Quipt Signs LOI to Acquire Comprehensive Respiratory Care Leader; To Add 4 New States, 165 Respiratory Therapists and Approximately $14 Million in Annual Revenue

Image by Scott Graham on Unsplash

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Quipt Home Medical Corp. QIPT QIPT announced that it has executed a non-binding letter of intent on November 22, 2021, to acquire an arm’s length private respiratory care company servicing seven states throughout the U.S. reporting unaudited trailing 12-month annual revenues of approximately $14 million, $1 million in net income, and positive Adjusted EBITDA (defined below).

Acquisition Details

The target specializes in providing high-quality, comprehensive respiratory care to patients in the long-term care setting including ventilator management, equipment, oxygen and supplies. It provides these facilities with the necessary clinical personnel and state-of-the-art respiratory tools and equipment, making it easy for them to care for patients with complex respiratory needs. It also has a pulmonary rehabilitation service, which assists patients with an even wider variety of respiratory care issues.

The target services facilities in seven states throughout the United States, four of which would be new states for Quipt. It employs 165 remote respiratory therapists, which would significantly bolster an already robust Quipt clinical team. With a mission that seeks to improve the patients’ health and quality of life by providing outstanding, compassionate respiratory care and unparalleled customer service, it matches the same passionate mission that Quipt continues to employ.

The target represents a new vertical of business for Quipt, which would leverage the company’s highly successful clinical respiratory care platform serving patients in the home into the long-term care setting. Quipt anticipates purchasing power advantages to bring down the cost of respiratory equipment and cross-selling opportunities to service additional patient needs with complementary equipment, and supplies. The target would expand Quipt’s reach, offerings, and allow for the Company to access more sales touchpoints, which the company anticipates will benefit its current business.

According to the LOI, Quipt expects to close the acquisition for $5,000,000, plus a $500,000 earn-out based on certain revenue targets, payable in cash, that would immediately be accretive to Quipt’s Adjusted EBITDA and net income. As part of the proposed acquisition, the company would not assume any long-term debt of the target. Closing of the acquisition is subject to final due diligence, final negotiation, and execution of a definitive purchase agreement, all closing conditions being satisfied or waived and all necessary approvals and is expected to occur within the next 90 days.

The acquisition would be expected to increase Quipt’s annual revenues by approximately $14 million and $1 million in net income before synergies. Leveraging existing infrastructure, Quipt would expect to achieve additional revenue generated from organic growth, cross-selling, and corporate synergies.

“We continue to strategically work through our robust acquisition pipeline, which has companies reflective of all three tiers of our previously disclosed acquisition strategy,  said Greg Crawford, Chairman and CEO of Quipt.

“This target is an extremely exciting opportunity for us to expand our operating scope to include patients with respiratory-related needs in the long-term care setting, which we see as an area of significant growth for years to come. We would leverage our at-home care model, which we feel is best in class into this new segment for us, and anticipate numerous cost and revenue synergies. This acquisition target would add four new states to our operating footprint, and 165 respiratory therapists to enhance our clinical team even further, as well as add approximately $14 million to the top-line and $1 million in net income.”

Chief Financial Officer Hardik Mehta added, “We have significant momentum across the organization and look forward to sharing our progress as we move into 2022. As a reminder, our balance sheet remains very solid with substantial flexibility to allow us to continue to implement our corporate strategy without interruption. The LOI and the letter of intent announced on November 16, 2021, both are expected to be closed using cash on hand and existing debt facility.”

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.