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QH

Quipt Home Medical Corp. (QIPT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $61.4M, flat sequentially vs Q4 2024 and down 2% year over year; adjusted EBITDA rose to $14.0M (22.8% margin), a 4.5% sequential increase from Q4 2024 as operational optimization drove margin expansion .
  • Net loss improved to ($1.1M), or ($0.03) diluted EPS, versus ($1.5M), or ($0.04) diluted EPS in Q1 2024; recurring revenue remained robust at 77% of total .
  • Management expects steady margin performance through 2025 and a return toward historical organic growth in calendar 2025; long‑term adjusted EBITDA margin target of ~25% remains achievable with scale, though not in the next three quarters .
  • Potential stock reaction catalysts: continued sequential margin improvement, stabilization of Medicare Advantage headwinds, resupply program scaling, active M&A pipeline, and possible reinstatement of the Medicare 75/25 blended rate .

What Went Well and What Went Wrong

What Went Well

  • Sequential margin improvement: adjusted EBITDA rose to $14.0M (22.8% margin) from $13.4M (21.8%) in Q4 2024, reflecting efficiencies from centralizing back‑office processes and cost optimization .
  • Resupply and recurring revenue durability: recurring revenue was 77% of total; respiratory resupply setups increased to ~124,000 (+1% YoY), supported by technology and centralized intake .
  • Management’s confident tone: “We expect operational discipline to support strong margin performance throughout the year” and a “return towards historical organic growth in calendar 2025” .

What Went Wrong

  • Top-line headwinds persisted: YoY revenue decline (-2%) driven by the 75/25 rate discontinuation, Medicare Advantage capitated shifts, and a disposable supply contract termination (aggregate ~$8M annual impact; ~$1.5M impact in the quarter) .
  • Higher operating expenses: OpEx rose to 49.5% of revenue in Q1 2025 from 47.6% in Q1 2024; patient CapEx increased to $9.4M (vs $7.3M YoY), partly due to ventilator fleet replacement .
  • Cash flow moderation: cash from operations decreased to $9.3M (vs $10.6M in Q1 2024), with Change Healthcare’s prior disruption still spotlighted across recent periods .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$62.6 $61.3 $61.4
Net Income ($USD Millions)$(1.5) $(3.2) $(1.1)
Diluted EPS ($)$(0.04) N/A$(0.03)
Adjusted EBITDA ($USD Millions)$15.3 $13.4 $14.0
Adjusted EBITDA Margin (%)24.5% 21.8% 22.8%
Cash from Operations ($USD Millions)$10.6 N/A$9.3

Actual vs Consensus (S&P Global):

MetricQ1 2025 Actual
Revenue ($USD Millions)$61.4
Diluted EPS ($)$(0.03)
Consensus (Revenue, EPS)Unavailable via S&P Global (tool request limit exceeded)

Notes: Wall Street consensus via S&P Global was unavailable using our data tools for Q1 2025; no beat/miss determination can be made.

Segment / Mix

Q1 2025 revenue mix and recurring components:

ComponentQ1 2025
Rentals of Medical Equipment ($USD Millions)$24.3
Respiratory Resupply Sales ($USD Millions)$22.9
Total Recurring Revenue ($USD Millions)$47.2
Recurring Revenue (% of Total)77%
Total Revenues used in RR calc ($USD Millions)$61.3

KPIs and Operating Metrics:

KPIQ1 2024Q4 2024Q1 2025
Unique Patients Served (approx)~155,000 ~153,000 ~157,000
Unique Set-ups/Deliveries~215,000 N/A~221,000
Respiratory Resupply Set-ups/Deliveries~123,000 N/A~124,000
Resupply Program Patients (TTM)172,000 (as of Sep 30, 2024) 172,000 174,000 (as of Dec 31, 2024)
OpEx as % of Revenue47.6% N/A49.5%
Patient CapEx ($USD Millions)$7.3 N/A$9.4
Cash on Hand ($USD Millions)N/A$16.2 (Sep 30, 2024) $15.5 (Dec 31, 2024)
Total Credit Availability ($USD Millions)N/A$34.7 (Sep 30, 2024) $32.4 (Dec 31, 2024)
Net Debt / Adjusted EBITDA (Leverage)N/A1.6x 1.5x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthCalendar 2025Return to historical organic growth levels “Drive a return towards historical organic growth in calendar 2025” Maintained
Adjusted EBITDA Margin TrajectoryFY 2025“Expect consistent margin performance for remainder of year” (Q3 2024) “Expect strong margin performance throughout the year” Strengthened tone
Long‑Term Adj. EBITDA Margin TargetLong‑TermNot explicitly stated prior25% long‑term target achievable with scale; not in next three quarters Reiterated target
Free Cash Flow Conversion (post CapEx & leases, pre debt service)Baseline6%–8% baseline (Q3 2024 commentary) No new numeric update in Q1; focus on margin stability and CapEx normalization Maintained
Net LeverageOngoingComfortable ~1.5x; capacity to ~2.0x if needed Net leverage 1.5x; balance sheet flexibility to invest Maintained
Regulatory Outlook (75/25)202575/25 pause impacted 2024 Potential reinstatement momentum; no current change Monitoring

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
GLP‑1 impact on Sleep businessPositive adherence and resupply data; no demand impact GLP‑1 continues to have no negative impact; real‑world data supports higher PAP starts and resupply adherence Positive tailwind
Regulatory/Macro (Medicare 75/25; MA capitation; Change Healthcare)75/25 end, MA shifts, Change Healthcare impacts noted Headwinds mostly behind; small residual in H1; possible 75/25 reinstatement momentum Stabilizing; potential positive
DOJ CIDOngoing; progressing with information Ongoing; controls in place; no conclusion of wrongdoing Ongoing
Technology/Process OptimizationEmphasis on e‑prescribe, automation, resupply platform Centralized intake and catchment rate improvements driving resupply and margin Continued optimization
Resupply Program ScalingStrong growth; 82% recurring in Q3 ~174k resupply patients TTM; 77% recurring; resupply ~124k setups Scaling steadily
M&A Pipeline and Industry ConsolidationActive pipeline; undervaluation vs peer transaction multiples Evaluating strategic opportunities; capital deployment flexibility Active
Bad Debt Expense under GAAPElevated in Q3 due to Change incident Historically ~4%–4.5%; expected to decline in H2 2025 Improvement expected
CapEx/Ventilator FleetHigher CapEx due to ventilator replacement Philips ventilator swap to continue for a couple quarters Temporary headwind
Organic Growth TargetsTarget 8%–10% annualized over time Aim for ~2% sequential organic growth; working toward historical levels Recovering trajectory

Management Commentary

  • “Our priorities for the fiscal year… are driving organic revenue growth, achieving operational net profit, generating positive cash flow, and expanding Adjusted EBITDA.” — Gregory Crawford, CEO .
  • “These enhancements are enabling us to operate more efficiently while maintaining our commitment to high‑quality patient care… we expect this operational discipline to support strong margin performance throughout the year.” — Hardik Mehta, CFO .
  • “We are focused on… reducing redundancies, and centralizing back‑office processes… positioning the business for sustainable long‑term growth.” — Gregory Crawford, CEO .
  • “Net leverage at 1.5x… gives us the flexibility to invest in strategic initiatives.” — Gregory Crawford, CEO .

Q&A Highlights

  • Disposable supply contract termination (~Nov 1) expected ~$2.5M headwind in calendar 2025; more weighted in early quarters .
  • Medicare Advantage capitation (Humana) headwind largely laps by H2; residual ~$1.0M in Q2 and ~$0.75–$0.80M in Q3; PPO has stabilized .
  • Margin outlook: stabilization with opportunities; 25% adjusted EBITDA margin is a long‑term achievable target, not within next three quarters .
  • Free cash flow lens: EBITDA minus patient CapEx margin needs to exceed 10% to generate material FCF; 2024 achieved ~10% overall; ventilator swap a near‑term CapEx headwind .
  • Resupply growth drivers: increasing catchment rates >80%, improved sleep compliance, focus on months 5–10 to reduce drop‑off .
  • Employee health insurance costs stabilized; expecting nominal annual increases of ~6%–9% .
  • Capital deployment: evaluating synergistic acquisitions; comfortable leverage up to ~2x if needed within covenants .

Estimates Context

  • S&P Global consensus estimates (Revenue, EPS) for Q1 2025 were unavailable due to data tool request limits, preventing a formal beat/miss comparison. As a result, we cannot quantify variance versus Wall Street consensus for this quarter using S&P Global data [GetEstimates error].
  • Given management’s guidance for steady margins and return to historical organic growth in calendar 2025, estimate models may focus on sequential margin progression and resupply durability rather than near‑term top‑line acceleration .

Key Takeaways for Investors

  • Sequential margin expansion amid flat revenue shows cost optimization traction; adjusted EBITDA rose 4.5% QoQ to $14.0M at 22.8% margin .
  • Headwinds from 75/25, MA capitation, and contract loss are largely behind the company, with limited residuals expected mainly in H1 2025 .
  • Recurring revenue engine remains strong (77% of total), with resupply scaling supported by centralized intake and catchment/compliance improvements—key to margin quality and FCF durability .
  • Long‑term adjusted EBITDA margin target of ~25% remains achievable with scale and organic growth; near‑term focus is margin stability and gradual expansion .
  • Balance sheet flexibility (net leverage 1.5x; $32.4M credit availability) supports organic initiatives and tuck‑in M&A pipeline engagement .
  • GLP‑1 dynamics are a tailwind for sleep: higher PAP starts and resupply adherence, with no observed demand headwind to date .
  • Regulatory watch: potential reinstatement of 75/25 would be a positive rate catalyst; ongoing DOJ CID remains a monitored overhang but with no conclusion of wrongdoing .