant amounts of patient stopping the therapy, either CPAP, VAPP or ventilation. In fact, we continue to see elevated levels of demand compared to historical run rates and did not experience a material financial impact to our Q4 financial...
The recall amongst other factors has created supply chain challenges industry wide. Despite the recall, we have not experienced significant amounts of patient stopping the therapy, either CPAP bypass or ventilation. In fact, we continue to see elevated levels of demand compared to historical run.
Rates and did not experience a material financial impact to our Q4 financials.
Speaker 2: We are striving to drive new setups and other product categories to mitigate the future impact due to the recall. Our clinical teams continue to operate at a high level and has done an excellent job working with patients and physicians to manage this complex process and we will continue to work diligently to minimize any future impact.
We are striving to drive new setups, and other product categories to mitigate the future impact due to the recall our clinical teams continue to operate at a high level and has done an excellent job working with patients and physicians to manage this complex process and we will continue to work diligently to minimize any future impact.
On the regulatory front, we continue to operate in an extremely bullish environment one of the major tailwind driving the industry comes from the decision made by CMS to cancel the 2021 competitive bidding program for 13 product categories.
Speaker 2: On the regulatory front, we continue to operate in an extremely bullish environment. One of the major tailwinds driving the industry comes from the decision made by CMS to cancel the 2021 competitive bidding program for 13 product categories.
Speaker 2: The cancellation of this program has provided us a clear margin outlook across our product mix and ensured our patient stability for the foreseeable future.
Cancellation of this program has provided us a clear margin outlook across our product mix and ensured our patients' stability for the foreseeable future.
Speaker 2: Moreover, in September , Medicare finalized a national coverage determination for oxygen that will expand home oxygen coverage and potentially reduce some of the administrative loads.
Moreover, in September Medicare finalized a national coverage determination for oxygen that will expand home oxygen coverage and potentially reduce some of the administrative load.
Turning our attention to recent actions.
<unk> announced a 5% plus CPI adjustment for <unk> in 2022, typically the consumer price index increases for <unk> have been in the 1% to 3% range last year, the inflation adjustment was less than 1%. Moreover legislation was.
Past to delay a 2% cut in Medicare payments that was created under to question, but has been put on hold over the past two years due to the pandemic.
Speaker 2: Congress has also delayed a 4% cut to Medicare reimbursements triggered by the pay as you go law until 2023.
Congress has also delayed a 4% cut to Medicare reimbursements triggered by the pay as you go law until 2023.
Speaker 2: The importance of the home medical industry has never been more prevalent, and we are pleased to see these continued positive regulatory developments.
The importance of the home medical industry has never been more prevalent and we are pleased to see these continued positive regulatory developments.
Turning to the underlying business are robust performance was driven through strong demand leading to larger volumes higher cash collections and continuing to support the business with lower operating cost.
Growth was propelled by our heavily weighted respiratory product mix highlighted by ventilation therapy and continued strength in oxygen therapy. We are pleased for the year, our bad debt expense has fallen to 8% compared to 9% for the corresponding year in 2020, an improvement of 1%.
This exemplifies our ability to scale and add more revenue through add on acquisitions without compromising our billing capabilities. The infrastructure. We have in place today allows us to position ourselves as a market leader and gives us the flexibility to add locations organically so the platform as well as.
Speaker 2: The infrastructure we have in place today allows us to position ourselves as a market leader and gives us the flexibility to add locations organically to the platform, as well as efficiently integrate acquired assets.
Efficiently integrate acquired assets.
Speaker 2: our recurring revenue base continue to be extremely solid for fiscal 2021, with recurring revenue representing 77 percent of overall revenue. Our recurring revenue base provides us further stability and consistency as we look at our growth outlook, business model, and financial reporting.
Our recurring revenue base continued to be extremely solid for fiscal 2021 with recurring revenue representing 77% of overall revenue our recurring revenue base provides us further stability and consistency as we look at our growth outlook business model and financial reporting.
Speaker 2: Quick had an extraordinary year, breaching $100 million in revenue, $21 million in adjusted EBITDA, entering five new states since reaching 76 locations and concluding a NASDAQ listing at the end of May.
<unk> had an extraordinary year, reaching $100 million in revenue $21 million and adjusted EBITDA entering five new states since reaching 76 locations and concluding and NASDAQ listing at the end of May we are set for another milestone filled year and are excited to X.
Speaker 2: We are set for another milestone-filled year and are excited to execute on the path forward for us to enhance shareholder value.
Acute on the path forward for us to enhance shareholder value.
Speaker 2: With that commentary, I'd like to hand the call over to Hardick to discuss our fourth quarter and full year fiscal 2021 financial results.
With that commentary I'd like to hand, the call over to Hardy to discuss our fourth quarter and full year fiscal 2021 financial results.
Thanks, Greg.
Last Thursday evening, we announced our fourth quarter unaudited fiscal 2020 , one financial results, representing the three and 12 months ended September 32021 in reviewing the fourth quarter and audited fiscal 'twenty 'twenty. One numbers. Please note that all financial values are in U S dollars and the full results are available on SEDAR and Edgar.
Here are some key highlights.
Through the companies continue to use of technology and centralized intake processes respiratory resupply setups and our deliveries increased to 158072 for the year ended September 32021, compared to 61468 for the year ended September 32020 and increase.
157, 2%.
The company's customer base increased by 53, 8% year over year to 140996 unique patients. So in fiscal 2021 from 91650 unique patients in fiscal 'twenty.
Compared to 253113 unique setups and deliveries in fiscal 2020. The company completed 364365 unique setup than deliveries in fiscal 2020 , one an increase of 44%.
Revenue for fiscal year, 2021 was $102 4 million compared to $72 6 million for fiscal year, 'twenty 'twenty, representing a 41% increase in revenue year over year.
Compared to fiscal year, 'twenty 'twenty, the company experienced organic growth of 10% for this fiscal year.
Recurring revenue as of fiscal year, 2020 , one continues to be strong and exceeds 77% of total revenue.
Adjusted EBITDA for fiscal year 2021 was $21 4 million at 21, 1% margin compared to adjusted EBITDA for fiscal year, 'twenty 'twenty of $15 5 million, representing a 38, 3% increase year over year.
Adjusted EBITDA margin was impacted by onetime costs related to Companys NASDAQ listing on May 27 2021.
Revenue for Q4, 2021 was $29 1 million compared to $19 7 million for Q4, 'twenty 'twenty, representing a 48% increase in revenue year over year.
Compared to Q4, 'twenty 'twenty the company experienced strong organic growth of 14% year over year.
Adjusted EBITDA for Q4, 2021 was $5 6 million at 19, 2% margin.
Adjusted EBITDA margin was impacted by the expenses related to acquisitions completed in fiscal Q4, as well as lower pre integration margin instead, the company's overall margin profile.
The company anticipates margins normalizing about 20% when this acquisitions are fully integrated.
Cash flow from continuing operations was $18 7 million for the year ended September 32021, compared to $14 1 million for the year ended September 32020.
For fiscal year, 2021 bad debt expense was 8% compared to 9% for fiscal year 'twenty 'twenty, an improvement of 1%. This exemplifies our ability to scale and add more revenue through add on acquisitions without compromising our billing capabilities.
Operating expenses for the year ending September 2021 was 51, 6% compared to 53, 2% the corresponding period in 2020, a substantial margin improvement, resulting from scaling on our existing platform.
Considering our one time expenses like NASDAQ listing rebranding initial acquisition related cost and the inflationary environment. We are in this has been a huge validation of our acquisition strategy.
The company reported $24 6 million of cash on hand as of September 30th 2021 compared to $29 2 million as at September 30th we need 20.
The company has undrawn credit facility of $20 million as of September 30th 2021 .
The current assets totaling more than $57 2 million compared with $32 7 million in net short term liabilities demonstrating continuing strength in our liquidity.
Our continued progress in economically building scale utilizing the robots and presence that we have in place is producing consistent strong financial results. We are proud with the continued execution displayed through the strength of our fourth quarter and full year results. We saw revenue, reaching 29 million for our fiscal fourth quarter and 100.
<unk> million for fiscal full year, surpassing the high end up our revenue range target Walsh seeing full year adjusted EBITDA margins remaining about 20%.
We are pleased with this margin stability roast, having a number of one time expenses related to our NASDAQ listing and I've continued acquisitions of smaller lower margin businesses, which we integrate to turn into high margin businesses that would be more accurately reflect company wide margins post integration.
We also continue to see very strong cash collections throughout the fourth quarter, resulting from our continuous effort to better our revenue cycle management processes.
Going forward, we seek to find ways to continue to grow our customer base and penetrate this market, while continuing to streamline our operational platform and generate positive cash flow and operational profits.
We completed six acquisitions during the year ended September 32021, and in the fiscal fourth quarter. We were ready act of implementing the inorganic portion of our growth strategy entering the new states of California, Missouri, Arkansas and Mississippi.
The combined entities, we acquired in those new markets had trailing 12 month annual revenues of approximately $11 million and adjusted EBITDA of 165 million.
Post integration, we expect that margin profile to be in line with the overall business.
During the fiscal fourth quarter, we added two exceptionally experienced health care executives with a specific focus on home medical equipment and services industry to so as EVP of operations and VP of acquisitions and integration both coming from two of the largest home medical equipment companies in the industry further comp.
Commending our robust leadership team Mauro.
Moreover, as we look at recent developments on January four 2022, we announced the acquisition of at home health equipment business with operations in Indiana reporting trailing 12 month annual revenues of approximately $13 million and $1 6 million in net income with anticipated adjusted EBITDA of two.
9 million reflective of a 22% margin post integration.
The acquisition creates grips single largest market from a revenue standpoint, covering the entire Cobra Shapiro of Indianapolis at home health equipment has a strong revenue base with over 40% steaming from exclusive contracts in the hospice segment opening a new vertical for us to strategically build throughout 2022.
Additionally, there is solid diversification amongst reference sources, and our payer base with exposure to less than 20% from Medicare. Furthermore, at home does not have a current exposure to ventilation therapy, providing us the growth opportunity to introduce our clinical ventilation therapy program as well as complementary clinical.
Petroleum products and services.
In closing as we work towards our long term goal of becoming a national provider of home health care in the United States, we remain prudent ensuring we follow our stringent criteria alongside our proven integration processes, which has been the driver of our consistent revenue growth about 40% display it on an annual basis.
We are enthused with the deep acquisition pipeline. We currently have consisting of a wide range of targets in terms of size and scale, which will help continue to drive our opportunity to penetrate existing and new states. We expect to remain very active throughout 2022 growth initiatives.
And with that update I will turn the call back to Greg.
Thanks Kartik.
Quit this in the midst of an ongoing national expansion effort currently servicing 15 states with the goal of continuing to grow our operating footprint into attractive region to serve as a leader in respiratory home care across the United States driven by our robust acquisition strategy.
Ongoing organic growth initiatives, including adding and expanding into synergistic verticals of services and are leveraging our significant infrastructure platform. We have the ability to meaningfully reach our goals as we move through 2022, we have done a tremendous job of efficiently integrating acquired businesses resolve.
And meaningful cost synergies and revenue growth opportunities that are driving consistent financial results across the organization.
2021 was a milestone filled year for quipped, we rebranded the organization to provide a significant opportunity in our local market as well as continuing to provide superior patient care, we experienced record financial results entered five new attractive states added 14 locations and 50.
<unk> thousand active patients and important insurance contracts.
We view ourselves as an operating engine that converts low margin businesses and the high margin businesses through operating efficiencies and cost savings synergies, which offer us immediate actionable opportunity.
It is truly our proven integration strategy that allows us the opportunity to be nimble and making strategic tuck in acquisitions acquisitions of scale and the opening of de novo locations to fill in attractive geographies obtain important insurance contracts add to our active patient base and build out our <unk>.
Referring physician network.
In 2021, we entered Florida, California, Missouri, Arkansas, and Mississippi and expanded in existing markets highlighted by our announcements in Illinois, and Indiana of recent.
We're utilizing a combination of the quip brand name post integration as well as leaving an acquired brand in place where it makes sense. We also continued to aggressively pursue opportunities that will complement our existing service offerings, such as expansionary opportunities into additional long term care facilities.
Hospital systems and nursing homes.
In November we acquired a biomedical services company with operations in the South Eastern United States, allowing us to expand into a brand new service line of biomedical repair services for respiratory equipment, including preventative maintenance.
We will be able to provide health care providers the ability to improve their operational efficiencies of the respiratory equipment program. We will also have the opportunity to acquire used equipment and repair in house, allowing us the ability to redeploy equipment and lower equipment acquisition cost.
The COVID-19 pandemic has demonstrated that home medical equipment care with a focus on respiratory patients is a crucial portion of the health care continuum of care.
Whether it be patients referral sources payers or lawmakers. It is clear the structural shift is well underway to ensure a patient is treated in our home care setting whenever possible. We continue to work with payers on potential opportunities for a shift from fee for service towards one that incorporates the <unk>.
Service, we provide for patients after the delivery of the equipment.
Our team is focused on finding the optimal ways to grow relationships with referral sources and we are seeing the benefits of this across the organization. We continue to invest in technology in order to improve our operating efficiencies whether through the ongoing use of our automated ordering platforms revenue cycle management or through our automated.
Friction based resupply program.
These actions drive sustained value to the company and allows US continue to increase our productivity. These investments into our scalable connected health care platform drives organic sales generations accretive acquisitions targeted market expansion and cash generation. This model also encourages.
Compliance improves outcomes and drives engagement with patients. Moreover, we can drive early interventions reduced hospitalizations and monitor treatment plant effectiveness, which all serves as a benefit to the payers.
I would now like to review with you the three components of our growth strategy.
We are laser focused on capturing market share economically and profitably through our organic growth initiatives our industry growth rate is about 5% to 6% per year. However, we believe we continue to significantly outpace the industry growth rate by focusing on significantly increasing our market share.
Sir in key target regions within the markets, we serve as well as opening new markets.
Lee we continue to lead the industry and technology deployment, and then our use of data mining tools to drive efficiencies and profitability and an example would be our robust subscription based model for resupply, which provides meaningful revenue synergies for us on the acquisition front.
The third component of our growth strategy is acquisitions, we are looking for turnkey respiratory operations that can be seamlessly integrated into our highly scalable platform as we look at M&A, we have three factors to our acquisition approach.
First being our focus on scale and hence targeting companies in the revenue range of $5 $20 million consistent annual EBIT margin between 10% to 20% plus and large distribution volume, which can be leveraged by our platform.
The second fastest being focused on our ambition of becoming a national provider. This segment focuses on acquiring sub $5 billion revenue targets with our strategic goal of expanding our payer mix and expanding our geographical footprint across the new states the third facet being a focus towards larger opportunities.
That would be more meaningful from a revenue EBITDA patient base and geographical reach standpoint.
On the capital markets front 2021 wasn't a historic year for quipped, completing our most significant milestone to date with the commencement of trading on the NASDAQ in late May.
At that time, we have been steadily marketing the company with U S and Canadian based institutional investors through Roadshows and conferences and we will continue to be active on this front. We are also pleased to have research coverage from 11 firms across Canada, and the United States and look forward to their continued support we are.
Working diligently to ensure the quip name vision and continued strong performance is echo to the investment community.
At this time I want to reiterate our outlook for calendar in 2022, representing physical Q1 2023 as originally disclosed on November 16th 2021 based on the current operations market trends and completed and prospective acquisitions, we have rewritten.
Our outlook for annual run rate revenue of $180 million to $190 million with $38 million to $43 million and adjusted EBITDA.
As I look at the evolution of our company I am so proud of the entire team for their hard work and dedication to going above and beyond and our results are a culmination of those efforts. We continue to strategically position. The company for continued robust growth and given the current landscape of the industry, we must remain active.
In capturing the many opportunities that exist in front of us and we have all the tools to do so we cannot be more excited for what the future holds for quipped in our more than 170000 patients we care for.
Once again I want to take a moment to thank the entire quip team for its tireless efforts and its stakeholders for their continued support.
Okay.
We will now begin the analyst question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
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Our first question comes from Doug Cooper of Beacon Securities. Please go ahead.
Hi, Good morning, Greg Arctic deferred graduations are successful quarter for the year.
First question on the supply chain issue is there any way to quantify.
Impact.
I know you said it didn't have a ton of impact but is there any way to quantify.
Maybe some lost revenue or even if I can call. It backlog of patients that haven't yet been able to set up is there any way to quantify that.
Yeah sure thanks for the compliment.
To quantify revenue when that would be a little tough for us, but just to give you. An example in that when we kind of ended.
At December 31st and that we had approximately over 8000 patients that were waiting to be set up on sleep devices.
And just going back and look at at some historical rates and that of where we were.
You know, we would typically end of month and that would maybe somewhere around 1000 or so patients in that so we've got a pretty large backlog that's kind of building the outcome and that's kind of a really an industry wide problem.
Okay.
I know the RASM had recently had their Q I think it was to Q2 conference call CEO Red mud predicted.
But the supply chain issues that start to loosen up in the June quarter.
You seem to corroborate that or what are your thoughts on the winter may loosen up.
Yeah, Yeah, we're starting to see from some other partners and that there are starting to move their product in that a little bit quicker. So we do expect and that as we go throughout 2022 to see those allocations and that increase so what you'll end up relieving some of these back orders and that that we continue to see I think the nice thing.
About quipped US you know, we're sitting in a little different position in that.
Incidentally that resonate with a primary vendor for us for sleep, which allows us to get some higher allocations and some of the smaller providers that were strictly with other manufacturers in that they really can't set up any patients are all at at all so physicians are kind of seeing that at least quipped is able to get patients set up it may.
Take a lot longer but at least they're moving through all this.
Setup process versus other companies.
They can't do it all.
Okay.
That's what's helped us build out our.
That's what's helping build out that pipeline we have.
Okay harder just how much cash do you have in the bank today after closing the debt home health and then a final one for you Greg.
Yeah.
Maybe you can just.
The run rate of the company today post these acquisitions my calculations around $140 million, you're targeting 180 to 190 by the end of the year. So that would be about 40 or $50 million gap, what's the funnel look like to get you there.
How do you have confidence that you're going to get there and I'll leave it there. Thanks.
Sure. So you know.
Sitting around approximately $20 million plus or minus given day.
Post the transaction.
You know.
The bridge to what.
Richard Guay, which says what our guidance has been is of course going to be acquisitions. You know we have a variety of those that we're looking at.
Now from low ends up $3 million to high ends up.
Tens of millions of dollars in Internet and revenue. So I think we have a pretty broad spectrum of what we are currently looking at and working on.
And don't see that as a challenge at least Oh baby sit today and the time, we have to get that done.
Thank you.
Our next question comes from Supper monetary of eight capital. Please go ahead.
Hello, and congrats on another excellent quarter and continued.
Outperformance. So I just wanted to touch a little bit more on the common Craig made around your positioning as there may be a shift towards more of a health value based purchasing model can you characterize.
Some of the I guess key performance indicators that would put you.
I'm in a position to get the positive payment adjustments that would come from those sorts of programs.
Yeah.
Yeah. This is Greg the clinical services that we are continue to provide and continue to invest in those resources.
As the industry continues to drive towards that type of payment system potentially in the future. We believe that will have up platforms that will allow us to enter.
Those particular, payor contracts and that swiftly and quickly yeah and certain regions.
And what some of the I guess.
Expansion things that you track or would there be kpis that you look to that would position you for those sorts of discussions or is it.
Cumulative antenne offering that would position you are not.
Two windows sorts of payer contracts.
Probably the primary Kpis right now and that would be the compliance of those devices and are the tracking of all the different data of hospital readmissions.
Which kind of all of that happens in the background and those are all just kind of internal records and that that we keep and then we also share with our physicians on their particular patients.
Okay and with that regard do you expect to provide some I guess benchmarks of how you performed relative to.
Some of the whether it's published or broader kind of industry numbers.
When it comes to hustle remissions or some of these key kpis that.
That would make the story and the value more salient or is that more backend.
At this point, it's more backend and internal information.
So that's something that we could potentially share in that with.
Shareholders in the future.
Understood and as you guys are increasingly expanding our reach and I know the pending NOI will continue that do you have a.
Visibility on relationships with national payers and I know there was some discussion of one national payer earlier last year was their ongoing discussions with additional national payers and how does it get to new regions are there is there a pick up with that.
A couple of our contracts in that that we had that were more regionally located.
With very large payers in the U S. We've been able to obtain national contracts, which essentially and that would allow us to provide services in any state and that that we decided to go to so that's what we've been working towards on the payer side and we'll continue that progress and kind of update and that has a new.
New contracts are presented.
Great. Thanks, and just one last question I know hard <expletive> mentioned, there are some opportunities in the tens of millions of dollars in terms of revenue opportunity that you look at with those typically be multistate opportunities are based.
Based on your current pipeline are you looking at.
Entry into potential larger states.
Sure.
It's all over the place some of them are.
Most of them are multistate, but there are also some that are concerned that concentrated inside a couple of states are or maybe just one state when the neighboring state that they already do.
Oh, yeah. So we do expect that as we grow our revenue line, we would be expanding into more and more states and territories.
Great I appreciate it thanks for taking the time today.
Thank you.
Our next question comes from Paul Stewards of I E capital markets. Please go ahead.
Good morning, guys and thanks for taking my question I'm, just calling in on behalf of Chelsea.
Congratulations on the quarter, obviously, a great to see I'm. Just wondering can you update us in terms of the acquisition target under LOI that you guys announced on November 22nd or is that still on track to close in the next a couple of weeks here as originally guided and and just also in terms of you know that.
That's release talked about increasing the debt facility is is that on track to grow that to $100 million as well.
Sure. So the alloy is still under works there were some some delays and comes up.
Working through that but you know we are trying to also work through some of the quality of earnings information on that so.
It's work in progress right now that's all I can say as far as the.
The line of credit you know, we do have a soft commitment letter from our lending partners. Yeah. However, so that we're not burdening the full cost associated with a such a large facility.
Do you plan to get into a definitive agreement only when we get ready to draw on it. So that's the status of.
The the last facility.
Okay. That's good to know thank you and in terms of your your margin guidance that you mentioned that it was going to be above 20% for the calendar year. This year.
I'm, assuming that's sort of under the roadmap to 180 $190 million of revenue. If M&A gets ahead of schedule. If you close some of these you know a tens of millions of revenue kind of a target you're looking at would that potentially change change the margin guidance or is that so robust that EBIT if M&A.
Hey, what was ahead of ahead of schedule that would stay on track for about 20%.
I think we fit we feel fairly confident about 2020 just about 'twenty at this point of time, but you do know that we are in an uncertain times in terms of inflationary market and so for those reasons, we have been kind of not giving a more particular guidance as it as it relates to EBITDA margins.
I think.
In regards to how that correlates with that acquisition.
Oh Oh.
Over the past couple of years, we have been able to maintain our EBITDA. Despite all the acquisition activity, which sometimes.
Tends to have a negative pressure for the short run as you kind of a squeeze all the synergies out of it but.
But having said that I think we feel generally confident about what we've said so far.
Okay and one last one for me just in terms of we saw that the Philips expanded their recall by another million devices is this something that you know the timeline sort of.
It is now pretty fixed in terms of when you can get off allocation and I know, there's a bit of a question earlier, but maybe just some more color on in terms of can red bed, you know sort of a scale up to offset the lower supply from philips or or other suppliers, how how do you see that trending in the next couple of.
Yes.
Yeah, we expect to be on allocation of that throughout 'twenty two in that that's kind of what we're forecasting now.
It's why we've been laser focused on our other product categories in that and kind of driving our home oxygen business, our home ventilation business, along with our resupply and that which thus far and that we've still been able to drive some really nice revenue numbers in that quarter over quarter.
And that's what we'll continue to remain focused on and then we also you know at some point and that once we're off allocation enable to get the equipment required to set patients up and that we do believe there'll be a really good pick up in that within a quarter or two and that once all of those patients are setup.
Okay. Thanks, so much guys.
Thank you.
Our next question comes from Justin <unk> of Stifel. GMP. Please go ahead.
Hi, Good morning, Thanks for taking my call had some questions on the organic growth.
So if it was a 10% for fiscal 2021 would that all be a volume related or was there some pricing increases.
There was a little bit of a price increase but if you look at on the overall you know from the time those price increases took place and the geographies that we weren't in that were impacted by the price increases and the proportion of those cars.
Because those.
Products in which there were.
Pricing because I think if you compare all of that.
To the organic growth I think.
A large portion of the organic growth is through.
Setting more patients and providing more products and and collecting more dollars.
Okay got it so a majority of its volume and.
And how sustainable is that organic growth and where there any COVID-19.
Impacts there that maybe led to a more robust growth that that may not repeat in the future.
No. We think actually this is Greg actually we think just the opposite when we look at the COVID-19 pandemic, we feel that its been hindering our organic growth.
So we believe once we get outside of this pandemic and that we've got a lot of areas in that that we can add as continuum areas and really expand our sales force and that which is frankly over the past two years have been locked out of a lot of new accounts, if they didn't have relationships.
So.
So we think that's what's going to happen, we're going to be able to drive better organic growth.
Got it and if around a double digit organic growth is a the target assuming that's mostly volume related with the CPI increase that you mentioned at the beginning of the call would that be on top of that or is considering a 10% organic growth a good target as it is.
Well we were.
Modelling purposes, we actually never promote.
A double digit growth from a modeling perspective, we always encourage you know our analysts and investors to keep that keep us at the.
The industry level, which as you know five 6% and then of course, we do strive to hit the numbers, we do hit a eventually but that's.
That would be my recommendation from a modeling perspective, we continue to see good robust organic cohort two are.
Increasing of coverage and bettering, our patient services and will continue to strive for that.
But that.
English is typically not inclusive of the CPI increase.
Got it and that's what can I say.
All right.
Right.
We've been we've been close to 10% over the past three fiscal years.
Mhm, we've been right in just over 9%.
Yeah, no absolutely good to see and that that 5% a CPI increase is that across all product lines.
Yes, that's our understanding we I mean, it's still preliminary and we are kind of diving into it but that's what it looks like.
Okay, Great and then that would just be across the Medicare portion of that there's not a whole yeah not the whole business.
Okay, Okay, Medicare person Alright, and then I'm just for the fiscal Q1 results I assume we're we're pretty close to that earnings state and anything to note on the outlook that we should be aware of or.
Or are you know more or less the same.
Yeah, more or less the same.
Oh, Okay, and do you have a earning state for that quarter.
No not not yet.
Will it be will be lead by the due date of our 14th Huh.
Approximately the 14th.
Sorry, that's the 14th of March or April February .
February February Okay, alright.
Alright, well look out for that thank you very much for taking my questions here.
Sure. Thank you.
Our next question comes from Raul Seragut, Sir of Raymond James. Please go ahead.
Good morning, Greg Good morning, Kartik. This is Michal Friedman on for Rahul today, congratulations on the on the breakthrough 2021, that's really fantastic results.
I would like to ask some questions on the sort of the broader picture in the medical equipment space.
Over you know over the last decade, there's been a active consolidation among our durable medical equipment players sort of coming down from 10000 to individual suppliers too.
Five or 6000 hours.
Wonder if you could provide some commentary on how that consolidation, it's trending particularly among smaller.
Suppliers, and how that sort of impacts your M&A outlook.
How that impacts the.
Yeah, Hi.
Last year in the last part of the question.
Oh yeah.
I was wondering how how does sort of industry consolidation trend is is continuing on into the early 2000, Twenty's and how that consolidation is playing into your M&A strategy.
Sure. So I mean it it it's a it has its pros and cons to be candid in terms of the current environment of recall and other supply chain issues are the pros and cons would be.
There are some desperate sellers that wants to to be on the market because of the situation there and they may not necessarily be a fit for us given that we can't get product to support what the challenges that they currently have but then it also opens up the good part of it is there are still.
Although.
But unfortunately, that's out there that we can we can look into we can support and we would go after them. So I think that it has been.
I I wish that you kind of even out approach due to the consolidation.
The activity from the broker dealer side seems to be up slightly on the slower side.
We have invested in our own you know we most of our deals are proprietary in nature and so to that extent, we feel pretty comfortable.
Kind of navigating through this current scenario.
Okay. Okay. That's really helpful and then sort of on the on the <unk>.
Bigger side of things that we saw some large M&A recently with the Owens <unk> minor are acquiring Apria I wonder.
How this affects your.
How you view large M&A in your in your sector and.
And what this might mean for for 'twenty, two 'twenty three 'twenty four.
Okay.
Yeah, I mean, we think the deal flow and that will continue and that for larger acquisitions are there. There are some deals that went public that we would consider large 75 million plus in revenue. So.
So we continue to see those types of companies available we do believe in that where we sit now with our ability.
To increase our line of credit with our cash balance and everything that we could.
Potentially in that land and acquisition.
A much larger in size and revenue. So so we think the market is going to continue to remain active I think when you look at the Apria deal that that kind of just us sets, where and that you're kind of seen multiples and things for a larger companies and that would be within that range.
Okay. That's great. Thank you very much and congratulations on tea.
Yeah.
Yeah.
Thank you.
Our next question comes from Bill Sutherland of the Benchmark Company. Please go ahead.
Thank you.
Greg chaotic.
Just.
Greg would you did you mentioned the impact in terms of the pressures from Covid on <unk>.
Staffing levels.
Levels and churn.
You're hearing that we're hearing from.
Particularly the home health nursing companies does that had any impact on your gross.
I wouldn't say, it's had any impact on our growth, but obviously, we've been dealing with the human resource as far as.
Our retention and recruitment we feel we're in a much better spot than we were say in.
The middle of 'twenty, one and that that's where we are seem to kind of hit our peak and that with the overcoming.
Overcoming the challenges in that of new hires and retention and that's why we feel things have gotten much better for us.
We've obviously pivoted in that with our recruitment I'll say one thing that's kind of came out of the entire pandemic is.
From a hiring side is a better quality candidates.
You know have decided they want to make a career shift or or something whether it be out of the hospital setting or something but still want to be in.
Health care. So so there had been some benefits in that that we've seen recently over the past quarter or so.
Have you.
Doing anything with your own packages retention packages and things too.
To improve retention or you're just seeing yourself.
Becoming more of a favorable place to work well.
Some other.
Some other locations.
It's been an entire package and that we've recently and that improved our health benefits, we've offered a sign on bonuses.
And different things like that in order to attract talent. So and you know since we've made those particular changes.
You know, it's it's made the hiring and that just a little bit easier in that there's been some relief on that side. So although I will say, it's definitely not as easy as it was two years ago and that to attract talent.
Right.
I feel we're sitting in a pretty good spot right now.
Sounds good thanks for the color.
Thank you.
This concludes the question and answer session I would like to turn the conference back over to Greg Crawford for any closing remarks.
Thank you. Thank you operator, and thank you all for your participation today as always you can find it on the web at W. W. Dot quipped home medical Dot Com, where we will be hosting a transcript of this call and also our updated investor deck on the site. You can also view some of the exciting products and developments discussed on this.
Call today.
So you won't have a great day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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