Quipt Home Medical Corp T.QIPT

Raymond James expects 30mil equity raise - dilution coming?

[besttobe]

VALUATION We update our models (Ex. 1) in which we conservatively assume a 3% organic growth rate, and no additional M&A through 2023 as QIPT’s management team—whom we’ve come to appreciate as very strong operators (yet another reason for right-sizing of QIPT’s valuation multiple)— ensures the acquisition of Great Elm is neatly and fully integrated. Also, while management indicated that the carrying cost of the $73 mln debt is very manageable given QIPT’s ~2.0 debt/ equity ratio, we conservatively assume a near-term $30 mln equity raise @ $9/sh deriving a proforma FD sh. count of 42.5 mln. As such, we roll forward our valuation of QIPT to a blended 10x 2023E EV/EBITDA and 8x 2024E EV/EBITDA multiple (corrected from previous inaccurate 12x and 10x resp.)

[lscfa]

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[lscfa]

lame bashing.  New equity at $9 US for accretive deals is not dilutive.

[ValueRider]

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[besttobe]

Maybe the right answer would be, instead of juvenile insults, is there will be no equity raises and Raymond James is just hoping to make some money. There is no need for an equity raise. This year Quipt will be focusing on fully intergrating the GEG and doing s few tuck ins. Also trying to make the company profitable and FCF positive now that they reach scale to prove the model. They have plenty

[gibbonsj]

I like the idea of $9/share because that's where share price will settle and then move up from there on the next acquisition or financial report.

[HatrikSeLaine]

As a reminder if this so-called equity future raise occurs, Raymond James is predicting it happens at $9 USD ($12 CAD).   $30 million USD of dilution at that point is going to look like chump change given the 60% upswing in CAD share price form here.

[Carlito3311]

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[checkup]

$7.50 cad  is way too cheap .........IMO ...... doubtful that wil happen.

[Tropicalsun]

It just goes to show what a guy misses reading some of these reports, if in fact you don't take the time to read them carefully. Totally missed the statement by RJ that conservatively we assume a near term equity raise at $9 ish for 30 million bucks.  An oddly worded statement in my view and how the hell would they just assume this? Near term in my books means fairly soon, stock trading

[HatrikSeLaine]

My thoughts exactly TropicalSun.   $12 CAD is light years away from $7 CAD and at that point the dilution is quite small on $30 million (if it ever even happens).   I just wanted all in this board to be quite clear in this one footnote from one analyst's personal thoughts as to what may or may not happen.  Also, please don't let the bashers totally embellish these or

[lscfa]

All the analysts have underestimated impact of CPI rate increase on ebitda. They have assumed historical margin of ~20%

[ValueRider]

ISCFA, the rate increase won't be reflected in Q1 numbers right? Going to be Q2 numbers that show that right?

[lscfa]

correct

[Tropicalsun]

I would agree with that statement, quite frankly it puzzles me as to why. These analyst's do have the resources, (money, staff ) to get the job done correctly. Probably lazy, or don't see it as that big a deal. However if you are correct in your dd, the CPI adjustment should go straight to the bottom line.

[lscfa]

Beacon comment: The CPI positive price adjustment of ~8% on Medicare and contracts tied to Medicare that took effect January 1, 2023. This will impact ~40% of QIPT’s revenue but also ~35-40% of Great Elm’s business. 8% of $220 million equates to $6-$7 million of incremental revenue over-and-above that $220 million level. Given the higher costs (ie. labour, equipment) have already been

[Carlito3311]

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[lscfa]

Updated report removes assumption of an equity raise.   https://quipthomemedical.com/file/2021/05/RJ-QIPT-FQ123-02.14.23.pdf