CINCINNATI—Quipt Home Medical Corp. has bought Great Elm Healthcare, LLC, a division of Great Elm Group, Inc. that operates a complete line of respiratory-related durable medical equipment (DME) service locations across eight states in the Midwest, Southwest and Pacific Northwest and had $60 million in revenue last year.
The purchase is priced at $80 million, including $73 million cash, $5 million in assumed debt and $2 million of Quipt common stock. The acquisition adds seven new states for Quipt, giving the respiratory DME company 115 locations in 26 states. The move also brings Quipt 70,000 new patients, taking its total served to 270,000.
"This creates immediate and actionable revenue synergies for us. Moreover, the valuable commercial insurance contracts, strong referring physician network and significant patient base we have accumulated across seven new states will give us the ability to cross sell our products into these new geographies,” said Greg Crawford, Quipt's chairman and CEO.
The move will make Quipt a coast-to-coast DME provider and gives it a platform for more growth. Both companies offer full service lines of respiratory equipment and focus on COPD patients, and Quipt reported 23% growth in its customer base in 2022.
"Great Elm represents a turnkey platform acquisition for Quipt as it dramatically enhances Quipt’s operations and provides the company with significant additional inorganic and organic growth opportunities," the company wrote in a press release.
In a news release, the company listed these financials:
- The combination of Quipt and Great Elm has a combined annualized revenue and annualized adjusted earnings before income, taxes and depreciation (EBITDA) of $220 million and $47 million, respectively, based on Quipt’s reported audited results for the fourth quarter ended September 30, 2022 and Great Elm’s unaudited results for the 12 months ended August 31, 2022.
- Quipt has identified $2 million in cost savings and synergies, which is expected to be captured over the first six months and is expected to result in Great Elm’s Anticipated Annualized Adjusted EBITDA of $15 million, representing a purchase price of 5.2x Adjusted EBITDA post cost savings and synergies. The anticipated annualized adjusted EBITDA is $49 million for Quipt.
- Post-acquisition, Quipt’s recurring revenue is expected to increase from 77% for the fiscal year ended September 30, 2022, to 82%, on a pro forma basis.
In addition, Quipt said the move "adds tremendous cross-selling opportunities in which Quipt may sell products in Great Elm locations, including ventilation and oxygen," allows Quipt to onboard Great Elm's sleep patients into its resupply patient, and is expected to create "opportunities to expand Quipt’s access for accretive tuck-in acquisitions."
The transaction "simplifies GEG's reporting and organizational structure" and "provides capital to grow the investment management business," according to a Great Elm news release.
