QIPT, the #5 leader in the Home Medical Equipment market!Robust business model benefiting from growing national scale: is the fifth-largest home medical equipment provider with 115 locations across 26 states. QIPT's growing national scale translates to advantages in price negotiations, efficiency in SGA spending, improved quality of service and ultimately, gains in market share. Management also highlighted its unique technology in advancing billings collection and improving quality of patient care through its automatic reordering system.
Rating: QIPT trades at very reasonable valuation of ~6x C2023E EBITDA. QIPT has historically traded at a low EBITDA multiple, given it has been mostly a regional operator, but the business is quickly transitioning into a national platform. National operators typically warrant better terms with payors, along with purchasing power and leading to improved margins. IMHO, should be trading in 8x-10x F2023 EBITDA range.
Strong drivers supporting 8-10% organic growth: QIPT delivered ~9% organic growth historically with conviction that 8-10%+ levels can be sustained in the near future. In January, durable medical equipment (DME) products benefited from a CPI increase of 6.4-9.1% with an estimated 8% blended price increase across the business's relevant product line (~35% of the business). At the same time, industry-wide supply chain issues have largely subsided with expectations that pre-pandemic levels of operations will resume by CQ2. The company has also been expanding its sales force to match its newfound size, and anticipates market share gains through increased exposure to service providers and patients.
All good news which will be reflected quite nicely in this weeks release of the Q2 2023 financials and earnings conference!
GLTA Quipt believers!