QIPT Q2 2020 Earnings Call
Operator: Thank you for standing by. This is the conference operator. Welcome to the Protech Home Medical Second Quarter 2020 Financial Results Conference Call and Webcast. 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. [Operator Instructions]. I would now like to turn the conference over to Greg Crawford, Chairman and CEO. 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 Protech Home Medical. Joining me today is Hardik Mehta, our Chief Financial Officer. On this call I would like to outline our core business, review our progress year-to-date with a focus on the last quarter and provide you with our updated outlook for 2020. However before we jump in let me first take a moment to thank our incredibly talented and dedicated employees who have stepped up in an unprecedented way during the COVID-19 pandemic. It is our employees that have enabled Protech to assist and relieving the strain placed on the traditional healthcare system by helping to move non-COVID-19 related patients out of the hospital system and into the home thereby freeing up beds to manage the large influx of patients that have contracted the virus. Without these hardworking individuals Protech would not be able to share with you the results we have today. As we walk through these financial results I hope it will be clear that Protech is in a strong and secure position with respect to our financial performance, our operations, our balance sheet, and the improving organic growth being derived from our first rate infrastructure. We have seen extraordinary resilience in our business model which this pandemic has underscored as an accelerated tailwind towards in-home healthcare has become even more prevalent in the healthcare industry during this period of time. We believe this bodes very well for Protech over the immediate and long-term given our scale, our operating leverage, and our key differentiator the exceptional service capabilities we showcase when working with our patients. We remind you that our remarks today will include forward-looking statements that are subject to important risk and uncertainties. For more information on these risk and uncertainties please see the reader advisory at the bottom of our results news release as well as our MD&A which you can find on our website and on SEDAR. The company's actual performance could differ materially from these statements. Yesterday evening we announced our second quarter financial results for fiscal 2020 and the three months ended March 31, 2020. More on these results in a moment but first let me provide a brief background on our company. Protech Home Medical provides a diverse offering of home respiratory services and medical equipment for treating in-home patients with chronic conditions in the United States. The company provides a range of products including oxygen therapy, sleep apnea treatment, certain medical equipment, and custom power mobility products. We operate in 10 states with more than 40 locations across the Midwest and the East Coast region completing hundreds of thousands of deliveries each year to more than 85,000 active patients. With that background I'd like to hand the call over to Hardik to discuss our second quarter fiscal 2020 financial results.
Hardik Mehta: Thanks Greg. In reviewing the second quarter fiscal 2020 numbers please note that all financial values are in Canadian dollars and the full results are available on SEDAR. As discussed on our year-end fiscal 2019 and first quarter fiscal 2020 conference calls and the associated filings, in the fourth quarter of fiscal 2019 the company sold Patient Home Monitoring, Inc. also called PHM, an asset we determined as being non-core. As per IFRS operating results of PHM, Inc are reported under discontinued operations. As a result please note that all the numbers for year-to-date and for second quarter of fiscal 2019 have been adjusted for this divestiture and are reported for continuing operations only. In the second quarter of fiscal 2020 Protech completed 63,956 setups or deliveries compared to 51,676 in the corresponding period last year, an increase of 24%. The company generated revenue of 24.1 million in second quarter fiscal 2020 up 15.7% from second quarter fiscal 2019 and up 4% from the first quarter fiscal 2020, majority of this was organic growth. Gross margin increased to 73% in the second quarter fiscal 2020 from 70.8% in second quarter fiscal 2019. Adjusted EBITDA for the second quarter of fiscal 2020 was $4.9 million compared to adjusted EBITDA for second quarter of fiscal 2019 of $3.8 million, presenting a 30% increase year-over-year. Adjusted EBITDA margins for the second quarter of fiscal 2020 increased to 20.4% compared to 18.2% for the second quarter of fiscal 2019. SG&A for the second quarter of fiscal 2020 was 12.7 million compared to SG&A for the first quarter of fiscal 2020 of 12.5 million representing a 2% decrease quarter-over-quarter. This highlights our ability to deliver additional margins on incremental revenue growth. Net income for second quarter of fiscal 2020 was 1.6 million compared to a loss of 0.5 million for second quarter of fiscal 2019 representing a 402% increase year-over-year. This gain was attributed to the change in fair value of debentures. At the end of second quarter fiscal 2020 cash balance was 6.2 million compared to 12.8 million at fiscal year-end 2019. The use of cash is approximately broken down as follows 4.3 million towards acquisition, 1 million towards net pay down of equipment leases, and about 1.4 million towards working capital which includes significant increase in inventory to plan, prepare, and respond to the pandemic. At the end of second quarter fiscal 2020 cash flow from operations for the six months ending March 2020 was 6 million compared to 4.1 million in the corresponding six months period ending March 2019. Current assets total more than 30.2 million compared to 23.4 million in net short-term liabilities demonstrating continuing strength in our liquidity. Subsequent to the quarter and in April 2020 the company received over 7.5 million of payments related to two separate provisions of U.S. corona virus Aid, Relief, and Economic Securities Act, also referred to as CARES Act. One provision was to assist company in maintaining their workforce and the second provision was to support healthcare providers such as Protech. 5.9 million is reflected by the payment protection provision of the CARES Act. As it relates to COVID-19 to echo Greg's point from earlier we have seen our business model continue to be extremely resilient during this unprecedented times. Our supply chain remains stable and we continue to see increase from our -- network that are actively seeking to discharge patients from the hospitals into the home. Our balance sheet is in excellent condition and our operating performance continues to improve. In this quarter we again posted a record revenue and continued to post industry leading margins. We are confident in our abilities to continue with this trajectory. Our focus remains on accelerating revenue growth, process improvement, and cost rationalization. In closing, the industry and company specific tailwinds continues to present us with an opportunity to seize market share and continue to improve our financial performance and we are confident in our capabilities to do so aggressively on a go forward basis. Thank you and with that update I will turn the call back to Greg.
Greg Crawford: Thanks Hardik. We are extremely pleased to share another record breaking quarter with strong operating performance and solid organic growth continuing to improve through 2020. Our company has been a true growth story in the at home healthcare industry prior to COVID-19 and this pandemic has only magnified the point that in home healthcare and tele-help are absolutely vital to our overall healthcare system and we're excited to help educate, assist, and provide exceptional service to our current and future patients. I am pleased with the quick response of the Centers for Medicare and Medicaid Services to remove noninvasive ventilators from the 2021 competitive bidding program. This segment represents 17% of our revenue and continues to grow. This announcement is very comforting to us as it provides a great boost to our patient centric clinical services, allows us to access our supply chain confidently, and gives us greater clarity into the margin outlook on the provision of such equipment for many years to come. Another event that took place subsequent to quarter-end as Hardik mentioned was the PPP loan we received. This loan helped us protect our employees and allow us to prepare and respond to the pandemic by ensuring that our supply chain continues to operate smoothly as Protech is on the front lines of the United States healthcare industry serving over 85,000 in-home respiratory patients. The alleviation of the strain on the traditional system is imperative and Protech is uniquely suited to help combat this growing problem. Now I want to take a moment to explain a little more in-depth what we're doing differently and why we have been able to achieve the results we have and why we continue to be so excited about the future. Protech uses unique efficient delivery costs models and technology to change the way in which home medical equipment is delivered to a growing and aging U.S. population. This segment of the market known as durable medical equipment or DME providers is estimated to approximate $60 billion. This is underlined by the fact that over 10,000 people in the U.S. will turn 65 every day for the next 15 years, this is our core market. In the last 12 months we have set up or delivered just under a quarter of a 1 million pieces of equipment to over 85,000 patients. We operate out of over 40 locations in 10 states and now have over 17,000 referring physicians. Our core product offering is for chronic illnesses that are treatable at home using streamline logistics and distribution Protech can offer home delivery and maintenance on this equipment which is a first for many of these patients. Given COVID-19 is a respiratory illness there has been a spotlight on the need for our equipment and our expertise as it relates to the treatment of respiratory illnesses as well as the overarching need for in-home healthcare with extraordinary patient care which is where we thrive. There are very few companies like Protech that have the balance sheet, scale, and competitive advantages including those from technology and logistics to benefit from such structural changes that have come from previous reimbursement cuts and now the COVID-19 pandemic. I would now like to review with you the three components of our growth strategy. First, we are laser focused on capturing market share economically and profitably. Our industry growth rate is about 3% to 5% per year. However, we believe we can continue to achieve well more than double the growth rate of the industry by focusing on significantly increasing our market share in key target regions within the markets we serve. To execute on this we are continuously hiring and training new sales representatives and will continue to expand our product base. It is important to remember that this is an industry of scale and Protech is still at the early stages of reaping the full benefits of being one of the only company that can benefit from that given our relative size. These benefits will further magnify themselves as we continue to grow both organically and through acquisitions. Secondly, we continue to lead the industry in technology deployment and in our use of data mining tools to drive efficiencies and profitability. Our patients ability to order a piece of equipment, a service call, or other ancillary option via the touch of a button is where the industry is headed. We have made significant investments in developing these tools and we'll continue to invest in them to continue to maintain our technological advantages over our competitors. Providing exceptional service to our patients through technology will continue to separate us from our competitors who are simply unable to implement technology based solutions due to their lack of scale and financial capabilities. The third component of our growth strategy is acquisitions. The key focus for our acquisition program is to focus on geographies where we already operate so that we are best able to integrate acquisition targets onto our platform by consolidating distribution channels, drive, and efficiencies and substantially improving overall profitability. We have made two acquisitions in the last calendar year which have been successfully integrated. I am very confident in our abilities to continue to integrate acquisitions as we find and execute on them. In light of the current environment our stance has not wavered. We remain patient and prudent as it comes to our acquisition strategy, we expect to see opportunities with favorable deal terms presenting themselves over the coming months and have the balance sheet to pull the trigger when the right opportunity presents itself. We will not waiver from making the right acquisition at the right time for the right consideration. Given the backdrop of the home healthcare industry our well defined three pronged strategy and our strong financial position we will continue to propel our company towards sustained financial growth and continued profitability. On the capital markets front I am thrilled to announce that the addition of three new research analysts covering Protech including Echelon Wealth Partners and Industrial Alliance Securities and Stifle Nicolaus Canada. This brings our total to five analysts that will accelerate and assist us in engaging with new investors to share our exciting story. During the pandemic we continue to be active in educating investors about the importance of our company especially in times like this. In this regard we continue to actively market our company to the investor community through virtual meetings and virtual conferences and we will continue to do so. Furthermore we are excited for our highly anticipated dual listing on the OTCQX. We are currently working through DTC eligibility process to accompany our U.S. listing. DTC eligibility will allow current and prospective Protech shareholders in the United States a more reliable, cost efficient, and timely clearing and settlement for common shares. This is a key milestone towards increasing our market presence in the United States and engaging with shareholders. As for a timeline update, given the impact of COVID-19 on staffing levels and various entities involved, the time frame for completion has been lengthened but we are confident we have the listing completed in the coming weeks. We firmly believe that this makes sense for a company headquartered in the U.S. and deriving 100% of its revenues from U.S. customers. I believe this is the first step towards fulfilling our ambitions of a dual listing on the NASDAQ or the NYSE, at the same time I want to make it clear that we will remain active in the Canadian capital markets and expect to do so going forward. I believe that Protech continues to be highly undervalued on a relative basis when compared to its peers. As such we are committed to tirelessly share and promote our story to close this valuation gap. While we do not release detailed forecast, I continue to stand by our previously stated objective of attaining an annualized revenue run rate of $100 million at some point during 2020 which would equate to an increase of at least 20% on a run rate basis. Finally as investors think about Protech Home Medical today I would highlight to them our exceptionally strong balance sheet, our expanding margins, and our improving cash flows all of which have put us in a position to quickly respond to organic growth initiatives and strategic acquisition opportunities. All of this I believe makes Protech a truly dynamic home healthcare company operating in a compelling and growing industry and therefore a truly unique investment opportunity. Once again I would like to take a moment to thank the entire Protech team for its tireless efforts and its stakeholders for all of their continued support. We look forward to continuing to demonstrate strong financial results and will continue to communicate with our retail and institutional shareholders the progress we're making towards our goals. This concludes our prepared remarks and we will now open for questions.
Operator: [Operator Instructions]. Our first question comes from Doug Cooper with Beacon Securities. Please go ahead.
Doug Cooper: Hi, good morning Greg and congratulations on the results and that was a very thorough recap of the business so we've gone through a lot of my questions actually. I just wanted to talk a little bit about the pandemic itself and you mentioned obviously it's a respiratory disease. Can you talk about what impact it's had specifically as we've gone through this maybe post the quarter-end into April and into May, the impact it has had on your ventilator business or your respiratory business or oxygen, we will start there?
Greg Crawford: Sure. The pandemic anatomy business has remained strong and robust respiratory referrals throughout the pandemic and it has even continued into May here with special attention to a lot of home oxygen prescribed. And that for patients and that more than we would typically see. As far as our ventilator business, nothing's really been related to COVID-19 and that's not really treating patients at home with ventilation due to COVID-19 that we've seen yet. But we've seen a robust increase in our ventilator business year-over-year and really year-to-date our revenues increased approximately about 11%. So we continue to see that line of business and that the revenue increase as far as a percentage of our overall revenue it stayed relatively flat just due to the two most recent acquisitions. We've really just started our program of selling that product within this business units. So we expect that as an overall percentage of revenue to increase but on same store sales we're very pleased to announce that we've seen a double-digit increase year-to-date.
Doug Cooper: You mentioned obviously home healthcare, tele health is clearly the buzzword going around. And particularly you have obviously a broad client base, is the billing code in place and how specifically bear in mind that the shift to tele health, how do you take advantage of that through acquisitions or technology or maybe you can just talk a little bit about that?
Greg Crawford: Yes, so tele health in our space is that is more of a communication and that of a way that we can get patients set up on equipment. And I'm happy to say that we've been on the tele health front and that for over two years now we've had that as an option. We've seen an increased demand in that for patients that want to utilize a tele health platform either to be trained on their equipment or to troubleshoot. And we think we'll continue to see that trend and that especially with the potential of the virus and that has taken a second wave through the U.S.
Doug Cooper: And Hardik just one for me, 6.2 million or so cash at the end of March, the 7.5 million came in subsequent, so is your current cash position around 13 million?
Hardik Mehta: Yes.
Doug Cooper: Greg, can you guys talk about the terms, I know you put it in a press release but the terms of the government subsidy are they repayable, forgivable, what are their chances there that you have to repay that?
Hardik Mehta: So as per the terms of the PPP loan I think we qualify and we are very optimistic that we would be able to put forgive most of it under the terms and conditions of the PPP loan.
Doug Cooper: Okay, and maybe just one final one for me. Look you had very strong flow through to EBITDA from sequentially, the G&A you think that's pretty well, we should be outside of acquisitions obviously but are you pretty much fixed on that G&A front around 12.5 million so further improvements in revenue is going to drop to EBITDA so 20.4% margin or what do you think you can get that to from an EBITDA perspective? And I'll leave it there, thanks.
Hardik Mehta: There's -- on the SG&A front we are very confident that it's steady and we're optimistic that it's going to see a further decline as a percentage of revenue. As we are able to push more revenue through the same infrastructure we are very confident about that, heading in the right direction. What was the second question Doug.
Doug Cooper: Just EBITDA margin, where do you think it can reach?
Hardik Mehta: I mean we've always said we have a potential to go into the 22 to 25 range and we are optimistic about going in this direction again. We need to continue working towards that and we are confident that we are heading in the direction.
Doug Cooper: Okay, great, thanks very much.
Operator: Our next question comes from Doug Loe with Echelon Wealth Partners. Please go ahead.
Douglas Loe: Yes, thanks very much operator and good morning guys. Your micro valuations on the quarter as well, couple of -- well lets start, it is a follow-up on Doug's questions with regard to EBITDA margin and maybe [indiscernible] slightly different way, most of the sort of integration synergies that could have been achievable through the Cooley and Acadia acquisitions in fact transpired or is there any other incremental EBITDA margin lift the could be achieved just based on additional integration process SG&A compression there?
Hardik Mehta: Doug, most of that acquisition related synergies has been realized. At this point there might be some danglers [ph] out there but nothing major. We -- again as I mentioned earlier we feel our SG&A is kind of steady and we are optimistic that it would further decrease in the percentage of revenue as we process more revenue to the infrastructure.
Douglas Loe: Got it, okay. And then if you addressed this in your commentary I apologize, I missed it but just on bad debt provision came in around 2.1 essentially at Q1 2020 level struck me as though there could be a little bit of upward escalation based on pandemic macro environment. Do you think that can be sort of stable in subsequent quarters or where you think that could sort of ship here say within the next quarter or two when the overall economic micro environment can still continue to be challenging notwithstanding your limit [ph]?
Hardik Mehta: So far we are not seeing any challenges when it comes to billing. There was a little slow down early in the quarter on the payment side but I think we are catching up. We are having some robust collection months in Q3 so far so we see that bad debt percentage steady or decreasing, we really don’t see much fluctuations there.
Douglas Loe: Awesome, that's great. And then thirdly and then I will hop back in the queue myself. So just your congratulations on --
Hardik Mehta: Doug, just to add to that point, we are -- you can see our AR build up a little bit on Q2 but we are already seeing some robust collections. So the insurance companies are up in line and they're processing our claim. So we are just having robust collections so far.
Douglas Loe: Perfect. Okay, well you anticipated my next question actually so I will shift sideways to something else and I will hop back into the queue. So the capital as your security or through the CARES Act I mean congratulations on that, is most of that -- are you obligated to the point most that is in staff retention and respiratory therapy protection or could part of that be deployed to a tangible assets perhaps increasing it better later [indiscernible] therapy capital assets and I will leave it there? Thanks.
Hardik Mehta: Yeah, so for the PPP the rules are pretty straightforward. Majority of that has to be used towards payroll and keeping employees employed. And there is some allowance for utilities and basically the other related expenses but those are really the two aspects that we need to use our PPP loan for.
Douglas Loe: Awesome, thanks guys. Congratulations.
Operator: Our next question comes from Justin Keywood with Stifel GMP. Please go ahead.
Justin Keywood: Good morning, good to see the growth in the quarter. The news release mentioned that most of the 16% growth was organic. Are we able to get a more precise number for what that was?
Greg Crawford: Sure, so what the press release says was the quarter-over-quarter most of that good quarter-over-quarter was organic, quarter-over-quarter net of foreign exchange between Q1 to Q2 of 2020 was about a 4% and a majority of that 4% growth quarter-over-quarter was organic. That's what we meant on our press release.
Justin Keywood: Okay that's helpful. And then on the M&A pipeline, there was some commentary that some of the discussions are resuming and perhaps they stalled when COVID-19 outbreak was first starting to happen, are you able to give us a sense of how many targets you're looking at right now and if these targets are largely tuck in opportunities?
Hardik Mehta: So due to COVID there is definitely a little bit of a slowdown on that activity. However, we have recently been seeing some -- reengage with our lab work sources and they are just waiting for some more clarity on the seller side whether they will to continue to pursue the opportunities in front of them. So I think what we're looking at there are some easy tuck-ins and there are some larger deals. The larger deals are kind of I wouldn't say stalled but they are kind of on a semi pause as they are in the process. But we see that going live pretty soon in recent future.
Greg Crawford: And I'll also add Justin, this is Greg is that we believe as we get into the second half of 2020 and that we expect there to be more tuck ins and that become available as we've seen in some of the marketplaces that we operate in and some of the smaller companies and that just didn't have the capabilities to respond to the pandemic and things and had capital issues with obtaining inventory. So we expect some opportunities to potentially come out of that later in the year.
Justin Keywood: Makes sense and just one final one, as company's market cap is approaching 100 million you mentioned a listing on the OTCQX, I was wondering if you're looking at possibly graduating to the TSX exchange?
Greg Crawford: Yes, we are actually -- we have reached out to TSX to see if we meet the guidelines are laid out by TSX and are actually working towards that, I would conclude that at this point.
Justin Keywood: Okay, great. Thank you for taking my questions.
Greg Crawford: Thank you.
Operator: Our next question comes from Andrew Hood with M Partners. Please go ahead.
Andrew Hood: Hey Greg and Hardik, great quarter. So I will just start with the inventory. I noticed in the quarter you spent about 4 million net on finance leases versus about 5 million last quarter. And obviously you were spending a lot anticipating the upcoming increase in demand and you now had that 1.5 million kind of reimbursed from the government essentially. So I was just wondering based on the facts that about $8.8 million to $8.9 million worth of leases are due this year do you expect that spending level to kind of decline moving forward. In short you think the inventory levels are enough now, it is basically what I'm getting at and can we expect the spending to kind of decline?
Greg Crawford: So I think the inventory levels are -- I think we are steady on that right now. We don't see a further spike on the inventory levels. I think we've done all the measures that we needed to take to plan and prepare to respond to the pandemic. As far as -- if that's the question I think that's the answer, as far as the spending goes I think it would be kind of aligned to what you have seen year-to-date with most likely a decrease slightly once we run to our inventory and not have to purchase to keep up the same levels of high inventories.
Hardik Mehta: And I will also add in. That would kind of be based on -- that would be based on the current situation if we would happen to see a second wave of the pandemic that could potentially flare up again, we will be preparing for that and acting very, very quickly. And that's in order to maintain inventory levels and really increase those so we can anticipate demand.
Andrew Hood: Okay, so the net payment on finance leases will probably stay around 4 million a quarter then?
Hardik Mehta: Yes.
Andrew Hood: Okay and then I don’t know if you know this out of the top of your head but just add about $8.9 million of the leases you do in less than a year. I was just curious if you guys know how much of that was related to buildings, like maybe now you're going to fire some of your warehouse leases that are wrapping up and you maybe don't renew that lease?
Hardik Mehta: So, I think on the real estate pieces what we have is pretty robust. There are only a few leases out there that we would not be renewing so what you see from a materiality point of view is reflective of what's going to take place in the next couple of months.
Andrew Hood: Okay, this is somewhat of a minor item but I was just looking at your discontinued operations, the other $415,000 loss which looks like it was just SG&A linked to PHM I'm just curious what that was because there was nothing like that last quarter and is that a onetime item?
Hardik Mehta: Yeah, that's the -- we had a settlement on one of the litigation outstanding with that company. And so that's why you see a huge outlay related to that for the legal fees and the settlements.
Andrew Hood: And so obviously that's been done now and there's no other potential expenses like the PHM?
Hardik Mehta: The PHM, Inc. has on the MD&A we have disclosed there are a couple more outstanding litigations on PHM, Inc. that we are continuing to monitor but we expect those to be settled pretty soon. We are expecting somewhere in the neighborhood of $0.5 million -- up towards $0.5 million in settling those. And then I just want to -- since we brought that up, just want to clarify that some of these litigations are really, really old five to six years old something that's been sitting around for a while and just popping up now.
Andrew Hood: Yeah okay. And I obviously thought of your core business either right, I understand?
Hardik Mehta: Yeah, and it's not in its core.
Andrew Hood: Yeah, in terms of the 6 million and the 1.5 million receipts subsequent to year-end through the PPP and the equipment grant as well, how is that accounted for?
Hardik Mehta: So right now we are going to keep it on our books as the HSS money that we had received that would be used towards the terms and conditions of the HSS money which is towards revenue loss and/or planning to pay for the pandemic. So inventory and assets and stuff like that. So that's how we are going to use those funds, that's how we are using those funds again. And as far as the HSS -- as far as the PPP goes we are going to record that as a loan right now and until it is forgiven if it stands alone.
Andrew Hood: And the final question for me, acquisition line of credit is something you guys have mentioned in the past or some sort of other debt to fuel acquisitions, is that still something that is ongoing?
Greg Crawford: Can you repeat that please.
Andrew Hood: I believe you guys said in the past that you were in some sort of discussions for an acquisition line of credit or some sort of other financing, is that still ongoing?
Hardik Mehta: Yes.
Andrew Hood: Okay, alright, that's it for me. Thanks guys.
Hardik Mehta: As you can understand through the pandemic all financial institution have paused pretty much accepting new applications or reviewing the ones that are in pipeline. So we are kind of going through that phase right now.
Andrew Hood: Okay, alright thanks. I will pass the line.
Operator: [Operator Instructions]. Our next question comes from Chelsea Stellick with iA Securities. Please go ahead.
Chelsea Stellick: Hi, good morning guys. Congrats on a great quarter. Yeah, just in terms of acquisition, could you give us an update I guess just like what you're seeing out there or what you think you will see in terms of multiples for acquisition targets and how much are these smaller players getting impacted by COVID-19, their ability to weather the storm, and do you foresee this like having an impact on your strategy?
Hardik Mehta: So, this is Hardik. On the multiple side we expect some kind of depressions or some multiples or some kind of a downward drain on the multiples. The market was really heating up pre-pandemic and the recent conversations we are having with our referral sources are suggesting that they are seeing a downward expectation on the seller side and also on the other marketplace players, which we are one of those. We did see a downward trend on the multiples. What I cannot tell you is how much downwards I think, once we get really active that's when you will know. So definitely on the downward side.
Greg Crawford: And I think Chelsea on the opportunity side and that like I had mentioned before, and that we do anticipate and that that there will be a fair amount of tuck-ins that are going to become available in the second half of 2020. And that, as you know, these smaller companies just did not have the capital needs to respond to the pandemic and didn't prepare. So we're very confident of that.
Chelsea Stellick: Perfect. And then just a second question for me and that will be it, could you just give us a sense on sort of what proportion of the increase in the patient serviced year-over-year is sort of like your base patients? And then what proportion would be the new patients that you are sort of helping with the discharge from the COVID-19 pandemic?
Hardik Mehta: I think referring back to what we said on our revenue growth, which is organic, I think that's kind of the uptick we are seeing on our patient count that is really coming from not related to the acquisitions, but from just organic growth in our natural sources, which is about 4%.
Chelsea Stellick: Alright, that's all for me. Thank you so much.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Greg Crawford for any closing remarks.
Greg Crawford: Thank you, operator and thank you all for your participation today. As always, you can find us on the web at www.protechhomemedical.com where we will be posting a transcript of this call and also our updated investor deck. On the site you can also use some of the exciting products and developments discussed on this call. Thank you and goodbye.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.