Quipt Home Medical Corp.

significant progress made. We have expanded our organizational capabilities, continuing to grow our employee base with additional talented new team members at each facet of the company, including many vital corporate functions. Additionally, as disclosed last quarter, we have accelerated the hiring of additional sales professionals which we anticipate will be a key driver of future organic growth. The model we have built has a consistent and robust track record for driving growth and we are very enthused by the continued operating results. The key differentiator for Quip in the marketplace is the high-touch service model we utilize catered to improving the quality of life for all of our patients. Our model is focused on constant patient education, device compliance through remote patient monitoring, and the use of our healthcare platform to drive early interventions and reducing hospitalizations. alleviating stress on the traditional healthcare system. This clear service-driven model is helping us to grow our market share organically as healthcare providers, such as hospitals, physicians, long-term care facilities, look for partners that can offer a range of products and services that improve outcomes, reduce hospital admissions, and help control costs. QUIP fills this need by delivering a one-stop solution for our sales touchpoints, offering a full suite of products and services to achieve these goals. The continued focus on economically scaling the business organically and inorganically with a focus on clinical excellence is having a very positive impact on our operating and financial results. The scale we are achieving, coupled with strong secular winds, such as a growing trend of Americans with multiple chronic conditions and aging U.S. population, and need for healthcare to be delivered and monitored in the home has fostered continued robust growth, which we are extremely proud of. On this call today, I will provide a summary of our significant growth activities year to date and update on the continued bullish regulatory landscape, the current supply chain environment, which has been improving and update our core business, with a focus on our record-breaking third quarter fiscal 2022 results. We have seen accelerating momentum year-to-date executing on the key pillars of our growth strategy, including making attractive acquisitions to advance our scale, investing in future organic growth, and further building out our healthcare network throughout the country. To this end, we were awarded a national contract with UnitedHealthcare the largest healthcare insurance provider in the United States. This UnitedHealth contract significantly expanded patient accessibility and continues our aggressive growth path. Moreover, as we make acquisitions, we can leverage this national contract where applicable to expand patient access as another synergy for us. Our growth initiatives focused on expanding our continuum of care, continued with the recently announced supply contract with Cardinal Health. This contract is extremely meaningful for QIP as it provides us the ability to produce meaningful cross-selling opportunities, including additional product lines to go after in the future. Additionally, any new acquisition will benefit from being able to immediately leverage the contract at new locations across the country, providing further synergies With the expectation this contract will give us stronger buying power for disposable medical supplies. Turning to the current supply chain dynamics, we have continued to see signs of steady improvement with timely allocations of CPAP devices through physical Q3 and real-time into physical Q4. For those not aware, in June of 21, Philips Respironics announced a voluntary recall of certain respiratory devices related to polyurethane foam used in those devices. The inventory trend has remained positive in real time, and we continue driving patient setups to ease the backlog as we move through fiscal Q4. The backlog now stands at approximately 6,000, down from a peak of over 8,000 in fiscal Q1. It is important to note a patient joins the resupply program three months after being set up on a device, which creates a lag in revenue, even as we continue to make headway on the backlog. Over the coming quarters, as the backlog continues to ease, that represents a nice tailwind for us. We believe there is a reason to be optimistic about the supply chain pressure continuing to alleviate as we continue through the calendar year, and moreover, We have not factored in any supply from Phillips at this time in our forecasting. On the regulatory front, we continue to operate in the best environment in well over a decade. The cancellation of the 2021 competitive bid program has provided us a clear margin outlook across our product mix and ensured our patient stability for the foreseeable future. Furthermore, CMS announced a 5% CPI adjustment for DME in 2022. Typically, the consumer price index increases for DME have been between 1% to 3%. Last year, the inflation adjustment was less than 1%. We are also anticipating a significant increase in the CPI adjustment for 2023, which would have a favorable impact on our margin profile. The importance of of the home medical equipment industry has never been more prevalent, and we are pleased to see these continued positive regulatory developments. Turning to the underlying business, our strong team led by operators continue to navigate this inflationary environment extremely well, and we have seen positive momentum in our hiring initiatives as we have progressed through the year. In particular, on the clinical services side, We have also seen continued margin strength and believe we have turned the corner on the worst of the supply chain impact. These positive trends and continued operating resilience led to another record financial performance in our fiscal Q3, which saw revenue of $36.7 million, 2% sequential organic growth from fiscal Q2. Strong operating cash flow and our adjusted EBITDA margin solid at 21%. I am proud of the continued robust margin profile our team of operators have maintained in a high inflation environment. Our overall performance is a result of the robust demand for our full suite of respiratory products highlighted by ventilation therapy and oxygen therapy. We are also seeing very strong demand for sleep therapy, which we anticipate will be a nice tailwind as the supply chain environment continues to improve, allowing to place more devices. Moreover, as we have moved out of the pandemic environment, we have seen more unrestricted access to referral sources, which will also assist in our organic growth initiatives. We continue to leverage our capabilities to move us up the chain of value-based care, and our results reflect this. This continued focus on superior patient outcomes and satisfaction was also a major factor in receiving the national insurance contract recently announced. Looking at our current acquisition pipeline, it remains very deep with targets that meet our stringent criteria, and we expect to remain very active over the remainder of the year. With that commentary, I'd like to hand the call over to Hardik to discuss our third quarter fiscal year results.

Thanks, Greg. Last evening we announced our fiscal third quarter 2022 financial results representing the three months and nine months ended June 30, 2022. In reviewing the fiscal third quarter 2022 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. The company generated revenue of 36.7 million in the third quarter fiscal 2022, up 40 percent from the third quarter fiscal 2021 and sequential quarter over quarter growth of two percent as of june 30th 2022 the company's backlog was approximately 6 000 patients in the queue to be set up on sleep devices compared to a more typical 1000 patients historically as greg mentioned we have seen timely allocations of cpa devices progressing in fiscal Q4 and are cautiously optimistic that sleep device allocations will continue to increase through the remainder of the year, which will relieve the backlog, generating a lift in revenue from this impacted segment of the business. Adjusted EBITDA for the third quarter of fiscal 2022 was $7.7 million compared to $5.3 million for the third quarter of fiscal 2021, representing a 44% increase year-over-year. Adjusted EBITDA margin for the third quarter of fiscal 2022 was strong at 21% for the quarter. Revenue for the nine months ended June 30th, 2022 increased to 99.8 million, a significant increase of 36.2% compared to the nine months ended June 30th, 2021. Adjusted EBITDA for the nine months ended June 30th, 2022 increased to 20.8 million or 30.4% increase compared to the nine months ended June 30, 2021, and represented 20.8% of the revenue. In the fiscal third quarter 2022, QIP completed 133,704 setups or deliveries compared to 95,192 in the corresponding period last year, an increase of 40%. In the fiscal third quarter 2022, we have completed 62,815 respiratory resupply setups or deliveries compared to 40,580 in the corresponding period last year, an increase of 55%. The company's recurring revenue continues to grow and it is about 77%. For the nine months ending June 2022, the operating expense was 46.7% of revenue compared to 43% for the same period in fiscal 2021. The increase was due to higher wages, fuel costs, as well as some one-time and non-recurring corporate expenses, including expenses related to acquisitions. Cash flow from operations for the nine months ending June 2022 was 19.4 million compared to 11.2 million in the corresponding period ending June 2021. Current assets totaled more than 47.3 million compared to 46.5 million in the net short-term liabilities, demonstrating continuing strength in our liquidity. At the end of third quarter fiscal 2022, cash balance was 18.5 million. We are continuing to build momentum across the organization led by the significant expansion of our infrastructure in favorable geographical areas throughout the country driven by our acquisition and organic growth strategy. I'm very pleased to see revenue reaching $36.7 million for our fiscal third quarter with a strong adjusted EBITDA margin at 21% as we continue through the integration process. of our recent acquisitions and anticipate these margins remaining stable. Our operating model continues to shine, further proving its strength during this challenging period of high inflation where our margins have continued to remain rock solid. The strong performance was driven by elevated demand for oxygen, ventilation therapy, and continued strength in our automated resupply program. We also continue to see solid cash collections through the third quarter, resulting from a continuous effort to better our revenue cycle management processes. The infrastructure we have in place today allows us to position ourselves as a market leader in at home respiratory care that quits formally within the top 10 providers by size in the country. Going forward, we will continue to find ways to grow our patient base and penetrate attractive markets with continuing to streamline our operational platform. Our revenue base during fiscal Q3 2022 remains strong, with recurring revenue representing approximately 77% of our overall revenue. This recurring revenue base provides us further stability and consistency as we look at our growth outlook, business model, and financial reporting. We are also extremely pleased with the ongoing results of our acquisition strategy. Integration is the key to our ongoing financial and operating success as it allows us to continue the strong pace of closing strategic acquisitions, and we have been enthused with the integration efforts to date. Since April 19, 2022, we have closed four acquisitions, adding locations across nine U.S. states, including Arkansas, Georgia, Massachusetts, Mississippi, North Carolina, Ohio, Texas, California, and Louisiana. Louisiana represented the 19th state of service for us, and the total geographical area represented over 5.5 million COPD patients, our key target group. The four acquisitions added over 30,000 active patients equate to over 25 million in revenue and over 4.5 million of adjusted EBITDA post integration. We are extremely focused on the successful integration of our recent acquisitions, which are all on schedule. It is our proven integration process, which has been the driver of our consistent financial and operating performance displayed on an annual basis. As it relates to our current pipeline and future growth, we currently do have a significant pipeline of acquisition candidates across all three tiers of our strategy, which will help continue to drive our opportunity to penetrate existing and new states. Moreover, we are looking at potential expansionary opportunities into synergistic verticals of service that could enhance our end to end product and service offering. We anticipate the recently disclosed Cardinal Health Supply Contract will have a significant role in any potential new product offering. On heels of strong performance, we were able to successfully convert the debentures notice of which has been provided. We believe this to be a very favorable event, strengthening our balance sheet and positioning us for future growth. On August 12, CIT committed to provide 100% of the senior secure credit facilities in the aggregate amount of up to $80 million, which comprises of a term loan facility of $5 million, a delayed draw term facility of $55 million, and a revolving credit facility of $20 million. We expect to close this facility in the next 30 days. It is important to note that this credit facility will expand with additional growth as long as we are within covenants. meaning while the current commitment is 80 million, as we continue to grow, the credit facility will increase beyond 80 million. With the robust balance sheet we have and the fresh capital commitment from that market, we will continue to solicit BME operators with the strong value proposition we have towards potential sellers in the marketplace. We are very enthused about our future prospect as we continue increasing our scale across the United States. Thank you, and with that update, I will turn the call back to Greg.

Thanks, Hardik. During this continued period of substantial expansion, QUIC has now grown its operating footprint to more than 90 locations in 19 states across the United States, completing hundreds of thousands of deliveries to more than 200,000 active patients with over 21,500 referring physicians. As Hardik mentioned, since April, we have closed four attractive acquisitions, adding over 30,000 active patients, equating to over 25 million in revenue and over $4.5 million of adjusted EBITDA post-integration. Moreover, we have now reached a run rate revenue of approximately $160 million on the heels of the hometown acquisition announced in July putting us well on our way to meet our financial outlook year to date. We have added important insurance contracts, added significant infrastructure and personnel, all of which has enhanced our national coverage sphere over an area that includes over 5 million COPD sufferers. We have built a scalable healthcare platform that allows for aggressive expansion organically and inorganically driven by the patient-centric ecosystem we have created, and this strategy is allowing us to grow market share in new and existing markets. Moreover, we are able to leverage the National United Health Contract when we acquire a provider to capture more eligible patients, accelerating expansion efforts. Notably, we are working on securing additional national contracts, and we will continue to work with other large commercial payers to help them better understand our strong patient-centric model and the benefits to patients and payers alike. With our valuable commercial insurance contracts, strong referring physician network, and significant patient base, we have accumulated in the state give us the opportunity to take a land and expand approach towards future growth. As we look at the current landscape, there is significant push underway to ensure a patient is treated in a home care setting whenever possible. It is important for us to continue finding optimal ways to grow relationships with referral sources, and we are seeing the benefits of this across the organization by focusing our efforts here. I would now like to review with you the three components of our core growth strategy. First, we are laser focused on growing market share economically and profitably through our organic growth initiatives. This includes expanding our sales team, which are quips, boots on the ground, reaching key touch points such as hospital systems, physicians' offices, and rehab centers. Moreover, opening de novo locations where it makes sense, leveraging the numerous cross-selling opportunities that exist, adding new verticals of service, and continuously optimizing our processes. Signing additional national healthcare insurance contracts with major commercial payers in the United States, further expanding our patient accessibilities. looking at opening de novo locations to complement existing infrastructure across our markets. Secondly, we continue to lead the industry and technology deployment driven by our robust respiratory resupply platform, which provides meaningful revenue synergies for us on the acquisition front. We expect our resupply program to be a driver of continued growth for us. The third component of our 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 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 million revenue targets with the strategic goal of expanding our payer mix and expanding our geographical footprint across 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, 2022 has continued to be a very exciting time for the company. as we have returned to in-person roadshows, investor and industry conferences. This has represented the first opportunity in the United States to meet with investors in person on the heels of our NASDAQ listing in May of 2021. Our ongoing success led to QUIP being included on the Russell Micro Cap Index at the conclusion of the 2022 Russell Index's annual reconstitution on June 27, 2022. Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. Approximately $12 trillion in assets are benchmarked against the Russell's U.S. indexes. Through the remainder of the year, we will continue to attend leading small cap conferences, participating in non-deal roadshows, and work with our covering analysts to get the quick name in front of as many eyeballs as we can. We feel we are very early in getting our exciting story out there, which provides us plenty of opportunity to grow the quality and geographical diversity of our shareholder base. As we move through the balance of the year, our top priorities remain investing in technology-driven platform in order to improve our operating efficiencies We're through the ongoing use of our automated ordering platform, revenue cycle management, and through our automated subscription-based resupply program. These actions will continue to drive sustained value and allows us to increase our productivity. These investments into our scalable connected healthcare platform drive organic sales generations, accretive acquisitions, targeted margin expansion, and cash generations. This model also encourages compliance, improves outcomes, and drives engagement with patients. Moreover, we can drive early interventions, reduce hospitalizations, and monitor treatment plan effectiveness, which all serves as a benefit to the payers. Once again, I would like to take a moment to thank the entire QIP team for its tireless efforts and its stakeholders for all their continued support.