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Operator: Thank you for standing by. This is the conference operator. Welcome to the Second Quarter 2025 Earnings Results Conference Call for Quipt Home Medical Corp. As a reminder, the conference is being recorded and participants are in listen-only mode. After the presentation, there will be an opportunity for analysts to ask questions. [Operator Instructions] We remind you that the remarks today will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please see the reader advisory at the bottom of the company’s results news release. The company’s actual performance could differ materially from these risk statements. At this point, I’d like to turn the conference over to Chairman and Chief Executive Officer, Greg Crawford. Please begin.

Greg Crawford: Thank you, operator, and thank you to everyone joining us today. I’m Greg Crawford, Chairman and CEO of Quipt Home Medical. I’m pleased to have Hardik Mehta, our Chief Financial Officer, and Tom Roehrig, our Chief Accounting Officer, also joining me today. Before we begin, I’d like to thank the entire Quipt team for their continued focus and execution and to extend our appreciation to our stakeholders for your ongoing support and partnership. Let me start by reiterating who we are and what we do. Quipt Home Medical is a diversified healthcare services company delivering a comprehensive range of home medical equipment and services to patients across the United States. We are driven by our commitment to clinical excellence powered by a patient-centric model and advanced technology-enabled solutions.

These strengths, combined with our specialized respiratory programs, position us effectively, support patients in the comfort of their homes. Today, Quipt operates over 130 locations across 26 states, serving over 223,000 active patients. Our scalable infrastructure and growing national presence enable us to deliver consistent, high-quality service while expanding our reach across both established and emerging markets. Respiratory care continues to be our core focus, compromising approximately 75% of our product mix. This strategic emphasis aligns with critical macro trends such as aging population, rising prevalence of chronic respiratory conditions like COPD, and ongoing demand within the sleep apnea market. These durable tailwinds paired with our operational expertise and expanding referral network strengthen our position for long-term growth.

Our go-to-market strategy is rooting and providing an integrated end-to-end respiratory care solution, complemented by a diverse portfolio of durable medical equipment. As a trusted partner for patients and healthcare providers, we have developed a scalable model that addresses the complexities and evolving demands of the durable medical equipment ecosystem. As it relates to our key priorities for the remainder of calendar ‘25 and beyond, we remain committed to three key areas. First, returning to our historical levels of organic growth. Second, optimizing capital allocation to drive long-term shareholder value. To this end, we have been active with our normal course issuer bid and expect to continue to do so in the months ahead. And third, building a scalable future-ready healthcare ecosystem through strategic healthcare system-focused expansion.

On today’s call, we’ll walk you through the details of our fiscal Q2 results, highlight our strategy to return to growth, including progress across our key growth initiatives and industry insights. In terms of performance, physical Q2 came in softer than expected as we continue to feel the downstream effects of the significant patient attrition stemming from the capitated agreement that went to other providers in the industry in 2024. In addition, a disposable supply contract in which the company was a participant was not renewed and a seasonal low in our resupply segment contributing to the overall revenue impact. Adjusted EBITDA margin came in at 23.3%, which is we view as a standout performance given the revenue softness. This is the result of the hard work we began in late ‘24 to make the organization more efficient and more responsive to market dynamics.

We are seeing the benefits today and we expect even greater leverage on this margin base as growth reaccelerates. Importantly, we are not standing still. Across the business, we are actively pulling multiple operation levers to reignite organic growth in the back-half of the calendar ‘25 and into fiscal ‘26. Strategically, we are evolving beyond traditional DME acquisitions. A central pillar of our forward strategy is to pursue healthcare system-bound opportunities, leveraging our scalable, repeatable integration strategy. Our goal is to embed Quipt directly within the hospital discharge ecosystem through preferred provider agreements that deliver coordinated value-based care. We are actively engaged in multiple conversations with leading regional health systems, and we expect to have meaningful updates over the near term.

These relationships are compelling not only because of their strategic fit, but also because they offer access to embedded patient volume, enhances our care continuity, and can be scaled across markets. Our team is highly focused on executing this strategy and aligning resources accordingly. We believe this approach will significantly enhance our competitive positioning while creating long-term shareholder value. Shifting focus to our sleep business, we’re pleased to report that GLP-1 medications continue to have no impact on demand. Referral activity for new device setups is steady and consistent in recent months. Recent real-world data shared by the leading device manufacturer involving nearly 1.4 million patients underscores the positive effects of GLP-1s on treatment adherence.

The study found that individuals with an obstructive sleep apnea, OSA diagnosis, who were prescribed the GLP-1 were 10.8% more likely to start positive airway pressure PEP therapy compared to those not on GLP-1s. Additionally, these patients exhibited higher resupply order rates over both 12- and 24- month periods. This data has now been steady with the same trend, plus or minus a couple tenths of a basis point as the leading manufacturer has grown their analysis from a year ago with approximately 300,000 patients to now tracking nearly 1.4 million patients. During the quarter, The Lancet Respiratory Medicine published a landmark meta-analysis highlighting the significant clinical impact of CPAP therapy. This extensive study, which evaluated data from over 1 million individuals, demonstrated that CPAP therapy reduces all-cause mortality by 37% and cuts cardiovascular-related mortality by even more compelling 55%.

These findings reinforce the critical role of CPAP in improving patient outcomes and further supports its value as a frontline treatment in sleep and cardiopulmonary health. We believe GLP-1 medications will serve as a long-term tailwind for our sleep business, introducing more motivated patients into the healthcare system as they focus on improving their overall health. Additionally, we continue to see a stable regulatory environment and we are not currently seeing any material headwinds in the near term. This consistency allows us to protect margins and focus on executing our strategic plan to return to growth without disruption. Moreover, we don’t expect tariffs to affect our Medicare/insurance contract products. With this clarity, we’re well positioned to expand our geographic footprint, strengthen our referral relationships, and pursue long-term partnerships across the healthcare ecosystem.

With that commentary, I’d like to hand the call over to Hardik to discuss our fiscal second quarter 2025 financial results.

Hardik Mehta: Thanks, Greg. On Monday evening, we announced our fiscal second quarter 2025 financial results for the three months ended March 31, 2025. Please note that all financial values in US dollars and are now reported under GAAP accounting principles, with comparison periods also reported under GAAP for consistency. Here are some key highlights from the quarter. The company’s customer base declined 2% year-over-year, serving 146,000 unique patients as of March 31, 2025, compared to 149,000 unique patients as of March 31, 2024. The company completed 203,000 unique setups deliveries in Q2 2025, a 3% decrease from 210,000 setups deliveries in Q2 2024. Respiratory resupply setups deliveries decreased 4% year-over-year, totaling 111,000 in Q2 2025.

Revenue for fiscal Q2 2025 came in at $57.4 million, down 6% year-over-year. This softer-than-expected performance reflects several key factors, ongoing headwinds from the withdrawal of Medicare Advantage members following a capitated agreement that went to other providers in the industry. In addition, in November 2024, a disposable supply contract in which the company was a participant was not renewed, contributing to the overall revenue impact. Seasonal weakness tied to patient deductible resets resulted in modestly lower resupply volumes during the first half of the quarter. However, the company has seen improved momentum in volume exiting both March and April. Revenue for the six months ended March 31, 2025, decreased to $118.8 million compared to $123.8 million for the six months ended March 31, 2024, representing a decrease of 4%.

Recurring revenue for Q2 2025 continues to be strong at 81% of total revenue. Adjusted EBITDA for Q2 2025 was $13.4 million at 23.3% of revenue compared to $14.9 million at 24.3% of revenue for Q2 2024, representing a 9.5% decrease. Adjusted EBITDA of $27.4 million for the six months ended March 31, 2025, compared to $30.2 million for the six months ended March 31, 2024, a decrease of 10.4%. Net loss for Q2 2025 was $3 million or $0.07 per diluted share compared to $739,000 or $0.02 per diluted share for Q2 2024. Cash flow from operations was $18.3 million for the six months ended March 31, 2025, compared to $14.9 million for the six months ended March 31, 2024. Operating expenses as a percentage of revenue came in at 50.8% in fiscal Q2 2025 compared to 48.9% in the corresponding period in 2024.

CapEx, also known as rental equipment transferred from inventory, for the six months ended March 31, 2025, was $17.9 million compared to $14.4 million for the corresponding period. Turning to the balance sheet. We exited the quarter in a strong financial position with $17.1 million in cash, $9.7 million of availability under revolving credit facility and $21 million available pursuant to the delayed draw term loan facility. Total liquidity of $30.7 million. Our net debt to adjusted EBITDA leverage stood at 1.5 times EBITDA, well within our target range. This gives us meaningful financial flexibility to fund organic growth initiatives and pursue healthcare system opportunities. We are also maintaining an active share repurchase program under our NCIB, which we will continue to utilize given the current low valuation we have.

One of the most important takeaway from this quarter is the strength and stability of our margin profile. Despite a decrease in revenue, we delivered an adjusted EBITDA margin of 23.3%, a direct result of the structural efficiencies initiatives we began rolling out in late 2024. These efforts included streamlining back-office functions, optimizing logistics and intake operations and driving greater cost discipline across the organization. As a result, our platform is now more scalable and resilient, allowing us to protect and sustain margin performance even in periods of lower top line contribution. To expand on Greg’s comment, while Q2 was a softer quarter for us from a revenue standpoint, our underlying operating engine remains solid. We are executing across multiple fronts to restore growth, expand margins and deliver shareholder value.

Our balance sheet is strong, our recurring revenue base is solid, and we have a clearly defined strategy to grow. Moreover, our focus has evolved beyond traditional DME acquisitions. We are actively engaging with healthcare systems to create deeper, more strategic partnerships, transactions that can come with preferred provider agreements and support integrated care delivery. As we progress through calendar 2025, we are energized by the opportunities before us to reignite growth. Our commitment to operational excellence, disciplined growth and patient-focused care remains the cornerstone of our approach, positioning us for the long-term success. With that, I’ll now turn the call back over to Greg.

Greg Crawford: Thank you, Hardik. Let me take a moment to expand on a few of the key points and share how we are strategically positioning Quipt to not only recover from the recent headwinds, but to emerge stronger and more agile. First, I want to be clear that while the second quarter came in below our expectations, we are not discouraged. On the contrary, we have strong conviction in the fundamentals of our business and we are executing with urgency and precision across all opportunities. We have seen our rental business continue to be very stable, and our teams are focused on rebuilding patient volume, and we’re seeing early indicators of momentum in referral patterns, setup activity and sales productivity. Our focus remains on restoring consistent organic growth, and we’re doing that by leaning into our core competencies, clinical respiratory care, integrated referral networks and efficient technology-enabled service delivery.

We’ve taken meaningful steps to strengthen our market presence, including sales presence in underpenetrated areas, launching new therapy offerings and reinvesting in our commercial capabilities that expand our funnel and improve conversion. These are tangible actions that will yield long-term value. Moreover, we are evolving our strategic playbook, prioritizing larger-scale healthcare system focused partnerships that align more directly with how care is delivered today. To that end, we are actively engaged in conversations with multiple integrated health systems around opportunities that would integrate Quipt into the discharge planning process. These relationships create embedded volume, improve care continuity and offer a compelling pathway to scale.

From a broader industry standpoint, we continue to benefit from the durable macro tailwinds. The demand for home-based care solutions, particularly for chronic respiratory conditions, is rising steadily. Patients want to receive care at home and providers want to reduce hospital utilization, and Quipt is uniquely positioned at this intersection. At the same time, we are continuing to improve how we operate. We’ve made measurable progress in simplifying our structure, standardizing intake and delivery processes and eliminating operational inefficiencies. These initiatives are positioning us to drive margin expansion even as revenue scales, a key priority for us moving forward. We are also committed to being responsible stewards of our capital.

Our balance sheet is in excellent shape, and we will continue to pursue value-enhancing uses of our capital, whether that’s funding growth, supporting targeted M&A or returning capital to shareholders through our NCIB. As we move through the remainder of 2025 and into 2026, our top priorities remain clear, reaccelerate organic growth by expanding patient access, improving referral conversion and deepening partnerships. Second, maintaining and further enhance our margin performance through continued operational streamlining and centralized support functions. And third, building scale intelligently with a focus towards health care system integration. And finally, drive shareholder value by aligning strategic execution with disciplined capital allocation and a clear growth vision.

I want to close by recognizing our team for their ongoing dedication and execution and thank our shareholders and partners for their continued confidence in our vision. While the environment has presented challenges, our long-term opportunity remains significant, and we are focused, aligned and well positioned to deliver on it. With that, we will now turn it over to the operator for questions.

Operator: [Operator Instructions] Our first question is from Bill Sutherland with The Benchmark Company. Please go ahead.

Bill Sutherland: Thanks, operator. Good morning, Greg and Hardik. I wondered if I could get a little more color on the two discrete items you guys called out in terms of the revenue impact this quarter. In the Humana loss of MA members or not loss, but the downtick in your contract size with them. Is this just the loss of their membership is more significant than they thought? Or does this have to do with where you came out in the contracting?

Greg Crawford: I think it has to do more with referral patterns in that. We understood early in the onset of what the revenue impact was going to be, but we clearly underestimated the referral impact as far as their behavior of referring the other Humana patients that are on PPO plans.

Bill Sutherland: I see. That didn’t come in like you expected.

Greg Crawford: Correct.

Bill Sutherland: And then the disposable supply contract issue, when did you learn about the nonrenewal?

Greg Crawford: That was in like September, October time frame.

Bill Sutherland: So what surprised you then this far from there?

Greg Crawford: It was more of a contract that we had for multiple decades in that, frankly, and there was a change of guard in that with staffing in that with where this contract was done, and it was just not renewed in that with Quipt any longer.

Bill Sutherland: But that happened at end of your fiscal ’24?

Greg Crawford: Yes. I think in fiscal ’24, we had one month — fiscal ’25, we had only one month. Yeah, one month.

Bill Sutherland: Okay. Just — I didn’t remember you mentioning this on the December quarter call.

Greg Crawford: I think we did.

Bill Sutherland: You did? Okay. My apologies. I guess last one for me, and I’ll hop off is, do you think your growth engine can become effective this quarter in terms of looking at a quarter-on-quarter trend?

Greg Crawford: Yeah. I mean, we are sitting here on May 13 here. So we have visibility in our April numbers. We had some trends going into March. So the trends do suggest stabilization and some uptick in our rental revenue and some recovery on our supplies business as well. But obviously, we’re just one month here into it, but two more to go. But the trends are in the right direction.

Bill Sutherland: Great. Good to hear. Thanks a lot.

Greg Crawford: Thank you.

Operator: [Operator Instructions] The next question is from John Pinney with Canaccord Genuity. Please go ahead.

John Pinney: Hi, John Pinney on for Richard Close. Thanks for the questions. So I guess I have a question about cash flow. So it’s like, if you take cash flow from operations less the purchase of P&E, less lease repayments, less equipment loan repayments, it’s like slightly positive on the quarter. You pulled a little bit on the revolver this quarter. Can you just give some commentary of what you’re doing in order to generate greater cash going forward?

Hardik Mehta: Yeah. So that’s a little bit of timing and then some better controls on the CapEx spend. We always encourage our investors to look at more of the year-to-date number or a trailing three quarters number than just look at the quarter. They tend to — depending on how we lease and depending on how much we have purchased, there could be some working capital in those. So all I would say is if you look at maybe over two quarters and three quarters, that will kind of look a more stabilized pattern than just a quarter. But to kind of — when we are talking about it, we spoke about this last quarter, we are in the middle of Philips recall. So there’s some cash constraints that comes as a result of it. There’s some timing in terms of — with Philips, we had a different financing program.

With the newer vendors, we have a different financing program. So there was some timing related to that as well, which pushed out our leasing further than what our typical terms would have been. Philips recall creates a drag for us because we took a lot of those machines out of servicing patients. They are sitting in our warehouse to be shipped, but we haven’t received some of the shipping details from Philips. There is some struggle on their end to take those equipments back. So we are kind of in a little bit of a working capital/CapEx overspend category for lack of a better word, because of mistiming between when we are taking equipment off the patient and when we will ultimately get credit from Philips, which we haven’t received yet.

John Pinney: So do you have any visibility as to when that would clear out?

Hardik Mehta: I’m sorry?

John Pinney: Do you have any visibility as to when that slight CapEx overspend with Philips and when that would clear up?

Hardik Mehta: I would say definitely over the next couple of quarters the spend should stabilize. I mean, there are still a few more ventilators that are out there. We ultimately paused this quarter because we were building a backlog in our warehouse where we were taking it off our patients. But on the other side, Philips wasn’t able to process intake of those. So at some point, we had to take that operational decision where we were going to pause until things cleared up with Philips. Our goal with Philips was to recycle everything by end of June. But I don’t think at this point, given the pace at which they’re able to take those equipment, we are pretty confident they’ll end up extending that time line ultimately. So that’s why earlier our goal was to get everything done by June.

But I think at this point, it will be definitely going into the quarter ending September, maybe into December. I don’t know. But I would say we are kind of more than halfway through it, but there’s still more to go in terms of recycling those equipments out of patients.

John Pinney: Thanks for that. So I guess with the sequential and year-over-year drop, do you have any like, I guess, color you can give or commentary as far as how much is attributable to the Humana capitated contract versus the — just like seasonal — like versus sequential, just like seasonal deductible reset versus the disposable contract going away?

Hardik Mehta: Sure. I mean, while we don’t break it up impact to impact in a public disclosure perspective, you can certainly deduce that by looking at similar patterns last quarter. If you look at our Q1 to Q2 last quarter, it might show some similar trends as well. And the rest is kind of between Humana and the supplies contract.

John Pinney: And then I guess one more. So I guess, like cost of inventory sold like as a percentage of revenue dropped pretty substantially sequentially and a little bit year-over-year as well. Do you expect that to kind of stay at that level? Or were there some other like kind of one-off items this quarter that would make it lower? Or any commentary you can provide there?

Hardik Mehta: Yeah. So the — again, cost of goods is another category where we tend to look at over at least six months to nine months timeframe. If you look at our year-to-date number, it was at 27.9% compared to 28% for fiscal 2024. So it kind of has stabilized. Q1 was slightly higher and Q2 had some normalizing adjustments to that coming from some credits that were due that weren’t received in the previous quarter and stuff like that. But if you look at our six months quarter, six months run rate for fiscal 2024, they kind of line up pretty consistent. We do hope to see some positive trends on the cost of goods with some of the things that we are working on going into Q3 and Q4.

John Pinney: All right. Great. Thank you.

Operator: This concludes the question-and-answer session. I’d like to turn the conference back over to Mr. Crawford for any closing remarks.

Greg Crawford: Thank you, and thank you all for your participation today. As always, you can find us on the web at www.quipthomemedical.com, where we will be posting a transcript of this call and also our updated investor deck. Thank you, and have a great day.

Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.