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Could 2022 Be the Breakout Year for Junior Medtech M&A Activity?

Jocelyn Aspa Jocelyn Aspa, The Market Herald
1 Comment| January 13, 2022

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It’s still only January and mergers and acquisition (M&A) activity is ramping up the health care and MedTech industry. Last year, M&A activity in the MedTech industry totaled roughly US$85 billion in deals and that trend is expected to continue into 2022.

While the top names in the healthcare industry typically dominate M&A activity, smaller companies are also prominent in generating M&A momentum.

Case in point, On January 10, it was announced that Owens & Minor (NYSE:OMI) had acquired Apria Inc. (NASDAQ:APR) for a valuation totaling $1.45 billion.

Owens & Minor is a global healthcare solutions company with a market capitalization valuation of $3.42 billion — making it nothing short of a healthcare giant — while Apria is a provider of home medical equipment and clinical support.

The acquisition of Apria will bolster Owens & Minor’s value proposition and position itself as a leader in the home healthcare market while also accelerating its growth and diversifying its revenue base.

In line with this, the acquisition will also expand Owen & Minor's patient platform by giving it access to over 90 percent of insured healthcare customers in the US.

All of this is to say that Apria’s acquisition by Owen & Minor means also good news for companies like Quipt Home Medical Corp. (TSXV:QIPT, NASDAQ:QIPT, Forum) —which is a company that provides in-home monitoring equipment supplies and services to patients — and its investors.

Based in the US, Quipt Home Medical is focused on improving the home management of chronic illnesses through telehealth systems and streamlined, automated distribution with the intention of making life easier for both patients and physicians.

With a market capitalization valuation of C$243.80 million, Quipt Home Medical is a much smaller company when compared to companies like Apria — which has a US$1.33 billion valuation — but that doesn’t mean Quipt Home Medical isn’t capable of its own M&A activity to bolster its portfolio.

Quipt Home Medical Acquires At Home Health Equipment

A week before Owens & Minor’s announcement, Quipt Home Medical announced it had acquired At Home Medical Equipment for $13.1 million in cash. At Home Medical is a business located in Indiana, while the acquisition makes it Quipt’s single largest market from a revenue standpoint.

At least 30 percent of At Home Equipment’s revenue base comes from the hospice segment, which will help position Quipt in this arena in 2022 and will provide Quipt with the potential to add patients to its existing subscription-based resupply program.

What’s more, the acquisition will cover the entire state of Indianapolis and add over 15,000 new patients, bringing the total number of patients Quipt serves to 170,000 patients.

“This is a significant acquisition as it creates the largest single market for us in a very attractive region allowing us the ability to strengthen our overall interconnected healthcare network in the state of Indiana. Our operating engine and proven ability to integrate acquired assets allow us to continue the strong pace of closing larger strategic acquisitions during this exciting growth period,” said Greg Crawford, Chairman and CEO of Quipt. “This acquisition is very powerful as it services the significant metro hub of Indianapolis, and we plan on quickly integrating their business operations and leveraging Quipt’s payor contracts across our existing Midwest locations.

The company also said the acquisition is expected to increase its annual revenue by $13 million and $1.6 million in net income with an adjusted EBITDA of $2.9 million post-integration.

The investment corner

As Quipt Medical marches forward into 2022 — and with prospective acquisitions in mind — the company will be one that investors will want to watch for this year.

In line with this, the company said its annual run-rate revenue should fall somewhere between $180 and 190 million with $38 to $43 million in adjusted EBITDA, putting it in a solid position to execute and deliver on its plans.

“As we look to our strategic growth path, we continue to have an extremely deep pipeline and expect to remain on an aggressive pace as we move through the first half of the year and are excited to execute on our vision for 2022,” Hardik Mehta, CFO of Quipt Medical, said in a press release.

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FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.


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