Quipt Home Medical Corp.

Thank you for standing by. This is the conference operator. Welcome to the fourth quarter and year-end 2021 Financial Results Conference Call and Webcast for Equipped 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 1 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 Quip Home Medical. Joining me today is Hardik Mehta, our Chief Financial Officer. I would like to begin by praising the over 700 Quip employees for their continued dedication to providing superior patient care to improve the quality of life for all our patients served. 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. Healthcare providers such as hospitals, physicians, long-term care facilities are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control cost. QIP fills this need by delivering a growing number of specialized products and services to achieve these goals. The QIPP 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 begin to implement our strategic vision of growing into a national home care provider in the United States. The continued compassionate care coupled with secular tailwinds of healthcare being delivered and monitored in the home has fostered continued robust growth, including impressive organic growth of 10% as compared to fiscal 2020. We continue to focus on expanding our organizational capabilities, including the addition of talented new team members and have made significant strides on this front through 2021. With a best-in-class service model in place and all the tools needed to position our organization to capitalize on our increased scale, it is the execution of our robust team that will continue to drive growth forward and allow us to take advantage of the opportunities across our product categories and our markets. At present, Quip operates out of 76 locations in 15 states across the United States, concentrated in the Midwest and the Southeast and East Coast regions, completing hundreds of thousands of deliveries each year to more than 170,000 active patients with over 19,000 referring physicians. We have seen continued momentum throughout the year as we executed on our strategic three-pronged growth strategy through a focus on technology utilization, improved workflow processes to improve our operating efficiency, and the build-out of our robust resupply program, all of which continue to yield consistent performance across the business. With the financial flexibility we have, the operational resilience, and strongest regulatory environment we have had in well over a decade behind us, there is plenty of opportunity to expand our geographical footprint into attractive markets throughout 2022. On this call, I will provide an update on the supply chain the continued bullish regulatory landscape, and update our core business, which continues to be very strong, with a focus on our record-breaking fourth quarter and full-year fiscal 2021 results. As many of you are aware, in June, Phillips Respironics announced the voluntary recall of certain respiratory devices related to polyurethane foam used in those devices. In September, Phillips began the remediation process for CPAP and BiPAP units, and the process of repairing and or replacing those units is well underway. The recall, amongst other factors, has created supply chain challenges industry-wide. Despite the recall, we have not experienced significant amounts of patients stopping the therapy, either CPAP BiPAP, or ventilation. In fact, we continue to see elevated levels of demand compared to historical run rates and did not experience a material financial impact to our Q4 financials. We are striving to drive new setups and other product categories to mitigate the future impact due to the recall. Our clinical teams continue to operate at a high level and 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 the major tailwinds driving the industry comes from the decision made 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. Moreover, in September, Medicare finalized a national coverage determination for oxygen that will expand home oxygen coverage and potentially reduce some of the administrative load. Turning our attention to recent actions, CMS announced a 5% plus CPI adjustment for DME in 2022. Typically, the consumer price index increases for DME have been in the 1% to 3% range. Last year, the inflation adjustment was less than 1%. Moreover, legislation was passed to delay a 2% cut in Medicare payments that was created under sequestering but has been put on hold over the past two years due to the pandemic. Congress has also delayed a 4% cut to Medicare reimbursements triggered by the pay-as-you-go law until 2023. The importance of the home medical industry has never been more prevalent, and we are pleased to see these continued positive regulatory developments. Turning to the underlying business, our robust performance was driven through strong demand, leading to larger volumes, higher cash collections, and continuing to support the business with lower operating costs Growth was propelled by our heavily weighted respiratory product mix, highlighted by ventilation therapy and continued strength in oxygen therapy. We are pleased for the year our bad debt expense has fallen to 8% compared to 9% for the corresponding year in 2020, an improvement of 1%. This exemplifies our ability to scale and add more revenue through add-on acquisitions without compromising our billing capabilities. The 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 continued to be extremely solid for fiscal 2021, with recurring revenue representing 77% of 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 had an extraordinary year, breaching $100 million in revenue, $21 million in adjusted EBITDA, entering five new states since reaching 76 locations, and concluding a NASDAQ listing at the end of May. We are set for another milestone-filled year and are excited to execute on the path forward for us to enhance shareholder value. With that commentary, I'd like to hand the call over to Hardik to discuss our fourth quarter and full year fiscal 2021 financial results.

Thanks, Greg. Last Thursday evening, we announced our fourth quarter and audited fiscal 2021 financial results representing the three and 12 months ended September 30, 2021. In reviewing the fourth quarter and audited fiscal 2021 numbers, please note that all financial values are in U.S. dollars and the full results are available on CDAR and EDGAR. Here are some key highlights. Through the company's continued use of technology and centralized intake processes, respiratory resupply setups and or deliveries increased to 158,072 for the year ended September 30, 2021 compared to 61,468 for the year ended September 30, 2020, an increase of 157.2%. The company's customer base increased by 53.8% year-over-year to 140,996 unique patients served in fiscal 2021 from 91,650 unique patients in fiscal 2020. Compared to 253,113 unique setups and deliveries in fiscal 2020, the company completed 364,365 unique setups and deliveries in fiscal 2021, an increase of 44%. Revenue for fiscal year 2021 was $102.4 million compared to $72.6 million for fiscal year 2020. representing a 41% increase in revenue year-over-year. Compared to fiscal year 2020, the company experienced organic growth of 10% for this fiscal year. Recurring revenue as of fiscal year 2021 continues to be strong and exceeds 77% of total revenue. Adjusted EBITDA for fiscal year 2021 was 21.4 million at 21.1% margin compared to adjusted EBITDA for fiscal year 2020 of $15.5 million, representing a 38.3% increase year-over-year. Adjusted EBITDA margin was impacted by one-time costs related to company's NASDAQ listing on May 27, 2021. Revenue for Q4 2021 was $29.1 million, compared to $19.7 million for Q4 2020, representing a 48% increase in revenue year-over-year. Compared to Q4 2020, the company experienced strong organic growth of 14% year-over-year. Adjusted EBITDA for Q4 2021 was $5.6 million at 19.2% margin. Adjusted EBITDA margin was impacted by the expenses related to acquisitions completed in fiscal Q4 as well as lower pre-integration margins that the company's overall margin profile. The company anticipates margins normalizing about 20% when these acquisitions are fully integrated. Cash flow from continuing operations was $18.7 million for the year ended September 30, 2021, compared to $14.1 million for the year ended September 30, 2020. For fiscal year 2021, bad debt expense was 8% compared to 9% for fiscal year 2020, an improvement of 1%. This exemplifies our ability to scale and add more revenue through add-on acquisitions without compromising our billing capabilities. Operating expenses for the year ending September 2021 was 51.6% compared to 53.2% the corresponding period in 2020, a substantial margin improvement resulting from scaling on our existing platforms. Considering our one-time expenses like NASDAQ listing, rebranding, initial acquisition-related costs, and the inflationary environment we are in, this has been a huge validation of our acquisition strategy. The company reported $34.6 million of cash on hands as of September 30, 2021, compared to $29.2 million as of September 30, 2020. The company has undrawn credit facility of $20 million as of September 30, 2021. The current assets total more than $57.2 million compared to $32.7 million in net short-term liabilities, demonstrating continuing strength in our liquidity. Our continued progress in economically building scale utilizing the robust infrastructure we have in place is producing consistent, strong financial results. We are proud with the continued execution displayed through the strength of our fourth quarter and full year results. We saw revenue breaching $29 million for our fiscal fourth quarter and $100 million for fiscal full year, surpassing the high end of our revenue range target, whilst seeing full year adjusted EBITDA margins remaining about 20%. We are pleased with this margin stability, whilst having a number of one-time expenses related to our NASDAQ listing and our continued acquisitions of smaller, lower margin DMA businesses, which we integrate to turn into high margin businesses, that we more accurately reflect company-wide margins post-integration. We also continue to see very strong cash collections throughout the fourth quarter, resulting from a continuous effort to better our revenue cycle management processes. Going forward, we seek to find ways to continue to grow our customer base and penetrate these markets while continuing to streamline our operational platform and generate positive cash flow and operational profits. We completed six acquisitions during the year ended September 30, 2021, and in the fiscal fourth quarter, we were very active implementing the inorganic portion of our growth strategy entering the new states of California, Missouri, Arkansas, and Mississippi. The combined entities we acquired in those new markets had trailing 12-month annual revenues of approximately $11 million and adjusted EBITDA of $1.65 million. Post-integration, we expect the margin profile to be in line with the overall business. During the fiscal fourth quarter, we added two exceptionally experienced healthcare executives with a specific focus on home medical equipment and services industry to serve as EVP of operations and VP of acquisitions and integration, both coming from two of the largest home medical equipment companies in the industry, further complementing our robust leadership team. Moreover, as we look at recent developments on January 4, 2022, we announced the acquisition of At Home Health Equipment, a business with operations in Indiana, reporting trailing 12-month annual revenues of approximately $13 million and $1.6 million in net income with anticipated adjusted EBITDA of $2.9 million, reflective of a 22% margin post-integration. The acquisition creates CRIP's single largest market from a revenue standpoint, covering the entire coverage sphere of Indianapolis. At-home health equipment has a strong revenue base with over 30% steaming from exclusive contracts in the hospice segment, opening a new vertical for us to strategically build throughout 2022. Additionally, there is solid diversification amongst referral sources and a payer base with exposure to less than 20% from Medicare. Furthermore, At Home does not have current exposure to ventilation therapy, providing us the growth opportunity to introduce our clinical ventilation therapy program as well as complementary clinical respiratory products and services. In closing, as we work towards our long-term goal of becoming a national provider of home healthcare in the United States, we remain prudent, ensuring we follow our stringent criteria alongside our proven integration processes which has been the driver of our consistent revenue growth of over 40% displayed on an annual basis. We are enthused with the deep acquisition pipeline we currently have, consisting of a wide range of targets in terms of size and scale, which will help continue to drive our opportunity to penetrate existing and new states. We expect to remain very active throughout 2022 in our growth initiatives. Thank you, and with that update, I will turn the call back to Greg.

Thanks, Hardik. QIPT is in the midst of an ongoing national expansion effort, currently servicing 15 states with the goal of continuing to grow our operating footprint into attractive regions to serve as a leader in respiratory home care across the United States. Driven by our robust acquisition strategy, ongoing organic growth initiatives, including adding and expanding into synergistic verticals of services, and leveraging our significant infrastructure platform, we have the ability to meaningfully reach our goals as we move through 2022. We have done a tremendous job of efficiently integrating acquired businesses, resulting in meaningful cost synergies and revenue growth opportunities that are driving consistent financial results across the organization. 2021 was a milestone-filled year for Quipt. We rebranded the organization to provide us significant opportunity in our local market, as well as continuing to provide superior patient care. We experienced record financial results, entered five new attractive states, added 14 locations, and 50,000 active patients and important insurance contracts. We view ourselves as an operating engine that converts low-margin businesses into high-margin businesses, through operating efficiencies and cost-saving synergies, which offer us immediate, actionable opportunity. It is truly our proven integration strategy that allows us the opportunity to be nimble in making strategic tuck-in acquisitions, acquisitions of scale, and the opening of de novo locations to fill in attractive geographies, obtain important insurance contracts, add to our active patient base, and build out our referring physician network. In 2021, we entered Florida, California, Missouri, Arkansas, and Mississippi and expanded in existing markets highlighted by our announcements in Illinois and Indiana of recent. We are utilizing a combination of the quick brand name post-integration as well as leaving an acquired brand in place where it makes sense. We also continue to aggressively pursue opportunities that will complement our existing service offerings such as expansionary opportunities into additional long-term care facilities, hospital systems, and nursing homes. In November, we acquired a biomedical services company with operations in the southeastern United States, allowing us to expand into a brand-new service line of biomedical repair services for respiratory equipment, including preventative maintenance. We will be able to provide healthcare providers the ability to improve their operational efficiencies of their respiratory equipment program. We will also have the opportunity to acquire used equipment and repair in-house, allowing us the ability to redeploy equipment and lower equipment acquisition costs. The COVID-19 pandemic has demonstrated that home medical equipment care with a focus on respiratory patients is a crucial portion of the healthcare continuum of care. Whether it be patients, referral sources, payers, or lawmakers, It is clear the structural shift is well underway to ensure a patient is treated in a home care setting whenever possible. We continue to work with payers on potential opportunities for a shift from fee-for-service towards one that incorporates the service we provide for patients after the delivery of the equipment. Our team is focused on finding the optimal ways to grow relationships with referral sources, and we are seeing the benefits of this across the organizations. We continue to invest in technology in order to improve our operating efficiencies, whether through the ongoing use of our automated ordering platforms, revenue cycle management, or through our automated subscription-based resupply program. These actions drive sustained value to the company and allows us to continue to increase our productivity. These investments into our scalable, connected healthcare platform drives organic sales generations, accretive acquisitions, targeted market expansion, and cash generation. This model also encourages compliance, improves outcomes, and drives engagement with patients. Moreover, we can drive early interventions, reduced hospitalizations, and monitor treatment plan effectiveness, which all serves as a benefit to the payers. 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 through our organic growth initiatives. Our industry growth rate is about 5% to 6% per year. However, we believe we continue to significantly outpass the industry growth rate by focusing on significantly increasing our market share in key target regions within the markets we serve, as well as opening new markets. Secondly, we continue to lead the industry in technology deployment and in our use of data mining tools to drive efficiencies and profitability. An example would be our robust subscription-based model for resupply, which provides meaningful revenue synergies for us on the acquisition front. The third component of our growth strategy is acquisitions. We are looking for turnkey respiratory operations that can be seamlessly integrated into our highly scalable platform. As we look at M&A, we have three factors to our acquisition approach. The first being a focus on scale and, hence, targeting companies in the revenue range of $5 to $20 million, consistent annual EBITDA margins between 10% to 20% plus, and large distribution volume, which can be leveraged by our platform. The second facet being focused on our ambition of becoming a national provider, this segment focuses on acquiring sub-$5 billion revenue targets with the strategic goal of expanding our payer mix and expanding our geographical footprint across the new states. The third facet being a focus towards larger opportunities that would be more meaningful from a revenue, EBITDA, patient base, and geographical reach standpoint. On the capital markets front, 2021 was an historic year for Quip, completing our most significant milestone to date with the commencement of trading on the NASDAQ in late May, Since that time, we have been steadily marketing the company with U.S. and Canadian-based institutional investors through roadshows and conferences and will continue to be active on this front. We are also pleased to have research coverage from 11 firms across Canada and the United States and look forward to their continued support. We are working diligently to ensure the Quip name, vision, and continued strong performance is echoed to the investment community. At this time, I want to reiterate our outlook for calendar end 2022 representing fiscal Q1 2023. As originally disclosed on November 16, 2021, based on the current operations, market trends, and completed and prospective acquisitions, we are reiterating our outlook for annual run rate revenue of $180 to $190 million with $38 to $43 million in adjusted EBITDA. As I look at the evolution of our company, I am so proud of the entire team for their hard work and dedication to going above and beyond, and our results are a culmination of those efforts. We continue to strategically position the company for continued robust growth, and given the current landscape of the industry, we must remain active in capturing the many opportunities that exist in front of us, and we have all the tools to do so. We cannot be more excited for what the future holds for QIPPT and our more than 170,000 patients we care for. Once again, I want to take a moment to thank the entire QIPPT team for its tireless efforts and its stakeholders for their continued support.

We will now begin the analyst question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw from the question queue, please press star, then two. We will pause for a moment as callers join the queue. Our first question comes from Doug Cooper of Beacon Securities. Please go ahead.

Good morning, Greg. Congratulations on a successful quarter four in the year. First question, on the supply chain issue, is there any way to quantify the impact? I know you said it didn't have a ton of impact, but is there any way to quantify maybe some lost revenue or even if I can call it backlog of patients that haven't yet been able to be set up? Is there any way to quantify that?

Yeah, sure. Thanks, Doug, for the compliment. To quantify revenue in that would be a little tough for us, but just to give you an example in that when we kind of ended our December 31st in that we had approximately over 8,000 patients that were waiting to be set up on sleep devices. And just going back and look at some historical rates in that of where we were You know, we would typically end a month in that with maybe somewhere around 1,000 or so patients in that. So we've got a pretty large backlog that's kind of building, and that's kind of really an industry-wide problem.

Okay. I know the ResMed recently had their Q, I think it was Q2 conference call. The CEO of ResMed predicted that the supply chain issues should start to loosen up in the June quarter. Anything you're seeing to corroborate that, or what are your thoughts on when it may loosen up?

Yeah, we're starting to see from some other partners in that they're starting to move their product in that a little bit quicker. So, we do expect in that as we go throughout 2022 to see those allocations and that increase, which will end up relieving some of these back orders in that that we continue to see. I think the nice thing about Quipt is we're sitting in a little different position in that considering that ResMed was a primary vendor for us for sleep, which allows us to get some higher allocations and some of the smaller providers that were strictly with other manufacturers in that they really can't set up any patients at all. So physicians are kind of seeing that at least quipped is able to get patients set up it may take a lot longer but at least they're moving through um the setup process versus other companies uh they can't at all okay so that's what's helping build out that pipeline we have okay um harding just how much um cash do you have in the bank today after closing the uh the at-home house and um and then the final one for you greg just

Maybe you can just, the run rate of the company today, post these acquisitions, my calculations, around $140 million. You're targeting $180 to $190 by the end of the year. So that would be about a $40 or $50 million gap. What's a funnel look like to get you there? And how do you have confidence that you're going to get there? And I'll leave it there and pass it along. Thanks.

Sure. So, you know, we are sitting around approximately $20-plus million in plus or minus given the post-transaction. The bridge to what you gave, which is what our guidance has been, is of course going to be acquisitions. We have a variety of those. that we are looking at, you know, from low ends of $3 million to high ends of tens of millions of dollars in revenue. So I think we have a pretty broad spectrum of what we are currently looking at and working on. And don't see that as a challenge, at least from where we sit today and the time we have to get that done.

Thank you.

Our next question comes from Seppur Monachery. of 8 Capital. Please go ahead.

Hello and congrats on another excellent quarter and continued performance. I just wanted to touch a little bit more on a comment Greg made around your positioning as there may be a shift towards more of a health value-based purchasing model. Can you characterize some of the key performance indicators that would put you in a position to get the positive payment adjustments that would come from those sorts of programs?

Yeah. This is Greg.

The clinical services that we continue to provide and continue to invest in those resources, as the industry continues to drive towards that type of payment system potentially in the future, we believe that we'll have platforms that will allow us to enter those particular payer contracts, and that swiftly and quickly in certain regions.

And would some of the, I guess, life extension things that you track, or would there be KPIs that you look to that would position you for those sorts of discussions, or is it a cumulative NTEN offering that would position you to win those sorts of payer contracts?

Probably the primary KPIs right now, and that would be the compliance of those devices and the tracking of all the different data of hospital readmissions, which kind of all of that happens in the background. Those are all just kind of internal records in that that we keep, and then we also share with physicians on their particular patients.

Okay. And with that regard, do you expect to provide some, I guess, benchmarks of how you perform relative to some of the, whether it's published or published? broader kind of industry numbers when it comes to possible re-emissions or some of these key KPIs that would make the story and the value more salient, or is that more back-end?

At this point, it's more back-end and internal information, so that's something that we could potentially share with shareholders in the future.

Understood. And as you guys are increasingly expanding your reach, and I know the pending LOI will continue that, do you have visibility on relationships with national pairs? And I know there was some discussion of one national player earlier last year. Was there ongoing discussions with additional national players? And as you get to new regions, is there a pickup with that?

Yeah.

Hey, could you characterize, I guess, numbers or in terms of like pipeline or discussions that you're having there?

A couple of our contracts and that that we had that were more regionally located with very large payers in the U.S., we've been able to obtain national contracts. which essentially, and that would allow us to provide services in any state in that that we decide to go to. So that's what we've been working towards on the payer side.

And we'll continue that progress and kind of update in that as new contracts are presented.

Great. Thanks. And just one last question. I know Hardik mentioned there are some opportunities in the tens of millions of dollars in terms of revenue opportunity that you look at. Would those typically be multi-state opportunities, or based on your current pipeline, are you looking at entry into a potential larger state?

Sure. It's all over the place. Most of them are multi-state, but then there are also some that are concentrated inside a couple of states or maybe just one state in the neighboring state that they are into. Yeah. We do expect that as we grow our revenue line, we would be expanding into more states and territories.

Great. Appreciate it. Thanks for taking the time today. Thank you.

Our next question comes from Paul Stewartson of IA Capital Markets. Please go ahead.

Good morning, guys, and thanks for taking my question. I'm just calling in on behalf of Chelsea. um congratulations on the quarter obviously uh great to see i'm just wondering can you update us in terms of the um acquisition target under loi that you guys announced on november 22nd is that still on track to close in the next uh couple of weeks here as originally guided and and just um also in terms of you know that press release talked about increasing the debt facility is is that on track to to grow that to 100 million as well

Sure. So the LOI is still under works. There were some delays in terms of working through that. We are trying to also work through some quality of earnings information on that. So it's work in progress right now. That's all I can say. As far as The line of credit, you know, we do have a soft commitment letter from our lending partners. However, so that we are not burdening with the full cost associated with such a large facility, we plan to get into an affinitive agreement only when we are ready to draw on it. So that's the status of the large facility.

Okay, that's good to know. Thank you. And in terms of your margin guidance, you mentioned that it was going to be above 20% for the calendar year this year. I'm assuming that's sort of under the roadmap to $180 million, $190 million of revenue. If M&A gets ahead of schedule, if you close some of these tens of millions of revenue kind of targets you're looking at, would that potentially change revenue? change the margin guidance, or is that so robust that even if M&A was ahead of schedule, that would stay on track for above 20%?

I think we feel fairly confident about, you know, 20 and just about 20 at this point of time, but you do know that we are in an uncertain times in terms of inflationary market. And so for those reasons, we've been kind of not giving a more particular guidance as it relates to EBITDA margins. I think in regards to how that correlates with acquisition, over the past couple of years, we have been able to maintain our EBITDA despite of the acquisition activity, which sometimes tends to have a negative pressure for the short run as you kind of squeeze all the synergies out of it. But having said that, I think we feel generally confident about what we've said so far.

Okay. And one last one from me, just in terms of, we saw that Philips expanded their recall by another million devices. Is this something that, you know, the timeline sort of is now pretty fixed in terms of, you know, when you can get off allocation? And I know there was a bit of a question earlier, but maybe just some more color in terms of can ResMed, you know, sort of scale up to offset the lower supply from Philips or or other suppliers, how do you see that trending in the next couple quarters?

Yeah, we expect to be on allocation in that throughout 22, and that's kind of what we're forecasting now. That's why we've been laser focused on other product categories and that and kind of driving our home oxygen business, our home ventilation business. along with our resupply, and that which thus far, and that we've still been able to drive some really nice revenue numbers in that quarter over quarter. And that's what we'll continue to remain focused on. And then we also, you know, at some point in that once we're off allocation and able to get the equipment required to set patients up, and that we do believe there'll be a really good pickup in that within a quarter or two, and that once all those patients are set up,

Okay, thanks so much, guys. Thank you.

Our next question comes from Justin Keywood of Stiefel GMP. Please go ahead.

Hi, good morning. Thanks for taking my call. Had some questions on the organic growth. So if it was 10% for fiscal 2021, would that all be volume related or was there some pricing increases?

There was a little bit of price increase, but if you look at on the overall, you know, from the time those price increases took place, the geographies that we were in that were impacted by the price increases and the proportion of those products in which there were price increases, I think you compare all of that to the organic growth. I think a large portion of the organic growth is through... setting more patients and providing more products and collecting more dollars.

Okay, got it. So majority is volume. And then how sustainable is that organic growth? And were there any COVID-19 impacts there that maybe led to more robust growth that may not repeat in the future?

No, we think actually this is Greg. Actually, we think just the opposite. When we look at the COVID-19 pandemic, we feel that it's been hindering our organic growth. So we believe once we get outside of this pandemic in that we've got a lot of areas in that that we can add as continuum areas and really expand our sales force and that which is frankly over the past two years have been locked out of a lot of new accounts if they didn't have relationships. So So we think that's what's going to happen. We're going to be able to drive better organic growth.

Got it. And if around a double-digit organic growth is the target, assuming that's mostly volume-related, with the CPI increase that you mentioned at the beginning of the call, would that be on top of that, or is considering a 10% organic growth a good target as it is?

Well, we... From a modeling purposes, we actually never promote a double-digit growth. From a modeling perspective, we always encourage analysts and investors to keep us at the industry level, which is 5%, 6%. And then, of course, we do strive to hit the numbers we do hit eventually. That would be my recommendation from a modeling perspective. We continue to see good, robust, organic growth through our increasing of coverage and bettering our patient services, and we'll continue to strive for that. But that increase is typically not inclusive of the CPI increase. Got it. Both rates are not inclusive of that.

I'll add in there that we've been close to 10% over the past three fiscal years. We've been right in just over 9%.

Yeah, absolutely. Good to see. And that 5% CPI increase, is that across all product lines?

Yes, that's our understanding. I mean, it's still preliminary, and we are kind of diving through it, but that's what it looks like.

Okay, great.

And that would just be across the Medicare portion of the business. Yeah, not the whole business.

Okay, okay, Medicare portion. All right, and then just for the fiscal Q1 results, I assume we're pretty close to that earning state. Anything to note on the outlook that we should be aware of or, you know, more or less the same?

Yep, more or less the same.

Okay. Okay. And do you have an earnings date for that quarter?

Not yet. It will be by the due date of the 14th, approximately the 14th.

Sorry, that's the 14th of March or April? February.

February.

Okay. All right. We'll look out for that. Thank you very much for taking my questions. Sure. Thank you.

Our next question comes from Rahul Saragasar of Raymond James. Please go ahead.

Good morning, Greg. Good morning, Hardik. This is Michael Freeman on for Rahul today. Congratulations on the breakthrough 2021. It's really fantastic results. I would like to ask some questions on the broader picture in the medical equipment space. Over the last decade, there's been active consolidation among durable medical equipment players coming down from 10,000 individual suppliers to 5,000 or 6,000. I wonder if you could provide some commentary on how that consolidation is trending, particularly among smaller suppliers, and how that impacts your M&A outlook.

How that impacts the... I lost you on the last part of the question.

I was wondering how the sort of industry consolidation trend is continuing on into the early 2020s and how that consolidation is playing into your M&A strategy.

Sure. So, I mean, it has its pros and cons, to be candid, in terms of the current environment of know recall and other supply chain issues uh the pros and cons would be uh there are uh some uh desperate sellers that wants to uh to be on the market because of the situation they are in and they may not necessarily be a fit for us given that we can't get products uh to support what the challenges that they currently have uh but then it also opens up the good part of it is there are still uh other good opportunities out there that we can look into, we can support, and we would go after them. So I think there has been, I would say, kind of an even out approach to the consolidation. The activity from the broker dealer side seems to be slightly on the slower side. However, we have invested in our own, you know, most of our deals are proprietary in nature. And so to that extent, we feel pretty comfortable. kind of navigating through this current scenario.

Okay, that's really helpful. And then sort of on the bigger side of things, we saw some large M&A recently with Owens & Miner acquiring Apria. I wonder how this affects your, how you view large M&A in your sector and what this might mean for 22, 23, 24?

Yeah, I mean, we think the deal flow in that will continue in that for larger acquisitions. There are some deals that weren't public that, you know, we would consider large, you know, $75 million-plus in revenue. So we continue to see those types of companies available. We do believe in that where we sit now with our ability to increase our line of credit with our cash balance and everything that, you know, we could potentially in that land and acquisition scenario of much larger in size and revenue. So we think the market's going to continue to remain active. I think when you look at the APRIA deal, that kind of just sets where and that you're kind of seeing multiples in things for larger companies, and that would be within that range.

Okay. That's great. Thank you very much, and congratulations on the fiscal year. Thank you.

Our next question comes from Bill Sutherland of the Benchmark Company. Please go ahead.

Thank you. Hey, Greg. Hey, Hardik. Greg, did you mention the impact in terms of the pressures from COVID on staffing levels and churn that we're hearing from particularly the home health nursing companies? Has that had any impact on your growth?

I wouldn't say it's had any impact on our growth, but obviously we've been dealing with human resource as far as retention and recruitment. We feel we're in a much better spot than we were, say, in the middle of 21 and that. That's where we seem to kind of hit our peak in that with overcoming the challenges and that of new hires and retention and that. So we feel things have gotten much better for us. We've obviously pivoted in that with our recruitment. I'll say one thing that's kind of came out of the entire pandemic is from a hiring side is better quality candidates, you know, have decided they want to make a career shift or something, whether it be out of a hospital setting or something, but still want to be in health care. So there have been some benefits in that that we've seen recently over the past quarter or so.

Have you... done anything with your own uh packages retention packages and things to improve retention or um you're just seeing yourself you know becoming more of a favorable place to work relative to some other some other locations it's been an entire package in that we've recently and that improved our health benefits uh we've offered sign-on bonuses uh

and, uh, different things like that in order to, uh, attract talent. Uh, so, and, you know, since we've made those particular changes, um, you know, it's, it's made the hiring in that just a little bit easier and that there's been some relief on that side. So, although I will say, uh, it's definitely not as easy as it was two years ago and that to, uh, attract talent, but I feel we're sitting in a pretty good spot right now.

Sounds good. Thanks for the color. Thank you.

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

Thank you. Thank you, operator, and thank you all for your participation today. As always, you can find us on the web at www.quipthomemedical.com, where we will be posting a transcript of this call and also our updated investor deck. On the site, you can also view some of the exciting products and developments discussed on this call today. Thank you and have a great day.

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