This Company Just Made a Possibly Lucrative Acquisition — What's Next?

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The global home medical equipment market is expecting to see a jump from around $31 billion in 2019 to a projected $57 billion in 2027 at a compound annual growth rate (CAGR) of 6.1%, according to a report by Allied Market Research. 

The industry has reportedly gained momentum over the years, owing to the increase in the prevalence of chronic diseases and the surge in the geriatric population around the globe. 

The durable medical equipment sector accounted for the largest market share in 2019 and is predicted to continue dominating throughout the projected period because of increased demand for home respiratory products such as ventilators, according to the report. 

Notable companies in the space include Quipt Home Medical Corp. QIPT, AdaptHealth Corp. AHCO, ResMed Inc. RMD, Amedisys Inc. AMED and Apria Inc. APR.

Quipt Home Medical Corp., recently announced that it acquired At Home Health Equipment, a provider of home medical equipment and supplies, to help expand its reach. The company believes this acquisition will significantly expand its reach in the Indianapolis area.

About the Acquisition

Considered Quipt’s largest single acquisition based on revenue, At Home Health adds more than 15,000 patients to Quipt’s active-patient database, bringing the total to around 17,000. At Home Health Equipment has been in the space for more than 25 years and has some often hard-to-obtain insurance contracts that may improve Quipt’s presence in the region.

Quipt expects the acquisition to enable it to tap into the market of a region where chronic obstructive pulmonary disease (COPD) is prevalent. Indiana has more than 440,000 COPD patients, according to the National Institutes of Health (NIH).

In addition, 30% of At Home Health Equipment’s revenue comes from the hospice sector, providing Quipt the opportunity to explore and build its business this year. The purchase may also give Quipt the platform to grow its ventilation therapy program and its clinical respiratory products and services while adding patients to its existing subscription-based resupply program, which Quipt believes will be a strong source of revenue.

In November, Quipt announced it had acquired a privately held biomedical services company operating in the southeastern part of the United States.

What This Means for Quipt

Quipt expects the acquisition of At Home Health Equipment to add $13 million in annual revenue, $1.6 million in net income and a projected $2.9 million (22% margin) of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). 

“This acquisition allows us to build out our operating footprint as we reach 170,000 active patients, adds $13 million in revenue, a meaningful EBITDA and net income contribution as well as providing us with significant infrastructure,”  Quipt Chief Financial Officer Hardik Mehta said.

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