We came across a bullish thesis on Quipt Home Medical Corp. (QIPT) on Substack by Inflexio Research. In this article, we will summarize the bulls’ thesis on QIPT. Quipt Home Medical Corp. (QIPT)’s share was trading at $2.30 as of March 20th. QIPT’s trailing and forward P/E were 85.85 and 227.27 respectively according to Yahoo Finance.
A patient in a clinic, taking a medication dose from a nebulizer to treat a respiratory disease.
Quipt Home Medical (QIPT) is a key player in the home healthcare equipment (HME) and respiratory therapy sector, supplying critical devices like oxygen concentrators, CPAP/BiPAP machines, and ventilators. Nearly 80% of its revenue is recurring, making it a stable business that benefits from strong secular tailwinds, including an aging population and a shift toward value-based care. Despite its solid market position, Quipt remains deeply undervalued compared to peers, creating a compelling investment case, especially in light of recent industry consolidation. Following Owens & Minor’s acquisition of Apria in 2022 and Rotech in 2024, Quipt has emerged as a prime buyout target. The HME sector remains fragmented, with over 6,000 regional and local providers, drawing significant private equity interest. A recent acquisition of Performance Home Medical by Grant Avenue Capital underscores the sector’s attractiveness, and Forager Capital’s dual investment in both Quipt and its former spinoff Viemed (VMD) raises the possibility of a re-merger, potentially creating a more scalable platform for further strategic interest.
Despite its strong fundamentals, Quipt’s stock has suffered due to multiple headwinds in 2024. Fears over GLP-1 weight-loss drugs reducing demand for CPAP machines pressured DME stock valuations, while a False Claims Act investigation by the U.S. Attorney’s Office in Georgia led to further weakness. Additionally, macroeconomic and operational disruptions, including the removal of pandemic-era Medicare reimbursement boosts, a cyberattack on Change Healthcare delaying insurance claims, and higher interest rates halting M&A activity, weighed on performance. As a result, Quipt missed its 8-10% organic growth target, and revenue and EBITDA declined modestly. However, recent data suggests a turnaround. Key metrics, such as patient volumes and respiratory equipment set-ups, reached new highs last quarter, and management reaffirmed a 2% sequential organic growth rate. Insider buying of 144,000 shares signals confidence, and ResMed’s study indicates that GLP-1 patients are actually more likely to start and adhere to CPAP therapy. Additionally, bipartisan support in Congress to reinstate the 75/25 Medicare reimbursement rate could serve as a policy tailwind.
The False Claims Act investigation remains a risk, but historical settlements in the industry suggest any financial penalty will be manageable. Notably, Quipt’s stock has already declined 30% since the probe’s disclosure, meaning even a worst-case settlement could act as a clearing event for investors. Meanwhile, the most overlooked catalyst may be growing activist involvement. In December 2024, Forager Capital escalated its engagement by filing a 13-D, and Kanen Wealth Management followed with aggressive share purchases and a proxy fight to replace board members. By February 2025, Quipt had entered into standstill agreements with both firms, and its Q1 2025 earnings call hinted at a shift in strategy. A newly formed board committee to evaluate governance and operational changes strongly suggests a strategic review or outright sale may be imminent.
Despite these catalysts, the market has yet to fully appreciate the potential upside. Sell-side analysts have largely ignored the activist developments, and no major coverage has explored Quipt’s valuation under a sale scenario. Applying the 6.3x EBITDA multiple from Owens & Minor’s Rotech acquisition suggests a $6.58 target price, representing 177% upside. Even without a buyout, continued organic growth could drive a re-rating to a 5x EBITDA multiple, yielding a $4.70 target, or 98% upside. With improving fundamentals, regulatory tailwinds, activist involvement, and a potential sale on the horizon, Quipt represents a deeply mispriced opportunity with an asymmetric risk-reward profile.
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 fourth 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.
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Disclosure: None. This article was originally published at Insider Monkey.