Quipt makes play for diabetes

CINCINNATI – Quipt Home Medical has dipped its toe into the diabetes market, which company execs say represents a “promising avenue” for growth. 

The company started testing the market in fiscal 2023, offering CGMs and supplies in certain markets, CEO Greg Crawford said on a call to discuss second fiscal quarter 2024 earnings. 

“The early signs have looked pretty good for us, so now we're in the process of expanding that around the rest of the company,” he said. “The diabetes patient population is very complementary to our existing patient population. And looking at sleep apnea patients, clinical research shows that as many as 48% of people diagnosed with Type 2 diabetes have also been diagnosed with sleep apnea.” 

Quipt's move into diabetes is also part of an overall strategy to boost organic growth toward a target of 8% to 10% annually, says Crawford. 

For the most recent quarter, organic growth was 6.5% year-over-year. 

“Our organic growth strategy remains focused on growing into continuing markets, enhancing cross-selling of our product offerings and expanding our insurance portfolio, which provides a barrier of entry in the marketplace,” Crawford said. 

Company execs are also bullish on sleep, saying recent developments like GLP-1s and the approval by the U.S. Food and Drug Administration of the Samsung Galaxy Watch to detect signs of sleep apnea will be a boon for business. 

“Our hope is that similar capabilities become available from other major tech companies,” Crawford said of the Galaxy. “The total addressable market is extremely large for this segment of patient and allows for multiple treatment modalities. (And) we believe, based on early data and positive developments of more motivated patients entering the health care system as they work toward their health goals, the introduction of GLP-1s can be a tailwind for our sleep business over time.” 

It wasn’t all good news in the quarter. Quipt absorbed a revenue impact from the expiration of the 75/25 Medicare blended reimbursement rates on Jan. 1, 2024. Additionally, the company saw the withdrawal of Medicare Advantage members in certain regions due to a capitated agreement with other providers.  And despite “quadrupling” in size since 2019, in terms of revenue and adjusted EBITDA, Quipt’s current public valuation represents one of the lowest multiples it has traded at in the last five years, says Crawford, prompting the company to implement a normal course issuer bid (NCIB). 

“Given the overall strong fundamentals of our business in real time, and that disconnect, we announced NCIB as an additional avenue to consider deploying capital that will allow us to enhance shareholder value opportunistically,” he said.