Q1 2024 Quipt Home Medical Corp Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the Fiscal Q1 2024 Earnings Results Conference Call for Quipt Home Medical Corps. 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. To join the question queue, you may press star, then 1 on your telephone keypad.

Thank you for standing by this is the conference operator welcome to the fiscal Q1 'twenty 'twenty four earnings results Conference call 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 opportune.

<unk> for analysts to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.

Operator: If you do need assistance during the conference call, you may signal an operator by pressing star then zero. 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 this page. These results use forward-looking statements. The company's actual performance could differ materially from these. At this point, I would like to turn the call over to Chairman and Chief Executive Officer Gret Crawford. Okay, let's go ahead.

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 two companies' results news release.

The company's actual performance could differ materially from these statements at this point I would like to turn the call over to Chairman and Chief Executive Officer Grant Crawford.

Please go ahead.

Greg Crawford: 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 Quipt Home Medical. Joining me today is Hardik Mehta, our Chief Financial Officer. Quipt Home Medical is a diversified healthcare services company providing a full spectrum of home medical equipment and services to patients in the comfort of their own homes across the United States.

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 course told medical joining me today is Hardy nature, our Chief Financial Officer.

Quipped home medical Whats, a diversified health care services company, providing a full spectrum of home medical equipment and services to patients from the comfort of their own homes across the United States I've quipped. Our model is centered around delivering clinical excellence and we drive this through our patient centric ecosystem leveraging technology enabled a coding solution.

Greg Crawford: At Quipt, our model is centered around delivering clinical excellence, and we drive this through our patient-centric ecosystem. Leveraging technology-enabled equipment solutions in conjunction with our specialized clinical respiratory programs to effectively treat patients at home in a way that best suits their needs. At present, approximately 80% of our product mix is dedicated to respiratory care, reflecting our dedication to meeting the needs of those with cardio and pulmonary conditions. Our remarkable team, exceeding over 1,200, is the driving force behind our success, bringing our vision to life daily with an unyielding commitment to superior patient care. We continue to achieve consistent financial and operational results driven by our resilient business model. As of fiscal Q1, our recurring revenue base sits at 83% of total revenue, representing the strength and predictability of our financial foundation. Moreover, driving our market share growth is the targeted go-to-market strategies we deploy and the end-to-end respiratory solutions we offer in the marketplace. With 125 locations across 26 states and over 287,000 active patients, Quipt has a strong reach from coast to coast.

In conjunction with our specialized clinical respiratory programs to effectively treat patients at home in a way that best suits their needs at present, approximately 80% of our product mix is dedicated to respiratory care, reflecting our dedication to meeting the needs of those with cardio pulmonary conditions.

A remarkable team exceeding over 1200 is the driving force behind our success, bringing our vision to life daily weapon unyielding commitment to superior patient care.

We continue to achieve consistent financial and operational results driven by our resilient business model.

As our fiscal Q1, our recurring revenue base sits at 83% of total revenue representing the strength and predictability of our financial Foundation. Moreover, driving our market share growth is the targeted go to market strategies, we deploy an Indian respiratory solutions, we offer in the marketplace.

With 125 locations across 26 states and over 287000 active patients quipped has a strong reach from coast to coast. What's the scale. We have gained we had been able to grow and monitor our constantly expanding patient base effectively reduce organizational redundancy and increase our margins.

Greg Crawford: With the scale we have tamed, we have been able to grow and monitor our constantly expanding patient base effectively, reduce organizational redundancy, and increase our margin. On this call, we will update you on our record-breaking fiscal first quarter 2024 performance, the strong demand trends we are continuing to see across our product categories in real time, and our strategic insights on the continued success of our core business. During fiscal Q1 2024, we continue to build momentum across the business, recording record revenue of $65.4 million or 60% year-over-year growth with a strong margin of 23.5%, equating to adjusted EBITDA of $15.3 million or growth of 71%. We are seeing consistent strength in our margin profile as we drive economies of scale in the business and implement our effective cost management strategy.

On this call we will update you on our record breaking fiscal first quarter 2020 for performance the strong demand trends, we're continuing to see across our product categories in real time, and our strategic insights on the continued success of our core business.

During fiscal Q1 2024, we continued to build momentum across the business recording record revenue of $65 4 million or 60% year over year growth with strong margin of 23, 5% equating to adjusted EBITDA of $15 3 million or growth of <unk>.

71%.

We're seeing consistent strength in our margin profile as we drive economies of scale in the business and implement our effective cost management strategies.

Greg Crawford: Our strategic emphasis on expanding the continuum of care, cross-selling our product offerings, capitalizing on a stable supply chain, and navigating a conducive regulatory landscape has positioned us very well. We've strategically targeted our efforts in areas with a higher prevalence of COPD, extending our reach and enhancing our sales touch points within these vital markets. In the United States, it's estimated that COPD affects nearly 16 million adults, and many more do not know they have it.

Our strategic emphasis on expanding their continuum of care cross selling our product offerings capitalizing on a stable supply chain and navigating a conducive regulatory landscape has positioned us very well.

We strategically targeted our efforts in areas with a higher prevalence of C. O P D extending our reach and enhancing our sales touch points within these vital markets. Indeed.

In the United States, It's estimated that COPD affects nearly 16 million adults and many more do not no they haven't.

Greg Crawford: This significant patient population is a key driver of our persistent growth. As we progress through the remainder of fiscal 2024, we are poised to achieve consistent and sustained organic growth, aiming for an annualized rate of 8 to 10%. This growth trajectory is not only a reflection of our strategic initiatives but also of our dedication to meeting and exceeding the evolving needs of our patient population. Additionally, we continue to implement our long-term strategic expansion plan. Our approach of offering a full range of end-to-end respiratory solutions with our varied product mix is essential to maintaining our success and a key factor in the growth of our core market. We can boost total volume growth, which is the key driver of organic growth, by focusing on our primary sales channels, which include medical facilities like hospitals, physicians' offices, long-term care facilities, home health agencies, and rehab.

This significant patient population as a key driver of our persistent growth.

As we progress through the remainder of fiscal 2024, we are poised to achieve consistent and sustained organic growth aiming for an annualized rate of 8% to 10%.

This growth trajectory is not only a reflection of our strategic initiatives, but also of our dedication to meeting and exceeding the evolving needs of our patient population.

Additionally, we continue to implement our long term strategic expansion plan, our approach of offering a full range of Indian respiratory solutions with our very product mix is essential to maintaining our success and a key factor in the growth of our core markets. We can boost total volume growth, which is the key driver of organic.

By focusing on our primary sales channels, which include medical facilities like hospitals physicians offices long term care facilities home health agencies and rehab centers.

Greg Crawford: Moreover, I am pleased to provide an update on the demand trends we are seeing within our sleep. Despite the ongoing market speculation and reaction concerning the adoption of GLP-1 diabetes and weight loss medications, I can confidently report that our sleep segment has continued to remain unaffected. Demand patterns continue to exhibit strength in real time, and our anticipation is that this will persist well into the foreseeable future. Recently, the largest manufacturer of sleep devices in the industry published data from a real-world study that showed a significant positive correlation between GLP-1s and pap therapy. The findings were that patients with an OSA diagnosis and prescribed a GLP-1 are actually more likely to initiate pap therapy and order supplies more frequently. In addition, it is critical to stress that CPAP and BiPAP therapy remain the accepted gold standard of care for patients with obstructive sleep apnea.

Moreover, I am pleased to provide an update on the demand trends, we are seeing within our sleep business. Despite the ongoing market speculation and reaction concerning the adoption of G. L. P. One diabetes and weight loss medications I can confidently report that our sleep segment continued to remain unaffected.

Demand patterns continued to exhibit strength in real time, and our anticipation is that this will persist well into the foreseeable future Risa.

Recently, the largest manufacturer of sleep devices in industry published data from a real world study that showed a significant positive correlation between G. L T ones and Pap therapy. The findings were that patients with OSA diagnosis and prescribe that she L. P. One are actually more likely to initiate pap therapy and order some.

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In addition, it is critical to stress that CPAP and bypass therapy remain the accept the gold standard of care for patients with obstructive sleep apnea.

Greg Crawford: Furthermore, we firmly believe that over 20 million Americans have OSA but have not yet received a diagnosis, which represents a significant unrealized potential for future market expansion. As of right now, we think that rising awareness and more OSA diagnoses could lead to a rise in the overall addressable market. Last but not least, we still think that the most important thing is to collaborate with our sleep patients to ensure their adherence to therapy, which is the foundation of our sleep segment focused on compliance. Looking at the regulatory landscape, we continue to see ongoing stability and have seen no signs suggesting a return to competitive bidding. In the past, CMS has started all competitive bidding procedures about 18 months before contracts and prices are finalized.

Furthermore, we firmly believe that over 20 million Americans have OSA, but have not yet received a diagnosis, which represents a significant unrealized potential for future market expansion.

As of right now, we think that rising awareness and more OSA diagnosis could lead to a rise in the overall addressable market.

Last but not least we still think that's the most important thing is to collaborate with our sleep patients to ensure their adherence to therapy, which is the foundation of our sleep segment focused on compliance.

Looking at the regulatory landscape, we continue to see ongoing stability and have seen no signs, suggesting that returned to competitive bidding.

In the past CMS has started all competitive bidding procedures about 18 months before contracts and prices are finalized as we look in the past year, we have seen positive policy developments such as the easing of restrictions for home oxygen that reduces the administrative burden on health care providers and opens up access to patients.

Greg Crawford: As we look back on the past year, we have seen positive policy developments, such as the easing of restrictions on home oxygen that reduces the administrative burden on healthcare providers and opens up access to patients. Due to the nature of our business, which involves supplying patients in the home setting across the United States with viable respiratory products and services, Quipt is well positioned to thrive in any potential downturns in the economy.

Due to the nature of our business, which involves supplying patients in the home setting across the United States with viable respiratory products and services.

<unk> is well positioned to thrive in any potential downturns in the economy, our proactive approach to both organic and inorganic along with our steadfast focus on developing a strong operational foundation and infrastructure have put us in a position of strength as we proceed through fiscal 2024.

Greg Crawford: Our proactive approach to both organic and inorganic growth, along with our steadfast focus on developing a strong operational foundation and infrastructure, have put us in a position of strength as we proceed through fiscal 2024. We plan to continue driving forward on the fundamental pillars of our strategic growth strategy, opening up additional attractive markets to implement our innovative go-to-market strategy throughout the country. With that commentary, I'd like to hand the call over to Hardie to discuss our fiscal first quarter 2024 financial results. Thanks, Greg.

We plan to continue driving forward on the fundamental pillars of our strategic growth strategy opening up additional attractive markets to implement our innovative go to market strategy throughout the country.

With that commentary I'd like to hand, the call over to Hardy to discuss our fiscal first quarter 2024 financial results.

Thanks, Gregg on Wednesday evening, we announced our fiscal first quarter 'twenty 'twenty four financial results representing the three months ended December 31 2023. Please note that all financial values are in U S dollars.

Hardik Mehta: On Wednesday evening, we announced our fiscal first quarter 2024 financial results, representing the three months ended December 31, 2023. Please note that all financial values are in U.S. dollars. Here are some key highlights.

Here are some key highlights.

Hardik Mehta: The company's customer base increased 56% year-over-year to 155,434 unique patients sold in Q1 2024, up from 99,420 unique patients in Q1 2023, compared to 146,350 UNIX setups and deliveries in Q1 2023. The company completed 215,370 unique setups and deliveries in Q1 2024, an increase of 47%. This includes 123,190 respiratory resupply sets deliveries for the three months ended December 31, 2023, compared to 69,482 for the three months ended December 31, 2022, an increase of 77%. Revenue for Fiscal Q1 2024 was $65.4 million compared to $40.8 million for Fiscal Q1 2023, representing a 60% increase in revenue year-over-year. Recurring revenue as of fiscal Q1 2024 continues to be strong and exceeds 83% of total revenue. Adjusted EBITDA for fiscal Q1 2024 was 15.3 million, or 23.5% margin, compared to adjusted EBITDA for fiscal Q1 2023 of 9 million at 22% margin, representing a 71% increase year-over-year.

The company's customer base increased 56%, yet or what are you are the 155434 unique patients. So in Q1 'twenty 'twenty four up from 99420 unique patients in Q1 'twenty three.

Compared to 146000 units 50 unique set ups and deliveries in Q1 2023.

We completed 215370 unique setups and deliveries in Q1, 'twenty 'twenty four an increase of 47%.

This includes 123190 respiratory grew supply setups. The reason for the three months ended December 31, when <unk> 23, compared to 69400 <unk>.

82 for the three months ended December 31, when you're 22, an increase of 77%.

Revenue for fiscal Q1, 'twenty 'twenty four.

$65 4 million compared to $40 8 million for fiscal Q1, 2022 representing a 60% increase in revenue year over year.

Recurring revenue as of fiscal Q1, 'twenty 'twenty four continues to be strong and exceeds 82% of total revenue.

Adjusted EBITDA for fiscal Q1, 'twenty 'twenty four was $15 3 million or 23, 5% margin compared to adjusted EBITDA for fiscal Q1, 2023, 9 million at 22% margin, representing a 71% increase year over year.

Hardik Mehta: Cash flow from continuing operations was $11.7 million for the three months ended December 31, 2023, compared to $4.8 million for the three months ended December 31, 2022, a substantial increase of 143%. For Fiscal Q1 2024, bad debt expense improved to 4.3% compared to 5.6% for Fiscal Q1 2022. This exemplifies the company's ability to scale without compromising billing and collection capabilities. Operating expense for the three months ended December 31, 2023 was 45.6% compared to 47.7% in the corresponding period in 2022.

Cash flow from continuing operations was $11 7 million for the three months ended December 31, 23, compared to $4 8 million for the three months ended December 31, 2022.

Abstention, an increase of 143%.

For fiscal Q1, 'twenty 'twenty four bad debt expense improved to four 3% compared to five 6% for fiscal Q1 2022.

Exemplifies the company's ability to scale without compromising billing and collection capabilities.

Operating expense for the three months ended December 31, 2023 was 45, 6% compared to 47, 7% in the corresponding period in 2020 two.

The company reported an $18 3 million of cash on hand at December 31, 2023, compared to $17 2 million as of September 30, when you're 23.

Hardik Mehta: The company reported $18.3 million of cash on hand at December 31, 2023 compared to $17.2 million as of September 30, 2023. The company had total credit availability of $41 million as of December 31, 2023, with $20 million available towards a revolving credit facility and $21 million available pursuant to a delayed draw-term loan facility. The company maintains a conservative balance sheet with net debt to adjust the EBITDA leverage of 1.3x. Our results in fiscal Q1 showed continued strength and demand across our product categories, and we are very proud to have produced another record-breaking quarter. We are witnessing the solid organic growth and consistency in margin that we try to achieve. For fiscal Q1, our revenue reached $65.4 million, and our adjusted EBITDA margin reached 23.5%.

The company had total credit over maybe a $41 million as of December 31.

With $20 million available towards the revolving credit facility and 21 million available pursuant to a delayed draw term loan facility.

The company maintains a conservative balance sheet with net debt to adjusted EBITDA leverage of one T X.

Although results in fiscal Q1 showed the continued strength in demand across our product categories and we are very proud to have produced another record breaking quarter.

We are witnessing the solid organic growth and consistency in margin that we've tried to watch.

For fiscal Q1, our revenue reached 65 4 million and adjusted EBITDA margin reached 23, 5% an exciting accomplishment underpinned by our diverse respiratory product suite and dedicate their service offerings.

Our success in driving operational efficiency and cost management has also played a pivotal role.

Looking at the annualized screen goes.

Order or run rate revenue now stands at an impressive $262 million coupled with the run rate adjusted EBITDA of $61 million.

Hardik Mehta: An exciting accomplishment underpinned by our diverse respiratory product suite and dedicated service offering. Our success in driving operational efficiency and cost management has also played a pivotal role. Looking at the annualized figures for the first quarter, our run rate revenue now stands at an impressive $252 million, coupled with a run rate adjusted EBITDA of $61 million.

We expect steady organic growth in fiscal 'twenty 'twenty four of 8% to 10% on an annual basis, which comes to volume growth as we continue to pick up market share.

We drive organic growth through our growing sales team the cross selling of products and continued expansion of the continuum of care in existing markets.

We continue to also improve net cash flow from operations as we push into fiscal 'twenty 'twenty four we saw our cashless shouldn't grow from $18 3 million in fiscal Q1 from $17 2 million in fiscal Q4, as a result of improved free cash flow.

Hardik Mehta: We expect steady organic growth in fiscal 2024 of 8 to 10% on an annual basis, which will come from volume growth as we continue to pick up market share. We drive organic growth through our growing sales team, the cross-selling of products, and continued expansion of the continuum of care in the Chisholm market. We continue to observe improved net cash flow from operations as we proceed to fiscal 2024. We saw our cash position grow from $18.3 million in fiscal Q1 to $17.2 million in fiscal Q4, as a result of improved free cash flow.

We continue to anticipate 6% to 8% cash flow from operations, falling capex and lease payments, but prior to any payments relating to debt service and acquisition costs payable.

We see this as our baseline scenario going ahead with the long term objective of improving this as we continue to expand our business. We are confident in our ability to grow our net cash flow inclusive of our capex needs.

The continued consistency of our revenue base is driven by our highly recurring revenue model, which accounted for more than 80% of our total revenue mix.

I don't know if this recurring stream is our resupply program, which has experienced significant expansion and now. So it was 172000 patients as of December 31, 2023, marking an impressive growth rate of 72%.

Hardik Mehta: We continue to anticipate 6-8% cash flow from operations following capex and or lease payments but prior to any payments relating to debt service and acquisition price payable. We see this as our baseline scenario going forward with the long-term objective of improving this as we continue to expand our business. We are confident in our ability to grow our net cash flow, inclusive of our capex. The continued consistency of our revenue base is driven by our highly recurring revenue model, which accounts for more than 83% of our total revenue.

The resupply program the wife's us a higher margin recurring revenue stream and plays a crucial role in extending the patient lifecycle with us.

Our robust balance sheet, either was 59 million available between cash and plenty of availability positions us exceptionally well to navigate through an environment of high interest rates and to strategically pursue both organic and strategic inorganic growth avenues.

Hardik Mehta: The cornerstone of this recurring stream is our resupply program, which has experienced significant expansion and now serves 172,000 patients as of December 31, 2022, marking an impressive growth rate of 72%. The resupply program provides us with a higher-margin recurring revenue stream and plays a crucial role in extending the patient life cycle with us. Our robust balance sheet, with over $59 million available between cash and credit availability, positions us exceptionally well to navigate through an environment of high interest rates and to strategically pursue both organic and strategic inorganic growth avenues. With a prudent leverage ratio of 1.3 times, we are strategically positioned to utilize a balanced mix of debt and cash, reflecting our commitment to a disciplined approach to growth. Maintaining our capital allocation discipline is crucial to our continued financial success, and we will continue to adhere to our strict approach.

With a prudent leverage ratio of one two times, we are strategically positioned to utilized a balanced mix of debt and cash reflecting our commitment to a disciplined approach to growth.

Maintaining our capital allocation discipline is crucial to our continued financial success and we will continue to adhere to our strict approach.

We are proud of our thoughtful acquisition approach and tie it into integration process that we have developed over many years.

Accessible integration of assets to date has been a major contributor to our sustained growth.

Coupled with our ongoing investments in organic growth, we have strengthened the company's position in the marketplace and have all the resources at our disposal to continue on our strategic path.

Thank you and with that update I'll turn the call back to Greg.

Thanks, Kartik. Our main objective is to deliver exceptional patient care and establish alliances with payors and referral sources in order to increase the number of patients we can assist and gain access to desired geographic areas, our expanded market share and overall reach allow us to take advantage of the economies.

Hardik Mehta: We are proud of our thoughtful acquisition approach and tried and true integration process that we have developed over many years. The successful integration of assets to date has been a major contributor to our sustained growth. Coupled with our ongoing investments in organic growth, we have strengthened the company's position in the marketplace and have all the resources at our disposal to continue on our strategic path. Thank you, and with that update, I'll turn the call back to you. Thanks, Hardik.

Scale within the business to drive margin growth and free cash flow generation, our sustained growth trajectory is a testament to the successful implementation of key facets of our expansion strategy to date, we have focus on Underpenetrated markets made accretive acquisitions committed to fueling our future.

Organic development and have significantly extended our health care network nationwide through strategic National insurance contracts regional insurance contracts and the expansion of continuum markets. Moreover, we are confident that our adaptive and seamlessly integrating new acquisitions is the driving force that further.

Greg Crawford: Our main objective is to deliver exceptional patient care and establish alliances with payers and referral sources in order to increase the number of patients we can assist and gain access to desired geographic areas. Our expanded market share and overall reach allow us to take advantage of the economies of scale within the business to drive margin growth and free cash flow generation. Our sustained growth trajectory is a testament to the successful implementation of key facets of our expansion strategy. To date, we have focused on under-penetrated markets, made accretive acquisitions, committed to fueling our future organic development, and have significantly extended our healthcare network nationwide through strategic national insurance contracts, regional insurance contracts, and the expansion of continuing markets. Moreover, we are confident that our adeptness in seamlessly integrating new acquisitions is a driving force that further propels our organic growth plan. We constantly look for ways to improve our operational efficiencies through automation, such as ordering systems, revenue cycle management, and our automated resupply program. These activities assist us to increase productivity and produce long-term value.

Propels our organic growth plans.

We constantly look for ways to improve our operational efficiencies through automation, such as ordering systems revenue cycle management in our automated resupply program. These activities assist us to increase productivity and produce long term value <unk>.

Investments in our scalable health care platform generates strong cash flow and margin expansion.

And looking at our core growth strategy, we have three foundational pillars, which include the following.

First is driving organic growth with the objective of 8% to 10% annually. We have continued growing our sales team, which is one of the core initiatives on this front. This is how we connect with key touch points like hospital networks Doctors' offices long term care facilities and rehab centers. Furthermore, while examining the operating environment.

The aging population and a noticeable rise in the number of Americans suffering from separate chronic illnesses are extremely favorable demographic trends for quit.

Greg Crawford: Investments in our scalable healthcare platform generate strong cash flow and margin expansion. In looking at our core growth strategy, we have three foundational pillars, which include the following. The first is driving organic growth with the objective of 8 to 10% annually.

Population ages, there is an increasing need for in home medical equipment and services, which presents a very viable long term growth opportunity.

Furthermore, a great deal of work is being done to ensure that patients receive care at home whenever possible.

Greg Crawford: We have continued growing our sales team, which is one of the core initiatives on this front. This is how we connect with key touch points like hospital networks, doctors' offices, long-term care facilities, and rehab. Furthermore, when examining the operating environment, the aging population and the noticeable rise in the number of Americans suffering from chronic illnesses are extremely favorable demographic trends for Quipt. As the population ages, there is an increasing need for in-home medical equipment and services, which presents a very viable long-term growth opportunity.

Second we are steadfast in our resolve to use technology to further enhance our operational efficiency and promote automation as we grow our company. Our primary focus is on optimizing our workflow procedures to generate tangible benefits and eliminate friction points for instance, enhanced procedures throughout our billing.

Collections Department of the company has led to a noticeable decrease in our bad debt expense and an increase in our net cash flow.

Furthermore, we are focused on the long term growth of E prescribing in our industry and have positioned ourselves well with our investments in this area in fiscal 2023 electronic prescribing is essential to the industry. As this technology can serve to boost productivity cut down on airs whose compliance and improve patient outcomes.

Greg Crawford: Furthermore, a great deal of work is being done to ensure that patients receive care at home whenever possible. Second, we are steadfast in our resolve to use technology to further enhance our operational efficiency and promote automation as we grow our company. Our primary focus is on optimizing our workflow procedures to generate tangible benefits and eliminate friction. For instance, enhanced procedures throughout our billing and collections department have led to a noticeable decrease in our bad debt expense and an increase in our net cash flow. Furthermore, we are focused on the long-term growth of e-prescribing in our industry and have positioned ourselves well with our investments in this area in fiscal 2020. Electronic prescribing is essential to the industry as this technology can serve to boost productivity, cut down on errors, boost compliance, and improve patient outcomes.

As of now less than 5% of our orders come from east prescribed and we anticipate this will grow significantly over time, given us an opportunity to improve the patient prescriber and provider experience by eliminating inefficiencies and reducing paperwork.

Our automated resupply platform is another excellent illustration of how we use technology that not only helps us achieve higher margins recurring revenue and organic growth, but it also offers us significant revenue synergies when we make strategic acquisitions the.

The resupply program also plays a crucial role in extending our patient lifecycle with us.

The third component of our growth strategy of scaling out through strategic accretive acquisitions in combination with our proven integration approach.

Since 2018, we have successfully integrated 19 acquisitions totaling more than $150 million in revenue.

We focus on respiratory businesses that are well suited to be successfully integrated into our scalable infrastructure. Our strategy is to expand both our payer base and our geographic reach into attractive regions because of our strong balance sheet, we will be able to seize opportunities to expand our patient base revenue EBITDA and.

Greg Crawford: As of now, less than 5% of our orders come from e-Prescribe, and we anticipate this will grow significantly over time, giving us an opportunity to improve the patient, prescriber, and provider experience by eliminating inefficiencies and reducing paperwork. Our automated resupply platform is another excellent illustration of how we use technology. It not only helps us achieve higher margins, recurring revenue, and organic growth, but it also offers us significant revenue synergies when we make strategic acquisitions. The resupply program also plays a crucial role in extending the patient lifecycle with us. The third component of our growth strategy is scaling up through strategic accretive acquisitions in combination with our proven integration approach. Since 2018, we have successfully integrated 19 acquisitions totaling more than $150 million in revenue. We focus on respiratory businesses that are well suited to be successfully integrated into our scalable infrastructure.

Graphic reach when they arise we will remain disciplined with our capital allocation approach and believe this to be one of the cornerstones of our ongoing financial success.

Despite quadrupling the size of the business since 2019 in terms of revenue and adjusted EBITDA as well as continuous growth of our key operating metrics. Our current public valuation represents one of the lowest multiples. We are traded at in at least five years given the continued strong performance of our business in real time and that disconnect.

We are actively engaging with investors from the United States and Canada to share our ongoing financial and operating achievements and discuss our long term growth objectives.

Greg Crawford: Our strategy is to expand both our payer base and our geographic reach into attractive regions. Because of our strong balance sheet, we will be able to seize opportunities to expand our patient base, revenue, EBITDA, and geographic reach when they arise. We will remain disciplined with our capital allocation approach and believe this to be one of the cornerstones of our ongoing financial success.

In calendar 2024, we have already attended two conferences completed two road shows and expect to be very active meeting with investors throughout 2024.

Our prudent capital management is reflected in our conservative balance sheet characterized by a modest leverage of one three times and bolstered by over $59 million and liquidity positions us advantageously to capitalize on both inorganic and organic growth opportunities throughout the fiscal 2024.

Greg Crawford: Despite quadrupling the size of the business since 2019 in terms of revenue and adjusted EBITDA, as well as continued growth of our key operating metrics, our current public valuation represents one of the lowest multiples we have traded at in at least five years. Given the continued strong performance of our business in real time and that disconnect, we are actively engaging with investors from the United States and Canada to share our ongoing financial and operating achievements and discuss our long-term growth objectives for calendar 2024. We have already attended two conferences, completed two roadshows, and expect to be very active meeting with investors throughout 2024. Our prudent capital management is reflected in our conservative balance sheet, characterized by a modest leverage of 1.3 times and bolstered by over $59 million in liquidity. This positions us advantageously to capitalize on both inorganic and organic growth opportunities throughout fiscal 2024. Given the recurring nature of our business model and strong financial foundation, we believe we are well insulated from any potential economic challenges that may arise. Our strategic approach, driven by our flexible capital structure, positions us well to continually seek ways to enhance shareholder value.

Given the recurring nature of our business model and strong financial Foundation. We believe we are well insulated from any potential economic challenges that may arise our strategic approach driven by our flexible capital structure positions us well to continually seek ways to enhance shareholder value.

Finally, I would like to take this chance to thank the entire quip team for their tireless work and our stakeholders for their continued support.

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, you will hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keith cause it.

Your question. Please press Star then two.

The first question comes from Richard close with Canaccord Genuity. Please go ahead.

Yeah. Thanks, congratulations on the quarter.

Yeah, Greg maybe if we can just start off with the disclosure on the investigation I'm not sure if you're able to say anything about that but.

If you are that would be helpful.

Yes sure. It is an ongoing inquiry in that but I think it would be important for everybody really to kind of understand and that that what if see ideas in that it's really a request for information and it's really kind of designed to gather facts in that that are necessary for regulatory authorities to make decisions and that weather.

Operator: Finally, I would like to take this chance to thank the entire Quipt team for their tireless work and our stakeholders for their continued support. 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.

<unk> that's occurred so.

And it's also you know the government has not reached a conclusion or anything like that but any wrongdoings occurred. So it's essentially a fact finding mission.

Richard Collamer Close: You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any. To withdraw your question, please press star, then two. Your first question comes from Richard Close on Canaccord Dinuity. Please go ahead. Yeah, thanks. Congratulations on the quarter.

We believe we have very strong internal controls on billing and compliance procedures in place and we're confident in our practices.

Okay. That's helpful is there any timeline that you.

You can share or just.

Is it open ended.

Yeah, its really kind of open ended and that I mean to kind of go through the inquiry of.

Greg Crawford: You know, Greg, maybe we can just start off with the disclosure about the investigation. I'm not sure if you're able to say anything about that, but if you are, that would be helpful. Yes, sure, it is an ongoing inquiry into that, but I think it would be important for everybody really to kind of understand what a CID is and that it's really a request for information, and it's really kind of designed to gather facts about that that are necessary for regulatory authorities to make decisions about whether a violation has occurred. And it's also, you know, the government has not reached a conclusion or anything like that that any wrongdoing occurred, so it's essentially a fact-finding mission.

To really figure out, even what and that exactly and that they're looking for so.

But even kind of even given a timeline and that is just really tough.

Okay. That's helpful with respect to resupply and E. Prescribing U E. Prescribing you mentioned less than 5% of orders come.

From that what is the what do you what do you do to essentially.

Ratchet up that.

I guess penetration.

Moved out from 5% up to the.

10, 15, 20% level.

Greg Crawford: You know, we believe we have very strong internal controls on billing and compliance procedures in place, and we're confident in our practices. Okay, that's helpful. Is there any timeline that you can share, or just give me?

Yeah. So the biggest challenges is really the adoption in that from the physician side.

That that's really been the adoption or the challenges is getting them to kind of change their habits and that so that's what we've been working with our sales team to do we've also we're in the process and that of.

Greg Crawford: Is it open-ended? Yeah, it's really kind of open-ended in that way. I mean, to kind of go through the inquiry process to really figure out even what in that exactly they're looking for. So, but even kind of even given a timeline, that is just really tough. Okay, that's helpful. With respect to resupply and e-prescribing, on the e-prescribing you mentioned, less than 5% of orders come from that. What do you do to essentially ratchet up that, I guess, penetration, move that from 5% up to the 10%, 15%, 20% level?

Getting set up with actually the company that we're partnered with and that we own a portion of or whatever we're going to start.

Sending out.

What's called like supplier initiated orders so.

So we have an initiative to do that to where we're gonna start sending out like a prescription renewals for supplies or oxygen whatever it may be.

As to why we're pushing these out to the doctor to kind of almost forced them Hey, you can log into the portal you can reveal all your prescriptions that are needed for your patience and with one click you can sign them. All if you approve them all and I think as they start to kind of see and that the ease of that and that you know the hope would be is that they would start.

Greg Crawford: Yeah, so the biggest challenge is really adoption from the physician side. That's really been the adoption, or the challenge is getting them to kind of change their habits and that. So that's what we've been working with our sales team to do. We're also in the process of getting set up with actually the company that we're partnered with and that we own a portion of or whatever, and we're going to start sending out what's called supplier initiated orders. So we have an initiative to do that where we're going to start sending out like our prescription renewals for supplies or oxygen, whatever it may be, to where we're pushing these out to the doctors to kind of, you know, almost force them to sign them all if they approve them all.

Ordering equipment and that.

Through the different portals and that we have available for Epo scribe.

That's actually one of the biggest challenges kind of on the front end.

When an order comes over and that it's that doesn't have the proper documentation to allow us to provide.

The equipment and the orders that do come over and that through the <unk> prescribed platforms and that that we have in place right now and that those orders are essentially able to be processed and almost delivered in that same day or something rather than multiple calls back and forth and that to the physician's office to get the proper documentation.

Okay. Thank you and then my final question is related to maybe the <unk>.

Greg Crawford: And I think as they start to kind of see and that the ease of that and that, you know, the hope would be is that they would start ordering equipment, and that, you know, through the different portals and that we have available for e-Prescribe. That's actually one of the biggest challenges kind of on the front end is when an order comes over and that it doesn't have the proper documentation to allow us to provide the equipment and the orders that do come over and that through the e-Prescribe platforms and that that we have in place right now and that those orders are essentially able to be processed and almost delivered in that same day or something rather than multiple calls back and forth and that to the physician's office to get the proper documentation.

Sales force in new market.

Opportunities can you give us an update on where you stand with respect to the size of the sales force and then you know.

Maybe any additional details in terms of expansion to new markets I guess within the 26 states that you currently serve.

Yeah, absolutely and that we kind of we reached our goal there and that that we were discussing there in 'twenty three in that so we do have another goal here in 'twenty four and place in that so we are in the process and that of getting additional sales reps onboard it most of what.

Greg Crawford: Okay, thank you. And then my final question is related to, maybe, the sales force and new market opportunities. Can you give us an update on where you stand with respect to the size of the sales force and then, you know, maybe any additional details in terms of expansion to new markets, I guess, within the 26 states that you currently serve? Yeah, absolutely. And that we kind of, we reached our goal there. And that's what we were discussing there at 23.

What we're seeing right now is really into a continuum areas and that in states that we're currently in that we feel there's opportunity.

For us to expand our services.

And then any new markets or.

Uh huh.

New markets, yes, but they're within states that we currently operate in.

Okay. So for example.

In Florida, we may be headed further south.

Okay. Thanks.

Sure.

The next question comes from Cooper Douglas The Decon Securities. Please go ahead.

Hi, good morning, everybody.

Greg Crawford: And that, so we do have another goal here in 24 in place for that. So we are in the process of getting additional sales reps onboarded. Most of what we're seeing right now is really into continuum areas, in states that we're currently in, where we feel there's opportunity for us to expand our service, and then any new markets.

I guess you got asked the question on the Doj So over let's move on to a couple of things first of all our revenue and EBITDA minus patient Capex thing from my notes it looks like patient Capex in the quarter was $7 3 million, which would imply EBITDAR minus patient capex of 8%.

Greg Crawford: New markets, yes, but they're within states that we currently operate in. So, for example, you know, in Florida, we may be headed further south. Okay, thanks. Sure. Your next question comes from Cooper Douglas. Please go ahead.

Or 12, 3% and eight.

<unk> 8 million or 12, 3% that's it looks like the highest that ratio has ever been is that sustainable as we head through 2024.

Yeah. Thanks, Doug.

I mean, you're right I mean that number has been the highest.

Cooper Douglas: I guess you got to ask the question about the DOJ, so I'll just move on to a couple of things. First of all, revenue... EBITDA minus patient capex, I think from the notes, looks like patient capex in the quarter was 7.3 million, which would imply EBITDA minus patient capex of 8% or 12.3%, 8 million or 12.3%. That looks like the highest that ratio has ever been.

It has ever been and we.

Oh I have always unfinished.

Analysts and investors to look at the company from a home on a rolling.

Rolling 12 month basis, and yeah, and if you look at that ratio are you seeing there hasn't been any.

Congrats and Chroman.

Even for Q4 and Q3, so I mean, why do we do encourage our investors.

Hardik Mehta: Is that sustainable as we head through 2024? Yeah, thanks Doug. I mean, you're right.

Investors and analysts to look at it from a rolling 12 month, so it evens out anytime.

Oh.

Timing.

Hardik Mehta: I mean, that number has been the highest that it has ever been. And, you know, we have always encouraged analysts and investors to look at the company on a rolling 12-month basis. And if you look at the ratio, you'll see that there has been continuous improvement even for Q4 and Q3. So, I mean, while we do encourage investors and analysts to look at it from a rolling 12-month perspective, so it evens out any kind of, you know, timing spikes and valleys, but it is suddenly heading in the right direction, and we are pleased that it is heading the way it is heading. And it comes with a lot of background work to translate into those numbers.

Spikes in wireless.

And there's just not only heading in the right direction and we are pleased that it's heading believes is headed.

A lot of megawatts.

Also adding to those numbers.

So to what degree is that expansion due to the resupply program.

Which obviously, there's no capex involved in that because you're just selling the equipment.

So patient.

Patients on the resupply program of 172000.

At December 31st what percentage of your <unk>.

Patients are eligible patients are on that program.

How many could you onboard.

From your existing client base in other words.

Yeah. So I guess when you say an active patient list I mean, there is somebody who has.

Picking up.

Whereas we see what our products almost in the last 12 months. So they are pretty much all of it.

Hardik Mehta: So, to what degree is that expansion... Due to the resupply program, which obviously there's no CapEx involved in that, because you're just selling the equipment, patients on the resupply program, 172,000 as of December 31st, what percentage of your patients, or eligible patients, are on that program? How many could you onboard from your existing client? Yes, so when we do say an active patient list, I mean that is somebody who has received a product from us in the last 12 months. So they are pretty much in our active pipeline to be solicited and to be reached out to in terms of whether they need a supplier, a refill on their supply, and stuff. So when we say that number, that is pretty much anybody who's taken something from us over the last 12 months. And some of them would have taken multiple orders, but they are still counted as one patient for the sake of clarity there. And to answer your first question, is an increase in sales revenue or the resupply program a contributor to an EB-DALS Medical Equipment Cap-Back number?

Active pipeline until we saw yesterday.

And to.

We reached out to in terms of whether they need a supplier Columbus applying stopped so they are.

When we say that nobody that has pretty much anybody who's taken something from us over the last 12 months or in some of them would have given multiple on its been basketball someday, there's one patient let's say.

And to answer your first question.

This is a.

An increase in the sales revenue or the resupply program.

To return to an EBITDA loss.

And then Capex number I certainly believe there is a mathematical portion to that right at the top line is increasing.

It doesn't come with an associated Capex. So yes, there's some contribution to that but I would say there's also a larger contribution towards all the initiatives that the company has been undertaking to result into more cash flow I think there's elements of that as well. So it's a combination of both.

Okay.

Just stick on the resupply program.

My calculations given the numbers you gave 83% of your revenue is recurring.

Hardik Mehta: I certainly believe there is a mathematical portion to that, right, the top line is increasing, but it doesn't commit an associated cap-back. So yes, there is some contribution to that, but I would say there is also a larger contribution towards all the initiatives that the company has been undertaking to result in more cash flow. I think there's elements of that as well, so it's a combination of both.

49% of that is from the resupply program, which all equates to about $26 million in change so the resupply program running about $106 million annualized.

Gross margin I think should be in the low forties.

It's accurate from other companies to disclose such information so.

Can you talk about the cash flow or free cash flow generated from just from the resupply program, which is obviously helping to.

Hardik Mehta: Okay, just to stick on the resupply program, then my calculations, given the numbers, gave 83% of your revenue is recurring, 49% of that is from the resupply program, which all equates to about $26 million and change. So the resupply program is running about $106 million annualized. Gross margin, I think, should be in the low 40s if it's accurate for other companies to disclose such information.

Pay for some of the patient cap ex that you do.

Yes.

Okay, Yes, that's suddenly.

Everything you said is kind of all within an hour or ballpark range of real numbers right.

But yeah, that's all already indicating about the proportion of the revenues where they know it.

So and then coming down to a.

But he stopped by program that is correct. If maybe you can still play program does have its own variable cost out.

Hardik Mehta: So can you talk about the cash flow or free cash flow generated just from the resupply program, which is obviously helping to..., you know, pay for some of the patient contact? Yes, everything you said is kind of all within our ballpark range of real numbers, right? But yeah, they are kind of very indicative of the proportion of the revenues within our portfolio. And then coming down to the resupply program, that is correct. The resupply program does have its own variable cost, which may not be a factor in some of our rental business.

It does have its own.

Variable cost, which which may not be a factor in some of our or a rental and rental business.

The hospital, we talked to the stations on a timely basis and stuff like that but net of net often that they do have a much higher.

Cash flow.

But they suddenly actually the cash flow that comes from many many desktop I think that's a way of.

Looking at it.

So well see.

Hardik Mehta: You know, there is a cost to reach out to these patients on a timely basis and stuff like that. But net of net of net, they do have a much higher cash flow, but they certainly exceed the cash flow that comes from medical equipment less than that, if that's a way of looking at it. So I don't know what the question was, but the question is, does it have more of a cash flow than some of our rental businesses? If that's all we did in a silo, the answer would be yes. Obviously, the numbers are consolidated because there are other elements of the business that you have to operate, which is kind of serving the equals of some of the patients that we have. Okay, thank you very much, Ernie. Yep. The next question comes from Michael Freeman with Freeman James. Go ahead. Hey, good morning, Greg. Good morning, Carter.

I didn't know what was the question, but the question. If the question is does it have more cash flow.

When some of our rental business.

That's all we did in a silo the answer would be yes, obviously the numbers are consolidated because there are other elements of the business that you have to operate a which is a which is not showing that you're supposed to come up with patients that we have.

Okay. Thanks.

Thanks, very much Eric.

Yeah.

The next question comes from Michael Freeman with Raymond James. Please go ahead.

Hey, good morning, Greg Good morning, Kartik, congratulations on a very strong quarter I'm going to I'm going to ask you. Another question on the Doj investigation.

<unk>.

I'm just curious I guess.

Michael Freeman: Congratulations on a very strong quarter. I'm going to ask another question about the DOJ investigation. I'm curious, I guess. As much as you can tell us.

As much as you can tell us so I wonder what.

If you could describe what instigated this investigation and and if this.

Greg Crawford: So I wonder if you could describe what instigated this investigation and, if this was presented to you, the number of cases that are in question or the number of false claims that are in question by the DOJ. Yeah, it's, it's, this is Greg. It's hard for us to determine at this point in time and that which prompted the CID. I mean, they're looking at billing claims a lot of times, you know, kind of based off things that you file and things like that. So it's really kind of a broad spectrum in that that they could really go into. So as far as the second part of your question in that, I think you would ask about, You can repeat that. I'm asking about the number of claims. I guess I'm trying to get to the potential, total charge that could be brought against you if there is any wrongdoing found.

It was presented to you the number the number of cases that are in question are the number of false claims that are in question by the Doj.

Okay.

Yeah. It's it's this is Greg it's hard for us to determine at this point in time and that of what prompted the C. I D.

I, there's there's many facets of that could be I mean, there they're looking at billing claims a lot of times.

Yeah, you know kind of based off things that you file and things like that so it's really kind of a broad spectrum and that that they can really go into so.

As far as the second part of your question in that I think you would ask about it.

If you could repeat that.

Hi, I'm asking about the number of claims I guess I'm I guess I'm I'm, just trying to get to the potential.

Total, okay I'm sorry.

We're not against it.

Any wrongdoing that yeah, yeah, I get it I get it I E. You know we don't know what that is there's nothing right now in that with it that would tell us that theres, even anything that's probable or estimate able and that for.

Greg Crawford: You know, we don't know what that is. There's nothing, you know, right now and with it that would tell us that there's even anything that's probable or estimable in that for what it is, because it's still kind of in a fact finding phase right now, and so they haven't concluded or anything like that that there was any wrongdoing or anything. Okay. All right. That's helpful. Thanks for your response. Now...

What it is because it is still kind of in a fact finding.

<unk> for right now and that so they haven't concluded or anything like that that you know there.

There was any wrongdoing or anything.

Okay, Alright, that's helpful. Thanks for thanks for about a year or so.

Now.

Hardik Mehta: I have your question. Now, let's, I wonder if you could describe your inorganic pipeline and potentially give us an idea of the value of near-term deals that might be, you know, approaching the finish line or exclusivity within that, three months maybe, and then maybe a longer-term outlook on that. Yes, thanks. This is Hardik.

Half of your question Noah, Let's I Wonder if you could describe.

Your your our inorganic pipeline.

And potentially give us an idea of the value of of near term deals.

That might be approaching finish line or exclusivity within the next three months, maybe and then maybe a longer term outlook on that pipeline.

Yes.

Hardik Mehta: I mean, we certainly don't have a number that we would be comfortable disclosing in terms of, you know, which ones are closer to the finish line versus which are in the more pre-LOI phase. The LOI phase is kind of how we look at it internally. What we can say is we continue to selectively look at the deals that, you know, get presented to us or the ones that we can solicit on our own. And they are at various stages, you know, one closer, more closer than the other. You know, we are, as mentioned in our prepared remarks, we are kind of disciplined about our approach to the M&A, and we would continue to do that. I mean, there is no particular concern that we have when it comes to opportunities to continue to do the M&A portion. That is a steady flow of deals coming into the market that we are able to develop on our own. All those metrics continue to be pretty consistent with what we have seen in, you know, 2022 and 2023.

Thanks This is jorge.

Hum.

We certainly don't have a number that you would be comfortable disclosing it themselves, we know which ones are closer to the finish line losses, which are filing tomorrow.

The LOI phase satellite favorite sort of how we look at it internally.

We can say is we continue to selectively look at the deals.

You know that's presented to US are the ones that you cannot solve it on our own and they are at radio stages, one closeout of more closer than the other you know we we are as mentioning.

My remarks, we are disciplined about our approach on the M&A and we looked thinking you can do that.

Uh huh.

No.

Thank you Philip and some that we had when it comes to a portion of it is to continue to do the M&A.

A portion of that is.

A steady flow of deals.

We went to the market that we are able to develop on our own all of those metrics continues to be pretty well.

Consistent with what we have seen in.

Or anything you're doing what do you think it can maybe I know I'm not answering the question, but I think again I don't want to reveal the jumbos flavor.

Hardik Mehta: Maybe, I know I'm not answering the question as asked, but I think I do want to give you the general flavor of how we see it on our end. All right, that's helpful. And if I can slide in on more, thank you for the commentary on GLP-1s in the prepared remarks, Greg. I'm curious if there's any internal strategy work on sort of the medium and long term outlook. Um, addressing potential changes in CPAP utilization and even potential strategies toward CPAP and GLP-1 combination therapy programs.

How how we see it on our own.

Alright, that's helpful and if I could cite alone more.

Thank you for the commentary on the GOP ones in there.

Prepared remarks, Greg.

And I'm curious if there's if you've done any internal strategy work on.

Sort of the medium and long term outlook.

Dressing potential changes in C pap utilization and even potential strategies toward.

CPAP and <unk>, one combination therapy programs like how good how good clipped them proactively.

Greg Crawford: Like, how could Quipt proactively participate in those sorts of things, Yes, absolutely. And that those are things that we're having internal discussions on now. It's just all different ways in that we can continue to do that to serve our patients and that and kind of grow that part of our business. That is, you know, certainly a stronghold for us, and we expect that to kind of continue well into the future. If anything, the most recent study that was brought out by one of the largest manufacturers of sleep devices and that was, you know, the correlation and that was kind of surprising, I guess you could say, was that patients who were utilizing GLP-1s were more likely and more compliant in using that on their CPAP or BiPAP device So I think that would tell us that people are becoming more health conscious and, you know, they want to improve all facets of their lives, and that includes sleeping better, which leads to a lot of other health conditions as well. Thanks very much. I'll get back in the queue.

Hum.

Participate in those sort of combinations.

Yes, absolutely and that those are things that are that were having internal discussions on now is it its just all different ways and that that we can continue in that too.

Serve our patients in that and kind of grow that part of our business and that that is you know.

Certainly a stronghold for us and we expect that to kind of continue well into the future if anything with the most recent study that was brought out by one of our largest manufacturers up sleep devices in that as well.

The correlation and that was kind of surprising I guess, you could say was that the patients and that's it we're utilizing G. L. P. Once and that will more likely and more compliant and that on their C.

CPAP or bipap device and they ordered supplies more frequently so I think that would tell us that people get more health conscious and you know they want to improve all facets of their life in that including sleeping better which leads to a lot of other health conditions as we know.

Great. Thanks, very much I'll get back in the queue.

Greg Crawford: All right, thank you. This next question comes from Julian. Darryl Stiefel, please go ahead.

Alright, thank you.

The next question comes from Julian hung stay from Stifel. Please go ahead.

Julian: Hi, this is Julian sub-in for Justin today. We've noticed from looking at some of the insurance companies that they've noted that there's higher utilization of Medicare Advantage, and they expect this to continue for the rest of 2024. We were wondering if you'd seen this, and what are maybe some of the implications for the company going forward? Yeah, this is Greg.

Hi, This is Julian subbing in for Justin today.

We've noticed from a looking at some of the insurance companies that they've noted that there's higher utilization of Medicare advantage and they expect us to continue for the rest of 'twenty 'twenty four.

We were wondering if you are seeing seen this.

And what are maybe some of the implications for the company going forward.

Yeah. This is Greg Thanks, Julien that's actually a really good question and that because that is something that we've monitored and internally and that as far as looking for patients that have converted over to a Medicare advantage plan in that from traditional Medicare and thus far this year most of that happens in that and in the first part.

Greg Crawford: Thanks, Julian. That's actually a really good question to that, because that is something that we've monitored internally as far as looking for patients that have converted over to a Medicare Advantage plan from traditional Medicare. And thus far this year, most of that happens in that in the first part of the year here, we haven't seen anything that's been materially different from prior years. There are certain parts of the country where you could say there are more patients slash customers that have converted over to Medicare Advantage plans, but as a whole, throughout the entire organization, we haven't seen any material change.

The year here.

We haven't seen anything that's been material different than prior years, there are certain parts of the country and that to where you could say there are more patients slash customers that have converted over to Medicare advantage plans, but as a whole and that throughout the entire organization and that we haven't seen any more.

Real change.

Okay, and just do a question on the investigative demand have you seen any similar cases across the industry and if so like what's been the result in those cases.

Greg Crawford: Okay. And just a question on the investigative demand. Have you seen any similar cases across the industry? And if so, what was the result in those cases?

Greg Crawford: Yeah, absolutely. I mean, it's not uncommon for a DMV company or any health care company within the U.S. to see these types of inquiries, especially larger companies. There's plenty of public information out there about that to kind of see these. I think each one probably takes a path of its own.

Yeah, absolutely and that I mean, it's not uncommon in that for a D any company or any health care company in that within the U S to see these types of inquiries.

Especially larger companies, there's plenty of public information out there and that to kind of see these I I think each one probably takes a.

Half of its own and I think it's really important in that too.

Greg Crawford: And I think, you know, it's really important in that to, you know, just make sure the government has not concluded, you know, any wrongdoing or anything. And even if there was, you still have the opportunity in that to come up with a mutual resolution in that. So and then even if that can't be reached in that, we also have the option to appeal. So anything you would likely find out there, if you just Google the CID and DMV company related, you're probably going to find more settlement-type cases there than you are going to find ones that had maybe been resolved or they came to a conclusion, and nothing was done in that.

You know two to just the government has not concluded any wrongdoing or anything and even if there was in that you know you still have the opportunity and that to come up with a mutual resolution and that so and then even if that can't be reached and that we also have the option to appeal. So anything you would.

Likely find out there if you just Google to see I D and D&B company related you're probably gonna find more settlement type cases.

Cases. There then you are going to find ones that were had had maybe been resolved or they came to a.

Conclusion, nothing was done at that so once again and that we feel very very confident in that and our internal controls in our billing and compliance.

Greg Crawford: So once again, we feel very, very confident in our internal controls and our billing and compliance, so we're confident in our practice. Okay, thank you so much for taking my question. Sure. The question comes from Stefan. Echelon, Capri.

So we're confident in our practices.

Okay. Thank you so much for taking my questions.

Sure.

The next question comes from Stefan Quenneville with Echelon capital market. Please go ahead.

Stefan: Go ahead. Hi guys, congrats on the quarter and thanks for taking my question. I wanted to also again probe a bit more on this Department of Justice and just maybe get you to help me frame this a bit better. I have looked at a number of those cases and settlements, and I've got a bunch here in front of me. And what I'm seeing is that these things typically take a number of years to occur. And even with much larger companies than you, you know, we've seen settlements in the low to mid millions of dollars. I think using the 2022 overall numbers, the average settlement for one of these cases is about $6 million.

Hi, guys congrats on a call and thanks for taking my question.

I wanted to just also again, probably the big one is the department of Justice and just.

Maybe get you to help me frame this a bit better I have looked at a number of those those cases and settlements and I.

A bunch of it here in front of me and what I'm seeing are largely is that these things take a typically a number of years to occur.

And even with much larger companies than you you know we've seen settlements in the low to mid millions of dollars.

I think he is in the 2022 overall numbers.

The average settlement for one of these cases is about $6 million.

Greg Crawford: Is that a fair way to frame sort of a worst-case scenario? Obviously, like, you know, that in these cases, something, some wrongdoing did occur, or allegedly occurred. You know, is that a reasonable way to look at this? Like, it'll take a couple of years for this to be settled, or not? Maybe help me understand, like, the parameters.

Is that a fair way to frame sort of a worst case scenario, obviously like you know that in these cases something.

Hmm wrongdoing did occur obviously.

Allegedly occurred.

Is that a reasonable way to look at this it will take a couple of years for this to be settled or.

Yeah, maybe help me understand what are the.

The parameters.

Greg Crawford: Yeah, well, based on the information that's been provided and by our council and that, that could be a good judgment in that, but also, at the same time, I mean, these cases, once again, end up taking legs of their own and going down different paths in that, you know, at this point, we don't believe that there's been any wrongdoing. And once again, we're very confident in our billing practices for that. So it's just really tough to say whether or not it's going to take years for that. I guess if they continue to investigate, yes, you know, it could take that long.

Yeah.

Yeah, well I think based on our information that's been provided and that by our council and that Oh.

That could be a good judgment of that but also at the same time and that Ah I mean these cases once again ended up taking legs of their own and go down different paths and that you know at this point and that we don't believe in that there's been any wrongdoing and once again, we're very confident in our billing practices in that so.

It's it's just really tough to say, whether or not it's going to take years and that I guess, if they continue to investigate yes, you know.

It could take that long.

Okay.

Hardik Mehta: I'll just add to what Greg said. I think you're right in terms of what you see in the public information; we're only seeing, for the most part, information around companies that came to some kind of resolution or some kind of negative outcome from that. What you're not seeing is the phase that we are in, right; this is a predetermination phase. So we don't, there are probably hundreds of days that result in one or two that actually reach a settlement phase and the numbers that you kind of presented, right, and that there's not much of a public information on how many investigations actually led to some kind of a settlement or a number out there.

I'll just add to upgrade said I think you're right in terms of what you see in the public public information the only thing for the most part information around companies that came to some kind of a resolution or some kind of a negative outcome from that what you're not seeing is the place that we got in right. This is a.

Pre determination phase. So we built that probably would be done noise out of that 112 days, resulting one or two.

I can do it yourself, so I don't want to say than the numbers that you presented and that they.

There's not much of a public information how many investigations actually led to some kind of.

Hardik Mehta: So I just want to point that out; we are still in that phase. Yeah, you know, I said, obviously, like, this is more of a worst-case scenario type thing. So I wasn't trying to imply that that was going to occur.

A settlement or a number out there. So I just wanted to point that out we are still in that space.

Yeah, you know I I said, obviously this is more of a worst case scenario type thing so I wasn't trying to imply.

Implied that that was going to occur.

Stefan: I guess I have two sort of follow-up questions. One is, what kind of disclosure should we expect about this going forward? Is it going to be on a sort of quarterly basis? We'll be hearing updates on this, or And then finally, maybe tied into this, you know, with this going on, is this in any way impacting you guys operationally in terms of looking for different M&A opportunities or things of that nature? Like, is this having an operational impact at this point?

I guess I have two sort of follow up questions. One is what kind of disclosure should we expect about this going forward is it is going to be honest sort of quarterly basis will be.

Any updates.

On this or.

And then finally, maybe.

Cut into this they don't.

With this going on is this in any way impacting you guys operationally in terms of looking for different M&A opportunities I think of that nature.

Like he is having an operational impact at this point or is it still sort of early days. He is monitoring it as part of normal so sort of legal issues that pop up overtime.

Greg Crawford: Or is it still sort of early days, and you're just monitoring it as part of the normal sort of legal issues that pop up over time? Yeah, could you repeat the first part of the question? But the first part is just sort of.

Yeah.

Yeah could you repeat the first part of the question.

But the first part is just sort of.

Greg Crawford: When would we expect, you know, updates on this? Should we expect, like, ongoing quarterly updates on what's occurring with this when you report your quarterly results? Is that reasonable? Okay. I got it. Yeah. Yeah. Yeah. Absolutely. And that, I mean, we will report on that, whether it's on a quarterly basis or things become material in that. We've always been very transparent and disclosing in that different regulatory issues that, you know, do come up in the normal, ordinary course, and this is a perfect example. And we will continue to update you on that timely basis, whether that's quarterly or as, you know, something would happen, it would be done through a PR. As far as running the business, you know, no.

When would we expect updates on that.

Should we expect a like ongoing quarterly updates on whats occurring with it when you report your quarters is that okay got it yeah, yeah, yeah, yeah, absolutely in that I mean, we what we report and that whether it's on a quarterly basis or things become material and that we've been always been very transparent and disclosing that different.

Regulatory item.

Issues that do come up the normal ordinary course, and this is a perfect example, and we will continue to update timely and that whether that's quarterly or as you know if something would happen it would be done through a PR or something.

As far as running the business you know and that I mean, we are heads down here.

Greg Crawford: In that, I mean, we are heads down here. We are focused on our strategic plan and that of growing both organically and through inorganic opportunities. And, you know, we're not going to deviate from that. We've got a very, very strong balance sheet to go out on and execute on that.

We're focused on our strategic plan and that are growing both organic and through inorganic opportunities are and you know we're not going to deviate from that we've got a very very strong balance sheet to go out on and executing that and once again, we're very confident in our billing and compliance procedures and that that we have in place.

Greg Crawford: And once again, we're very confident in our billing and compliance procedures and that we have in place. Okay, great. That's it for me.

Okay, Great. That's it for me thanks, guys.

Operator: Thanks, guys. Thank you. This concludes the question and answer session. I would like to turn the conference back over to Mr. Crawford for any closing remarks. All right.

Thank you.

This concludes the question and answer session I would like to turn the conference back over to Mr. Crawford for any closing remarks. Please go ahead.

Greg Crawford: Thank you, operator, and thank you all for your participation today. As always, you can find us on the web at www.quipthomemedical.com, where we will be posting a transcript of this call and our updated investor deck. Thank you, and have a great day. This concludes today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.

Alright, Thank you operator, and thank you all for your participation today as always you can find it on the web at Www quipped home medical Dot Com, where we will be posting a transcript of this call.

And our updated investor deck, Thank you and have a great day.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Okay.

Okay.

Yes.

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