Quipt Home Medical Corp.

Thank you for standing by. This is the conference operator. Welcome to the third quarter fiscal 2021 financial results conference call and webcast 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 and 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, as well as the company's MD&A, which you can find on the website, CDAR, and as may be included on EDGAR. the company's actual performance could differ materially from these statements. At this point, I'd like to turn the call over to Chairman and Chief Executive Officer Greg Crawford.

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 Quiptome Medical. Joining me today is Hardik Mehta, our Chief Financial Officer. I would like to begin by applauding our over 600 Quipt employees for their continued commitment to providing superior patient care to improve the quality of life for all our patients served. The quick motto is, exceeding expectations, enriching lives, as providing exceptional service isn't just something we do, it's who we are, and it's who we will always be. It is the clinical services we provide that have allowed us to grow our market share and set our sights on growing into a national home care provider in the United States. The continued compassion care coupled with the secular tailwinds of healthcare being delivered and monitored in the home has fostered continued robust growth, including impressive organic growth of 11% year-to-date. As a reminder, QIP specializes in end-to-end respiratory care, utilizing our interconnected healthcare platform, which leverages a sophisticated technology infrastructure and strong regional distribution footprint to streamline all phases of the delivery process. Known for our service-intensive model, ongoing patient education, and in-home respiratory therapy services, we are able to operate a successful patient-centric ecosystem throughout the organization. At present, QIPT operates out of 60 locations in 15 states across the United States, concentrated in the Midwest, Southeast, and East Coast regions, completing hundreds of thousands of deliveries each year to more than 145,000 active patients with over 18,000 referring physicians. We continue to execute on our three-pronged growth strategy through continued technology implementation, driving organic growth, and closing accretive acquisitions. We are able to leverage technology and workflow processes to improve our operations, which continue to yield consistent performance across the business. We have the financial resources, operational fortitude, and strongest regulatory environment we have had in a decade behind us to allow for the expansion of our geographical footprint and addition of additional talent across the organization. All aspects are a part of the strategy as we become a national leader in respiratory care across the United States. On this call, I will provide an update on the Phillips Recall, the continued bullish regulatory landscape, and update our core business, which continues to be very strong, with a focus on our record-breaking third quarter fiscal 2021 results. As many of you are aware, in June, Phillips Respironic announced a voluntary recall of certain respiratory devices related to polyurethane foam used in those devices. Philips Respironics has been a fantastic partner to us over the years, and we are committed to working through these challenges united together. Our ongoing dialogue with Philips concludes that the entire cost structure will be pushed onto them as it relates to trade-outs. As it relates directly to our business, I am pleased to note that we have additional strong supplier relationships with Philips representing only a minority percentage of the impacted category. Additionally, we are very proactive in getting ahead of the recall, including strong inventory management, device recovery, and as mentioned, working with an alternative supplier. Despite the recall, we have not experienced significant amounts of patients stopping the therapy, either CPAP, BiPAP, or ventilation. We have not experienced the financial impact to our Q3 financials and are yet to see a material impact into Q4. We have the ability and are striving to drive new setups and other product categories to mitigate the future impact due to the recall. Our clinical team has done an excellent job working with patients and physicians to manage this complex process, and we will continue to work diligently to minimize any future impact. On the regulatory front, we continue to operate in an extremely bullish environment. One of those major tailwinds propelling our industry comes from the decision made last October by CMS to cancel the 2021 competitive bidding program for 13 product categories. The cancellation of this program has provided us a clear margin outlook across our product mix and ensured our patient stability for the foreseeable future. Turning to the underlying business, we delivered solid year over year results and reached the high end of our run rate revenue guidance range, nearing $105 million. Our strong performance was driven through higher volumes, higher cash collections, and continuing to support the business with lower operating costs. Revenue of $26.2 million, adjusted EBITDA of $5.3 million, was driven by our heavily weighted respiratory product mix highlighted by sleep ventilation therapy and continued strength and oxygen therapy we are pleased for the nine months ending june 2021 that our bad debt expense has fallen to eight percent compared to ten percent for the same period in 2020 an improvement of two percent this exemplifies our progress on scaling the business and ensuring optimal billing processes. The first rate infrastructure we have in place today allows us to position ourselves as a market leader and gives us the flexibility to add locations organically to the platform as well as efficiently integrate acquired assets. Our recurring revenue base continues to be extremely solid during the first nine months of 2021. With recurring revenue representing approximately 75% of our overall revenue, our recurring revenue base provides us further stability and consistency as we look at our growth outlook, business model, and financial reporting. Quip is at such a pivotal time in the company's life cycles. On the heels of breaching $100 million run rate revenue and entering four new states since mid-July, reaching 60 locations, nearing 150,000 active patients, and concluding a NASDAQ listing at the end of May, we are set to execute on the exciting path forward for us to build shareholder value. With that background, I'd like to hand the call over to Hardik to discuss our third quarter 2021 financial results.

Thanks, Greg. Yesterday evening, we announced our third quarter financial results for fiscal 2021 representing the three months and nine months ended June 30, 2021. In reviewing the third quarter fiscal 2021 numbers, please note that all financial values are in US dollars and the full results are available on CDAR and EDGAR. Here are some key highlights. In the third quarter fiscal 2021, QIP completed 95,192 setups or deliveries compared to 57,551 in the corresponding period last year, an increase of 65%. In the third quarter fiscal 2021, QIP completed 40,580 respiratory resupply setups or deliveries compared to 14,436 in the corresponding period last year, an increase of 181%. The company's customer base increased 74% year-over-year to 64,578 unique patients served in Q3 2021 from 37,128 unique patients served in Q3 2020. The company generated revenue of $26.2 million in the third quarter fiscal 2021, up 41% from third quarter fiscal 2020. Not factoring acquisitions, the organic growth year-over-year was approximately 7%. The company's recurring revenue continues to be strong, and it is above 75%. Operating expenses for the third quarter of fiscal 2021 was 50% compared to third quarter of fiscal 2020 of 51%. For the nine months ending June 2021, bed debt expense was 8% compared to 10%, for the same period in 2020, an improvement of about 2%. This exemplifies our capability to scale and add more revenue through add-on acquisitions without compromising our billing capabilities. Adjusted EBITDA for third quarter of fiscal 2021 was 5.3 million compared to 4.4 million for the third quarter of fiscal 2020, representing a 21% increase year-over-year. Adjusted EBITDA margin for the third quarter of fiscal 2021 continues to be strong and was at 20% for the quarter. Adjusted EBITDA margin was impacted by one-time costs related to the company's NASDAQ listing from May 2021. Cash flow from operations for the nine months ending June 2021 was $11.9 million compared to $9.8 million in the corresponding period ending June 2022. Current assets totaled more than $61.7 million compared to $32.5 million in net short-term liabilities, demonstrating continuing strength in our liquidity. At the end of third quarter fiscal 2021, cash balance was $30.6 million compared to $27.2 million on March 31, 2021. At the end of third quarter fiscal 2021, the company has an undrawn revolving credit facility of $20 million USD. We are proud with the continued execution displayed through the strength of our third quarter results, once again seeing the consistency of our model in full display. We saw revenue breaching $26 million, reflecting the high end of our revenue range target and EBITDA margins remaining above 20%, whilst having a number of one-time expenses related to NASDAQ listing. We continue to experience sustained growth across all product mix, highlighted by heightened demand for ventilators, sleep, and oxygen equipment. We also continue to see very strong cash collections through the third quarter resulting from a continuous effort to better our revenue cycle management processes. Moreover, we have seen our business in Q4 2021 remain elevated and continue to be in a position to accelerate our growth trajectory over the near and medium term as we look forward to further our long-term acquisition strategy. Furthermore, we remain extremely pleased with our operating performance through the third quarter and are pleased with the increasing organic growth rate, which has been a top priority for us. Overall, market conditions continue to be sound, and we believe the tailwinds will continue to life the entire industry. Our infrastructure allows us to scale quickly, and the robust financial position we have provides us the ability to target meaningful acquisition candidates that work significantly to move the needle for our coverage peer in the United States. We expect to have a very busy remainder of the year as it relates to our M&A program and our organic growth initiatives. We are pleased to announce the addition of David Chester to lead our M&A and integration team. David is a healthcare executive with 21 years of experience with a specific focus on the home medical equipment and services industry. David comes as a director of acquisition from one of the largest home medical equipment companies in the industry. We are thrilled to make this significant hire for our company and look forward to David being an instrument in the future growth of the company. In closing, we continue to have an active pipeline and we expect to see more strategic M&A opportunities throughout the remainder of the year. With approximately $33 million in cash on hand and an untapped $20 million credit facility, we strongly believe in our ability to add substantial revenue at a very fast pace. We will continue our disciplined capital allocation strategy furthering our strategic goals and are more confident than ever in our market position and ability to quickly increase our scale. Thank you, and with that update, I'll turn the call back to Greg.