In-home monitoring and disease management services provider Quipt Home Medical Corp. (QIPT) is scheduled to report its fourth-quarter (ended September 30, 2023) results on December 18, 2023.

While the company’s quarterly revenue is expected to increase 56.8% year-over-year, its EPS is expected at $0. In this piece, I have discussed several reasons why it could be wise to wait for a better entry point in the stock now.

During the last quarter, QIPT failed to surpass the consensus EPS and revenue estimates. While analysts expected an EPS of $0.01, the company reported a loss per share of $0.03. Similarly, its revenue failed to surpass the analyst estimates by 0.6%. Its recurring revenue exceeded 80% of revenues.

While its revenue has grown at a CAGR of 41.1% over the past three years, it has yet to translate to bottom-line improvement, as its EPS has shown a negative CAGR growth of 37.4% during the same period.

On the other hand, its customer base during the last quarter increased 58% year-over-year to 140,515 unique patients. The company’s unique set-ups/deliveries rose 51.5% over the prior-year quarter to 202,587. Also, respiratory resupply set-ups/deliveries increased 73% year-over-year to 108,391.

QIPT’s CEO and Chairman Greg Crawford said, “We are thrilled to announce robust fiscal third-quarter results, which display record sequential organic growth and additional margin acceleration, clearly illustrating that our business continues to fire on all cylinders.”

“Our long-term growth strategy will continue to focus on driving organic volume growth, focused acquisition strategy that utilizes our proven integration process, and by leveraging upon our acquisition pipeline,” he added.

On September 11, QIPT announced the acquisition of a business with operations in Mississippi, Texas, and Louisiana. This acquisition adds scale with ten locations spread across three states, 17,500 active patients, 1,900 unique referring physicians, important insurance contracts, and decades of operating experience in the markets served.

Post the acquisition, the company, on a consolidated basis, is expected to have 287,500 current active patients and 34,400 referring physicians in 125 locations across 26 U.S. states. Moreover, the acquisition is set to increase QIPT’s current annual revenues by approximately $9 million and its adjusted EBITDA by $2 million.

The stock has declined 32.7% over the past nine months and 7.9% year-to-date to close the last trading session at $4.34.

Here’s what could influence QIPT’s performance in the upcoming months:

Mixed Financials

QIPT’s total revenues for the third quarter ended June 30, 2023, increased 64.3% year-over-year to $60.28 million. Its rentals of medical equipment revenue rose 42% over the prior-year quarter to $25.71 million. The company’s adjusted EBITDA increased 80.5% year-over-year to $13.90 million.

On the other hand, its operating income declined 72.5% year-over-year to $170 thousand. Its net loss came in at $1.03 million. In addition, its loss per share stood at $0.03.

Mixed Analyst Estimates

Analysts expect QIPT’s EPS for fiscal 2023 to decline 126.7% year-over-year to $0.04. On the other hand, its revenue is expected to increase 58.6% year-over-year to $221.77 million. Its EPS and revenue for fiscal 2024 are expected to increase 250% and 21.8% year-over-year to $0.06 and $270.15 million, respectively.

High Profitability

In terms of the trailing-12-month gross profit margin, QIPT’s 73.05% is 28.5% higher than the 56.84% industry average. Likewise, its 21.55% trailing-12-month EBITDA margin is 299.1% higher than the industry average of 5.40%. Furthermore, the stock’s 1.01x trailing-12-month asset turnover ratio is 155% higher than the industry average of 0.40x.

Mixed Valuation

In terms of forward EV/Sales, QIPT’s 1.17x is 67.2% lower than the 3.56x industry average. Its 5.14x forward EV/EBITDA is 61.6% lower than the 13.37x industry average. Likewise, its 0.83x forward Price/Sales is 79.1% lower than the 3.96x industry average.

On the other hand, in terms of forward non-GAAP P/E, QIPT’s 92.99x is 392.8% higher than the 18.87x industry average. Likewise, its 19.41x forward EV/EBIT is 11.7% higher than the 17.38x industry average.

POWR Ratings Reflect Uncertainty

QIPT has an overall rating of C, equating to Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. QIPT has a C grade for Value, consistent with its mixed valuation.

It has a C grade for Sentiment, in sync with its mixed analyst estimates. Its high profitability justifies its B grade for Quality.

QIPT is ranked #22 out of 66 stocks in the Medical - Services industry. Click here to access QIPT’s Growth, Momentum, and Stability ratings.

Bottom Line

While QIPT’s topline is expected to grow during the fourth quarter, its bottom line is projected to remain under pressure in the near term. However, the company’s long-term growth will be driven by favorable demographic trends and the regulatory environment, expansion of its footprint in three major states, strong organic growth, and robust demand for respiratory equipment.

Given its mixed fundamentals, mixed analyst estimates, and mixed valuation, it could be wise to wait for a better entry point in the stock.

How Does Quipt Home Medical Corp. (QIPT) Stack Up Against Its Peers?

QIPT has an overall POWR Rating of C, equating to a Neutral rating. You may check out the stocks within the Medical - Services industry possessing an A (Strong Buy) or B (Buy) rating: National HealthCare Corporation (NHC), Cardinal Health, Inc. (CAH), and HealthStream, Inc. (HSTM). To access more Medical - Services stocks set to outperform, click here.

What To Do Next?

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QIPT shares fell $4.34 (-100.00%) in premarket trading Monday. Year-to-date, QIPT has declined -3.18%, versus a 24.45% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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