Quipt Home Medical Corp. (QIPT): A Bull Case Theory

We came across a bullish thesis on Quipt Home Medical Corp. (QIPT) on Substack by Petty Cash. In this article, we will summarize the bulls’ thesis on QIPT. Quipt Home Medical Corp. (QIPT)’s share was trading at $2.66 as of Feb 19^th. QIPT’s trailing and forward P/E were 85.85 and 263.16 respectively according to Yahoo Finance.

Quipt Home Medical (QIPT) reported earnings that were largely in line with expectations, though the stock declined 3-4% following the announcement. Revenue came in at $61.3 million, down 2% year-over-year due to the expiration of the 75/25 blended rate relief in January 2024, a withdrawal of Medicare Advantage members in certain regions, and the non-renewal of a disposable supply contract in November 2024. These factors accounted for approximately $8 million in lost revenue, with $1.5 million impacting this quarter. EBITDA stood at $14.0 million, and the company maintained a net debt-to-adjusted EBITDA ratio of 1.5x. Importantly, the SEC investigation concluded in November 2024 with no recommended enforcement action, removing a major overhang on the stock.

The company’s core respiratory care business remains strong, comprising 77% of total revenue. Management emphasized that GLP-1 drugs, often viewed as a potential headwind, could actually serve as a long-term tailwind, with no negative impact seen so far. Looking ahead, QIPT is targeting 2% sequential growth for the remainder of the fiscal year, aligning with its 8-10% organic growth goal. Valuation remains compelling at approximately 3.5x EV/EBITDA, placing it at the lower end of the range.

Despite the stock’s underperformance over the past year, QIPT appears more attractive today. Revenue is expected to return to growth in the next quarter or two, major shareholders such as KWM and Forager have increased their involvement, and the risks associated with regulatory scrutiny and reimbursement changes have diminished. With consistent margins and improving fundamentals, the risk/reward profile remains compelling, and the investment thesis remains intact.

Quipt Home Medical Corp. (QIPT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 6 hedge fund portfolios held QIPT at the end of the third quarter which was 5 in the previous quarter. While we acknowledge the risk and potential of QIPT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than QIPT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.