Quipt Home Medical Corp.

Thank you for standing by. This is the conference operator. Welcome to the fiscal fourth quarter and audited full year 2024 earnings results conference call 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'll 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 on operator by pressing star then 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. 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 to everyone joining us today. I'm Greg Crawford, Chairman and CEO of Cryptome Medical. I'm pleased to have Hardik Mehta, our Chief Financial Officer, and Tom Rurik, our Chief Accounting Officer, also joining me today. Quipt Home Medical is a diversified healthcare services company delivering a comprehensive range of home medical equipment and services to patients across the United States. Our commitment is to clinical excellence powered by a patient-centric model and advanced technology-enabled solutions. These combined with our specialized respiratory programs allow us to effectively meet patient needs in the comfort of their own homes. At present, Quipt has expanded to over 135 locations across 26 states with over 314,000 active patients, which has enabled us to strengthen our coast-to-coast reach. Our go-to-market strategy is anchored in delivering an end-to-end respiratory care solution supported by a diverse portfolio of durable medical equipment offerings. By operating as a one-stop solution for patients and healthcare providers, we've built a scalable model designed to meet the complex and evolving needs of the DME ecosystem. Respiratory care represents approximately 80% of our product mix, highlighting our commitment to serving the patients with pulmonary and cardiovascular conditions. This focus aligns with powerful macro trends, including the aging population, the increased prevalence of COPD, and the significant untapped potential in the sleep apnea market. These factors combined with our expertise and scale position us to meet the rising demand for high-quality in-home respiratory care solutions. On today's call, we will review our fiscal fourth quarter and full year 2024 results, as well as provide insights into emerging demand trends, operational highlights, and the strategic initiatives shaping our trajectory into fiscal 2025. For fiscal 2024, we achieved record revenue of $245.9 million. 16% year-over-year growth alongside a consistent adjusted EBITDA margin of 23.5%, leading to adjusted EBITDA of $57.9 million, an increase of 14% over last year. In real time, we are experiencing consistent demand across all major product categories with notable gains in our primary sales channels. We are pleased with the progress achieved in fiscal fourth quarter, particularly as we continue to navigate through several unique industry-wide challenges. In Q4, we returned the positive sequential organic growth of 1%, a meaningful improvement that reflects the resilience of our business. As discussed on previous conference calls, we have officially transitioned from IFRS to GAAP reporting standards, aligning us with our US peers. As part of this change, bad debt expense is now reported within the revenue line, which inherently reduces the reported revenue figure. It's important to emphasize that this adjustment represents a change in presentation and does not represent a sudden loss of revenue. Bad debt expense has always previously been reported as a separate line item, and this adjustment simply reflects its inclusion within the revenue under GAAP. As mentioned, we return to positive sequential revenue growth. Year-over-year organic growth was approximately 3%. Real-time strength in referral activity across our product offerings has us well positioned to achieve sustained consistent organic growth in calendar 2025. Turning to our sleep business, we are pleased to report that GLP-1 medications continue to have no negative impact on demand. Referral activity for new device setups remain steady while replacement supply volumes have been strong. Recent real-world data shared by the leading sleep device manufacturer involving 989,000 patients underscores the positive effects of GLT-1 on treatment adherence. The study found that individuals with an obstructive sleep apnea LSA diagnosis who were prescribed a GLT-1 were 10.8% more likely to start CPAP therapy compared to those not on GLP-1s. Additionally, these patients exhibited higher resupply order rates over both 12 and 24-month periods. We believe GLP-1 medications will serve as a long-term tailwind for our sleep business, introducing more motivated patients into the healthcare system as they focus on improving their overall health. Moving to the ongoing civil investigative demand known as the CID, We continue working diligently to resolve this matter as quickly as possible and want to again make the point that the government has not determined that any wrongdoing has occurred at this time. We remain committed to transparency and will provide updates as appropriate. As it relates to the regulatory environment, late last week, the Centers for Medicare and Medicaid Services announced positive CPI adjustments for 2025 fee schedules, ranging from 2.4% to 3%. depending on the item and the location. Competitive bidding program items in former competitive bidding areas will see a 2.9% increase, while competitive bidding program items in non-CBA areas will receive a 3% increase. In rural areas, the 50-50 blended rate will continue with the 3% increase applied to the adjusted portion of the rate. This positive CPI adjustment will provide further support to our organic growth objectives for calendar 2025. During fiscal Q4, we prioritized creating additional efficiencies within our core operations, ensuring our organic growth ambitions for calendar 2025 are met. As we emerge from the industry-wide challenges faced in 2024, we are actively exploring opportunities to allocate capital for further growth and value creation. As we head into calendar year 2025, we expect to see a return to our historical organic growth rate. Moving to the M&A landscape, It remains highly dynamic with numerous opportunities aligning with our disciplined acquisition criteria. Our pipeline is expanding and we remain focused on executing synergistic acquisitions at attractive multiples to enhance our scale. We are managing our debt conservatively, with net leverage at 1.6 times, which gives us the flexibility to invest in strategic initiatives. As we move forward, we are confident in our ability to deliver exceptional patient care, strengthen relationships with payers, and execute a disciplined, scalable growth strategy. Through these efforts, we are well positioned to drive consistent long-term value for our shareholders. With that commentary, I'd like to hand the call over to Hardik to discuss our fiscal fourth quarter and full year 2024 financial results.

Thanks, Greg. On Monday evening, we announced our fiscal fourth quarter and full year 2024 financial results representing the three months and 12 months and their September 30, 2024. Please note that all financial values are in US dollars and are now reported under GAAP accounting principles with the comparison figures also reported in GAAP for consistency. Here are some key highlights. Respiratory resupply setups and deliveries increased to 480,000 for the year ended September 30, 2024, compared to 396,000 for the year ended September 30, 2023, reflecting a growth of 21% driven by our use of technology and centralized intake processes. The customer base grew 10% year-over-year, serving 314,000 unique patients in fiscal year 2024, compared to 286,000 unique patients in fiscal year 2023. We completed 854,000 unique setups slash deliveries in fiscal year 2024, an increase of 13% from 754,000 unique setups deliveries in fiscal year 2023. Revenue for fiscal year 2024 was $245.9 million compared to $211.7 million in fiscal year 2023, representing a 16.2% year-over-year increase. Approximately $7.1 million, or 3%, was driven by organic growth. As part of GAAP, revenue is now inclusive of our bed debt expense. This change does not represent a sudden loss in revenue, but a different way of presenting bad debt in our financials. It's important to emphasize that bad debt expense has always existed and been reported separately from revenue. The difference now is its inclusion within revenue figure under GAAP. All comparison periods reflect this change. We can read revenue remains strong, exceeding 78% of total revenue in fiscal year 2024. Adjusted EBITDA for fiscal year 2024 was 57.9 million with a 23.5% margin compared to 50.6 million and a 23.9% margin in fiscal year 2023. It represents a 14% increase year-over-year. For fiscal Q4 2024, revenue was 61.3 million, up 3% from 59.6 million in fiscal Q4 2023. We returned to positive sequential organic growth of 1%. Adjusted EBITDA for fiscal Q4 2024 was $13.4 million, reflecting a 21.8% margin compared to $14.7 million at 24.6% margin in fiscal Q4 2023. This represents an 8.8% decrease year over year. Cash flow from continuing operations was 35.7 million for the 12 months ended September 30, 2024, compared to 37 million in the prior year. Excluding the impact of these reporting adjustments, QUIP achieved positive sequential revenue growth of 1%, signaling that our underlying business fundamentals are improving. We expect that calendar year 2025, which begins with fiscal Q2 2025, we'll see a return to our historical organic growth rate. Operating expenses as a percentage of revenue came in at 49.8% in fiscal year 2024, compared to 48.7% the corresponding period in 2023. Acquisitions contributed approximately 8.6 million of the increase. Professional fees related to the CID and the loss in foreign private issuer status contributed approximately 3.3 million to the increase in fiscal 2024. For fiscal 2025, we anticipate lower CID professional fees with the objective to find resolution. Medical equipment capex, also known as rental equipment transfers from inventory during the years ended September 30, 2024 and 2023 was 33,566,000 and 29,279,000. As of September 30, 2024, the company reported 16.2 million in cash on hand compared to 14.4 million in cash on hand as of June 30, 2024. The company has total credit availability of 34.7 million, including 13.7 million available on the revolving credit facility and 21 million on the delayed draw term loan facility. We maintain a conservative balance sheet with the net debt to adjusted EBITDA leverage ratio of 1.6 X fiscal 2024 marked a year of resilience for our business in the face of multiple industry wide challenges that we absorb, which negatively impacted our financial performance and prevented us from achieving our target of eight to 10% annualized organic growth. The pause of the Medicare 75, 25 relief as of January 1, 2024, And the withdrawal of Medicare Advantage member due to the capitated agreement engaged with other providers in the industry impacted revenue by approximately 5 million for the year end of September 30, 2024. Moreover, the estimated impact on collections on accounts receivable from the change healthcare cyber attack is estimated at approximately 3 million. Despite the headwinds, we achieved record-breaking results of 245.9 million in revenue and achieved an adjusted EBITDA margin of 23.5%, which reflects our ability to drive operational efficiencies and scale. These results demonstrate the consistency of our performance, even in periods of uncertainty, and our ability to adapt to changing market dynamics. Our operating metrics remain strong, supported by consistent demand trends and referral patterns across our diversified product and service mix. Importantly, the strength in these referral patterns offset the majority of the last Humana Medicaid Advantage patients, highlighting the resilience of our business model. As we transition into calendar 2025, we are optimistic about our ability to sustain this underlying positive trends, supported by strong referral activity and demand for our end-to-end respiratory solutions. Fiscal 2024 showcased the stability and resilience of the business, and we are well positioned for sustained growth and long-term success. We expect consistent organic growth in calendar 2025 to return, and that it will persist as we continue to drive volume through our organic sales team, the cross-selling of products, and continued expansion of the continuum of care in adjusted markets. For fiscal 2025, our guidance continues to be for 6% to 8% free cash flow, a non-GAAP measure. The company defines free cash flow as adjusted EBITDA, less capital expenditures, both in cash and those financed with group and loans, and repayments of leases. The company believes free cash flow is a useful supplemental financial measure for it and investors in assessing the company's ability to pay interest, repay the senior credit facility, and pursue business opportunities and investments, including making acquisitions. For fiscal 2024, the company reported 16.2 million or 6.6% of revenue in free cash flow. The continued consistency of our revenue base is driven by our highly recurring revenue model, which accounts for more than 51% of our total revenue mix. Our resupply program is a major proponent of this recurring revenue base as we have significantly scaled, now consists of 172,000 patients as of September 30, 2024. The resupply program represents an amazing growth area for us, extending our patients' life cycle with us. Our healthy balance sheet with 50.9 million of liquidity provides ample flexibility to execute both our organic growth initiatives and strategic acquisition pipeline. With a modest net leverage of 1.6 times, we are well positioned to deploy a balanced mix of debt and cash to scale our business thoughtfully. With the expectation that the cost of capital environment will improve over time, we are confident in our ability to capitalize on strategic opportunities while maintaining financial discipline. The combination of our operational scale, financial strength, and disciplined growth strategy positions us to deliver enhanced value for our shareholders in 2025 and beyond. As we continue to scale, the inherent operating efficiencies in our model will drive margin enhancement and long-term value creation. Scale is a critical component of our strategy as it enhances our ability to meet increasing demand, deepens our market penetration, and creates durable competitive advantages across our platform. Thank you. And with that update, I'll turn the call back to Greg.