Quipt Home Medical (Quipt Home Medical Stock Quote, Chart, News, Analysts, Financials TSXV:QIPT) may have posted a softer quarter, but Leede Financial analyst Douglas Loe is holding firm on the company’s long-term potential, even as he cuts his price target nearly in half, citing weaker growth and cash flow metrics in the latest results.
Kentucky-based respiratory medical equipment distributor Quipt Home Medical reported softer-than-usual financial results for the quarter ending in March but still delivered solid margins. Gross margin came in at 73.6%, slightly above its seven-year average of 72.9%, and its EBITDA margin of 21.5% was among the highest in the healthcare services group the analyst tracks.
“The bottom line,” said Loe, is that there is “no denying that FQ225 financial data were soft by Quipt’s own standards, and we are revising our PT accordingly.”
In his May 13 update, Loe notes that all stocks, including Quipt, are evaluated based on growth and free cash flow. By those standards, and compared to its own past performance, Quipt’s latest quarter was soft.
As a result, Loe is lowering his price target and valuation.
“We are revising our PT from US$8.25 to US$4.50, with our valuation now based on 3x EV-to-EBITDA, using F2026 as our reference year, during which we are projecting F2026 EBITDA US$52.0M, actually below Quipt’s T12M EBITDA level (including FQ225 data) of US$53.5M,” Loe said.
“We incorporate FQ225 balance sheet data (cash of US$17.1M & total debt of US$70.3M) & fully diluted S/O of 47.3M into our EV calculation. Based on this valuation method, as depicted in Exhibit 2, we derive a new one-year PT for QIPT of US$4.41, which we round to US$4.50. With reference to QIPT’s prior day closing price, our revised PT corresponds to a one-year return of 113%, hence our sustained ‘Buy’ rating on the stock and its respiratory medical equipment distribution network.”
So, Quarterly softness was not unique to Quipt and coincidentally was also experienced by peer firm Viemed in its corresponding quarterly update.
“Though QIPT are expected to experience near-term softness at least until forthcoming quarterly data shows EBITDA/cash flow/ margin improvement in comparison to what we assume is trough performance in FQ225,” Loe said. “We believe that ascribing a 3x multiple to F2026 projections that we project to be flat sequentially is still reasonable and is actually a discount to the multiple currently ascribed to Quipt’s LA-based peer Viemed Healthcare (VMDQ, NR; 4.0x EV-to-F2026 consensus EBITDA forecast) that reported its own March-end quarterly data last week.”
Loe expects Quipt to deliver $51.8-million in Adjusted EBITDA on $234.4-million in revenue for fiscal 2025. He sees those numbers holding steady into 2026, with a slight uptick to $51.9-million in EBITDA on $234.7-million in revenue.
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About The Author /
Rod Weatherbie is a journalist based in Prince Edward Island. Since 2004, he has written extensively about the Canadian property and casualty insurance landscape. He was also a founder and contributing editor for a Toronto-based arts website and a PEI-based food magazine. His fiction and poetry have been featured in The Fiddlehead, The Antigonish Review, and Juniper.
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