Quipt Home Medical Q2 F25 Update - $QIPT.to

I'm OUT!

*Disclosure: I own shares in QIPT. I am not a professional. Please do your own due diligence.

Price: $2.30 CAD / $1.67 USD

MC: 72 million USD

EV: 141 million USD

1 year performance: -58%

QIPT reported last night and held a call this morning. Results were well behind my expectations and the stock was down 22.8%. Ouch.

*all numbers in USD unless stated otherwise

Quarter Recap

• Revenue came in at 57.4 million vs my estimate of 61.5 million.

• EBITDA came in at 13.4 million vs my estimate of 14 million.

• Withdrawal of Medicare Advantage members following a capitated agreement that went to other providers in the industry.

• In November 2024, A disposable supply contract in which the Company was a participant was not renewed, contributing to the overall revenue impact.

• Seasonal weakness tied to patient deductible resets resulted in modestly lower re-supply volumes during the first half of the quarter;

  • Company has seen improved momentum in volume exiting both March and April 2025.

Call Notes

• Focus is to return to organic growth.

• GLP-1s having no impact on the business so far.

• Stable regulatory environment.

• Looking at M&A beyond DME into other verticals.

• There was some questions around the expectations for growth from here. It sounds like things are stable.

Valuation

Shares are trading at around 2.6x EV/ttm EBITDA.

Closing Thoughts

I originally picked up my shares in the thoughts of this being a potential turn around or at least a return to prior growth rates.

The prior two quarters hinted at returning to historical organic growth rates, at least that’s what I gathered from my perspective. This quarter was supposed to be one to show year over year growth in the business even if just a small amount. The last conference call was held early February and I think the language used was not the same as how the business actually performed. Last two quarters had hinted at them returning to organic growth after lapping the 75/25 blended rate expiration. There was mention of the loss of disposable supply contract, but I didn’t think it was this material. And they released a Strategic Priorities news release at the end of March 2025. In it there was mention of a buyback, so I don’t feel like I was reaching.

I was thinking that with the presence of an activist, we would get some sort of event to push management to initiate a larger buyback or something to support the share price. Given that the management and the activists settled on a cooperation agreement, I thought we were likely going to see a solid quarter giving management credibility in the eyes of the activists. The quarter obviously was below the market’s expectations.

Their are things that the company can control and things it can’t. QIPT can’t control reimbursement rates, the Change Healthcare cyberattack, the timing of the resupply agreement, demographic shifts, etc. One thing they can control is how they communicate to investors. I feel like investors were misled on the company’s performance. It’s hard for me to get onboard with them now.

I sold shares today and am looking to sell the remaining stake in the near future. I would look to re-enter with some data points that give me conviction.

I am sorry for anyone who followed me into this trade.

Thanks for reading.

Dean

* less long QIPT and looking to unwind the trade