Q3 2025 Quipt Home Medical Corp Earnings Call

Speaker #3: Thank you for standing by. This is the conference operator. Welcome to the third quarter 2025 earnings results conference call for Qipt Home Medical Corp.

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the third quarter 2025 earnings results conference call for Quipt Home Medical Corp. 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 one on your telephone keypad. Should you 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 the company's results news release. The company's actual performance could differ materially from these statements.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: We remind you that the remarks today will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please see the Reader Advisory at the bottom of the company's results news release.

Speaker #3: The company's actual performance could differ materially from these statements. At this point, I'd like to turn the conference over to Chairman and Chief Executive Officer Greg Crawford.

Conference Operator: At this point, I would like to turn the conference over to Chairman and Chief Executive Officer Greg Crawford.

Speaker #4: Thank you, Operator, and thank you to everyone joining us today. I'm Greg Crawford, Chairman and CEO of Qipt Home Medical. I'm pleased to be joined today by our Chief Financial Officer, Hardik Mehta, and our Chief Accounting Officer, Tom Rarick.

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

Speaker #4: Let me begin by expressing our appreciation to the entire Qipt team for their continued execution and commitment, and to our shareholders for their support.

Speaker #4: Qipt Home Medical is a healthcare services company delivering a comprehensive range of home medical equipment and services to patients across the United States. We operate with a mission to deliver high-quality, technology-enabled care that allows patients to remain in the comfort of their homes with a particular focus on chronic respiratory conditions.

Speaker #4: As we look at the improved results for the physical third quarter, we saw clear revenue stabilization across the business and a return to positive organic growth driven by strength in our core therapies, consistent activity in our sleep resupply channel after the seasonal weakness experienced in physical Q2, and a return to more balanced overall referral volumes.

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

Speaker #4: We believe the most difficult period is behind us, and our operating engine is well-positioned to scale again. During the quarter, we continued to demonstrate a strong and consistent adjusted EBITDA margin performance coming in at 23.5%.

Speaker #4: Despite a dynamic environment, we have delivered steady margin results quarter after quarter, a direct outcome of the structural improvements we began implementing in late 2024.

Speaker #4: Subsequent to quarter-end, we made significant strategic progress on our healthcare system expansion strategy. Following the end of the quarter, we announced a milestone transaction with Ballard Health, a prominent integrated health system comprised of 20 hospitals serving 29 counties of the Appalachian Highlands in Tennessee, Virginia, North Carolina, and Kentucky.

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

Speaker #4: This transaction embeds Qipt directly into Ballard's discharge pathway, positioning us as their preferred provider across their network. While it's early, the operational momentum coming out of the deal has been promising, and it validates our broader strategy to scale through value-based relationships.

Speaker #4: Then, earlier this morning, we announced a definitive agreement to form a joint venture anchored by three powerhouse health systems: Henry Ford Health, McLaren Health, and Blanchard Valley Health.

Speaker #4: These partnerships embed us into the discharge process of a significant number of hospitals and affiliated care sites, giving us the ability to serve patients at the exact point their care transitions to the home.

Gregory Crawford: These partnerships embed us into the discharge process of a significant number of hospitals and affiliated care sites, giving us the ability to serve patients at the exact point their care transitions to the home. That is an incredibly valuable position in today's healthcare environment. This joint venture strengthens our Midwest presence and formally launches us into Michigan, one of the most important markets in our expansion strategy. Just as important, it creates a scalable blueprint for future health system partnerships across the country. Hart Medical Equipment's two-decade reputation for clinical excellence and their alignment with health system care coordination perfectly complement our mission of delivering high-quality respiratory and home medical equipment solutions nationwide. Hart Medical Equipment has built a best-in-class reputation for quality patient care and operational excellence, with over 60,000 patients served monthly and direct alliances with some of the Midwest's largest integrated health systems.

Speaker #4: That's an incredibly valuable position in today's healthcare environment. This joint venture strengthens our Midwest presence and formerly launches us into Michigan, one of the most important markets in our expansion strategy.

Speaker #4: Just as important, it creates a scalable blueprint for future health system partnerships across the country. Parts two decade reputation for clinical excellence and their alignment with health system care coordination perfectly complement our mission of delivering high-quality, respiratory and home medical equipment solutions nationwide.

Speaker #4: Part has built a best-in-class reputation for quality patient care and operational excellence, with over 60,000 patients served monthly and direct alliances with some of the Midwest's largest integrated health systems.

Speaker #4: These partnerships are deeply embedded in Hardt's operation and hospital discharge processes, providing a steady and reliable flow of patient referrals. This joint venture with three major health systems marks Qipt's formal entry into Michigan, extending our geographic footprint into one of the Midwest's most attractive and strategically important healthcare markets.

Gregory Crawford: These partnerships are deeply embedded in Hart Medical Equipment's operation and hospital discharge processes, providing a steady and reliable flow of patient referrals. This joint venture with three major health systems marks Quipt Home Medical Corp.'s formal entry into Michigan, extending our geographic footprint into one of the Midwest's most attractive and strategically important healthcare markets. Moreover, the transaction expands us in Ohio and surrounding markets. This joint venture exemplifies our strategy of scaling through healthcare system integration, and we see tremendous opportunity to leverage Hart Medical Equipment's infrastructure. With its 29 branch locations, highly experienced management team, and a strong cultural alignment with Quipt Home Medical Corp., Hart Medical Equipment will serve as a cornerstone in our evolution as a national leader in the respiratory-focused home medical equipment.

Speaker #4: Moreover, the transaction expands us in Ohio and surrounding markets. This joint venture exemplifies our strategy of scaling through healthcare system integration and we see tremendous opportunity to leverage Hardt's infrastructure, with its 29 branch locations, highly experienced management team, and a strong cultural alignment with Qipt.

Speaker #4: Hardt will serve as a cornerstone in our evolution as a national leader in the respiratory-focused home medical equipment. We have entered the second half of 2025 with confidence, backed by the firming of our operating metrics, recent healthcare system transactions, and a clear roadmap for growth.

Gregory Crawford: We have entered the second half of 2025 with confidence, backed by the firming of our operating metrics, recent healthcare system transaction, and a clear roadmap for growth. Revenue stabilization is evident across our business, underpinned by resilient demand in our core rental segment and resupply program, which remains the foundation of our recurring revenue profile. As the environment normalizes, we are seeing referral activity return to more predictable patterns and setup activity rise accordingly. Importantly, our product portfolio has proven durable. Demand for our core offerings, particularly oxygen, sleep therapy, ventilator services, and sleep resupply, continues to be stable and well-diversified. Our infrastructure is purpose-built for scalability and efficiency, allowing us to support a growing patient population while preserving operational leverage. The structural improvements we implemented in late 2024 are yielding results.

Speaker #4: Revenue stabilization is evident across our business, underpinned by resilient demand in our core rental segment and resupply program, which remains the foundation of our recurring revenue profile.

Speaker #4: As the environment normalizes, we are seeing referral activity return to more predictable patterns and setup activity rise accordingly. Importantly, our product portfolio has proven durable; demand for our core offerings, particularly oxygen, sleep therapy, ventilator services, and sleep resupply, continues to be stable and well-diversified.

Speaker #4: Our infrastructure is purpose-built for scalability and efficiency, allowing us to support a growing patient population while preserving operational leverage. The structural improvements we implemented in late 2024 are yielding results.

Speaker #4: We are now positioned with a more agile cost structure, a reinvigorated sales effort, and a broader base of healthcare relationships. These factors reinforce our confidence in delivering consistent operating performance.

Gregory Crawford: We are now positioned with a more agile cost structure, a reinvigorated sales effort, and a broader base of healthcare relationships. These factors reinforce our confidence in delivering consistent operating performance. Before I turn the call over to Hardik, I want to reiterate that the board and management remain laser-focused on making thoughtful decisions that we believe are in the best interests of maximizing long-term shareholder value. With that, I will turn the call over to Hardik to walk through our fiscal third quarter 2025 financial results.

Speaker #4: Before I turn the call over to Hardik, I want to reiterate that the board and management remain laser-focused on making thoughtful decisions that we believe are in the best interests of maximizing long-term shareholder value.

Speaker #4: With that, I'll turn the call over to Hardik to walk through our physical third quarter 2025 financial results.

Speaker #5: Thanks, Greg. On Monday evening, we announced our fiscal third quarter 2025 financial results for the three and nine months ended June 30, 2025. Please note that all financial values are in US dollars and are reported under GAAP accounting principles, with comparison periods also restated under GAAP for consistency.

Hardik Mehta: Thanks, Greg. On Monday evening, we announced our fiscal third quarter 2025 financial results for the three and nine months ended June 30, 2025. Please note that all financial values are in U.S. dollars and are reported under GAAP accounting principles, with comparison periods also restated under GAAP for consistency. This quarter marks a return to positive organic growth and signals clear revenue stabilization across our business. Here are the key highlights from the quarter. The company's customer base decreased modestly, serving 151,000 unique patients as of June 30, 2025, compared to 153,000 unique patients as of June 30, 2024. The company completed 210,000 unique setups deliveries in Q3 2025, compared to 216,000 in Q3 2024. Respiratory resupply setups deliveries totaled 119,000 in Q3 2025, a change from 120,000 in the prior year quarter.

Speaker #5: This quarter marks a return to positive organic growth and signals clear revenue stabilization across our business. Here are the key highlights from the quarter.

Speaker #5: The company's customer base decreased modestly, serving 151,000 unique patients as of June 30, 2025, compared to 153,000 unique patients as of June 30, 2024.

Speaker #5: The company completed 210,000 unique setups, deliveries, in Q3, 2025, compared to 216,000 in Q3, 2024. Respiratory resupply setups, deliveries, total 119,000 in Q3, 2025, a change from 120,000 in the prior year quarter.

Speaker #5: Revenue for fiscal Q3, 2025 came in at $58.3 million, compared to $60.8 million in Q3, 2024, a decrease of 4.1%. This compares to revenue of $57.4 million in Q2, 2025.

Hardik Mehta: Revenue for fiscal Q3 2025 came in at $58.3 million, compared to $60.8 million in Q3 2024, a decrease of 4.1%. This compares to revenue of $57.4 million in Q2 2025, reflecting a return to positive quarter-over-quarter organic growth of 1.6%. Revenue for nine months ended June 30, 2025 was $177 million, compared to $184.6 million for the nine months ended June 30, 2024, a decrease of 4.1%. Recurring revenue for Q3 2025 continues to be strong at 81% of total revenue. Adjusted EBITDA for Q3 2025 was $13.7 million or 23.5% of revenue, compared to $14.2 million or 23.4% of revenue for Q3 2024, representing a 3.6% decrease. Adjusted EBITDA of $41 million or 23.2% of revenue for the nine months ended June 30, 2025, compared to $44 million or 24% of revenue for nine months ended June 30, 2024, a decrease of 7.7%.

Speaker #5: Reflecting a return to positive quarter-over-quarter organic growth of 1.6%. Revenue for the nine months ended June 30, 2025, was $177 million, compared to $184.6 million for the nine months ended June 30, 2024, a decrease of 4.1%.

Speaker #5: Recurring revenue for Q3, 2025 continues to be strong at 81% of total revenue. Adjusted EBITDA for Q3, 2025 was $13.7 million, or 23.5% of revenue, compared to $14.2 million, or 23.4% of revenue for Q3, 2024.

Speaker #5: Representing a 3.6% decrease, adjusted EBITDA was $41 million, or 23.2% of revenue, for the nine months ended June 30, 2025, compared to $44 million, or 24% of revenue, for the nine months ended June 30, 2024, a decrease of 7.7%.

Speaker #5: Net loss for Q3, 2025 was $3 million, or 0.07 for diluted share, compared to $1.6 million loss, or 0.04 for diluted share for Q3, 2024.

Hardik Mehta: Net loss for Q3 2025 was $3 million or $0.07 per diluted share, compared to $1.6 million loss or $0.04 per diluted share for Q3 2024. Cash flow from operations was $27.9 million for the nine months ended June 30, 2025, compared to $25.4 million for the nine months ended June 30, 2024. The company reported $11.3 million of cash on hand as of June 30, 2025, as compared to $17.1 million of cash on hand as of March 31, 2025. Approximately $5 million of change in cash compared to the previous quarter was used to pay down the line of credit balance. Total credit availability was $35.3 million as of June 30, 2025, with $14.3 million available on a revolving credit facility and $21 million available pursuant to the delayed draw download facility.

Speaker #5: Cash flow from operations was $27.9 million, for the nine months ended June 30, 2025, compared to $25.4 million, for the nine months ended June 30, 2024.

Speaker #5: The company reported $11.3 million in cash on hand as of June 30, 2025, compared to $17.1 million in cash on hand as of March 31, 2025.

Speaker #5: Approximately $5 million of change in cash, compared to the previous quarter, was used to pay down the line of credit balance. Total credit availability was $35.3 million as of June 30, 2025, with $14.3 million available on a revolving credit facility and $21 million available pursuant to the delayed draw-down loan facility.

Speaker #5: Operating expenses, as a percentage of revenue, came in at $53.3% in Q3, 2025, compared to $50.4% in the corresponding period in 2024. CapEx also known as rental equipment transferred from inventory for the nine months ended June 30, 2025, was $15.2% of revenue, compared to $13.3% of revenue for the same period in 2024.

Hardik Mehta: Operating expenses as a percentage of revenue came in at 53.3% in Q3 2025, compared to 50.4% in the corresponding period in 2024. CAPEX, also known as rental equipment transferred from inventory for the nine months ended June 30, 2025, was 15.2% of revenue, compared to 13.3% of revenue for the same period in 2024. As previously mentioned, current Philips recall on its ventilators has contributed to the increase in our rental equipment CAPEX. Our net debt to adjusted EBITDA leverage ratio was 1.5X, well within our target range. We are pleased with the important progress we made during the fiscal third quarter. Our results indicate we are seeing clear revenue stabilization in the business, with a return to positive organic growth quarter over quarter. These outcomes are direct results of the operational initiatives we have executed over the past three quarters.

Speaker #5: As previously mentioned, the current Philips recall on its ventilators has contributed to the increase in our rental equipment CapEx. A net debt to adjusted EBITDA leverage ratio was 1.5x, well within our target range.

Speaker #5: We are pleased with the important progress we made during the fiscal third quarter. Our results indicate we are seeing clear revenue stabilization in the business, with a return to positive organic growth quarter-over-quarter.

Speaker #5: These outcomes are direct results of the operational initiatives we have executed over the past three quarters. Moreover, we delivered a strong and consistent adjusted EBITDA margin of 23.5%, underpinned by structural efficiency improvements initiated in late 2024.

Hardik Mehta: Moreover, we delivered a strong and consistent adjusted EBITDA margin of 23.5%, underpinned by structural efficiency improvements initiated in late 2024. Following quarter end, we executed our first acquisition of a healthcare system-owned DME provider, generating $6.6 million in annualized revenue in a strategic transaction completed with Ballad Health. This transaction includes a preferred provider agreement covering 20 hospitals across four states. Moreover, as Greg Crawford mentioned earlier, this morning we announced that we have entered into a joint venture to acquire 60% ownership stake in Hart Medical Equipment, a nationally accredited provider of home medical equipment and supplies based in Michigan. This joint venture adds immediate scale to our platform.

Speaker #5: Following quarter-end, we executed our first acquisition of a healthcare system-owned DME provider, generating $6.6 million in annualized revenue in a strategic transaction completed with Ballard Health.

Speaker #5: This transaction includes a preferred provider agreement covering 20 hospitals across four states. Moreover, as Greg mentioned earlier, this morning we announced that we have entered into a joint venture to acquire 60% ownership stake in Heart Medical Equipment, nationally accredited provider of home medical equipment and supplies based in Michigan.

Speaker #5: This joint venture adds immediate scale to our platform. Heart-generated approximately $60 million in revenue and $7 million in adjusted EBITDA as of June 30, 2025, and once the transaction closes, which we expect to occur by the end of fiscal Q4 2025, we anticipate reaching an annualized run rate revenue of roughly $300 million company-wide.

Hardik Mehta: Hart generated approximately $60 million in revenue and $7 million in adjusted EBITDA as of June 30, 2025, and once the transaction closes, which we expect to occur by the end of fiscal Q4 2025, we anticipate reaching an annualized run rate revenue of roughly $300 million company-wide. Quipt will acquire a 60% ownership interest for total consideration in the range of $17 million to $18 million. This structure allows us to preserve balance sheet flexibility while adding a strategically aligned asset. Hart's 29 locations across Michigan and Ohio, along with its embedded partnership with Henry Ford Health, McLaren Health, and Blanchard Valley Health System, Wood County Hospital, and the Bellevue Hospital, create direct access to a recurring patient base of more than 67,000 patients each month.

Speaker #5: Qipt will acquire a 60% ownership interest for total consideration in the range of $17 to $18 million. This structure allows us to preserve balance sheet flexibility while adding a strategically aligned asset.

Speaker #5: Heart's 29 locations across Michigan and Ohio, along with its embedded partnership with Henry Ford Health, McLaren Health, and Blanchard Valley Health System, Wood County Hospital, and the Bellevue Hospital, create direct access to a recurring patient base of more than 67,000 patients each month.

Speaker #5: Once closed, we expect Heart's adjusted EBITDA margin to align with our historical corporate averages within three quarters, driven by operational integration, shared best practices, and cost efficiencies.

Hardik Mehta: Once closed, we expect Hart's adjusted EBITDA margin to align with our historical corporate averages within three quarters, driven by operational integration, shared best practices, and cost efficiencies. This transaction fits squarely into our disciplined capital allocation strategy, is health system aligned, and repeatable as a template for future partnership. This is a clear validation of our strategy to partner with leading healthcare systems in the United States that are aligned in mission and values. As we progress to calendar 2025, we are energized by the opportunity before us to drive a consistent growth path. Our commitment to operational excellence, disciplined growth, and patient-focused care remains the cornerstone of our approach, positioning us for long-term success. With that, I will now turn the call back over to Greg.

Speaker #5: This transaction fits squarely into our disciplined capital allocation strategy, as health system align and repeatable as a template for future partnership. This is a clear validation of our strategy to partner with leading healthcare systems in the United States that are aligned in mission and values.

Speaker #5: As we progress to calendar 2025, we are energized by the opportunity before us to drive a consistent growth path. Our commitment to operational excellence, disciplined growth, and patient-focused care remains the cornerstone of our approach.

Speaker #5: Positioning us for long-term success. With that, I'll now turn the call back over to Greg.

Speaker #4: Thank you, Hardik. Today, Qipt now operates over 160 locations across 27 states, serving over 325,000 active patients. Our scalable infrastructure and growing national presence enable us to deliver consistent, high-quality service while expanding our reach across both established and emerging markets.

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

Speaker #4: Our go-to-market strategy is rooted in providing an integrated end-to-end respiratory care solution, complemented by a diverse portfolio of durable medical equipment. As a trusted partner for patients and healthcare providers, we have developed a scalable model that addresses the complexities and evolving demands of the durable medical equipment ecosystem.

Speaker #4: At this time, respiratory care comprises over 75% of our product mix. This strategic emphasis aligns with critical macro trends, including an aging population, rising chronic respiratory disease rates, and sustained demand in sleep care.

Speaker #4: These long-term drivers, coupled with our execution, reinforce our confidence in the future. Moving to our sleep business, recent real-world data shared by the leading sleep device manufacturer involving 1.6 million patients underscores the positive effects of GLP-1s on treatment adherence.

Gregory Crawford: Moving to our sleep business, recent real-world data shared by the leading sleep device manufacturer, involving 1.6 million patients, underscores the positive effects of GLP-1s on treatment adherence. The study found that individuals with an obstructive sleep apnea diagnosis who were prescribed a GLP-1 were 11% more likely to start positive airway pressure compared to those not on GLP-1s. Additionally, these patients exhibited higher CPAP resupply order rates at both the one-year mark, showing a 300 basis point increase, and at the two-year mark, showing a 500 basis point increase post-setup. This data, now tracking nearly 1.6 million patients, has been steady with some positive trends. Moreover, there is a growing use of wearables for sleep tracking that is also driving awareness and funneling patients into diagnostics. GLP-1 drugs are increasing engagement with sleep health, not displacing CPAP demand.

Speaker #4: The study found that individuals with an obstructive sleep apnea diagnosis who were prescribed a GLP-1 were 11% more likely to start positive airway pressure compared to those not on GLP-1s.

Speaker #4: Additionally, these patients exhibited higher CPAP resupply order rates at both the one-year mark showing a 300 basis point increase and at the two-year mark showing a 500 basis point mark increase post-setup.

Speaker #4: This data, now tracking nearly 1.6 million patients, has been steady with some positive trends. Moreover, there is a growing use of wearables for sleep tracking that is also driving awareness and funneling patients into diagnostics.

Speaker #4: GLP-1 drugs are increasing engagement with sleep health not displacing CPAP demand. As we look at our growth roadmap, we've made targeted progress on several fronts.

Gregory Crawford: As we look at our growth roadmap, we have made targeted progress on several fronts. During the year, we have successfully opened two DeNova locations in Florida and Alabama, and we expect to continue expanding our DeNova footprint in the months ahead as part of a focused national market expansion strategy. In parallel, we are deepening our referral networks across both new and existing markets by reinforcing relationships with physicians, hospitals, and other healthcare verticals. We are positioning Quipt to capture a larger share of patient volume at the point of discharge. This is already contributing to improved setup activity and a more consistent pipeline of recurring patients. We have also continued to evolve our product portfolio with a specific focus on respiratory care. Most recently, we introduced a new Medicare-approved respiratory device designed to enhance airway clearance and secretion mobilization, particularly relevant for our higher acuity patients.

Speaker #4: During the year, we have successfully opened two de novo locations in Florida and Alabama, and we expect to continue expanding our de novo footprint in the months ahead, as part of a focused national market expansion strategy.

Speaker #4: In parallel, we are deepening our referral networks across both new and existing markets by reinforcing relationships with physicians, hospitals, and other healthcare verticals. We are positioning Qipt to capture a larger share of patient volume at the point of discharge.

Speaker #4: This is already contributing to improved setup activity and a more consistent pipeline of recurring patients. We've also continued to involve our product portfolio with a specific focus on respiratory care, most recently reintroduced a new Medicare-approved respiratory device designed to enhance airway clearance and secretion mobilization, particularly relevant for our higher acuity patients.

Speaker #4: This fits seamlessly into our strategy of expanding care offerings while serving more complex clinical needs. To support our sales productivity, we also launched the Qipt Sales Academy, a formal program to accelerate onboarding, improve rep performance, and strengthen referral conversion.

Gregory Crawford: This fits seamlessly into our strategy of expanding care offerings while serving more complex clinical needs. To support our sales productivity, we also launched the Quipt Sales Academy, a formal program to accelerate onboarding, improve rep performance, and strengthen referral conversion. This is a direct investment in our front-end commercial capabilities. Taken together with the recent transactions announced with major healthcare systems, this truly is a transformative time for Quipt. We are embedding ourselves directly into some of the most influential patient care networks in the country. These transactions are not just incremental; they fundamentally enhance our competitive positioning, open the door to large, consistent patient volumes, and create a scalable blueprint for future healthcare system collaborations nationwide.

Speaker #4: This is a direct investment in our front-end commercial capabilities. Taken together with the recent transactions announced with major healthcare systems, this truly is a transformative time for Qipt.

Speaker #4: We are embedding ourselves directly into some of the most influential patient care networks in the country. These transactions are not just incremental; they fundamentally enhance our competitive positioning, open the door to large, consistent patient volumes, and create a scalable blueprint for future healthcare system collaborations nationwide.

Speaker #4: When combined with our expanding geographic reach, deeper referral integration, operational optimization, and an increasingly diversified product mix, we are building a durable engine capable of delivering consistent, organic expansion while protecting and enhancing margins.

Gregory Crawford: When combined with our expanding geographic reach, deeper referral integration, operational optimization, and an increasingly diversified product mix, we are building a durable engine capable of delivering consistent organic expansion while protecting and enhancing margins. Backed by a strong balance sheet, a stable and growing recurring revenue base, and an execution-focused leadership team, Quipt is exceptionally well-positioned to accelerate growth, deepen healthcare system partnerships, and create substantial long-term shareholder value. On the capital market fronts, we will continue to engage actively with investors across North America. Given the company's low valuation, important business progress, return to organic growth, and the backdrop of significant recent healthcare system-focused transactions, we are excited to tell our story. In closing, we remain committed to maximizing long-term shareholder value for all shareholders. The board and management team are actively evaluating all ways to enhance the company's strategic position while advancing growth and operational performance.

Speaker #4: Backed by a strong balance sheet, a stable and growing recurring revenue base, and an execution-focused leadership team, Qipt is exceptionally well-positioned to accelerate growth, deepen healthcare system partnerships, and create substantial long-term shareholder value.

Speaker #4: On the capital market fronts, we will continue to engage actively with investors across North America, given the company's low valuation, important business progress, return to organic growth, and the backdrop of significant recent healthcare system-focused transactions, we are excited to tell our story.

Speaker #4: In closing, we remain committed to maximizing long-term shareholder value for all shareholders. The board and management team are actively evaluating all ways to enhance the company's strategic position while advancing growth and operational performance.

Speaker #4: As we look ahead, we're confident in the strength of our business, our positioning in the market, and our ability to execute on initiatives that support sustained value creation.

Gregory Crawford: As we look ahead, we are confident in the strength of our business and our positioning in the market and our ability to execute on initiatives that support sustained value creation. With that, Operator, we are now ready to take questions.

Speaker #4: And with that, Operator, we are now ready to take questions.

Speaker #2: Thank you. 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.

Conference Specialist: Thank you. 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 you are using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Our first question is from Doug Cooper with Beacon Securities. Please go ahead.

Speaker #2: You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.

Speaker #2: Our first question is from Doug Cooper with Beacon Securities. Please go ahead.

Speaker #6: Hi, good morning everybody, and I guess nice work on sort of stabilizing the business. Hardik or Greg, again, just first question, you know, and I track what I would call adjusted EBITDA—I call it EBITDA minus patient capex—and by my calculation, that ticked up to that margin ticked up to 8% in the quarter, which is the best in about a year, I guess, since it was, you know, over 12.5% in Q2, '24.

Doug Cooper: Hi, good morning everybody. I think it's nice to work on sort of stabilizing the business. Hardik or Greg, just first question, I track what I would call adjusted EBITDA, call it EBITDA minus patient CAPEX. By my calculation, that ticked up to, that margin ticked up to 8% in the quarter, which is the best in about a year, I guess, since it was over 12.5% in Q2 2024. Can you just talk a little bit about what you think you can target on that to get that moving back, continue to move it in the right direction?

Speaker #6: Can you just talk a little bit about what you think you can target on that to get things moving back, you know, to continue to move in the right direction?

Speaker #5: Hey Doug, thanks for for the call. and the question, you know, look, I I think we we would expect for us to kind of continue improvements on on our EBITDA margins patient capex has been a drag as we have kind of mentioned in our previous calls.

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

Speaker #5: We we are continuing to see our investments in in in replacing ventilators through due to the Phillips recall. so if anything, I would say as long as we can maintain our our EBITDA margins through some revenue growth and stabilization of the of the expenses, which we have demonstrated we can, we we kind of look forward to keeping this this EBITDA as capex margins steady or or kind of expand.

Speaker #6: Okay, Greg, can you just talk a bit about the sort of JV congratulations and how it looks like an interesting transaction? The EBITDA margin for that heart right now is $7 million.

Doug Cooper: Greg, you just talked about the sort of the JV. Congratulations on that. It looks like an interesting transaction. EBITDA margin for that Hart right now at $7 million. How do you, you mentioned in your speech there that you anticipated moving back up to Quipt Home Medical Corp.'s average, which is implied obviously over in a doubling of that EBITDA from $7 million to $14 million or whatever the number is. How do you do that?

Speaker #6: How how do you and you you mentioned in your speech there that you anticipated moving back up to Qipt's average, which is implied obviously over in over in a doubling of that EBITDA from 7 to 14 or whatever the number is.

Speaker #6: How do you how do you do that?

Speaker #5: Yeah, so we expect over the next few quarters in that, once we get that business fully integrated in that and get it under similar cost structures, and that that that Qipt has historically seen.

Gregory Crawford: We expect over the next few quarters, once we get that business fully integrated and get it under similar cost structures that Quipt has historically seen, we will be able to do that. That is what we have historically done in the past with most acquisitions. That is going to come from multiple levers, from cost structures that are kind of totally related.

Speaker #5: you know, we'll we'll we'll be able to do that in that. That's what we've historically done in the past with most acquisitions. I mean, that's going to come from multiple multiple levers, you know, from cost structures, and that that are kind of totally related in that.

Speaker #6: Okay, let me just walk through this. You know, it sounds interesting to get these patients sourced when they're being discharged. What are they being discharged for?

Doug Cooper: Okay. Walk through me, you know, it sounds interesting to get these patients at source when they are being discharged. What are they being discharged for? What do they actually go into those health centers for, hospitals for?

Speaker #6: What do they actually go into those health centers for, hospitals for?

Speaker #5: Yeah, well, I mean, hey, that should be a whole various types of diagnosis and and and treatments, but primarily, and that we're treating respiratory conditions in that.

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

Speaker #5: So the majority of what we would see out of in that the new JV, and that would be respiratory related. so that would be your ventilation, your oxygen, and then you move kind of into the sleep in that department in that that's doing the sleep testing and things, and then also providing that complementary in that equipment solutions in that for for those patients.

Speaker #5: so that's kind of the primary drivers. We don't expect the product mix to kind of change or anything there. We do expect to see an increase in the respiratory in that referrals in that.

Speaker #5: So we've got some programs that we would like to implement in that throughout that those those systems that we believe will help drive additional in that referrals and that they're maybe going to other providers in the marketplace.

Speaker #2: Oh, we seem to have lost our caller in queue, so I will announce the next caller is Bill Sutherland with Benchmark Company. Please go ahead.

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

Speaker #6: Thank you. Hey, hey Greg and Hardik. the the JV that you just announced is there any financial aspect to it? any stake that you put up?

Bill Sutherland: Thank you. Hey, Greg and Hardik. The JV that you just announced, is there any financial aspect to it? Any stake that you put up?

Speaker #5: Bill, this

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

Speaker #7: Hardik, I'm not sure I completely understand your question. Could you rephrase that a little bit differently, please?

Speaker #6: Well, is there any financial component to the JV, or is it just a, you know, an agreement in terms of.

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

Speaker #7: Oh.

Speaker #6: Yeah.

Speaker #7: Yeah, yeah, it's a it's a true investment. So yeah, we are going to take equity position in the JV alongside the hospital systems that we mentioned.

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

Speaker #7: you know, our earnings call and and the press release that we gave out. So it's a it's it's almost like an acquisition for lack of a better word.

Speaker #7: At, except for the fact that we are kind of, you know, not only just equity holders, but we are going to work very closely with these hospital systems to further enhance their discharge processes. Then how do we capture most of those patients that are getting discharged from these hospital systems?

Speaker #7: So it's also a lot of alignment at the C-level to make sure that there are there's seamless discharges that we could, you know, Heart has as an operating entity would be able to service, which they have been.

Speaker #7: you know, they have 60-plus million dollars in top-line revenue, so they have been really doing well and successful at doing it. you know, being a classic healthcare system DME, they tend to have some inefficiencies, you know, they saw us as a good partner that runs good DME and we are we are fortunate to partner with them in in, again, the JV is a classic financial JV where we're going to be an equity partner.

Hardik Mehta: You know, they have $60-plus million in top-line revenue, so they have been really doing well and successful at doing it. You know, being a classic healthcare system DME, they tend to have some inefficiencies. You know, they saw us as a good partner that runs good DME, and we are fortunate to partner with them in, again, the JV is a classic financial JV where we're going to be an equity partner.

Speaker #6: I didn't see the press release, forgive me, but did you did you talk about kind of what the the level of investment is and any other?

Bill Sutherland: I didn't see the press release, forgive me, but did you talk about what the level of investment is?

Speaker #7: Yeah.

Hardik Mehta: Yeah.

Speaker #6: Yeah,

Speaker #6: okay.

Bill Sutherland: Yeah, okay.

Speaker #7: Yes. So I'll.

Hardik Mehta: Yes.

Speaker #6: Okay.

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

Speaker #7: I'll I'll I'll take a look at that. Do you do you all think you've made a lot of progress with the the plan for improving the operating efficiencies?

Speaker #7: Starting in a year ago, is there more to go there, or have you pretty much completed you know what you set out to do?

Speaker #5: Well, well I think we set out to do with what was in our core business, but now with the recent acquisitions in that, as you've historically seen with us, is that we've been able to increase the margins in that on those acquired assets, and I think we've kind of clearly laid that out as that we expect both of those in that to be up the corporate average in that in the coming quarters, especially for the larger $60 million one.

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

Speaker #5: We think that's going to take us a few quarters and then from there, I think, you know, there there could be further margin improvement, but we'll we'll be laser-focused on integrating those assets and continue to work on our organic growth initiatives throughout the rest of the business.

Speaker #6: Great. And then, Greg, maybe just update us now that you've gotten you've been completing a couple of deals any how how should we think about the M&A pipeline right now?

Bill Sutherland: Great. Then, Greg Crawford, maybe just update us now that you've gotten, you've been completing a couple of deals. How should we think about the M&A pipeline right now?

Speaker #5: Yes, our M&A pipeline remains strong, so we continue to work through the pipeline of, you know, what's the best strategic fit for us.

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

Speaker #5: there's certainly no shortage of acquisitions right now, I'll say. we're starting to receive a lot of inbounds in that, especially now that we've been a little more active in the marketplace in that so we've got a full pipeline and, you know, it it it expect to continue to evaluate those and work towards closing the best one that's going to create the most value for us long-term.

Speaker #6: Do you think you're going to lean, just basically focus it primarily on the kind of things you've just done? Or do you have a partnership?

Bill Sutherland: Do you think you are going to lean just basically focus it primarily on the kind of things you have just done, or you have a partnership?

Speaker #5: No, I think it'll be a combination.

Gregory Crawford: No, I think it will be a combination.

Speaker #6: Okay.

Speaker #5: We've got both in our our current pipeline.

Bill Sutherland: Okay.

Gregory Crawford: We have both in our current pipeline.

Speaker #6: Okay. And then last thing, I don't think I I heard most of the of your parent commentary did you meant did you talk about the one big beautiful bill and any any impact at all from that?

Bill Sutherland: Okay. Last thing, I don't think I heard most of your prepared commentary. Did you talk about the one big beautiful bill and any impact at all from that?

Speaker #5: We we did not, no. We we don't have anything that we anticipate that would affect our operational or anything along those lines.

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

Speaker #6: Okay. That's what I was figuring, but I just wanted to double-check. Okay.

Bill Sutherland: Okay. That's what I was figuring, but I just wanted to double-check. Okay.

Speaker #5: Yeah.

Speaker #6: And thank you both.

Gregory Crawford: Yeah.

Bill Sutherland: Thank you both.

Speaker #5: Thank you.

Gregory Crawford: Thank you.

Speaker #2: The next question is from Justin Keywood with Steeple GMP. Please go ahead. Justin Keywood, your line is open. I'll try one more time. Justin Keywood, your line is open.

Conference Specialist: The next question is from Justin Keywood with Stifel GMP. Please go ahead. Justin Keywood, your line is open. I will try one more time. Justin Keywood, your line is open. He appears not to be able to. This concludes the question and answer session. I would like to turn the conference back over to Mr. Crawford for any closing remarks.

Speaker #2: It appears not to be able. This concludes the question and answer session. I'd like to turn the conference back over to Mr. Crawford for any closing remarks.

Speaker #8: Good Good Good night.

Bill Sutherland: You're not.

Conference Specialist: I'm sorry, Mr. Crawford. Your line was muted. I'll conclude the call. Thank you for participating and have a pleasant day.