EDGAR 10-K Filing

Company CIK: 1540013
Filing Year: 2025
Filename: 1540013_10-K_2025_0001104659-25-120879.json

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ITEM 1. BUSINESS
Item 1. Business.
Company Overview
Quipt Home Medical Corp. and its subsidiaries (“Quipt” or the “Company”), is a provider of durable medical equipment (“DME”) / home medical equipment (“HME”) in the United States (“US”). The Company specializes in delivering effective in-home treatments for managing various chronic conditions, with a primary focus on respiratory diseases. The Company’s comprehensive solutions support patients dealing with heart and pulmonary diseases, sleep apnea, reduced mobility, and other chronic health challenges. Currently, the Company serves patients across 27 states in the US.
On December 14, 2025, the Company entered into an Arrangement Agreement (the “Arrangement Agreement”) to be acquired by 1567208 B.C. Ltd. and REM Aggregator, LLC (collectively, “Purchaser”), entities affiliated with Kingswood Capital Management, LP (“Kingswood”). Under the terms of the Arrangement Agreement, Purchaser will acquire all of the issued and outstanding common shares of the Company (the “Shares”) pursuant to a Plan of Arrangement (the Arrangement) under the Business Corporations Act (British Columbia) (the BCBCA) for US$3.65 per Share.
At the effective time of the Arrangement (the “Effective Time”), each Share, other than any Shares exchanged by shareholders who may properly exercise dissent rights under the BCBCA, will be deemed to be transferred to Purchaser in consideration for the right to receive a cash payment from the Purchaser in the amount equal to US$3.65, without interest.
The transaction is expected to close during the first half of 2026, subject to customary closing conditions, including receipt of shareholder, regulatory, and court approvals. Upon completion of the transaction, the Company will become a privately-held company.
If the Arrangement is consummated, the Shares will be de-listed from The Nasdaq Capital Market and the Toronto Stock Exchange and de-registered under the Securities Exchange Act of 1934, as amended, and the Company will cease to be a Canadian “reporting issuer”, as soon as practicable following the Effective Time.
Pursuant to the terms of an equity commitment letter entered into by and between Purchaser and Kingswood and delivered to the Company at the signing of the Arrangement Agreement (the “ECL”), Purchaser has obtained equity commitments from Kingswood for the transactions contemplated by the Arrangement Agreement, the aggregate proceeds of which Purchaser will use to fund the consideration payable at closing and thereafter, all fees, costs, expenses and other amounts payable by Purchaser in connection with the transactions contemplated by the transactions contemplated by the Arrangement Agreement (the Commitment). The ECL includes a guarantee from Kingswood to the Company, on the terms and conditions set forth in the ECL.
Each option exercisable to acquire one or more Shares from the Company (a Company Option), outstanding immediately prior to the Effective Time (whether vested or unvested) will be deemed to be unconditionally vested and exercisable and will, without any further action by or on behalf of a holder of the Company Option, be deemed to be surrendered and transferred by such holder to the Company in consideration for the right to receive a cash payment from the Company in an amount equal to the excess, if any, of US$3.65 over the exercise price of such option, less any amounts the Company
is required to withhold for taxes, without interest. Any option for which the exercise price is equal to or greater than US$3.65 will be cancelled for no consideration.
Each of the Company’s restricted share units (a Company RSU) outstanding immediately prior to the Effective Time (whether vested or unvested) will, without any further action by or on behalf of the holder of any such Company RSU, be deemed to be transferred by such holder to the Company in consideration for the right to receive a cash payment from the Company in the amount equal to US$3.65, less any amounts the Company is required to withhold for taxes, without interest.
The Arrangement Agreement also provides customary restrictions on the Company’s ability to solicit alternative acquisition proposals from third parties and engage in discussions or negotiations with third parties regarding such proposals. Notwithstanding these restrictions, the Company may under certain circumstances provide information to and participate in discussions or negotiations with third parties with respect to an unsolicited acquisition proposal that constitutes or could reasonably be expected to constitute or lead to a Superior Proposal (as defined in the Arrangement Agreement).
Quipt’s primary business objective is to create shareholder value by becoming one of the largest providers of in-home respiratory solutions in the US. Quipt aims to achieve this through a dual strategy of driving organic growth in its core business and expanding its geographical footprint via strategic acquisitions of DME/HME providers. Quipt’s growth plan focuses on aggregating patients in existing or complementary markets, both through acquisitions and by capturing market share from competitors. Through leveraging compliance technology, the company enhances patient compliance with ongoing training and follow-up, while streamlining the delivery and setup of equipment and devices to improve speed and ease for patients. Quipt expects to continue to be a solution to the rising healthcare costs in the US by offering more cost-effective home-based solutions while increasing the quality of life for patients dealing with respiratory diseases.
Quipt is an acquisitive company that follows a disciplined capital allocation strategy. The Company’s mergers and acquisitions (“M&A”) strategy is based on acquiring additional DME/HME providers that are synergistic to Quipt economies of scale. The Company generally seeks to acquire cash generating companies which lead to increased cash flows that are then re-invested to make additional new cash generating acquisitions. Quipt generally operates under a shared services model which results in obtaining cost efficiencies, technology improvements and synergies across the acquisitions and the various business units where possible. The Company is focused on the implementation of technology solutions for its acquired subsidiaries.
Corporate Information
Quipt was incorporated under the Business Corporations Act (Alberta) on March 5, 1997. Pursuant to a reverse take-over transaction completed on June 1, 2010 by way of a three-cornered amalgamation, the Company acquired all of the issued and outstanding shares in the capital of PHM DME Healthcare Inc. and changed its name to Patient Home Monitoring Corp. On December 30, 2013, pursuant to a Certificate of Continuance, the Company changed its jurisdiction of governance by continuing from Alberta into British Columbia. On December 21, 2017, pursuant to an arrangement under the provisions of Division 5 of Part 9 of the Business Corporations Act (British Columbia) (the “BCBCA”) involving the Company, Viemed Healthcare, Inc. and the securityholders of the Company, the Company completed a spin-out of Viemed Healthcare, Inc. and its operating businesses. In addition, on December 21, 2017, the Company completed an amalgamation, by way of vertical shortform amalgamation under the BCBCA, with its wholly owned subsidiary and the amalgamating company continuing as Patient Home Monitoring Corp. On May 4, 2018, the Company changed its name to Protech Home Medical Corp. On May 13, 2021, the Company changed its name from Protech Home Medical Corp. to Quipt Home Medical Corp. The Company’s head office is located at 1019 Town Drive, Wilder, Kentucky 41076, and its registered office is located at Suite 2700, 1133 Melville Street, Vancouver, British Columbia V6E 4E5. The Company’s common shares (“Common Shares”) are listed for trading on the Nasdaq Capital Market (“Nasdaq”) and the Toronto Stock Exchange (“TSX”), both under the symbol “QIPT”.‎ Our website address is located at quipthomemedical.com and our investor ‎relations website is located at quipthomemedical.com/investors. We file electronically with the U.S. Securities and ‎Exchange Commission (the “SEC”) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports ‎on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange ‎Act of 1934, as amended (the “Exchange Act”). We make available on our website, free of charge, copies of
these reports and other information as soon as ‎reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The reports are also ‎available at www.sec.gov.‎
Recent Transactions
On July 1, 2025, through QHM Holdings Inc., we acquired 100% of Mediserve Medical Equipment of Kingsport, Inc. (“Mediserve”). Mediserve is a Tennessee-based company with operations in two states in the same industry as the Company. The purchase price was $2,616,000, comprised of $2,466,000 in cash at closing to the sellers, plus $150,000, the present value of a $160,000 holdback. The cash at closing was paid from cash on hand.
Effective September 1, 2025, through QHM Holdings Inc., we acquired a 60% membership interest in IRB Medical Equipment, LLC, doing business as Hart Medical Equipment (“Hart”), a Michigan limited liability company in the same industry as us. The transaction was completed pursuant to an Equity Purchase Agreement dated August 11, 2025 (the “Hart Purchase Agreement”) among Quipt, Hart, and Hart HoldCo, LLC (the “Hart Seller”). We acquired our 60% interest through the payment of $17,372,000 in cash to the Hart Seller and the repayment of $3,261,000 of Hart indebtedness at closing. The purchase was funded with borrowings under our senior credit facility (the “Facility”).
Prior to closing, 100% of the equity interests in Hart were contributed to the Hart Seller by its previous owners. Pursuant to the Hart Purchase Agreement, we purchased 60% of the membership interests of Hart directly from the Hart Seller, and the Hart Seller retained the remaining 40% membership interests. In connection with the transaction, the parties entered into an administrative support services agreement, and Hart’s operating agreement was amended and restated pursuant to the Sixth Amended and Restated Operating Agreement to provide for the operation of Hart as a joint venture between us and the Hart Seller.
Specialized Skills and Knowledge
The Company requires some of its employees to have specific skills, knowledge, and background to perform some key tasks and functions, such as patient care and patient set-up, among others. For example, the Company employs a team of respiratory therapists to provide services. Each respiratory therapist is required to be state licensed, either as a Registered Respiratory Therapist and/or a Certified Respiratory Therapist. Additionally, the Company’s clinical team manages patients that use its services ranging from nebulizers to invasive ventilation.
The Company also employs a team of Assistive Technology Professionals (“ATP”) who provide customized mobility and bath safety equipment for patients. Its ATPs are certified through NRRTS (National Registry of Rehabilitation Technology Suppliers) and RESNA (Rehabilitation Engineering and Assistive Technology Society of North America). Part of the ATP team has gone further in their education to receive certifications that allow them to specialize in areas within complex rehabilitation.
As the company is a US healthcare provider, it also requires employees in its revenue cycle management team to have specialized knowledge regarding processing claims and reimbursement for the Company’s products.
Competitive Conditions
The Company has physical operations in 27 states. The Company participates in a highly competitive market, which may become more competitive as new DME providers enter or existing DME providers merge with others. Certain competitors have vertically integrated manufacturing and services sectors of the market. Several large, national companies have operations and products and services offerings, as well as an acquisitive strategy similar to the Company, such as Lincare, Apria, Rotech, and Adapt Healthcare. Apart from the large national DME providers, the Company also faces competition from regional and local family-owned DME providers. While the Company is one of the top ten providers of DME/HME products and related services in the US, its current competitors may gain market share, and any new entrants, with greater financial and technical resources, may provide additional competition. Accordingly, there can be no assurance that the Company will be able to grow its operations organically to meet the competitive environment.
New Products
The Company continually explores and considers additional products and services that would complement the products and services already offered by its subsidiaries that would serve the current patient population and/or help the Company to expand and enter into new segments and serve new patients in its existing service areas.
Significant Customers
For the years ended September 30, 2025 and 2024, the Company had no customers that accounted for 10% or more of its consolidated revenue. The Company earns revenues by seeking reimbursement from government agencies (such as Medicare and Medicaid) and private health insurance companies. With the Medicare program of the US government being the primary entity making payments for a significant portion of revenue, if the Medicare program were to slow payments of the Company receivables for any reason, the Company would be adversely impacted.
Changes to Payor Contracts
CMS’s health insurance policies for Medicare in the US may affect the amount of revenue the Company receives. Apart from Medicare reimbursement, the majority of the Company’s revenues are derived from the fee-for-service pricing guidelines set by numerous payors like private health insurance companies and other governmental agencies like Medicaid that the Company contracts with. These pricing guidelines are subject to change at the discretion of these payor contracts.
Employees
As of September 30, 2025, the Company had a total of approximately 1,600 employees. In addition, the Company has staff augmentation arrangements with global partners.
Foreign Operations
As at the date hereof, the Company conducts all of its operations through its subsidiaries, which operate exclusively in the US.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks. The following discussion highlights some of these risks and others are discussed elsewhere in this report. These and other risks could materially adversely affect our business, revenue, financial condition and results of operations. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. See also “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K.
Risks Related to Our Business and Industry
Reliance on relatively few suppliers for the majority of Quipt’s patient service equipment and supplies could adversely affect Quipt’s ability to operate.
Quipt currently relies on a relatively small number of suppliers to provide it with the majority of its patient service equipment and supplies. Significant price increases, or disruptions in the ability to obtain such equipment and supplies from existing suppliers, may force Quipt to use alternative suppliers. Additionally, any new tariffs, taxes, or other costs imposed on manufacturers of certain medical equipment could be passed on to customers, such as Quipt. Such manufacturers may be forced to make other changes to their products or manufacturing processes that are unacceptable to Quipt, resulting in a need to change suppliers. Any change in suppliers Quipt uses could cause delays in the delivery of such products and possible losses in revenue, which could adversely affect Quipt’s results of operations. In addition, alternative suppliers may not be available or may not provide their products and services at similar or favorable prices. The emerging nature of the market presents risks that suppliers may not be able to provide equipment to satisfy ‎demand. Demand may outstrip supply, leading to equipment shortages. ‎If Quipt cannot obtain the patient service equipment and
supplies it currently uses, or alternatives at similar or favorable prices, Quipt’s ability to provide such products may be severely impacted, which could have an adverse effect on its business, financial condition, results of operations, cash flow, capital resources and liquidity. Conversely, incorrect demand forecasting could lead to excess inventory. The industry is subject to a high level of ‎regulatory scrutiny, and government or manufacturer recalls could adversely affect Quipt’s ability to provide ‎services and achieve revenue targets.‎
Inadequate supply could impair Quipt’s ability to attract new business and could create upward pricing pressure ‎on equipment and supplies, adversely affecting margins for Quipt. Equipment manufacturers may pursue a strategy of vertical integration and should Quipt ever need to order equipment from those ‎manufacturers, such equipment may not be available on favorable terms.‎
Supply chain disruptions and economy-wide labor shortages in the U.S. could negatively impact Quipt’s businesses.
Supply chain disruptions, such as materials and equipment shortages, shipping, logistics and other delays, might make it more difficult and costly for Quipt to obtain products or services from third parties. If these types of disruptions occur, they could have a material adverse effect on Quipt’s business, financial condition, results of operations and cash flows. Labor shortages may lead to a significant increase in competition throughout the industry to attract and retain talent and lead to increased labor costs.
Quipt’s failure to recruit and retain qualified employees, or to control its labor costs, could have a material adverse effect on its business, financial position, results of operations, and cash flows.
While Quipt seeks to mitigate any cost increases, labor impacts and supply chain delays and shortages, these efforts may not be successful and Quipt could experience adverse impacts due to such factors. Quipt cannot predict the extent of these factors or other future increases in operating costs. To the extent such costs continue to increase, Quipt may be prevented, in whole or in part, from passing such cost increases through to its existing and prospective customers, or Quipt’s customers may seek other competitive sources due to supply chain delays, which could have a material adverse impact on Quipt’s business, financial position, results of operations and cash flows.
Quipt has been negatively impacted by inflation and rising interest rates.
Increases in inflation have had, and may continue to have, an adverse effect on Quipt. Current and future inflationary effects may be driven by, among other things, general inflationary cost increases, supply chain disruptions and governmental stimulus or fiscal policies. The cost to manufacture and distribute the equipment and products that Quipt provides to patients is influenced by the cost of materials, labor, and transportation, including fuel costs. Quipt continues to experience inflationary pressure and higher costs as a result of the increasing cost of materials, labor and transportation. The increase in the cost of equipment and products is due in part to a shortage in the availability of certain products, the higher cost of shipping, and general inflationary cost increases. Additionally, it is not certain that Quipt will be able to pass increased costs onto customers to offset inflationary pressures. Continuing increases in inflation could impact the overall demand for Quipt’s products and services, its costs for labor, equipment and products, and the margins it is able to realize on its products, all of which could have an adverse impact on Quipt’s business, financial position, results of operations and cash flows. In addition, future volatility of general price inflation and the impact of inflation on costs and availability of materials, costs for shipping and warehousing, workforce wage pressure, and other operational overhead could adversely affect Quipt’s financial results. Although there have been recent increases in inflation, Quipt cannot predict whether these trends will continue.
Inflationary increases may result in higher interest rates, which in turn may result in higher interest expense related to variable rate indebtedness. Future increases in inflation may result in higher interest rates which could increase interest expense related to Quipt’s variable rate indebtedness and any borrowings it may undertake to refinance existing fixed rate indebtedness. Higher interest rates also impact the discount rate used in the valuation of intangible assets, including goodwill, and the impact on the discount rate could result in additional impairment charges for such assets. In addition, there can be no assurance that we will be able to refinance the Facility, which has $87,583,000 outstanding as of September 30, 2025, upon maturity, or that any such refinancing would be on terms as favorable as the terms of the
Facility. If we are unable to refinance the term loan at maturity or are only able to do so at higher interest rates, our interest expense would increase, and the amount of our cash flow and our financial condition could be adversely affected.
Quipt’s business depends on its information systems, including software licensed from or hosted by third parties, and any failure or significant disruption or effective cyber-attack on any of these systems, security breaches or improper disclosure of or loss of data could materially affect our business, results of operations and financial condition.
Quipt’s business depends on the proper functioning and availability of its computer systems and networks. Quipt relies on an external service provider to provide continual maintenance, upgrading and enhancement of various information systems used by Quipt for its operational needs. Quipt licenses third-party software that supports intake, personnel scheduling and other human resources functions, office clinical and centralized billing and receivables management in an integrated database, enabling Quipt to standardize the care delivered across its network of locations and monitor its performance and consumer outcomes. Quipt also uses various third-party software providers for its order processing and inventory management platform. To the extent that its third-party providers fail to support, maintain and upgrade such software or systems, or if Quipt loses its licenses with third-party providers, the efficiency of Quipt’s operations could be disrupted or reduced.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information or other intellectual property. Quipt or its third-party vendors may experience cybersecurity and other breach incidents, including such incidents that remain undetected for an extended period. A cybersecurity attack or other incident that bypasses Quipt’s or its third-party vendors’ information systems security could cause a security breach that may lead to a material disruption to Quipt’s information systems infrastructure or business and/or involve a significant loss of business or patient health or other protected data or information. If a cybersecurity attack or another unauthorized attempt to access Quipt’s or its third-party vendors’ systems or facilities were to be successful, it could result in the theft, destruction, loss, misappropriation or release of confidential information or intellectual property, and could cause operational or business delays that may materially impact Quipt’s ability to provide various healthcare services.
Even when a security breach is detected, the full extent of the breach may not be determined immediately. If Quipt experiences a reduction in the performance, reliability, or availability of its information systems, its operations and ability to process transactions and produce timely and accurate reports could be materially adversely affected. If Quipt experiences difficulties with the transition and integration of information systems or is unable to implement, maintain, or expand its systems properly, Quipt could suffer from, among other things, operational disruptions, delays, cessation of service, regulatory problems, increases in administrative expenses and other harm to its business and competitive position. For example, in February 2024, Quipt learned that one of its third-party software providers who interfaces with UnitedHealth Group’s Change Healthcare (“Change Healthcare”) information technology systems in connection with Quipt’s claims processing activity had a cybersecurity threat actor gain access to some of the Change Healthcare information technology systems. UnitedHealth Group isolated the impacted systems upon learning of this threat and Change Healthcare suspended its claims processing activity with Quipt’s third-party software provider. Although claims processing has resumed, this incident could have a continuing adverse effect on Quipt’s business and results of operations.
There can be no assurance that Quipt’s and its third-party software providers’ safety and security measures and disaster recovery plans will prevent damage, interruption, breach of their information systems and operations or data loss. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect, Quipt and its third-party software providers’ may be unable to anticipate these techniques or implement adequate preventive measures. In addition, hardware, software or applications Quipt develops or procures from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security of its information systems. Unauthorized parties may attempt to gain access to Quipt’s systems or facilities, or those of third parties with whom Quipt does business, including its confidential managed file transfer software providers, through fraud or other forms of deceiving its employees or contractors. Costs and potential problems and interruptions associated with any such unauthorized access or the implementation of new or upgraded systems and
technology or with maintenance or adequate support of existing systems and technology, including systems and technology intended to protect against unauthorized access, also could disrupt or reduce the efficiency of Quipt’s operations.
Any successful cybersecurity attack or other unauthorized access to Quipt’s, Quipt’s third-party vendors’, or any of its or their acquisition targets’ systems, facilities or patient health information also could result in negative publicity, which could damage Quipt’s reputation or brand with its patients, referral sources, payors or other third parties and could subject Quipt to substantial penalties under HIPAA and other federal and state data protection laws, in addition to costs and potential damages associated with private litigation related to those affected. Failure to maintain the security and functionality of Quipt’s information systems and related software or to contract with third parties, or a failure to defend a cybersecurity attack or other attempt to gain unauthorized access to Quipt’s, Quipt’s third-party vendors’, or any of its or their acquisition targets’ systems, facilities or patient health information, could expose Quipt to a number of adverse consequences, the vast majority of which are not insurable, including, but not limited to, disruptions in Quipt’s operations, regulatory and other civil and criminal penalties, fines, investigations and enforcement actions (including, but not limited to, those arising from the SEC, Canadian securities regulatory authorities, FTC, the Office of Inspector General or state attorneys general), private litigation with those affected by the data breach, loss of customers, disputes with payors and increased operating expense, all or any of which could adversely impact Quipt’s financial condition and results of operations.
Quipt’s financial performance is affected by continuing efforts by private third-party payors to control their costs, and if Quipt agrees to lower its reimbursement rates due to pricing pressures from such private third-party payors, Quipt’s financial condition and results of operations would likely deteriorate.
Quipt derived approximately 25% and 27% of its net revenue for the years ended September 30, 2025 and 2024, respectively, by seeking reimbursement from Medicare. If the Medicare program were to slow payments of Quipt receivables for any reason, Quipt would be ‎adversely impacted. In addition, Medicare, private health insurance companies,‎ and third-party private payors ‎continually seek to control the cost of providing healthcare services through direct contracts with healthcare providers, increased oversight and greater enrollment of patients in managed care programs and preferred provider organizations. These private payors are increasingly demanding discounted fee structures, including setting reimbursement rates based on Medicare fee schedules or requiring healthcare providers or suppliers to assume a greater degree of financial risk related to patient care. Reimbursement rates under private payor programs may not remain at current levels and may not be sufficient to cover the costs of caring for patients enrolled in such programs, and Quipt may experience a deterioration in pricing flexibility, changes in payor mix and growth in operating expenses in excess of increases in payments by private third-party payors. Quipt may be compelled to lower its prices due to increased pricing pressures, which could adversely impact Quipt’s financial condition and results of operations. A reduction in reimbursement may be unrelated to any concurrent decline in the cost of operations, thereby resulting in ‎reduced profitability. Quipt’s costs of operations could increase, but the cost increases may not be passed on to ‎customers because reimbursement rates are set without regard to the cost of service.‎
Quipt’s payor contracts are subject to renegotiation or termination, which could result in a decrease in Quipt’s revenue or profits.
The majority of Quipt’s payor contracts are subject to unilateral termination by either party on between 30 and 90 days’ prior written notice. Such contracts are routinely amended (sometimes by unilateral action by payors regarding payment policy), renegotiated, subjected to a bidding process with Quipt’s competitors, or terminated altogether. Sometimes in the renegotiation process, certain lines of business may not be renewed, or a payor may enlarge its provider network or otherwise change the way it conducts its business in a way that adversely impacts Quipt’s revenue. In other cases, a payor may reduce its provider network in exchange for lower payment rates. Quipt’s revenue from a payor may also be adversely affected if the payor alters its utilization management expectations and/or administrative procedures for payments and audits, changes its order of preference among the providers to which it refers business or imposes a third-party administrator, network manager or other intermediary. Payors may also decide to refer business to their own provider subsidiaries, such as specialty pharmaceuticals and/or home medical equipment networks owned by such payors or by third-party management companies. Any of these activities could materially reduce Quipt’s revenue from these payors.
Changes made by payors to the way they cover products supplied by Quipt could have an adverse impact on Quipt’s revenue and operations.
Payors that provide coverage for products supplied by Quipt can make changes to their plans and benefit designs that can have an adverse impact on Quipt’s revenue and operations. The impact of changing the benefit can include changes to the types of providers that can provide products, increased competition, changes to covered amounts, and changes to patient deductibles.
Changes in governmental or private payor supply replenishment schedules could adversely affect Quipt.
A significant amount of our revenue comes from the sale of various products, such as masks and tubing and rental of medical equipment, such as CPAPs, oxygen concentrators, and ventilators. Medicare, Medicaid and private payors limit the number of times per year that patients may purchase such supplies or the number of months that equipment can be rented. To the extent that any governmental or private payor revises their guidelines to reduce the number of times such supplies can be purchased or the number of months that equipment can be rented, such reductions could adversely impact Quipt’s revenue, financial condition and results of operations.
If Quipt fails to manage the complex and lengthy reimbursement process, its revenue, financial condition and results of operations could suffer.
Because Quipt depends upon reimbursement from Medicare, Medicaid and third-party payors for a significant majority of its revenues, Quipt’s revenue, financial condition and results of operations may be affected by the reimbursement process, which in the healthcare industry is complex and can involve lengthy delays between the time that services are rendered and the time that the reimbursement amounts are settled. Depending on the payor, Quipt may be required to obtain certain payor-specific documentation from physicians and other healthcare providers before submitting claims for reimbursement. Certain payors have filing deadlines and will not pay claims submitted after such deadlines. Quipt cannot ensure that it will be able to effectively manage the reimbursement process and collect payments for its equipment and services promptly.
Quipt may be adversely affected by consolidation among health insurers and other industry participants.
In recent years, there has been a continuing trend of health insurers merging or increasing efforts to consolidate with other non-governmental payors. Insurers are also increasingly pursuing alignment initiatives with healthcare providers. Consolidation within the health insurance industry may result in insurers having increased negotiating leverage and competitive advantages, such as greater access to performance and pricing data. Quipt’s ability to negotiate prices and favorable terms with health insurers in certain markets could be affected negatively as a result of this consolidation. In addition, the shift toward value-based payment models could be accelerated if larger insurers, including those engaging in consolidation activities, find these models to be financially beneficial. There can be no assurance that Quipt will be able to negotiate favorable terms with payors and otherwise respond effectively to the impact of increased consolidation in the payor industry or vertical integration efforts.
Quipt may be adversely affected if it is unable to maintain current levels of collectability and by the deterioration of the financial condition of Quipt’s payors and disputes with third parties could have a significant negative impact on Quipt’s financial condition and results of operations.
The collection of accounts receivable requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures. There can be no assurance that Quipt will be able to improve upon or maintain its current levels of collectability and days sales outstanding in future periods. Further, some of Quipt’s payors and/or patients may experience financial difficulties, or may otherwise not pay accounts receivable when due, resulting in increased write-offs. If Quipt is unable to properly bill and collect its accounts receivable, its financial condition and results of operations will be adversely affected. In addition, from time to time, Quipt is involved in disputes with various parties, including its payors and their intermediaries regarding their performance of various contractual or regulatory obligations. These disputes sometimes lead to legal and other proceedings and cause Quipt to incur costs or experience delays in collections, increases in its accounts receivable or loss of revenue. In addition, in the
event such disputes are not resolved in Quipt’s favor or cause Quipt to terminate its relationships with such parties, there may be an adverse impact on its financial condition and results of operations.
If Quipt is unable to maintain or develop relationships with patient referral sources, its growth and profitability could be adversely affected.
Quipt’s growth and profitability depend in large part on referrals from acute care hospitals, sleep laboratories, pulmonologist and endocrinologist offices, skilled nursing facilities, hospice operators and other patient referral sources in the communities served by Quipt, its ability to establish and maintain close working relationships with such patient referral sources and its ability to increase awareness and acceptance of the benefits of inpatient rehabilitation, home health, and hospice care by its referral sources and their patients. By law, referral sources cannot be contractually obligated to refer patients to any specific provider. In addition, Quipt’s relationships with referral sources are subject to federal and state healthcare laws such as the federal Anti-Kickback Statute and the Stark Law to the extent these services provide a financial benefit to or relieve a financial burden for a potential referral source or are subsequently found not to be for fair market value. However, there can be no assurance that other market participants will not attempt to steer patients to competing post-acute providers or otherwise limit Quipt’s access to potential referrals. The establishment of joint ventures or networks between referral sources, such as acute care hospitals, and other post-acute providers may hinder patient referrals to Quipt. Quipt’s loss of, or failure to maintain, existing relationships or its failure to develop new relationships with referral sources could adversely affect its ability to grow its business and operate profitably.
Quipt experiences competition from numerous other sleep therapy equipment, home respiratory, and mobility equipment providers, and this competition could adversely affect its revenues and its business.
The sleep therapy equipment, home respiratory, and mobility equipment markets are highly competitive and include a large number of providers, some of which are national providers, but most of which are either regional or local providers, including hospital systems, physician specialists and sleep labs. The primary competitive factors are quality considerations such as responsiveness, access to payor contracts, the technical ability of the professional staff and the ability to provide comprehensive services. These markets are very fragmented. Some of Quipt’s competitors may now or in the future have greater financial resources or more effective sales and marketing activities. The rest of the homecare market in the US consists of regional providers and product-specific providers, as well as numerous local organizations. Hospitals and health systems are routinely looking to provide coverage and better control of post-acute healthcare services, including homecare services of the types Quipt provides. These trends may continue as new payment models evolve, including bundled payment models, shared savings programs, value-based purchasing and other payment systems.
New entrants to the sleep therapy equipment, home respiratory/home medical equipment and mobility equipment markets could have a material adverse effect on Quipt’s business, results of operations and financial condition. A number of manufacturers of home respiratory equipment currently provide equipment directly to patients on a limited basis. Such manufacturers have the ability to provide their equipment at prices below those charged by Quipt, and there can be no assurance that such direct-to-patient sales efforts will not increase in the future or that such manufacturers will not seek reimbursement contracts directly with Quipt’s third-party payors, who could seek to provide equipment directly to patients from the manufacturer. In addition, pharmacy benefit managers could enter the home medical equipment market and compete with Quipt. Large technology companies, such as Amazon.com, Inc. and Alphabet Inc., have disrupted other supply businesses and have entered the healthcare market. In the event such companies enter the home medical equipment market, Quipt may experience a loss of referrals or revenue.
Changes in medical equipment technology and development of new treatments may cause Quipt’s current equipment or services to become obsolete.
Quipt evaluates changes in home medical equipment technology and treatments on an ongoing basis for purposes of determining the feasibility of replacing or supplementing items currently included in the patient service equipment inventory and services that Quipt offers patients. Quipt’s selection of medical equipment and services is formulated on the basis of a variety of factors, including overall quality, functional reliability, availability of supply, payor reimbursement policies, product features, labor costs associated with the technology, acquisition, repair and ownership costs and overall patient and referral source demand, as well as patient therapeutic and lifestyle benefits. Manufacturers continue to invest
in research and development to introduce new products to the marketplace. It is possible that major changes in available technology, payor benefit or coverage policies related to those changes, or the preferences of patients and referral sources may cause Quipt’s current product offerings to become less competitive or obsolete, and it will be necessary to adapt to those changes. Unanticipated changes could cause Quipt to incur increased capital expenditures and accelerated equipment write-offs, and could force Quipt to alter its sales, operations and marketing strategies.
In addition, the development and commercialization of new drugs to address obesity may limit the prospects for Quipt’s current equipment or services. A number of new glucagon-like peptide (GLP-1) receptor agonist drugs, including Mounjaro, Wegovy, and Ozempic, have entered the market. The long-term effect of these drugs on Quipt’s business is uncertain. However, these drugs may have a significant impact on obesity rates over time, which may result in reduced demand for our current equipment or services, and we may not be able to adapt to those changes to stay competitive.
Quipt’s operations involve the transport of compressed and liquid oxygen, which carries an inherent risk of rupture or other accidents with the potential to cause substantial loss, and have involved the operation of medical gas facilities that are subject to federal and state regulations, which requires significant compliance oversight and expenses.
Quipt’s operations are subject to the many hazards inherent in the transportation of medical gas products and compressed and liquid oxygen, including ruptures, leaks and fires. These risks could result in substantial losses due to personal injury or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage and may result in curtailment or suspension of Quipt’s related operations. If a significant accident or event occurs, it could adversely affect Quipt’s business, financial position and results of operations. Additionally, corrective action plans, fines or other sanctions may be levied by government regulators who oversee transportation of hazardous materials such as compressed or liquid oxygen.
Quipt provides a significant number of patients with oxygen-based therapy, and from time to time, Quipt has operated medical gas facilities in several states subject to federal and state regulatory requirements. Quipt’s medical gas facilities and operations are subject to extensive regulation by the Food and Drug Administration (“FDA”) and other federal and state authorities. The FDA regulates medical gases, including medical oxygen, pursuant to its authority under the federal Food, Drug and Cosmetic Act. Among other requirements, the FDA’s current Good Manufacturing Practice (“cGMP”) regulations impose certain quality control, documentation and record keeping requirements on the receipt, processing and distribution of medical gas. Further, in each such state, its medical gas facilities would be subject to regulation under state health and safety laws, which vary from state to state. The FDA and state authorities conduct periodic, unannounced inspections at medical gas facilities to assess compliance with the cGMP and other regulations, and Quipt expends significant time, money and resources in an effort to achieve substantial compliance with the cGMP regulations and other federal and state law requirements at each of its medical gas facilities. Quipt also complies with the FDA’s requirement for medical gas providers to register their sites with the agency. There can be no assurance, however, that these efforts will be successful and that Quipt’s medical gas facilities will maintain compliance with federal and state law regulations. Failure by Quipt to maintain regulatory compliance at its medical gas facilities could result in enforcement action, including warning letters, fines, product recalls or seizures, temporary or permanent injunctions, or suspensions in operations at one or more locations, and civil or criminal penalties which could materially harm its business, financial condition, results of operations, cash flow, capital resources and liquidity.
Quipt currently outsources, and from time to time in the future may outsource, a portion of its internal business functions to third-party providers, which has significant risks, and Quipt’s failure to manage these risks successfully could materially adversely affect its business, results of operations, and financial condition.
Quipt currently outsources, and from time to time in the future may outsource, portions of its internal business functions, including billing and administrative functions relating to revenue cycle management and accounts payable, to third-party providers in India and the Philippines, and utilizes third-party managed file transfer software providers to transfer its sensitive and protected customer data. These third-party providers may not comply on a timely basis with all of Quipt’s requirements or may not provide Quipt with an acceptable level of service or may not protect properly Quipt’s and its customers’ confidential or protected data. This could result in significant disruptions in Quipt’s operations and significantly increase costs to undertake Quipt’s operations, either of which could damage Quipt’s relationships with its customers. In addition, Quipt’s outsourced functions may be negatively impacted by any number of factors, including:
political unrest; public health crises; social unrest; cyber-attacks; terrorism; war; vandalism; currency fluctuations; changes to the laws of India, the Philippines, the US or any other jurisdictions in which Quipt does business or outsources operations; or increases in the cost of labor and supplies in India and the Philippines or any other jurisdiction in which Quipt outsources any portion of its internal or other business functions. Quipt’s outsourced operations may also be affected by trade restrictions, such as tariffs or other trade controls. As a result of its outsourcing activities, it may also be more difficult for Quipt to recruit and retain qualified employees for its business needs at any time. Quipt’s failure to successfully outsource certain of its business functions could materially adversely affect its business, results of operations, and financial condition.
Quipt’s ability to successfully operate its business is largely dependent upon the efforts of key personnel of Quipt, including senior management, the loss of any of whom could negatively impact Quipt’s operations and financial results.
Quipt is highly dependent on the performance and continued efforts of its senior management team. Quipt’s future success is dependent on its ability to continue to attract and retain qualified executive officers and senior management. Any inability to manage Quipt’s operations effectively could adversely impact its financial condition and results of operations.
Quipt’s ability to successfully operate its business is also dependent upon the efforts of certain other key personnel of Quipt. It is possible that Quipt will lose some key personnel, the loss of which could negatively impact its operations and profitability.
Quipt’s strategic growth plan, which has historically involved the acquisition of other companies, may not succeed.
Quipt’s strategic plan calls for growth in its business over the next several years through an increase in its density in select markets where it is established as well as the expansion of its geographic footprint into new markets. This growth would place (and has placed) significant demands on Quipt’s management team, systems, internal controls and financial and professional resources. As a result, Quipt could be required to incur (and has incurred) expenses for hiring additional qualified personnel, retaining professionals to assist in developing the appropriate control systems and expanding Quipt’s information technology infrastructure. If Quipt is unable to effectively manage growth, its financial results could be adversely impacted.
Quipt’s strategic plan has historically involved acquisitions of home medical equipment providers, and such acquisitions remain an element of Quipt’s strategy. Quipt may face increased competition for attractive acquisition candidates, which may limit the number of acquisition opportunities available to Quipt or lead to the payment of higher prices for its acquisitions. Without successful acquisitions, Quipt’s future growth rate could decline. In addition, Quipt cannot guarantee that any future acquisitions, if consummated, will result in further growth.
Quipt’s strategic plan contemplates successful integration of acquired home medical equipment providers with Quipt’s existing business, including reduction in operating expenses with respect to the acquired companies. Integrating an acquisition could be expensive and time-consuming and could disrupt Quipt’s ongoing business, negatively affect cash flow and distract management and other key personnel from day-to-day operations. Quipt may not be able to successfully combine the operations of recently acquired companies with its operations, and, even if such integration is accomplished, Quipt may never realize the potential benefits of such an acquisition.
The integration of acquisitions requires significant attention from management, may impose substantial demands on Quipt’s operations or other projects and may impose challenges on us including, but not limited to, consistencies in business standards, procedures, policies and business cultures. There can be no assurance that any future acquisitions, if consummated, will result in further growth.
Specific integration risks relating to the acquisition of other companies by Quipt may include:
● difficulties related to combining previously separate businesses into a single unit, including patient transitions, product and service offerings, distribution and operational capabilities and business cultures;
● availability of financing to the extent needed to fund acquisitions;
● customer loss and other general business disruption;
● managing the integration process while completing other independent acquisitions or dispositions;
● diversion of management’s attention from day-to-day operations;
● assumption of liabilities of an acquired business, including unforeseen or contingent liabilities or liabilities in excess of the amounts estimated;
● failure to realize anticipated benefits and synergies, such as cost savings and revenue enhancements;
● potentially substantial costs and expenses associated with acquisitions and dispositions;
● failure to retain and motivate key employees;
● difficulties in establishing and applying Quipt’s internal control over financial reporting and disclosure controls and procedures to an acquired business;
● obtaining necessary regulatory licenses and payor-specific approvals, which may impact the timing of when Quipt is to bill and collect for services rendered;
● Quipt’s ability to transition patients in a timely manner may impact Quipt’s ability to collect amounts for services rendered;
● Quipt’s estimates for revenue accruals during the integration of acquisitions may require adjustments in future periods as the transition of patient information is finalized; and
● delays in obtaining new government and commercial insurance payor identification numbers for acquired branches, resulting in a slowdown and/or loss of associated revenue.
Political and economic conditions, including significant global or regional developments such as economic and political events, including the implementation of tariffs, natural disasters, and public health crises that are out of Quipt’s control, could adversely affect its revenue, financial condition, and results of operations.
Quipt’s business can be affected by a number of factors that are beyond its control, such as general geopolitical, economic, and business conditions, including slower economic growth, disruptions in financial markets, economic downturns in the form of either contained or widespread recessionary conditions, inflation, elevated unemployment levels, sluggish or uneven economic recovery, government actions impacting trade agreements, including the imposition of trade restrictions such as tariffs and retaliatory counter measures, government deficit reduction, tax legislation increasing the federal corporate income tax rates, natural and other disasters, public health crises affecting the operations of Quipt or its customers or suppliers, staffing shortages, product shortages, and disruptions in delivery systems.
We source our products from vendors who may manufacture or import our products from various countries. In February 2025, the US government announced tariffs on product imports from certain countries, including higher tariff levels on those imported from Canada, Mexico, and China. These actions have resulted, and are expected to further result, in retaliatory measures on US goods by those countries and others. If maintained, these recently announced tariffs, and the potential escalation of trade disputes could pose a risk to our business that could affect our revenue and cost of sourcing materials. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and are expected to be impacted by various factors, such as negotiations between the US and affected countries, the responses of other countries or regions, exemptions or exclusions that already exist or may be granted, availability and cost of alternative sources of our products, and our ability to offset the effects of any tariffs that might be imposed. Specific legislative and regulatory proposals may be introduced to change international trade law, regulations, or interpretations thereof (possibly with retroactive effect) of various jurisdictions or limit trade relief benefits that, if enacted, could materially increase the cost of our goods, increase our effective tax rate, or have a material adverse impact on our financial condition and results of operation. We cannot predict whether our own or industry initiatives to maintain, extend, or create tariff relief for our products will be successful. We also cannot predict the effect, if any, of the imposition of new or increased tariffs by one country and retaliatory responses by other countries who are trade partners. It is possible that these changes could adversely affect our business beyond the resilience of our current supply chain. Further, actions we take to adapt to new tariffs or trade restrictions may increase our costs or risks or may cause us to modify our operations,
which could be time-consuming and expensive; impact pricing of our products, which could impact our sales, profitability, and our reputation; or cause us to forgo new business opportunities.
We continue to monitor the worsening macroeconomic conditions. Turmoil in the financial markets, including in the capital and credit markets, and any uncertainty over its breadth, depth, and duration may put pressure on the global economy and could have a negative effect on Quipt’s business. The shortage of liquidity and credit combined with substantial losses in worldwide equity markets could cause an economic recession in the US or worldwide. If global financial markets experience extreme disruption, governments may take unprecedented actions intended to address extreme market conditions that may include severely restricted credit and declines in real estate values. If conditions in the global economy, US economy, or other key vertical or geographic markets are weak or uncertain, Quipt could experience material adverse impacts on its revenue, financial condition, and results of operations.
Quipt’s current insurance program is expensive to maintain and may expose it to unexpected costs and negatively affect its business, financial condition and results of operations, particularly if it incurs losses not covered by its insurance or if claims or losses differ from its estimates.
There is an inherent risk of liability in the provision of healthcare services. As a participant in the healthcare industry, Quipt may periodically be subject to lawsuits, some of which may involve large claims and significant costs to defend, such as mass tort or other class actions. Although Quipt’s insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar provisions that it believes are reasonable based on its operations, the coverage under its insurance programs may not be adequate to protect it in all circumstances. Quipt’s insurance policies contain exclusions and conditions that could have a materially adverse impact on Quipt’s ability to receive indemnification thereunder, as well as customary sub-limits for particular types of losses. Additionally, insurance companies that currently insure companies in Quipt’s industry may cease to do so, may change the coverage provided or may substantially increase premiums in the future. The incurrence of losses and liabilities that exceed Quipt’s available coverage, therefore, could have a material adverse effect on its business, financial condition and results of operations.
Quipt also maintains Directors and Officers (D&O) Liability insurance coverage to protect all of its directors and executive officers. As premiums for insurance covering directors’ and officers’ liability are rising, Quipt may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. There can be no assurance that this D&O coverage will be sufficient to cover the costs of the events that may lead to its invocation, in which case, there could be an adverse impact on Quipt’s financial condition, should such an unforeseen event occur. As a result, it may be more difficult for us to attract and retain qualified people to serve on Quipt’s board of directors, its board committees, or as executive officers.
Potential conflicts of interest may arise.
There are potential conflicts of interest to which some of Quipt’s directors and officers may be subject ‎in connection with its operations, and situations may arise where the directors and officers may be ‎in direct competition with Quipt. Conflicts of interest, if any, which arise may be subject to and be governed ‎by procedures prescribed by the Business Corporations Act (British Columbia), which require a director or officer of a corporation who is a party to or is a ‎director or an officer of or has a material interest in any person who is a party to a material contract or proposed ‎material contract with Quipt to disclose his interest and to refrain from voting on any matter in respect of ‎such contract unless otherwise permitted under the Business Corporations Act (British Columbia). Any decision made by any of such directors and ‎officers involving Quipt should be made in accordance with their duties and obligations to deal fairly and in ‎good faith with a view to the best interests of Quipt and its shareholders.‎
Quipt conducts all of its operations through foreign subsidiaries in the US.
Quipt conducts all its operations through its US subsidiaries. Therefore, to the extent of these ‎holdings, Quipt (directly and indirectly) is dependent on the cash flows of these subsidiaries to meet its ‎obligations. The ability of such subsidiaries to make payments to their parent companies may be constrained by the ‎following factors: the level of taxation, particularly corporate profits and withholding taxes, in the jurisdiction in which ‎each subsidiary operates; and the introduction of exchange controls or repatriation restrictions or the availability of ‎hard currency to be repatriated.‎
Quipt’s revenue is generated from operations in the US and is exposed to foreign exchange risk, which may negatively affect Quipt’s results of operations.
All of Quipt’s revenue is generated from operations in the US. Quipt is subject to a number of risks ‎associated with its operations that may increase liability and costs and require significant management attention. These ‎risks include:‎
● compliance with US laws that apply to Quipt’s US operations, including lawful access, privacy ‎laws and anti-corruption laws;‎
● instability in economic or political conditions, including inflation, recession and political uncertainty;‎
● potential adverse tax consequences; and
● litigation in US courts.‎
In addition, Quipt is exposed to foreign exchange risk. At times, including at September 30, 2025, Quipt holds significant cash in Canadian dollars (“C$”). Quipt monitors foreign currency exposures and ‎from time to time could authorize the use of derivative financial instruments such as forward foreign exchange ‎contracts to economically hedge a portion of foreign currency fluctuations.‎
Based on the exposure of Canadian cash at September 30, 2025, depreciation or appreciation of the Canadian dollar ‎against the US dollar (“$”) could result in a significant effect on net income or loss. Quipt has not employed any ‎foreign currency hedging programs.
Risks Related to Regulation
Quipt’s revenue could be impacted by federal and state changes to reimbursement and other Medicaid and Medicare policies.
Quipt derived approximately 31% and 32% of its net revenue for the years ended September 30, 2025 and 2024, respectively, from Medicare and various state-based Medicaid programs. These programs are subject to statutory and regulatory changes affecting overall spending, base rates or basis of payment, retroactive rate adjustments, annual caps that limit the amount that can be paid (including deductible and coinsurance amounts) home medical supplies for Medicare beneficiaries, administrative or executive orders and government funding restrictions, all of which may materially adversely affect the rates and frequency at which these programs reimburse Quipt. Healthcare providers, suppliers, and payors are facing increasing pressure to reduce healthcare costs, and recent budget proposals and legislation at both the federal and state levels have called for cuts in Medicare and Medicaid reimbursement rates. Enactment and implementation of measures to reduce or delay reimbursement or overall Medicare or Medicaid spending could result in substantial reductions in Quipt’s revenue and profitability. Payors may disallow Quipt’s requests for reimbursement based on determinations that certain costs are not reimbursable or reasonable because either adequate or additional documentation was not provided or because certain items or services were not covered or considered medically necessary. Revenue from third-party payors can be retroactively adjusted after a new examination during the claims settlement process or as a result of post-payment audits. Quipt may also be subject to pre-payment review of certain service lines or products and equipment as a result of negative audit findings or other third-party payor determinations, which can result in significant delays in claims processing and could materially impact its revenue.
As a result of the Public Health Emergency Declaration, National Emergency Declaration, and pursuant to the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), among other things, the Centers for Medicare & Medicaid Services (“CMS”) issued regulatory guidance indicating enforcement discretion and flexibility regarding the provisions of items and services by the Medicare Durable Medical Equipment, Prosthetics, Orthotics, & Supplies (“DMEPOS”) suppliers like Quipt. These provisions were announced through blanket waivers under Section 1135 of the Social Security Act, two Interim Final Rules with Requests for Comment on April 6, 2020 and May 8, 2020, respectively, and through numerous forms of subregulatory guidance. These provisions included modifications of various requirements under CMS regulations and Medicare and Medicaid program rules that aim to expand the capacity of healthcare providers and suppliers to deliver healthcare services while minimizing the risk of viral exposure. CMS’s changes included the exercise of enforcement discretion with respect to the clinical conditions and face-to-face encounter requirements required under certain national and local coverage determinations applicable to certain items and supplies
Quipt offers. However, many of these flexibilities have now ended or were modified following the end of the COVID-19 public health emergency and subsequent regulatory changes.
The CARES Act also provided for a temporary suspension of reduced rates for items and services provided by Quipt. Previously, CMS applied a blended payment rate for DME furnished in rural or noncontiguous non-competitive bidding areas. Pursuant to provisions of the CARES Act, through the end of the public health emergency, that blended rate was based on 50% of the adjusted fee schedule amount (adjusted based on competitively bid prices) and 50% of the unadjusted DMEPOS fee schedule amount. On December 28, 2021, CMS extended the temporary 50/50 blended rate for rural and noncontiguous non-competitive bidding areas after the public health emergency. This 50/50 blended rate was continued in the 2023 DMEPOS Fee Schedule through December 31, 2023. After which rates reverted to a 75/25 blend which then terminated on January 1, 2024, leading to a downward shift in reimbursement.
In December 2025, CMS finalized a proposal regarding the DMEPOS Competitive Bidding Program (CBP); this will impact how Medicare payment is made for DMEPOS CBP product categories in this next CBP round. These product categories include products in Quipt’s portfolio including, but not limited to, continuous glucose monitoring systems, which Quipt added to its offerings in 2023. Notably, however, CPAP devices and supplies, a core product of Quipt, will be removed from CBP. While Quipt will be able to cease CBP obligations for CPAP devices and supplies, it will need to remain a contract supplier to furnish items subject to the DMEPOS CBP, such as CGMs. CMS will announce specific dates for registration and bidding in late spring/early summer 2026, with payment rates in effect no later than January 1, 2028.
While Quipt cannot predict what Medicare payment rates or coverage determinations will be in effect in future years, changes to payment rates or benefit coverages may materially impact its financial condition and results of operations.
The CARES Act temporarily suspended the 2% payment adjustment applied to all Medicare fee-for-service claims under The Budget Control Act of 2011. The 2% BDCA sequestration was reinstated as of July 1, 2022. The payment adjustment has, and may continue to, adversely affect Quipt. Additionally, sequestration may have a continued revenue impact on Quipt’s individual contracts with Medicare Advantage Organizations depending on individual contracts.
The Statutory Pay-As-You-Go Act of 2010 (PAYGO) required that automatic payment cuts of 4% be put into place if a statutory action is projected to create a net increase in the deficit over either five or 10 years. The enactment of the American Rescue Plan Act in 2021 would have triggered PAYGO sequestration in 2021. In the Protecting Medicare & American Farmers from Sequester Cuts Act, Congress delayed the PAYGO sequestration until January 1, 2023. The Consolidated Appropriations Act, 2023 (Public Law No: 117-328) further prevented implementation of the PAYGO Medicare 4% sequester through the end of 2024. The Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (Public Law 119-37) further prevented implementation of the PAYGO Medicare sequester through January 2026; however, the separate 2% sequestration cut mandated by the BCA was not deferred and will take effect in January 2026 and continue through 2032. Cuts in Medicare reimbursement will likely have a negative impact on Quipt’s financial condition and results of operations.
Quipt is subject to US federal and state healthcare fraud and abuse and false claims laws and regulations, under which prosecutions have increased in recent years and Quipt may become subject to such litigation, and if Quipt is unable to comply or has not fully complied with such laws, it could face substantial penalties.
Quipt’s operations are subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal Stark Law and the federal False Claims Act. These laws may impact, among other things, Quipt’s sales, marketing and education programs.
The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. In addition, a person or entity does not need to have actual knowledge of the statute or specific
intent to violate it in order to have committed a violation. The Anti-Kickback Statute is broad and, despite a series of narrow safe harbors, prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. Many states have also adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.
The federal Ethics in Patient Referrals Act of 1989, commonly known as the “Stark Law,” prohibits, subject to certain exceptions, physician referrals of Medicare and, as applicable under state law, Medicaid patients to an entity providing certain “designated health services” if the physician or an immediate family member has any financial relationship with the entity. The Stark Law also prohibits the entity receiving the referral from billing any good or service furnished pursuant to an unlawful referral. Various states have corollary laws to the Stark Law, including laws that require physicians to disclose any financial interest they may have with a healthcare provider to their patients when referring patients to that provider. Both the scope and exceptions for such laws vary from state to state. The federal False Claims Act prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government. The False Claims Act defines “knowingly” to include actual knowledge, acting in deliberate ignorance of the truth or falsity of information, or acting in deliberate disregard of the truth or falsity of information. False Claims Act liability includes liability for reverse false claims for avoiding or decreasing an obligation to pay or transmit money to the government. This includes False Claims Act liability for failing to report and return overpayments within 60 days of the date on which the overpayment is “identified.” Penalties under the False Claims Act can include exclusion from the Medicare program. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Suits filed under the False Claims Act, known as qui tam actions, can be brought by any individual on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. The frequency of filing qui tam actions has increased significantly in recent years, causing greater numbers of medical device, pharmaceutical and healthcare companies to have to defend a False Claims Act action. When an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each separate false claim. Various states have also enacted laws modeled after the federal False Claims Act.
Quipt is currently the subject of an ongoing investigation by the US Department of Justice (the “DOJ”) concerning whether the Company may have caused the submission of false claims to government healthcare programs for CPAP equipment. In April 2024, Quipt received a subpoena from the SEC to provide certain documents related to the Company and the DOJ investigation, the civil investigative demand (“CID”) and financial reporting and disclosure matters (“SEC Subpoena”). Further to the SEC Subpoena, the SEC concluded its investigation in November 2024 and, based on the information it had as at such time, the SEC advised that it did not intend to recommend an enforcement action by it against the Company. No assurance can be given as to the timing or outcome of the DOJ’s investigation or that no action may ultimately result from the SEC’s investigation.
HIPAA, and its implementing regulations, also created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
From time to time, Quipt has been and is involved in various governmental audits, investigations and reviews related to its operations. Reviews and investigations can lead to government actions, resulting in the assessment of damages, civil or criminal fines or penalties, or other sanctions, including restrictions or changes in the way Quipt conducts business, loss of licensure or exclusion from participation in Medicare, Medicaid or other government programs. Additionally, as a result of these investigations, healthcare providers and entities may face litigation or have to agree to settlements that can include monetary penalties and onerous compliance and reporting requirements as part of a consent
decree or corporate integrity agreement. If Quipt fails to comply with applicable laws, regulations and rules, its financial condition and results of operations could be adversely affected. Furthermore, becoming subject to these governmental investigations, audits and reviews may result in substantial costs and divert management’s attention from the business as Quipt cooperates with the government authorities, regardless of whether the particular investigation, audit or review leads to the identification of underlying issues.
Quipt is unable to predict whether it could be subject to actions under any of these laws, or the impact of such actions. If Quipt is found to be in violation of any of the laws described above or other applicable state and federal fraud and abuse laws, Quipt may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from Medicare, Medicaid and other government healthcare reimbursement programs and the curtailment or restructuring of its operations.
Failure by Quipt to successfully design, modify and implement technology-based and other process changes to maximize productivity and ensure compliance could ultimately have a significant negative impact on Quipt’s financial condition, reputation and results of operations.
Failure to achieve the cost savings or enhanced quality control expected from the successful design and implementation of such initiatives may adversely impact Quipt’s financial condition and results of operations. Additionally, Medicare and Medicaid often change their documentation requirements with respect to claims submissions. The standards and rules for healthcare transactions, code sets and unique identifiers also continue to evolve, such as ICD 10 and HIPAA 5010 and other data security requirements. Moreover, government programs and/or commercial insurance payors may have difficulties administering new standards and rules for healthcare transactions and this may adversely affect timelines of payment or payment error rates. The DMEPOS Competitive Bidding Program also imposes new reporting requirements on contracted providers. Failure by Quipt to successfully design and implement system or process modifications could have a significant impact on its operations and financial condition. From time to time, Quipt’s outsourced contractors for certain information systems functions may make operational, leadership or other changes that could impact Quipt’s plans and cost-savings goals. The implementation of many of the new standards and rules will require Quipt to make substantial investments. Further, the implementation of these system or process changes could have a disruptive effect on related transaction processing and operations. If Quipt’s implementation efforts related to systems development are unsuccessful, Quipt may need to write off amounts that it has capitalized related to systems development projects. Additionally, if systems development implementations do not occur, Quipt may need to incur additional costs to support its existing systems.
If CMS requires prior authorization or implements changes in documentation necessary for Quipt’s products, Quipt’s revenue, financial condition and results of operations could be negatively impacted.
CMS has established and maintains a Master List of Items Frequently Subject to Unnecessary Utilization of certain DMEPOS items identified as being subject to unnecessary utilization. This list identifies items that CMS has determined could potentially be subject to prior authorization as a condition of Medicare payment. Since 2012, CMS has also maintained a list of categories of DMEPOS items that require face-to-face encounters with practitioners and written orders before the DMEPOS supplier may furnish the items to beneficiaries. In a final rule issued in 2019, CMS combined and harmonized the two lists to create a single unified list (the “Master List”). CMS also reduced the financial threshold for inclusion on the Master List. With certain exceptions for reductions in Payment Threshold (defined as an average purchase fee of $1,000 or greater, adjusted annually for inflation, or an average monthly rental fee of $100 or greater, adjusted annually for inflation), items remain on the Master List for ten years from the date the item was added to the Master List. The presence of an item on the Master List does not automatically mean that prior authorization is required. Under the 2019 final rule, CMS selects items from the Master List for inclusion on the “Required Prior Authorization List.” The expanded Master List would increase the number of DMEPOS items potentially eligible to be selected for prior authorization, face-to-face encounter and written order prior to delivery requirements as a condition of payment. In August 2022, CMS suspended the prior authorization requirement for specified orthosis items on the Required Prior Authorization List under certain circumstances when reported with certain modifiers, effective April 13, 2022. On January 17, 2023, CMS published the annualF/WOPD Required List update in a federal register announcement, which added 10 orthosis codes that go into effect on April 17, 2023. To ensure practitioner involvement, these items will require an in person face-to-face encounter or telehealth encounter and also require a written order prior to delivery (WOPD). If CMS adds additional
products to the Master List, expands the list of items subject to prior authorization, or expands face-to-face encounter requirements or provisions requiring a written order prior to delivery, these changes may adversely impact Quipt’s revenue, financial condition and results from operations.
Reimbursement claims are subject to audits by various governmental and private payor entities from time to time and such audits may negatively affect Quipt’s revenue, financial condition and results of operations.
Quipt receives a substantial portion of its revenues from the Medicare program. Medicare reimbursement claims made by healthcare providers, including HME providers, are subject to audit from time to time by governmental payors and their agents, such as MACs that, among other things, process and pay Medicare claims, auditors contracted by CMS, and insurance carriers, as well as the Office of Inspector General of the Department of Health and Human Services (the “OIG-HHS”), CMS and state Medicaid programs. These include specific requirements imposed by the Durable Medical Equipment Medicare Administrative Contractor (“DME MAC”) Supplier Manuals, Medicare DMEPOS enrollment requirements and Medicare DMEPOS Supplier Standards. To ensure compliance with Medicare, Medicaid and other regulations, government agencies or their contractors, including MACs, Recovery Audit Contractors (“RACs”), Unified Program Integrity Contractors (“UPICs”) and Zone Program Integrity Contractors (“ZPICs”), often conduct audits and request customer records and other documents to support Quipt’s claims submitted for payment of services rendered and compliance with government program claim submission requirements. Some contractors are paid a percentage of the overpayments recovered. Negative audit findings or allegations of fraud or abuse may subject Quipt or its individual subsidiaries to liability, such as overpayment liability, refunds or recoupments of previously paid claims, payment suspension, or the revocation of billing or payment privileges in governmental healthcare programs. If CMS or a state Medicaid agency determines that certain actions of the Company or an affiliated subsidiary present an undue risk of fraud, waste, or abuse, they may suspend the billing or payment privileges of the entity, deny the entity’s enrollment or revalidation for Medicare or Medicaid participation, and potentially deny the re-enrollments of other commonly owned entities. Such actions, if imposed on the Company or its subsidiaries, could materially adversely impact the Company’s revenue, financial condition and results of operations.
In many instances, there are only limited publicly available guidelines and methodologies for determining errors with certain audits. As a result, there can be a significant lack of clarity regarding required documentation and audit methodology. The clarity and completeness of each patient medical file, some of which is the work product of physicians not employed by Quipt, is essential to successfully challenging any payment denials. For example, certain provisions under CMS guidance manuals, local coverage determinations, and the DME MAC Supplier Manuals provide that clinical information from the “patient’s medical record” is required to justify the initial and ongoing medical necessity for the provision of DME. Some DME MACs, CMS staff and other government contractors have taken the position, that the “patient’s medical record” refers not to documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, healthcare facility or other clinician, and that clinical information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity. If treating physicians do not adequately document, among other things, their diagnoses and plans of care, the risks that the Company will be subject to audits and payment denials are likely to increase. Moreover, auditors’ interpretations of these policies are inconsistent and subject to individual interpretation, leading to significant increases in individual suppliers and industry-wide perceived error rates. High error rates could lead to further audit activity and regulatory burdens and could result in Quipt making significant refunds and other payments to Medicare and other government programs. Accordingly, Quipt’s future revenues and cash flows from government healthcare programs may be reduced. Private payors also may conduct audits and may take legal action to recover alleged overpayments. Quipt could be adversely affected in some of the markets in which it operates if the auditing payor alleges substantial overpayments were made to Quipt due to coding errors or lack of documentation to support medical necessity determinations. Quipt cannot currently predict the adverse impact these measures might have on its financial condition and results of operations, but such an impact could be material.
Moreover, provisions of the Patient Protection and Affordable Care Act (“ACA”) implemented by CMS require that overpayments be reported and returned within 60 days of the date on which the overpayment is “identified.” Any overpayment retained after this deadline may be considered an “obligation” for purposes of the False Claims Act, liability for which can result in the imposition of substantial fines and penalties. CMS currently requires a six-year “lookback period,” for reporting and returning overpayments.
Quipt cannot currently predict the adverse impact, if any, that these audits, determinations, methodologies and interpretations might have on its financial condition and results of operations.
Significant reimbursement reductions and/or exclusion from markets or product lines could adversely affect Quipt.
In March 2019, CMS announced that it would consolidate all rounds and areas of the DMEPOS Competitive Bidding Program into a single round of competition effective January 1, 2021 named “Round 2021”, to consolidate prior CBAs. Round 2021 contracts became effective on January 1, 2021 and extend through December 31, 2023. CMS included 16 product categories in the Round 2021. On April 10, 2020, CMS announced that due to the COVID-19 pandemic, it removed the non-invasive ventilators product category from the Round 2021 DMEPOS Competitive Bidding Program.
On October 27, 2020, CMS announced that it would not award competitive bid contracts in 13 of the 15 remaining product categories due to a failure to achieve expected savings, and that Round 2021 contract awards would only be made for off-the-shelf (OTS) knee and back braces. On May 25, 2023, CMS announced a temporary gap period for the CBP starting January 1, 2024, following the expiration of all Round 2021 contracts for OTS knee and back braces on December 31, 2023. The gap period commenced as anticipated and CMS has yet to announce when the temporary gap period for the CBP would end, but indicated that it would start bidding for the next CBP round after it completes the formal notice and comment rulemaking process and implements necessary changes to the CBP to establish sustainable process, save money for Medicare patients and taxpayers, help limit fraud, waste, and abuse, and ensure patient access to quality items and services. During the temporary gap period, any Medicare-enrolled DMEPOS supplier may furnish DMEPOS items and services to patients, with payment in former CBAs based on 100% of the single payment amount for that CBA (increased by the projected percentage change in Consumer Price Index for All Urban Consumers), and payment in non-CBAs based on fully adjusted rates per the applicable methodology under 42 C.F.R. § 414.210(g).
The competitive bidding process (which is expected to be re-bid every three years) has historically put pressure on the amount Quipt is reimbursed in the markets in which it exists, as well as in areas that are not subject to the DMEPOS Competitive Bidding Program. The rates required to win future competitive bids could continue to depress reimbursement rates. Quipt will continue to monitor developments regarding the DMEPOS Competitive Bidding Program. While Quipt cannot predict the outcome of the DMEPOS Competitive Bidding Program on its business in the future nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, the program may materially adversely affect its financial condition and results of operations.
Failure by Quipt to maintain required licenses, permits and accreditation could impact its operations.
Quipt is required to maintain a significant number of state and/or federal licenses and permits for its operations and facilities. The ability of Quipt and its subsidiaries to obtain, sustain or renew any such licenses and permits on acceptable ‎terms is subject to changes in regulations and policies and to the discretion of the applicable authorities or other ‎governmental agencies. There is no guarantee that the Quipt will meet these conditions.‎‎ Moreover, certain employees are required to maintain licenses in the states in which they practice. Quipt manages the facility licensing function centrally. In addition, individual clinical employees are responsible for obtaining, maintaining and renewing their professional licenses, and Quipt has processes in place designed to notify branch or pharmacy managers of renewal dates for the clinical employees under their supervision. State and federal licensing requirements are complex and often open to subjective interpretation by various regulatory agencies. Accurate licensure is also a critical threshold issue for the Medicare enrollment and the Medicare competitive bidding program. From time to time, Quipt may also become subject to new or different licensing requirements due to legislative or regulatory requirements developments or changes in its business, and such developments may cause Quipt to make further changes in its business, the results of which may be material. Although Quipt believes it has appropriate systems in place to monitor licensure, violations of licensing requirements may occur and failure by Quipt to acquire or maintain appropriate licensure for its operations, facilities and clinicians could result in interruptions in its operations, refunds to state and/or federal payors, sanctions or fines or the inability to serve Medicare beneficiaries in competitive bidding markets which could adversely impact Quipt’s financial condition and results of operations.
Accreditation is required by most of Quipt’s managed care payors and is a mandatory requirement for all Medicare DMEPOS providers. If Quipt or any of its branches lose accreditation, or if any of its new branches are unable to become accredited, such failure to maintain accreditation or become accredited could adversely impact Quipt’s financial condition and results of operations.
Legislative action or changes could adversely affect Quipt’s business, results of operations and financial condition.
There could be legislative action that could adversely affect Quipt’s business model, including, without ‎limitation: a decision by the US government to become the exclusive provider of health care services at some ‎time in the future; changes in US federal or state laws, rules, and regulations, including those governing the ‎corporate practice of medicine, and fee splitting; and changes in the US Anti-Kickback Statute and Stark Law ‎and/or similar state laws, rules, and regulations. Conversely, budgetary problems in the US could lead to ‎reduced funding, substantial modification, or elimination of Medicare programs, which would end reimbursement for ‎many patients. There can be no assurance that new rules and regulations will not be enacted or that existing rules and ‎regulations will not be applied in a manner which could limit or curtail Quipt’s business. Amendments to ‎current laws and regulations could have a substantial adverse impact on Quipt and could adversely affect its financial condition and results of operations.‎
Healthcare reform legislation could have a material impact on Quipt’s business, results of operations and financial condition.
Healthcare reform laws significantly affect the US healthcare services industry. In recent years, many legislative ‎proposals have been introduced or proposed in Congress and in some state legislatures that would affect major changes ‎in the healthcare system, either nationally or at the state level. At the federal level, Congress has continued to propose or ‎consider healthcare budgets that substantially reduce payments under the Medicare and Medicaid programs. The ‎ultimate content, timing or effect of any healthcare reform legislation and the impact of potential legislation on us is ‎uncertain and difficult, if not impossible, to predict. That impact may be material to Quipt’s business, financial ‎condition, or results of operations.‎
Actual or perceived failures to comply with applicable data protection, privacy and security, and consumer protection laws, regulations, standards and other requirements could adversely affect Quipt’s business, results of operations and financial condition.
Numerous federal and state laws and regulations addressing patient privacy and consumer privacy, including HIPAA and the HITECH Act, govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information or personal information. Such laws and regulations relating to privacy, data protection, marketing and advertising, and consumer protection are evolving and subject to potentially differing interpretations. These requirements may be interpreted and applied in a manner that varies from one jurisdiction to another and/or may conflict with other laws or regulations. As a result, Quipt’s practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations. Any failure, or perceived failure, by Quipt or any of its third-party partners or service providers to comply with privacy policies or federal or state privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which they may be subject, or other legal obligations relating to privacy or consumer protection, could adversely affect Quipt’s reputation, brand and business, and may result in claims, proceedings or actions against Quipt by governmental entities, consumers, users, suppliers or others. These proceedings may result in financial liabilities or may require Quipt to change its operations, including ceasing the use or sharing of certain data sets.
HIPAA and the HITECH Act, and their implementing regulations, require Quipt to comply with standards for the use and disclosure of health information within Quipt and with third parties. HIPAA and the HITECH Act also include standards for common healthcare electronic transactions and code sets, such as claims information, plan eligibility, payment information, and privacy and security of individually identifiable health information.
HIPAA requires healthcare providers, including Quipt, in addition to health plans and clearinghouses, to develop and maintain policies and procedures with respect to protected health information that is used or disclosed. The HITECH
Act included notification requirement for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for civil monetary penalties for HIPAA violations. HIPAA also provides for criminal penalties.
In addition, various federal and state legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection and consumer protection. For instance, the CCPA became effective on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Although there are limited exemptions for protected health information and the CCPA’s implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, the CCPA may increase Quipt’s compliance costs and potential liability. Many similar privacy laws have been proposed at the federal level and in other states.
Additionally, the FTC and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the online collection, use, dissemination and security of health-related and other personal information. Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access. Consumer protection laws require Quipt to publish statements that describe how it handles personal information and choices individuals may have about the way Quipt handles their personal information. If such information that Quipt publishes is considered untrue, it may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5 of the FTC Act.
Under the Federal CAN-SPAM Act, the TCPA and the Telemarketing Sales Rule and Medicare regulations, Quipt is limited in the ways in which it can market and service its products and services by use of email, text or telephone marketing. The actual or perceived improper sending of text messages may subject us to potential risks, including liabilities or claims relating to consumer protection laws. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs. Any future such litigation against us could be costly and time-consuming to defend. For example, the TCPA, a federal statute that protects consumers from unwanted telephone calls, faxes and text messages, restricts telemarketing and the use of automated SMS text messages without proper consent. On April 1, 2021, in Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), the U.S. Supreme Court adopted a narrow definition of the type of automated dialers that are subject to the TCPA, thereby removing some automated text messages from the scope of the TCPA consent requirements. As a result, there may be an increase in litigation under state laws and new legislation at the federal and state level in an effort to ensure that consent is required for calls and text messages that are now outside the scope of the TCPA. For example, in May 2021, the Florida legislature passed a bill that expands restrictions for telephonic sales calls, including text messages, made using automated selection and dialing systems and creates a private right of action for violations of the law. Additionally, state regulators may determine that telephone calls to patients of Quipt are subject to state telemarketing regulations. If Quipt does not comply with existing or new laws and regulations related to telephone contacts or patient health information, it could be subject to criminal or civil sanctions. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which Quipt handles healthcare-related data and communicates with payors, and the cost of complying with these standards could be significant. The scope and interpretation of the laws that are or may be applicable to the delivery of consumer phone calls, emails and text messages are continuously evolving and developing. If Quipt does not comply with these laws or regulations or if it becomes liable under these laws or regulations, it could face direct liability, could be required to change some portions of its business model, could face negative publicity and its business, financial condition and results of operations could be adversely affected. Even an unsuccessful challenge of Quipt’s phone, email or SMS text practices by its consumers, regulatory authorities or other third parties could result in negative publicity and could require a costly response from and defense by Quipt.
Quipt may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
The long-term effects of climate change are difficult to predict and may be widespread. The impacts may include physical risks (such as rising sea levels or frequency and severity of extreme weather conditions), social and human effects (such as population dislocations or harm to health and well-being), compliance costs and transition risks (such as regulatory or technology changes) and other adverse effects. The effects could impair, for example, the availability and cost of certain products, commodities and energy (including utilities), which in turn may impact Quipt’s ability to procure goods or services required for the operation of its business at the quantities and levels it requires. Quipt may bear losses incurred as a result of, for example, physical damage to or destruction of its facilities (such as patient service offices and warehouses), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change.
Governments in the U.S., Canada and abroad are considering new or expanded laws to address climate change. Such laws may include limitations on GHG emissions, mandates that companies implement processes to monitor and disclose climate-related matters, additional taxes or offset charges on specified energy sources, and other requirements.
Risks Related to Our Financial Condition
If Quipt were required to write down all or part of its goodwill, its net earnings and net worth could be materially adversely affected.
Quipt had approximately $61,560,000 of goodwill recorded on its Consolidated Balance Sheets at September 30, 2025. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. If Quipt’s market capitalization drops significantly below the amount of net equity recorded on its balance sheet, it might indicate a decline in its fair value and would require Quipt to further evaluate whether its goodwill has been impaired. If, as part of Quipt’s annual review of goodwill, or if any triggering events are identified on an interim basis indicating a possible impairment of goodwill, Quipt is required to write down all or a significant part of its goodwill, its net earnings and net worth would be materially adversely affected, which could affect Quipt’s flexibility to obtain additional financing. In addition, if Quipt’s assumptions used in preparing its valuations for purposes of impairment testing differ materially from actual future results, Quipt may record impairment charges in the future, and its financial results may be materially adversely affected. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit’s fair value, including the revenue growth rates, discount rate, and control premium used to estimate the reporting unit’s fair value, and judgment about impairment triggering events.
Quipt may not be able to generate sufficient cash flow to cover required payments or comply with financial and operating covenants under its long-term debt and long-term operating leases.
Failure to generate sufficient cash flow to cover required payments or comply with financial and operating covenants under Quipt’s long-term debt and long-term operating leases could result in defaults under such agreements and cross-defaults under other debt or operating lease arrangements, which could harm its operating subsidiaries. Quipt may not generate sufficient cash flow from operations to cover required interest, principal and lease payments. In addition, Quipt’s current indebtedness contains restrictive covenants and requires Quipt to maintain or satisfy specified coverage tests. These restrictions may interfere with Quipt’s ability to obtain additional advances under its existing Facility or to obtain new financing or to engage in other business activities, which may inhibit Quipt’s ability to grow its business and increase revenue. In addition, failure by Quipt to comply with these restrictive covenants could result in an event of default which, if not cured or waived, could result in the acceleration of its debt.
Quipt may need additional capital to fund its operating subsidiaries and finance its growth, and Quipt may not be able to obtain it on acceptable terms, or at all, which may limit its ability to grow.
Quipt’s ability to maintain and enhance its operating subsidiaries and equipment to meet regulatory standards, operate efficiently and remain competitive in its markets requires Quipt to commit substantial resources to continued investment in its affiliated facilities and equipment. Additionally, the continued expansion of its business through the
acquisition of existing facilities, expansion of existing facilities and construction of new facilities may require additional capital, particularly if Quipt were to accelerate its acquisition and expansion plans. Financing may not be available or may be available only on terms that are not favorable. In addition, some of Quipt’s outstanding indebtedness restricts, among other things, its ability to incur additional debt. If Quipt is unable to raise additional funds or obtain additional funds on acceptable terms, it may have to delay or abandon some or all of its growth strategies. Further, if additional funds are raised through the issuance of additional equity securities, the percentage ownership of Quipt’s shareholders would be diluted. Any newly issued equity securities may have rights, preferences or privileges senior to those of the Common Shares.
We will continue to incur significantly increased expenses and administrative burdens as a result of being a public company, which could have a material adverse effect on Quipt’s business, financial condition and results of operations.
As a public company, Quipt is subject to the reporting requirements and other obligations of the Exchange Act, the Sarbanes-Oxley Act, including the requirements of Section 404, the Securities Act (British Columbia), applicable national and multilateral instruments, as well as rules and regulations subsequently implemented by the SEC, Canadian securities regulatory authorities, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board and the securities exchanges. The SEC, Canadian securities regulatory authorities, and other regulators continue to adopt new rules and regulations and make additional changes to existing regulations that require Quipt’s compliance. Regulatory reform may lead to substantial new disclosure obligations, which may lead to additional compliance costs and impact, in ways Quipt cannot currently anticipate, the manner in which Quipt operates its business. Compliance with such requirements may cause Quipt to continue to incur additional accounting, legal and other expenses and may make certain activities more time-consuming. Quipt also incurs costs associated with corporate governance requirements, including requirements under securities laws, as well as rules and regulations implemented by the SEC, Canadian securities regulatory authorities, TSX and Nasdaq. Such rules and regulations increase Quipt’s legal and financial compliance costs and Quipt continues to devote significant time to comply with these requirements. Quipt is currently evaluating and monitoring developments with respect to these rules and regulations and cannot predict or estimate the amount of additional costs it may incur or the timing of such costs.
Quipt has and will continue to incur costs to maintain internal control over financial reporting. It may also be more expensive to obtain director and officer liability insurance. Risks associated with Quipt’s status as a public company may make it more difficult to attract and retain qualified persons to serve on the board of directors or as executive officers. Furthermore, certain of the key personnel of Quipt may be unfamiliar with the requirements of operating a company regulated by the SEC and Canadian securities regulatory authorities, which could cause Quipt to have to expend time and resources helping them become familiar with such requirements. These increased costs will require Quipt to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
Risks Related to Our Securities
We are subject to risks associated with proxy contests and other actions of activist shareholders.
Publicly traded companies have increasingly become subject to campaigns by activist investors advocating corporate actions such as governance changes, financial restructurings, increased borrowings, special dividends, share repurchases or even sales of assets or entire companies to third parties or the activists themselves. Quipt previously experienced activist activity, including a hostile attempt to replace members of the Board, received letters and issued press releases with respect to strategic transactions, and a contested director nomination notice under the U.S. universal proxy rules. Although Quipt entered into cooperation and standstill arrangements with certain shareholders, including the Cooperation Agreement entered March 3, 2025 with an entity affiliated with Kanen Wealth Management, LLC and David L. Kanen and the Non-Disclosure and Standstill Agreement entered February 1, 2025 with Forager Fund, L.P. (“Forager Fund”) and Forager Capital Management, LLC (“Forager Capital”, and together with Forager Fund, “Forager”), those agreements are limited in scope and duration and do not prevent other shareholders, or the same shareholders after expiry, from initiating or
supporting future activist campaigns or proxy contests. In addition, certain shareholders who entered into support or cooperation arrangements in connection with the 2025 annual meeting of shareholders have obligations that will expire or cease to be effective by Quipt’s next annual general meeting, which may increase the risk of renewed activism, board change proposals, or attempts to obtain control of the Board through the meeting or otherwise.
Ongoing or future activism, proxy contests or related public campaigns could adversely affect Quipt’s business, financial condition and results of operations in several ways. Responding to such campaigns is costly and time-consuming, diverts the attention of the Board, management and employees, and can disrupt execution of Quipt’s strategic and operational plans. Public campaigns and the associated uncertainty may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel, business partners, customers and others important to Quipt’s success, any of which could negatively affect Quipt’s business and results of operations and financial condition. Moreover, actions by activist shareholders may be exploited by Quipt’s competitors, cause concern to current or potential customers and make it more difficult to attract and retain qualified personnel. If activist nominees or representatives are elected or appointed to the Board with a short-term or conflicting agenda, Quipt’s ability to execute on its long-term strategy could be adversely affected. Activism and related market speculation can also lead to significant share price volatility and reduced trading liquidity.
Quipt may receive unsolicited acquisition proposals or other public or private communications urging it to pursue strategic alternatives, including an extraordinary transaction. While we regularly evaluate opportunities to enhance shareholder value, we have determined to date that the unsolicited approaches we have received have not been in the best interests of the Company and its shareholders. There can be no assurance that Quipt will continue to receive, or that Quipt will accept, any future proposals, that any process initiated in response would result in a transaction, or that, if undertaken, any transaction would be consummated on attractive terms or at all. The initiation, conduct or termination of any strategic review or sale process could be disruptive, could result in the loss of key employees or customers, could harm our negotiating leverage with counterparties, and could lead to increased costs, litigation risk, regulatory review and significant volatility in our share price. If a potential transaction is explored but not completed, Quipt’s share price could decline to the extent it reflects market expectations of a transaction premium, and its relationships and operations could be adversely affected.
There is also risk that attempts to influence or obtain control of the Board through the annual meeting process, including under the U.S. universal proxy rules, could recur. The cooperation and standstill arrangements Quipt have in place do not preclude other shareholders from initiating or supporting proxy contests and may not prevent parties to those agreements from taking actions after the expiry of applicable periods. Quipt also cannot predict whether Quipt will be able to reach additional agreements with activists or other shareholders on acceptable terms in the future, or whether such agreements, if reached, will result in the outcomes anticipated when entered.
The occurrence, continuation or escalation of any of the foregoing activities is inherently unpredictable. Quipt cannot predict the timing, outcome or ultimate impact of any current or future activism, proxy contest, or strategic review, or the extent to which any such matters will distract the Board and management from its business or otherwise affect Quipt’s performance.
We may not be able to effectively maintain controls and procedures required by Section 404 of the Sarbanes-Oxley Act that are applicable to us.
As a public company, Quipt is required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in Quipt’s quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting, as well as Canadian securities laws and regulations. To comply with the requirements of being a public company, we may continue to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff. These rules and regulations also increase our legal and financial compliance costs and make some activities more time-consuming and costly.
If we are not able to maintain internal controls and procedures in accordance with the requirements of applicable securities laws, rules, and regulations, including, without limitation, Section 404 in a timely manner or with adequate
compliance, we may not be able to conclude that our internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our Common Shares. The existence of material weaknesses in internal control over financial reporting could adversely affect our reputation or investor perceptions of us.
We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies or smaller reporting companies may make our Common Shares less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We may remain an emerging growth company for up to five years, or until such earlier time as we have more than $1.235 billion in annual revenue, the market value of our stock held by non-affiliates is more than $700 million or we issue more than $1 billion of non-convertible debt over a three-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, being permitted to present only two years of audited financial statements and a correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict whether investors will find our Common Shares less attractive if we rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares, and our stock price may be more volatile.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We are also a “smaller reporting company,” as such term is defined in Rule 12b-2 of the Exchange Act, meaning that the market value of our Common Shares held by non-affiliates is less than $250 million. We may continue to be a smaller reporting company if either (i) the market value of our Common Shares held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our Common Shares held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Once we are no longer an “emerging growth company,” a “smaller reporting company” or otherwise no longer qualify for applicable exemptions, we will be subject to additional laws and regulations affecting public companies that will increase our costs and the demands on management and could harm our operating results and cash flows.
We are subject to the reporting requirements of the Exchange Act, which requires, among other things, that we file with the SEC, annual, quarterly and current reports with respect to our business and financial condition as well as other disclosure and corporate governance requirements. However, as an emerging growth company, we may take advantage of exemptions from various requirements such as an exemption from the requirement to have our independent auditors attest to our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, as well as an exemption from the “say on pay” voting requirements pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. We will no longer qualify as an emerging growth company after September 30, 2026 (or upon such earlier time as we no longer meet the other applicable requirements). After we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 of the Exchange Act, which may allow us to take
advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this prospectus and in our periodic reports and proxy statements. Once we are no longer an emerging growth company or a smaller reporting company or otherwise no longer qualify for these exemptions, we will be required to comply with these additional legal and regulatory requirements applicable to public companies and will incur significant legal, accounting and other expenses to do so. If we are not able to comply with the requirements in a timely manner or at all, our financial condition or the market price of our common stock may be harmed.
Fluctuations in the price of Quipt’s securities could contribute to the loss of all or part of your investment.
Our Common Shares are currently listed and posted for trading on the TSX and Nasdaq. ‎The trading price of our Common Shares could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our Common Shares and our Common Shares may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our Common Shares may not recover and may experience a further decline.
Factors affecting the trading price of our Common Shares may include:
● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
● changes in the market’s expectations about our operating results;
● our operating results failing to meet the expectation of securities analysts, investors or our guidance in a particular period;
● changes in financial estimates and recommendations by securities analysts concerning Quipt or the home medical equipment industry in general;
● operating and stock price performance of other companies that investors deem comparable to us;
● our ability to market new and enhanced products on a timely basis;
● changes in laws and regulations affecting our business;
● our ability to meet compliance requirements;
● commencement of, or involvement in, litigation involving us;
● inability to quickly remediate material weaknesses or the continued identification of material weaknesses in internal control over financial reporting;
● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
● the volume of shares of our Common Shares available for public sale;
● any major change in our board of directors or management;
● sales of substantial amounts of Common Shares by our directors, executive officers or significant shareholders or the perception that such sales could occur; and
● general economic and political conditions such as tariffs, recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism, including the war in Ukraine and the ongoing conflict in the Middle East.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. Securities of small-cap ‎and ‎healthcare ‎companies have experienced substantial volatility in the past, often based on ‎factors unrelated to ‎the ‎financial ‎performance or prospects of the companies involved. ‎In addition, the stock market in general, including each of Nasdaq and the TSX, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. Accordingly, the market price of our ‎‎Common Shares at any given point in time may not ‎‎‎accurately ‎reflect the long-term value of the Company. The trading prices and valuations of these stocks, and of our Common Shares, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or results of operations. A decline in the market price of our Common Shares also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. Moreover, securities class-action litigation often has been brought ‎‎against companies ‎following periods of volatility in the market ‎price of their securities. The Company may in the
‎‎future be the target of ‎similar litigation. Securities litigation could ‎result in substantial costs and damages and divert ‎‎management’s attention ‎and resources‎.‎
Because Quipt has no current plans to pay cash dividends on its Common Shares for the foreseeable future, you may not receive any return on investment unless you sell your Common Shares for a price greater than that which you paid for them.
We have never declared or paid any dividends on our Common Shares. ‎We intend, for the ‎foreseeable future, ‎to retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our Common Shares unless you sell our Common Shares for a price greater than that which you paid for them.
Quipt’s normal course issuer bid program expired, which may have potential impacts on share valuation, liquidity and capital allocation.
Quipt’s normal course issuer bid on the TSX, authorized on April 23, 2024, expired on April 30, 2025 and was not renewed. The prior authorization permitted Quipt, subject to TSX limits and applicable securities laws, to purchase for cancellation up to approximately 10% of its public float; an aggregate of 62,800 Common Shares were repurchased under that authorization.
If Quipt were to consider future repurchases, any new program would be subject to Board approval, applicable TSX rules and Canadian and U.S. securities laws, Quipt’s cash needs and liquidity, contractual and financing covenants, blackout periods and other restrictions, and may be modified, suspended or discontinued at any time. There can be no assurance that Quipt will implement or effect repurchases in the future, that any repurchases would occur at prices or times that are favorable, or that any repurchases would have the expected impact on Quipt’s share price or per-share metrics. If Quipt were to allocate cash to repurchases in the future and economic or industry conditions deteriorate, Quipt could have reduced flexibility to fund operations, capital expenditures, strategic initiatives or opportunistic transactions. Conversely, if Quipt refrains from repurchases in favor of other uses of capital, the market may react adversely. Any of the foregoing could negatively affect Quipt’s business, financial condition and results of operations.
Provisions in our constating documents and under British Columbia law could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management.
Provisions in our constating documents may discourage, delay or prevent a merger, acquisition or other change in control of us that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for our shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Shares, thereby depressing the market price of our Common Shares. Moreover, Quipt is authorized to issue an unlimited number of Common Shares, an unlimited number of first preferred ‎shares without par value, and an unlimited number of second preferred shares without par value.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our board of directors. Among other things, these provisions:
● allow the authorized number of our directors to be changed only by resolution of our board of directors;
● limit the manner in which shareholders can remove directors from the board;
● establish advance notice requirements for shareholder proposals that can be acted on at shareholder meetings and nominations to our board of directors;
● require that shareholder actions must be effected at a duly called shareholder meeting unless the requisite written consent for such actions is obtained in accordance with the Business Corporations Act (British Columbia);
● ‎authorize our board of directors to issue shares without shareholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and
● require the approval of the holders of at least two-thirds of the votes that all our shareholders would be entitled to cast to amend or repeal certain provisions of our constating documents.
Forward-looking statements may prove to be inaccurate, which could have a material adverse effect on Quipt’s business, financial condition and results of operations.
Readers are cautioned not to place undue reliance on forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, of both a general and ‎specific nature, that could cause actual results to differ materially from those suggested by the forward-looking ‎statements or contribute to the possibility that predictions, forecasts or projections will prove to be materially ‎inaccurate. Additional information on the risks, assumptions and uncertainties are found in this Annual Report on Form 10-K and in ‎certain of the documents incorporated by reference herein under the heading “Caution Regarding ‎Forward-Looking Statements”.‎

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
The Company’s total space is approximately 750,000 square feet, and consists of warehouse, retail, and administrative offices. The Company leases all but one of its over 175 facilities. The following is a summary of the Company’s largest facilities by location:
Square
Location
Owned / Leased
Footage
Primary Usage
Wilder, KY
Leased
25,000
Corporate headquarters, warehouse, administrative
Mesa, AZ
Leased
24,300
Warehouse, administrative
Flint, MI
Leased
21,500
Warehouse
Southfield, MI
Leased
21,400
Warehouse, administrative
Indianapolis, IN
Leased
19,100
Warehouse, administrative
Indianapolis, IN
Leased
15,000
Warehouse, retail
Essexville. MI
Leased
13,100
Warehouse, retail, administrative
Paducah, KY
Leased
11,500
Warehouse, retail
Cheboygan. MI
Leased
10,800
Warehouse
Lexington. KY
Leased
10,700
Warehouse, retail
Grand Blanc, MI
Leased
10,700
Administrative
Waterville, ME
Leased
10,400
Warehouse, retail
Lincoln, NE
Leased
10,000
Warehouse, retail
Management believes that the Company’s sites are adequate to support the business and that the properties and equipment have been well maintained.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
From time to time, the Company is involved in various legal proceedings and investigations arising in the ordinary course of business, including those relating to proxy contests and other actions of activist shareholders, employment matters, relationships with clients and contractors, intellectual property disputes and other business matters. The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and if one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that period could be materially adversely affected.
The Company has received a civil investigative demand (“CID”) from the Department of Justice (“DOJ”) through the US Attorney’s Office for the Northern District of Georgia pursuant to the False Claims Act regarding an investigation concerning whether the Company may have caused the submission of false claims to government healthcare programs for CPAP equipment. The Company is cooperating with the investigation. No assurance can be given as to the timing or outcome of the DOJ’s investigation.
In April 2024, the Company received a subpoena from the SEC to provide certain documents related to the Company and the DOJ investigation, CID, and financial reporting and disclosure matters. The SEC concluded its investigation in November 2024 and, based on the information it had at such time, the SEC advised that it did not intend to recommend an enforcement action by it against the Company.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosure.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.
Market Information and Holders
The Company’s Common Shares are listed for trading on the TSX and on Nasdaq, both ‎under the symbol “QIPT”.‎ As of December 11, 2025, there were 83 holders of record of the Company’s Common Shares. The actual number of shareholders is greater than this number of holders of record, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include shareholders whose shares may be held in trust by other entities.
Dividend Policy
The Company has never declared or paid any dividends on its Common Shares. The Company intends, for the ‎foreseeable future, to retain its future earnings, if any, to finance the Company’s business activities. The payment of future dividends, ‎if any, will be reviewed periodically by the Board and will depend upon, among other things, ‎conditions then existing including earnings, financial conditions, cash on hand, financial requirements to fund business ‎activities, development and growth, and other factors that the Board may consider appropriate in the ‎circumstances.‎ Dividends paid by the Company would be subject to tax and, potentially, withholdings.
Dividends paid or credited or deemed to be paid or credited by the Company to a non-resident of Canada will ‎generally be subject to Canadian withholding tax at the rate of 25%, subject to any applicable reduction in the rate ‎of such withholding under an income tax treaty between Canada and the country where the holder is resident. ‎Under the Canada-United States Tax Convention (1980), as amended, the withholding tax rate in respect of a dividend paid to a U.S. resident shareholder that beneficially ‎owns such dividends is generally reduced to 15%, unless the U.S. resident shareholder is a corporation ‎which owns at least 10% of the voting shares of the Company at that time, in which case the withholding tax rate ‎is reduced to 5%.‎ U.S. resident shareholders may be entitled to claim a foreign tax credit for any Canadian tax withheld, depending on the circumstances.
Unregistered Sale of Equity Securities
None.
Securities Authorized for Issuance under Equity Compensation Plans
Such information is incorporated by reference to the information set forth in Part III, Item 12 of this Annual Report on Form 10-K.
Purchase of Equity Securities
Neither we nor any affiliated purchaser repurchased any of our equity securities during the quarter ended September 30, 2025.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the accompanying notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described in Part I, Item 1A. "Risk Factors" and elsewhere in this Annual Report on Form 10-K.
The audited consolidated financial statements as of and for the years ended September 30, 2025 and 2024 (the “consolidated financial statements”) of the Company were prepared in accordance with accounting principles generally accepted in the US (“GAAP”).
The consolidated financial statements, which are presented in US dollars, have been prepared under the historical cost convention, as modified by the measurement at fair values of certain financial assets and financial liabilities.
Overview
Quipt business objective
The growth in the number of elderly patients in the US healthcare market is creating pressure to provide more efficient delivery systems. Healthcare providers, such as hospitals, physicians, and pharmacies, are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control costs. Quipt fills this need by delivering a growing number of specialized products and services to achieve these goals. Quipt seeks to provide an ever-expanding line of products and services over larger geographic regions within the US using several growth strategies. With over 175 offices, Quipt employs approximately 1,600 employees in the US.
Recent transactions
On July 1, 2025, we completed the acquisition of Mediserve, a Tennessee-based full-service durable medical equipment provider. On September 1, 2025, we completed the acquisition of a 60% ownership interest in Hart, a Michigan-based provider of durable medical equipment, point-of-service products, and related services.
Future outlook
Our priority continues to be the generation of operating profit, positive cash flow, and growth in Adjusted EBITDA, a non-GAAP financial measure which is defined below, in fiscal year 2026 and beyond. As we continue to expand in our existing markets, we plan to leverage our business platforms to enter new markets and expand our product offerings. Our continued business integration and rationalization, and our prior acquisitions, have given us a focus and path toward revenue growth and profitability. We will continue to improve operational efficiencies and call center management as they are key execution points to maintaining our Adjusted EBITDA while growing revenues by cross selling products to existing and acquired patients.
Selected Annual Information ($ amounts in thousands, except per share amounts)
As of or for the
As of or for the
As of or for the
As of or for the
three months ended
three months ended
year ended
year ended
September
September
September
September
30, 2025
30, 2024
30, 2025
30, 2024
Number of patients served
200,000
153,000
346,000
314,000
Number of equipment set-ups or deliveries
282,000
212,000
917,000
854,000
Respiratory resupply set-ups or deliveries
133,000
120,000
486,000
480,000
Adjusted EBITDA
$
14,924
$
13,444
$
55,947
$
57,746
Total revenues
$
68,313
$
61,332
$
245,359
$
245,915
Net income (loss) per share - Basic
$
(0.08)
$
(0.07)
$
(0.24)
$
(0.16)
Net income (loss) per share - Diluted
$
(0.08)
$
(0.07)
$
(0.24)
$
(0.16)
Total assets
$
283,289
$
247,248
Total long-term liabilities
$
96,484
$
79,207
Shareholders' equity
$
112,097
$
107,191
(1)
Operating Results
The fiscal year ended September 30, 2025 presented us with a range of challenges that we absorbed in the period, which negatively impacted our financial performance and prevented us from achieving our target annualized organic growth.
The Medicare 75/25 blended rate (“Medicare 75/25”), which had been providing rate relief for certain geographies, was discontinued as of January 1, 2024‎. Medicare 75/25 was introduced in 2020. This rate adjustment, named after its 75%/25% allocation model, aimed to protect access to medical equipment products and services in non-rural, non-competitive bid areas by temporarily increasing Medicare reimbursement rates for providers serving those areas. This legislative action was designed to ensure that medical equipment suppliers could continue providing essential products and services. This blended rate was implemented to counter the decline in reimbursement rates experienced in the years prior to 2020. The discontinuance is still under legislative review, and Medicare 75/25 could return, but the cessation on January 1, 2024 had a negative impact ‎on our revenue and operating results in the fiscal year ended September 30, 2025.
Beginning during the fiscal year ended September 30, 2024 and continuing into the fiscal year end September 30, 2025, we also experienced the withdrawal of Medicare Advantage members due to a capitated agreement moving to other providers in the industry. Further, in November 2024, a disposable supply contract which the Company was a party to was not renewed.
The Company uses Change Healthcare, a subsidiary of UnitedHealth Group, to submit patient claims to certain non-Medicare payors for payment. UnitedHealth Group announced that on February 21, 2024, Change Healthcare’s information technology systems were impacted by a cybersecurity incident ‎ (the “Change Healthcare Incident”)‎. This incident significantly impacted the healthcare industry and hindered the ability to process and bill claims during the three months ended March 31, 2024 and June 30, 2024, creating a reduction in our cash flow, including collections of claims not directly impacted by the‎ Change Healthcare Incident that were slowed by the diversion of normal collection efforts to address the Change Healthcare Incident. The ultimate resolution of the Change Healthcare Incident also had a negative impact on our revenue and operating results during the fiscal year ended September 30, 2025.
The cumulative impact of these events on total revenue is estimated to be approximately $1,500,000 and $8,500,000 for the three and twelve months ended September 30, 2025, respectively.
Comparison of Results of Operations for the Years and Three Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations for the years and three months ended September 30, 2025 and 2024 (amounts in thousands, except per share amounts):
For the three
For the three
For the
For the
months ended
months ended
year ended
year ended
September 30,
September 30,
September 30,
September 30,
30, 2025
30, 2024
30, 2025
30, 2024
Total revenues
$
68,313
$
61,332
$
245,359
$
245,915
Cost of inventory sold
20,406
17,664
68,182
68,925
Operating expenses
34,125
31,446
125,457
122,542
Right-of-use operating lease amortization and interest
1,681
1,362
6,434
5,974
Depreciation
10,369
10,016
39,429
38,490
Amortization of intangible assets
1,505
1,521
6,053
6,091
Stock-based compensation
1,409
4,035
2,484
Acquisition-related costs
Gain on disposals of property and equipment
(329)
(55)
(1,225)
(107)
Interest expense, net
1,634
1,524
6,277
6,381
(Gain) loss on foreign currency transactions
(188)
(43)
Share of loss in equity method investment
Change in fair value of derivative liability - interest rate swap
(10)
(452)
1,122
Provision (benefit) for income taxes
(374)
Net income attributable to noncontrolling interest
-
-
Net loss
$
(3,550)
$
(2,940)
$
(10,701)
$
(6,763)
Loss per share
Basic
$
(0.08)
$
(0.07)
$
(0.24)
$
(0.16)
Diluted
$
(0.08)
$
(0.07)
$
(0.24)
$
(0.16)
Revenue
For the year ended September 30, 2025, revenue totaled $245,359,000, a decrease of $556,000, or 0.2%, from the year ended September 30, 2024. This decrease is primarily due to a reduction of approximately $8,500,000 from the challenges discussed in Operating Results above, and was mostly offset by $7,300,000 contributed by the acquisitions during the year ended September 30, 2025.
For the three months ended September 30, 2025, revenue totaled $68,313,000, an increase of $6,981,000, or 11.4%, from the three months ended September 30, 2024. This increase is primarily due to $7,300,000 contributed by the acquisitions during the three months ended September 30, 2025, which was partially offset by the challenges discussed in the Operating Results above.
Inventory sold
For the year ended September 30, 2025, inventory sold totaled $68,182,000, a 1.1% decrease as compared to $68,925,000 for the year ended September 30, 2024. The decrease was due to the decrease in revenue.
For the three months ended September 30, 2025, inventory sold totaled $20,406,000, a 15.5% increase from $17,664,000 for the three months ended September 30, 2024. The increase in dollars was due to the growth in revenues. As a percentage of revenue, inventory sold increased to 29.9% for the three months ended September 30, 2025 as compared to 28.8% for the three months ended September 30, 2024, due to the acquisitions’ inventory sold being higher as a percentage of revenue. Additionally, estimated vendor rebates were lower due to the lack of growth in purchases required to achieve the same tier that was achieved for the year ended September 30, 2024.
Operating expenses
For the year ended September 30, 2025, operating expenses were $125,457,000, an increase of $2,915,000 from $122,542,000 for the year ended September 30, 2024. The acquisitions during the year ended September 30, 2025 contributed approximately $3,500,000 to the increase in operating expenses. This was offset by decreases in the remaining portion of the Company from reduced headcount and incentive compensation, and controls on discretionary spending such as marketing and travel.
For the three months ended September 30, 2025, operating expenses were $34,125,000, an increase of $2,679,000 from $31,446,000 for the three months ended September 30, 2024. The acquisitions during the three months ended September 30, 2025, contributed approximately $3,500,000 to the increase in operations. This was offset by decreases in the remaining portion of the Company from reduced headcount and incentive compensation, and controls on discretionary spending such as marketing and travel.
Right-of-use operating lease amortization and interest
Right-of-use operating lease amortization and interest increased by $460,000 to $6,434,000 for the year ended September 30, 2025 from $5,974,000 for the year ended September 30, 2024. The increase was due to new locations and, to a lesser extent, the impact of the acquisitions during the year ended September 30, 2025.
Right-of-use operating lease amortization and interest increased by $319,000 to $1,681,000 for the three months ended September 30, 2025 from $1,362,000 for the three months ended September 30, 2024. The increase was due to new locations and, to a lesser extent, the impact of the acquisitions during the three months ended September 30, 2025.
Depreciation expense
Depreciation expense increased by $939,000 to $39,429,000 for the year ended September 30, 2025 from $38,490,000 for the year ended September 30, 2024. This increase was primarily due to approximately $800,000 from the acquisitions during the year ended September 30, 2025.
Depreciation expense increased by $353,000 to $10,369,000 for the three months ended September 30, 2025 from $10,016,000 for the year ended September 30, 2024. The increase was primarily due to approximately $800,000 from the acquisitions during the three months ended September 30, 2025 offset by decreases in rental equipment depreciation due to the timing of additions.
Stock-based compensation
Stock-based compensation increased by $1,551,000 to approximately $4,035,000 for the year ended September 30, 2025 from $2,484,000 for the year ended September 30,2024 due to grants of restricted stock units and stock options during the year ended September 30, 2025.
Stock-based compensation increased by $1,079,000 to approximately $1,409,000 for the three months ended September 30, 2025 from $330,000 for the three months ended September 30, 2024 due to grants of restricted stock units and stock options during the year ended September 30, 2025.
Acquisition-related costs
Acquisition related costs increased by $416,000 to $817,000 for the year ended September 30, 2025 from $401,000 for the year ended September 30, 2024. This increase is due to acquisitions during the year ended September 30, 2025.
Acquisition related costs increased by $589,000 to $596,000 for the three months ended September 30, 2025 from $7,000 for the three months ended September 30, 2024, due to acquisitions during the year ended September 30 2025.
Gain on disposals of property and equipment
Gain on disposals of property and equipment increased to $1,225,000 for the year ended September 30, 2025 from $107,000 for the year ended September 30, 2024, as a result of proceeds received from the return of recalled ventilators to the manufacturer.
Gain on disposals of property and equipment increased to $329,000 for the three months ended September 30, 2025 from $55,000 for the three months ended September 30, 2024, as a result of proceeds received from the return of recalled ventilators to the manufacturer.
Interest expense, net of interest income
Interest expense, net of interest income, decreased by $104,000 to $6,277,000 for the year ended September 30, 2025 from $6,381,000 for the year ended September 30, 2024 as a result of lower average balances and lower interest rates on the Facility and equipment loans
Interest expense, net of interest income, increased $110,000 to $1,634,000 in the three months ended September 30, 2025 from $1,524,000 for the three months ended September 30, 2024, primarily due to the one month of interest on the borrowing under the Facility used to fund the acquisition of Hart.
Share of loss in equity method investment
Share of loss in equity method investment was a loss of $79,000 and $324,000 for the three months and year ended September 30, 2025, respectively. Share of loss in equity method investment was a loss of $67,000 and $309,000 for the three months and year ended September 30, 2024. This represents the Company’s pro rata percentage of the net loss of DMEScripts, LLC, which was acquired in the year ended September 30, 2023.
Provision (benefit) for income taxes
The provision for income taxes of $241,000 for the year ended September 30, 2025 increased from $109,000 for the year ended September 30, 2024.
The provision for income taxes was $141,000 for the three months ended September 30, 2025, as compared to a benefit for income taxes of $374,000 for the three months ended September 30, 2024. The benefit in the three months ended September 30, 2024 primarily relates to the filing of the tax returns for the year ended September 30, 2023 being more favorable than originally estimated.
Net income attributed to noncontrolling interest
The net income attributable to noncontrolling interest was $121,000 for both the three months and year ended September 30, 2025. This is related to the Company acquiring a 60% ownership interest in Hart during the three months ended September 30, 2025.
Non-GAAP measures
Throughout this MD&A, references are made to a measure which is believed to be meaningful in the assessment of the Company’s performance. This metric is a non-standard measure under GAAP and may not be identical to similar measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results as determined in accordance with GAAP. The primary purpose of this non-GAAP measure is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash or unusual items on the Company’s operating performance. Management uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the Company’s performance.
Adjusted EBITDA
This MD&A refers to “Adjusted EBITDA,” which is a non-GAAP ‎financial measure that does not have standardized meaning prescribed by GAAP. The ‎Company’s ‎presentation of this financial measure may not be comparable to similarly titled measures used by ‎other ‎companies. This financial measure is intended to provide additional information to investors concerning ‎the ‎Company’s performance.‎
Adjusted EBITDA is defined as net income (loss), adjusted for net interest expense, depreciation, amortization, right-of-use operating lease amortization and interest, provision (benefit) for income taxes, certain professional fees, stock-based compensation, acquisition-related costs, gain on disposals of property and equipment, gain (loss) on foreign currency transactions, change in fair value of derivative liability - interest rate swap, and share of loss in equity method investment. Adjusted EBITDA is a non-GAAP measure that the Company uses as an indicator of financial health and excludes ‎several items which may be useful in the consideration of the financial condition of the Company.
Set forth below are descriptions of the material financial items that have been excluded from net income (loss) to calculate Adjusted EBITDA and the material limitations associated with using this non-GAAP financial measure.
● The amount of interest expense we incur or interest income we generate, including right-of-use interest expense, may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of net interest expense to be a representative component of the day-to-day operating performance of our business.
● Depreciation and amortization expense, including right-of-use amortization, may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations and amortization of intangibles valued in acquisitions. However, we do not believe these charges necessarily reflect the current and ongoing cash charges related to our business.
● Provision (benefit) for income taxes may be useful for investors to consider because it generally represents the taxes which may be payable for the period and may reduce the amount of funds otherwise available for use. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
● We do not consider certain professional fees, including those related to the CID, the loss of foreign private issuer status, and proxy contests and other actions of activist shareholders, to be representative components of the day-to-day operating performance of our business.
● Stock-based compensation expense may be useful for investors to consider because it is a component of compensation received by the Company’s directors, officers, employees, and consultants. However, stock-based compensation is being added back because it is non-cash and because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but rather were made for the Company’s long-term benefit over multiple periods.
● Acquisition-related costs may be useful for the investors to consider because they are professional fees directly related to pursuing and completing various acquisitions. While the costs are expected to be recurring if the Company continues to make acquisitions, they are generally incurred prior to the inclusion of such acquisitions in the consolidated revenues of the Company.
● The change in fair value of derivative liability - interest rate swaps and the share of loss in equity method investment are added back because it is non-cash in the period of change in the fair value.
● The gain on disposals of property and equipment is excluded because they are a recapture of previously depreciated property and equipment.
● The loss (gain) on foreign currency transactions is excluded because they are not a representative component of our day-to-day operations.
The following table is a reconciliation of net loss to Adjusted EBITDA for the indicated periods‎ (amounts in thousands of $):
For the three
For the three
For the
For the
months ended
months ended
year ended
year ended
September
September
September
September
30, 2025
30, 2024
30, 2025
30, 2024
Net loss
$
(3,550)
$
(2,940)
$
(10,701)
$
(6,763)
Add back:
Depreciation and amortization
11,874
11,537
45,482
44,581
Interest expense, net
1,634
1,524
6,277
6,381
Right-of-use operating lease amortization and interest
1,681
1,362
-
6,434
5,974
Provision (benefit) for income taxes
(374)
Professional fees
1,263
1,092
4,348
3,298
Stock-based compensation
1,409
4,035
2,484
Acquisition-related costs
Change in fair value of derivative liability - interest rate swap
(10)
(452)
1,122
Gain on disposals of property and equipment
(329)
(55)
(1,225)
(107)
Gain (loss) on foreign currency transactions
(188)
(43)
Share of loss in equity method investment
Adjusted EBITDA
$
14,924
$
13,444
$
55,947
$
57,746
Use of Proceeds
The following table provides information about the Company’s recent debt and equity financings and the actual use of proceeds from those financings compared to the intended use of proceeds from the offerings.
Date of Financing
Type of Financing
Gross Proceeds
Initial Intended Use of Net Proceeds
Actual Use of Net Proceeds to Date
Explanation of Variance and Impact on Business Objectives
September 2, 2025
$110.0 million facility consisting of delayed-draw term loan availability of $85.0 million, a term loan of $5.0 million, and $20.0 million revolving credit availability.
$20.65 million, consisting of a $17.4 million draw on the delayed-draw term loan, and a $3.25 million draw on the revolving credit.
The proceeds were expected to be used for acquisitions, working capital, and general corporate requirements.
The proceeds drawn to date were fully used to acquire Hart.
Proceeds have been used as intended.
Financial Position
The following table is the Company’s summarized financial position as of September 30, 2025 and 2024 (in thousands):
As of
As of
September 30, 2025
September 30, 2024
Cash
$
12,916
$
16,174
Accounts receivable, inventory and prepaid assets
65,433
56,880
Property and equipment
46,056
37,385
Right of use assets, net
18,393
16,475
Goodwill and intangible assets, net
139,120
118,686
Other assets
1,371
1,648
Total assets
$
283,289
$
247,248
Accounts payable and other current liabilities
$
74,708
$
60,850
Long-term liabilities
96,484
79,207
Total liabilities
171,192
140,057
Shareholders’ equity
112,097
107,191
Total liabilities and shareholders’ equity
$
283,289
$
247,248
Liquidity and Capital Resources
The Company’s primary source of liquidity is cash on hand and its line of credit availability. As of September 30, 2025, the Company had cash on hand of $12,916,000 and revolving credit availability under the Facility of $9,050,000. The Company’s approach in managing liquidity is to ensure, to the extent possible, that it will have enough liquidity to meet its liabilities when due. The Company will do so by continuously monitoring actual and expected cash flows and monitoring financial market conditions for signs of weakness. The Company faces minimal liquidity risk in its current financial obligations as they become due and payable.
Cash Flows
The following is a summary of the Company’s cash flows for the following periods (in thousands):
For the three
For the three
For the
For the
months ended
months ended
year ended
year ended
September 30,
September 30,
September 30,
September 30,
Net cash flow provided by operating activities
$
9,778
$
6,739
$
37,692
$
35,381
Net cash flow used in investing activities
(23,334)
(3,363)
(32,945)
(10,313)
Net cash flow provided by (used in) financing activities
15,239
(1,794)
(7,758)
(26,147)
Effect of exchange rate changes on cash held in foreign currencies
(17)
(247)
Net increase (decrease) in cash
$
1,666
$
1,771
$
(3,258)
$
(1,035)
Operating Activities
Net cash flow provided by operating activities was $37,692,000 for the year ended September 30, 2025, an increase of $2,311,000 from $35,381,000 for the year ended September 30, 2024. For the year ended September 30, 2025, the change in working capital improved $6,572,000 to a use of cash of ($1,082,000) for the year ended September 30, 2025 as compared to a use of cash of ($7,654,000) for the year ended September 30, 2024, due primarily to the negative impact of the Change Healthcare Incident during the year ended September 30, 2024. This was partially offset by an increase in the net loss by $3,938,000 and the variance in the gain on disposals of property and equipment of $1,118,000.
Investing Activities
Net cash flow used in investing activities was $32,945,000 for the year ended September 30, 2025, an increase of $22,632,000 from $10,313,000 for the year ended September 30, 2024, primarily due to the two acquisitions made during the year ended September 30, 2025 of $21,684,000.
Financing Activities
Net cash flow used in financing activities was $7,758,000 for the year ended September 30, 2025, a decrease of $18,389,000 from $26,147,000 for the year ended September 30, 2024. This was primarily due to the $17,400,000 borrowing on the delayed-draw term loan portion of the Facility to fund the acquisition of Hart in September 2025.
Capital management
The Company considers its capital to be shareholders’ equity, excluding noncontrolling interest, which totaled $100,498,000 as of September 30, 2025, and the Facility with a principal amount of $87,583,000 as of September 30, 2025.
The Company raises capital, as necessary, to meet its needs such as funding its working capital requirements and take advantage of perceived opportunities and, therefore, does not have a numeric target for its capital structure. Funds are primarily raised through credit facilities and other long-term debt arrangements, and the issuance of common shares. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the size of the Company, is reasonable.
The Company had the following equity instruments outstanding as of September 30, 2025 and September 30, 2024 (in thousands):
As of
As of
September 30, 2025
September 30, 2024
Common shares
43,444
43,090
Options
3,778
3,402
Restricted stock units
2,583
Financing
Historically and currently, the Company has financed its operations from cash flow from operations, borrowings on the Facility, equipment loans, leases, and through the issuance of equity.
Senior Credit Facility
The Company has a $110,000,000 senior credit facility with a group of US banks that matures in September 2027. The Facility consists of a delayed-draw term loan facility of $85,000,000, of which $83,600,000 has been drawn; a term loan of $5,000,000, which was drawn at closing; and a $20,000,000 revolving credit facility. The Facility is secured by substantially all assets of the Company and is subject to certain financial covenants, with which the Company was in compliance as of September 30, 2025.
A summary of the outstanding balances related to the Facility as of September 30, 2025 is as follows (in thousands):
As of
As of
September 30, 2025
September 30, 2024
Delayed-draw term loan
$
72,383
$
58,400
Term loan
4,250
4,500
Revolving credit facility
10,950
6,323
Total principal
87,583
69,223
Deferred financing costs
(948)
(1,430)
Net carrying value
$
86,635
$
67,793
Current portion
$
4,155
$
3,248
Long-term portion
82,480
64,545
Net carrying value
$
86,635
$
67,793
The delayed-draw term loan and the term loan are bearing interest at a weighted average 6.7% as of September 30, 2025. The rate is based on a secured overnight financing rate (“SOFR”), with a floor of 0.5%, plus a spread of 2.1% to 2.85% (2.4% as of September 30, 2025) based on the Company’s leverage ratio and will reprice within three months. The revolving credit facility is bearing interest at 7.0% as of September 30, 2025 and will reprice within three months. The Facility also has fees for unused availability of 0.75% for the delayed-draw term loan and 0.25% for the revolving credit facility. The fair value of the Facility was determined considering market conditions, credit worthiness and the current terms of debt, which is considered Level 2 on the fair value hierarchy. Due to the near-term repricing of the interest rates, the fair value of the Facility approximates the principal value as of September 30, 2025 and 2024.
To manage the risks of the cash flows related to interest expense, the Company entered into several interest rate swaps on $54,000,000 of the principal amount of the Facility. The swaps carry a fixed SOFR of 3.4% to 4.4%, resulting in a weighted combined rate of 6.6%.
The swaps are settled quarterly and mature on September 30, 2026 and at the Facility’s maturity. Any difference between the Facility’s SOFR rate and the swap’s rate is recorded as interest expense. For the year ended September 30, 2025 and 2024, a reduction of $228,000 and $311,000 to interest expense was recorded in the consolidated statements of income (loss), respectively.
As of September 30, 2025, the fair value of the interest rate swap liability, which was determined using Level 2 inputs of market conditions on future expected interest rates, credit worthiness, and the current terms of debt, was $670,000, as compared to $1,122,000 as of September 30, 2024 and is recorded in derivative liability - interest rate swap in the condensed consolidated statements of financial position. The Company has recorded the changes in fair value of derivative liability - interest rate swaps on the consolidated statements of income (loss).
Interest expense on the Facility, including the impact of the interest rate swap agreements, was $5,095,000 and $5,346,000 for the years ended September 30, 2025 and 2024, respectively.
The Company has incurred financing costs to obtain and maintain the Facility, which is reflected as a reduction of the outstanding balance and will be amortized as interest expense using the effective interest method over the life of the Facility. During the years ended September 30, 2025 and 2024, $563,000 and $513,000 of amortization of deferred financing costs was recorded, respectively.
Equipment Loans
The Company is offered financing arrangements from the Company’s suppliers and the supplier’s designated financial institution, in which payments for certain invoices or products can be financed and paid over an extended period. The financial institution pays the supplier when the original invoice becomes due, and the Company pays the third-party financial institution over a period of time. In most cases, the supplier accepts a discounted amount from the financial institution and the Company repays the financial institution the face amount of the invoice with no stated interest, in twelve
equal monthly installments. The Company uses its incremental borrowing rate of 6.6% to 8.0% to impute interest on these arrangements. The discount of the carrying amount from the face value of the loans is $252,000 as of September 30, 2025. The Company has also assumed equipment loans in conjunction with several of its acquisitions.
The balance of the loans as of September 30, 2025 is $12,215,000, with substantially all of the balance due within the next year.
Lease Liabilities
The Company enters into leases for real estate and vehicles. Real estate leases are operating leases and are valued at the net present value of the future lease payments at the incremental borrowing rate. Vehicle leases are finance leases and recorded at the rate implicit in the lease - a weighted average of 8.7% as of September 30, 2025 - based on the current value and the estimated residual value of the vehicle, if any. Future payments on these liabilities are as follows (in thousands):
Less than 1 year
$
8,079
Between 1 and 5 years
13,792
More than 5 years
Total
22,649
Less: finance charges
(2,707)
Lease liabilities
19,942
Current portion of lease liabilities
6,898
Long-term portion of lease liabilities
$
13,044
Quarterly operating results
Results of operations for the healthcare services market in which the Company operates show little seasonality from quarter to quarter. The increase in revenues from the past year is primarily due to the Company’s acquisitions during the year ended September 30, 2025.
The following table provides selected historical information and other data, which should be read in conjunction with the consolidated financial statements of the Company (amounts in thousands except per share amounts).
As of or for the
As of or for the
As of or for the
As of or for the
three months ended
three months ended
three months ended
three months ended
September 30, 2025
June 30, 2025
March 31, 2025
December 31, 2024
Revenue
$
68,313
$
58,289
$
57,376
$
61,381
Net income (loss)
(3,550)
(3,025)
(3,042)
(1,084)
Net income (loss) per share - basic
(0.08)
(0.07)
(0.07)
(0.03)
Net income (loss) per share - diluted
(0.08)
(0.07)
(0.07)
(0.03)
Total assets
$
283,289
$
236,092
$
244,645
$
242,816
As of or for the
As of or for the
As of or for the
As of or for the
three months ended
three months ended
three months ended
three months ended
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
Revenue
$
61,332
$
60,759
$
61,249
$
62,575
Net income (loss)
(2,940)
(1,596)
(739)
(1,488)
Net income (loss) per share - basic
(0.07)
(0.04)
(0.02)
(0.04)
Net income (loss) per share - diluted
(0.07)
(0.04)
(0.02)
(0.04)
Total assets
$
247,248
$
249,784
$
248,614
$
243,893
Related party transactions
The Company (through indirect wholly owned subsidiaries) has six leases for office, warehouse, and retail space with a rental company affiliated with the Company’s Chief Executive Officer, the majority of which were entered into in 2015,
prior to such subsidiaries being acquired by the Company and prior to the Chief Executive Officer joining the Company, and five of which were renewed effective October 1, 2022. The leases have a combined area of 74,520 square feet. Lease payments under these leases were approximately $65,000 and $63,000 per month for the twelve months ended September 30, 2025 and 2024, respectively, with increases on October 1 of each year equal to the greater of (i) the Consumer Price Index for All Urban Consumers (CPI-U), and (ii) 3%. One lease expires in June 2026 and the remaining five leases expire on September 30, 2029.
Off balance sheet arrangements
The Company has no material undisclosed off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations or financial condition, revenues or expenses results of operations, liquidity, capital expenditures or capital resources.
Critical accounting estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s management reviews these estimates, judgments, and assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted prospectively in the period in which the estimates are revised. Actual results could differ from those estimates.
Estimates where management has made subjective judgments and where there is significant risk of material adjustments to assets and liabilities in future accounting periods included in the list below.
Accounts receivable
The Company estimates that a certain portion of receivables from customers may not be collected and maintains a reserve for expected pricing concessions and insurance denials. The Company evaluates the net realizable value of accounts receivable as of the date of the consolidated balance sheets, considering current and historical cash collections, the age of the accounts receivable, and relevant business conditions. Significant judgments are made in order to incorporate forward-looking information into the estimation of reserves and may result in changes to revenue and accounts receivable period to period which may significantly affect the Company’s results of operations.
Intangible assets
The Company has recorded various intangible assets consisting primarily of non-compete agreements, trademarks, customer contracts and customer relationships in connection with various business acquisitions. Non-compete agreements are recognized at the estimated fair value associated with the non-compete agreements entered by the sellers of acquired companies. Trademarks are recognized at the estimated fair value associated with the trade name of the acquired company. Customer contracts are recognized at the estimated fair value of the present value of expected future customer billings based on the statistical life of a customer. Customer relationships are recognized based on the estimated fair value given to the long-term associations with referral sources such as doctors, medical centers, etc.
The Company reviews the estimates for useful lives on an annual basis, or more frequently if events during the year indicate that a change may be required, with consideration given to technological obsolescence and other relevant business factors. A change in management’s estimate could impact depreciation/amortization expense and the carrying value of property and equipment and intangible assets.
The Company periodically evaluates the recoverability of long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the assets are evaluated in relation to the operating performance and future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected
discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and discount rates, reflecting varying degrees of perceived risk. The Company did not have any long-lived asset impairments in the years ended September 30, 2025 or 2024.
Goodwill impairment
The Company tests goodwill for impairment on an annual basis on July 1, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. The Company determines the fair value of our reporting unit using the income approach and market approach to valuation, as well as other generally accepted valuation methodologies. The income approach utilizes a discounted cash flow analysis using management’s assumptions. The market approach compares the reporting unit to similar companies with the assumption that companies operating in the same industry will share similar characteristics and that company values will correlate to those characteristics. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized equal to the difference between the carrying amount and the estimated fair value of the reporting unit. The Company concluded that there was no impairment of goodwill during the years ended September 30, 2025 or 2024.
The approach uses cash flow projections based upon a financial forecast approved by management, covering a five-year period. Cash flows for the years thereafter are extrapolated using the estimated terminal growth rate. The risk premiums expected by market participants related to uncertainties about the industry and assumptions relating to future cash flows may differ or change quickly, depending on economic conditions and other events.
Foreign currency transactions
Transactions in foreign currencies are initially recorded at the foreign currency spot rate or the rate realized in the transaction. Monetary items are translated at the foreign currency spot rate as of the reporting date and exchange differences from monetary items are recognized in profit or loss. Non-monetary items that are not carried at fair value are translated using the exchange rates at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The assets and liabilities of foreign operations are translated into US dollars at the rate of exchange prevailing at the reporting date and their statements of operations are translated at the average monthly rates of exchange.
Revenue recognition
Revenues are billed to, and collections are received from customers. Because of continuing changes in the health care industry and third-party reimbursement, the consideration receivable from these insurance companies is variable as these billings can be challenged by the payor. Therefore, the amount billed by the Company is reduced to an estimate of the amount that the Company believes will be ultimately allowed by the insurance contract, including co-pays and deductibles. This estimate involves significant judgment including an analysis of past collections and historical modification rates. Management regularly reviews the actual claims approved by the insurance companies, adjusting estimated revenue as necessary.
The Company does not offer warranties to customers in excess of the manufacturer’s warranty. Any taxes due upon sale of the products or services are not recognized as revenue. The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities during the years ended September 30, 2025 and 2024.
Rental of medical equipment
Revenue that is generated from equipment that the Company rents to patients is primarily recognized over the noncancelable rental period, typically one month, and commences on delivery of the equipment to the patients. Revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and patients. Rental revenue, less estimated adjustments, is recognized as earned on a straight-line basis over the noncancellable lease term.
Sales of medical equipment and supplies
The Company sells equipment, consumable supplies, and replacement parts to customers and recognizes revenue on delivery, as at that point all performance obligations have been met.
Shipping and handling
The Company provides shipping and handling at no charge in sending product to customers. The Company does not consider this a separate performance obligation since these shipping and handling activities occur before the customer obtains control of the goods. The shipping and handling are considered activities to fulfill the entity’s promise to transfer the goods and are expensed within operating expenses.
Share-based payments
The Company grants stock options and restricted stock units to employees, members of the Board of Directors, and consultants. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense on a straight-line basis over the vesting period. Fair value is measured using the Black-Scholes Model. In estimating fair value, management is required to make certain assumptions and estimates, such as the expected life of units, volatility of the Company’s future share price, risk-free interest rates, and future dividend yields, at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results. The Company has elected to recognize the effect of forfeitures in compensation cost when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited. Further, the Company has elected to use the contractual term as the expected term. Compensation expense is recognized on a straight-line basis, by amortizing the grant date fair value over the vesting period for each separately vesting portion of the award.
Loss per share
The Company presents basic and diluted loss per share data for its ordinary shares. Basic loss per share is calculated by dividing the net loss by the weighted average number of Common Shares outstanding during the period. Contingently issuable shares (including shares held in escrow) are not considered outstanding common shares and consequently are not included in the loss per share calculations. The Company’s potentially dilutive common share equivalents are stock options and restricted stock units. The years ended September 30, 2025 and 2024 were periods of net losses, therefore, the potentially dilutive common share equivalents are excluded in the determination of dilutive net loss per share because their effect is antidilutive. In order to determine diluted loss per share, it is assumed that any proceeds from the exercise of dilutive instruments would be used to repurchase common shares at the average market price during the period.
Leases
Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified assets.
The Company’s operating leases are for real estate and range from 2 to 11 years. The Company’s finance leases are for vehicles and range from 2 to 7 years.
The Company’s leases include fixed payments, as well as in some cases, scheduled base rent increases over the term of the lease. Certain leases require variable payments of common area maintenance, operating expenses, and real estate taxes applicable to the property. Variable payments are excluded from the measurements of lease liabilities and are expensed as incurred. Any tenant improvement allowances received from the lessor are recorded as a reduction to rent expense over the term of the lease. Some of the Company’s vehicle lease agreements contain residual value guarantees.
The Company determines if an arrangement is a lease at the inception of the contract. Lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term for those arrangements where there is an identified asset, and the contract conveys the right to control its use. The right-of-use asset is measured at the
initial amount of the lease liability. Right-of-use assets are included in property and equipment in the Company's consolidated balance sheets.
Operating lease expense is recognized on a straight-line basis over the term of the lease. Finance lease cost includes a.) depreciation, which is recognized on a straight-line basis over the expected life of the right-of-use asset and included in depreciation in the Company’s consolidated statements of income (loss), and b.) interest expense, which is recognized following an effective interest rate method and is included in interest expense in the Company’s consolidated statements of income (loss).
The Company’s real estate operating leases do not provide an implicit rate that can be easily determined. Therefore, the Company applies its incremental borrowing rate to the lease based on the information available at the commencement date. This estimate impacts the carrying amount of the lease liabilities and the interest expense recorded on the consolidated statement of income (loss). Vehicle finance leases are recorded at the interest rate implicit in the lease based on the current value and the estimated residual value of the vehicle.
Certain leases include one or more options to renew or terminate the lease at the Company’s discretion. When the Company recognizes a lease, it assesses the lease term based on the conditions of the lease and determines whether it is probable that it will choose to extend the lease at the end of the initial lease term. This estimate could affect future results if the Company extends the lease or exercises an early termination option.
The Company accounts for non-lease and lease components to which they relate as a single lease component. Additionally, the Company recognized lease payments under short-term leases with an initial term of twelve months or less, as well as low value assets, as an expense on a straight-line basis over the lease term without recognizing the lease liability and ROU asset.
Income taxes
Deferred taxes are determined based on the differences between the financial statements and the tax bases using rates as enacted in the laws. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized.
Interest and penalties related to unrecognized tax benefits are recognized in the tax provision. Liabilities for uncertain tax positions are recognized when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. There have not been any material interest or penalties during any of the years presented.
Business combinations
The Company accounts for business combinations using the acquisition method when control is obtained by the Company. The Company measures the consideration transferred, the assets acquired, and the liabilities assumed in a business combination at their acquisition-date fair values. Acquisition-related costs are recognized as expenses in the periods in which the costs are incurred, and the services are received. The excess of the consideration transferred to obtain control, over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed, is recognized as goodwill as of the acquisition date.
Contingent consideration for a business combination is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as a liability is measured at subsequent reporting dates at fair value with the corresponding gain or loss being recognized in profit or loss.
Contractual Commitments and Obligations
The following table summarizes the Company’s contractual commitments and obligations as of September 30, 2025 (in thousands), which are primarily for debt, leasing of offices and other obligations. The leases have been entered into with terms between one and ten years, including optional extensions.
Less than
1-3
3-5
After 5
Total
1 year
Years
Years
Years
Debt
$
99,798
$
16,532
$
83,266
$
-
$
-
Finance lease obligations
17,202
6,548
6,548
3,328
Operating leases
3,573
1,531
2,000
-
Other obligations
38,431
38,431
-
-
-
Total contractual obligations
$
159,004
$
63,042
$
91,814
$
3,370
$

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to financial risks of varying degrees of significance which would affect its ability to achieve its strategic objectives for growth: market risk (including currency risk and interest rate risk), credit risk, and liquidity risk. These risks arise from the normal course of operations and all transactions are undertaken to support the Company’s ability to continue as a going concern. Risk management is carried out by management under policies approved by the Board of Directors. The Company’s overall risk management program seeks to minimize potential adverse effects on the Company’s financial performance.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk are primarily cash and accounts receivable. Substantially all of the Company’s cash is maintained with three major financial institutions, one of which is the administrative agent for the Company’s senior credit facility. At times, the cash in the financial institutions is in excess of the amount insured by the Federal Deposit Insurance Corporation. Substantially all accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, and directly from patients. Receivables generally are collected within industry norms. The Company continuously monitors collections from its clients and maintains a reserve for expected losses based upon historical experience and any specific payor collection issues that are identified.
As of September 30, 2025, the Company has 18% of its accounts receivable with Medicare. As this is a US government program, we believe there is very little credit risk associated with these balances. No customer represented more than 10% of outstanding accounts receivable.
Currency risk
Currency risk is the risk that the Company will be subject to foreign currency fluctuations in its cash balances denominated in foreign currencies. All of the Company’s sales and inventory sold and almost all of the Company’s operating expenses are in US dollars. Cash is maintained in both US dollars and Canadian dollars. Consequently, the Company is exposed to foreign exchange fluctuations. The Company will continue to maintain cash balances in both US and Canadian dollars, but management anticipates that it will not purchase any securities or financial instruments to speculate on currency fluctuations or engage in any currency hedging programs.
The Company’s objective in managing its foreign currency risk is to monitor foreign exchange rates and minimize its net exposures to foreign currency cash flows by generally holding most of its cash in US dollars. However, at times, including at September 30, 2025, the Company does hold significant cash in Canadian dollars. During the twelve months ended September 30, 2025, the Company recognized a foreign currency loss of approximately $367,000 due to unfavorable movements in the exchange rates. The Company monitors foreign currency exposures and from time to time could
authorize the use of derivative financial instruments such as forward foreign exchange contracts to economically hedge a portion of foreign currency fluctuations.
Based on the exposure of Canadian cash at September 30, 2025, depreciation or appreciation of the Canadian dollar against the US dollar could result in a significant effect on net income or loss. The Company has not employed any foreign currency hedging programs.
Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The interest rate on the credit facility has a variable rate that can be fixed for a maximum of six months. The Company has entered into interest rate swap agreements whereby $54,000,000 of principal will receive a fixed rate during the year ended September 30, 2025. With $87,583,000 of borrowings on this facility at September 30, 2025, each 1% increase would result in an additional $335,830 of annual interest expense. The interest on the Company’s other debt is either imputed or has a fixed rate and is not subject to cash flow interest rate risk.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
Report of the Independent Registered Public Accounting Firm (BDO USA, P.C., Cincinnati, Ohio, PCAOB #243)
Consolidated Statements of Financial Position
Consolidated Statements of Income (Loss)
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Quipt Home Medical Corp.
Wilder, KY
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Quipt Home Medical Corp. (the “Company”) as of September 30, 2025 and 2024, the related consolidated statements of income (loss), changes in shareholders’ equity, and cash flows for each of the two years in the period ended September 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BDO USA, P.C.
We have served as the Company's auditor since 2022.
Cincinnati, Ohio
December 15, 2025
Quipt Home Medical Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of US dollars, except per share amounts)
As of
As of
September 30,
September 30,
ASSETS
Current assets
Cash
$
12,916
$
16,174
Accounts receivable, net
34,697
29,116
Inventory
25,640
20,853
Prepaid and other current assets
5,096
6,911
Total current assets
78,349
73,054
Long-term assets
Property and equipment, net
46,056
37,385
Right of use assets, net
18,393
16,475
Goodwill
61,560
50,733
Intangible assets, net
77,560
67,953
Equity method investment
1,311
Other assets
Total long-term assets
204,940
174,194
TOTAL ASSETS
$
283,289
$
247,248
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
$
46,698
$
35,363
Current portion of equipment loans
12,212
12,804
Current portion of lease liabilities
6,898
5,867
Current portion of senior credit facility
4,155
3,248
Deferred revenue
4,593
3,568
Purchase price payable
-
Total current liabilities
74,708
60,850
Long-term liabilities
Equipment loans
Lease liabilities
13,044
13,283
Derivative liability - interest rate swap
1,122
Senior credit facility
82,480
64,545
Deferred income taxes
TOTAL LIABILITIES
171,192
140,057
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY
Capital stock
Common shares, no par value, unlimited shares authorized; 43,443,972 and 43,091,273 issued and outstanding as of September 30, 2025 and 2024, respectively
-
-
Preferred Shares, no par value, unlimited shares authorized, none issued and outstanding as of September 30, 2025 and 2024
-
-
Additional paid in-capital
281,667
277,762
Accumulated deficit
(181,272)
(170,571)
Noncontrolling interest
11,702
-
TOTAL SHAREHOLDERS' EQUITY
112,097
107,191
TOTAL LIABILITIES AND EQUITY
$
283,289
$
247,248
The accompanying notes are an integral part of these consolidated financial statements
Quipt Home Medical Corp.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Expressed in thousands of US dollars, except per share amounts)
Year Ended
Year Ended
September 30,
September 30,
Revenue
Rentals of medical equipment
$
100,108
$
94,308
Sales of medical equipment and supplies
145,251
151,607
Total revenues
245,359
245,915
Cost of inventory sold
68,182
68,925
Operating expenses
125,457
122,542
Right-of-use operating lease amortization and interest
6,434
5,974
Depreciation
39,429
38,490
Amortization of intangible assets
6,053
6,091
Stock-based compensation
4,035
2,484
Acquisition-related costs
Gain on disposals of property and equipment
(1,225)
(107)
Operating income (loss)
(3,823)
1,115
Financing expenses
Interest expense
6,744
7,168
Interest income
(467)
(787)
Loss (gain) on foreign currency transactions
(43)
Share of loss in equity method investment
Change in fair value of derivative liability - interest rate swap
(452)
1,122
Loss before income taxes
(10,339)
(6,654)
Provision for income taxes
Net loss before noncontrolling interest
$
(10,580)
$
(6,763)
Net income attributable to noncontrolling interest
-
Net loss
$
(10,701)
$
(6,763)
Net income (loss) per share
Basic loss per share
$
(0.24)
$
(0.16)
Diluted loss per share
$
(0.24)
$
(0.16)
Weighted average number of common shares outstanding:
Basic
43,291
42,501
Diluted
43,291
42,501
The accompanying notes are an integral part of these consolidated financial statements
Quipt Home Medical Corp.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
EQUITY
(Expressed in thousands of US dollars, except per share amounts)
Number of
Total
Shares
Additional Paid-
Accumulated
Noncontrolling
shareholders'
(000’s)
In Capital
Deficit
Interest
equity
Balance September 30, 2023
42,102
$
274,923
$
(163,808)
$
-
$
111,115
Net loss
-
-
(6,763)
-
(6,763)
Settlement of restricted stock units
(213)
-
-
(213)
Stock options exercised
-
-
Stock-based compensation
-
2,484
-
-
2,484
Balance September 30, 2024
43,091
$
277,762
$
(170,571)
$
-
$
107,191
Net income (loss)
-
-
(10,701)
(10,580)
Settlement of restricted stock units
-
-
-
-
Acquisition of Hart
-
-
-
11,581
11,581
Repurchase of shares
(62)
(130)
-
-
(130)
Stock-based compensation
-
4,035
-
-
4,035
Balance September 30, 2025
43,444
$
281,667
$
(181,272)
$
11,702
$
112,097
The accompanying notes are an integral part of these consolidated financial statements
Quipt Home Medical Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of US dollars, except per share amounts)
Year Ended September 30,
Operating activities
Net loss
$
(10,701)
$
(6,763)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
45,482
44,581
Stock-based compensation
4,035
2,484
Gain on disposals of property and equipment
(1,225)
(107)
Amortization of financing costs and accretion of purchase price payable
Loss (gain) on foreign currency transactions
(43)
Share of loss in equity method investment
Change in fair value of derivative liability - interest rate swap
(452)
1,122
Deferred income taxes
Right-of-use operating lease amortization and interest
6,434
5,974
Payments of operating leases, including interest
(6,138)
(5,386)
Adjustments to purchase price payable
-
(29)
Change in working capital, net of acquisitions:
Net decrease (increase) in accounts receivable
2,575
(3,294)
Net increase in inventory
(2,417)
(3,420)
Net decrease (increase) in prepaid and other current assets
2,193
(3,124)
Net decrease in deferred revenue
(21)
(943)
Net increase (decrease) in accounts payables and accrued liabilities
(3,412)
3,127
Net cash flow provided by operating activities
37,692
35,381
Investing activities
Purchase of property and equipment
(12,354)
(10,313)
Cash proceeds from sale of property and equipment
1,233
Cash paid for acquisitions, net of cash acquired
(21,824)
(210)
Net cash flow used in investing activities
(32,945)
(10,313)
Financing activities
Repayments of equipment loans
(24,472)
(26,792)
Repayments of finance leases
(1,436)
(1,579)
Borrowings on delayed-draw term loan
17,400
-
Repayments of delayed-draw term loan and term loan
(3,668)
(3,450)
Gross borrowings on the revolving credit facility
18,250
17,100
Gross repayments on the revolving credit facility
(13,623)
(10,777)
Other, net
(79)
(60)
Repurchase of shares, net of issuance costs
(130)
-
Settlement of restricted stock units
-
(213)
Proceeds from exercise of stock options
-
Payments of purchase price payable
-
(944)
Net cash flow (used in) provided by financing activities
(7,758)
(26,147)
Net increase (decrease) in cash
(3,011)
(1,079)
Effect of exchange rate changes on cash held in foreign currencies
(247)
Cash, beginning of year
16,174
17,209
Cash, end of year
$
12,916
$
16,174
Supplemental cash flow information
Cash paid for interest
$
(5,914)
$
(6,826)
Cash paid (refunded) for income taxes
(1,249)
Operating lease additions
2,074
4,229
Equipment loan additions
23,828
25,304
Finance lease additions
1,975
Purchases of property and equipment in ending accounts payable
2,161
The accompanying notes are an integral part of these consolidated financial statements
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
1.Nature of operations
Reporting entity
Quipt Home Medical Corp. (“Quipt” or the “Company”) was incorporated under the Business Corporations Act (Alberta) on March 5, 1997. On December 30, 2013, pursuant to a Certificate of Continuance, the Company changed its jurisdiction of governance by continuing from Alberta into British Columbia. The Company’s head office is located at 1019 Town Drive, Wilder, Kentucky 41076, and its registered office is located at Suite 2700, 1133 Melville Street, Vancouver, British Columbia V6E 4E5.
All significant operating decisions are based on analysis of the Company as a whole; accordingly, the Company operates in one business segment, which is the sale and rental of medical equipment and related devices.
The Company’s common shares are traded on the Nasdaq Capital Market and the Toronto Stock Exchange, both under the symbol “QIPT”.
2.Basis of Presentation and summary of significant accounting policies
Basis of accounting
These consolidated financial statements as of and for the years ended September 30, 2025 and 2024 (the “consolidated financial statements”) of the Company were prepared in accordance with accounting principles generally accepted in the US (“GAAP”).
The consolidated financial statements, which are presented in US dollars, have been prepared under the historical cost convention, as modified by the measurement at fair values of certain financial assets and financial liabilities.
The consolidated financial statements of the Company are presented in US dollars, which is the Company’s functional currency, determined using management’s judgment that the primary economic environment in which it will derive its revenues and expenses incurred to generate those revenues is the US.
Basis of measurement
These consolidated financial statements have been prepared on a going concern basis that assumes that the Company will continue its operations for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of operation.
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated. The Company’s consolidated entities have a functional currency of US dollars, and are listed in the table below. They are wholly owned, except for IRB Medical Equipment, LLC, dba Hart Medical Equipment (“Hart”), which is 60%-owned.
Prior to closing, 100% of the equity interests in Hart were contributed to the Hart HoldCo, LLC (“the Hart Seller”) by its previous owners. Pursuant to the purchase agreement, the Company acquired 60% of the membership interests of Hart directly from the Hart Seller, and the Hart Seller retained the remaining 40% membership interests. In connection with the
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
transaction, the parties entered into an administrative support services agreement, and Hart’s operating agreement was amended and restated pursuant to the Sixth Amended and Restated Operating Agreement to provide for the operation of Hart as a joint venture between the Company and the Hart Seller.
The Company has control of Hart and therefore its financial statements are included in the Company’s consolidated financial statements, with the noncontrolling 40% interest reflected as a line item on the consolidated statements of financial position, income (loss) and changes in shareholders’ equity.
100 W. Commercial Street, LLC
Med Supply Center, Inc.
Acadia Medical Supply, Inc.
Medical West Healthcare Center, LLC
Access Respiratory Home Care, L.L.C.
Mediserve Medical Equipment of Kingsport, Inc.
Alliance Home Care & Mobile Diagnostics, L.L.C.
Metro-Med, Inc.
At Home Health Equipment, LLC
Metro-Med, Inc. - Los Alamitos
Black Bear Medical, Inc.
Metro-Med, Inc. - Ventura
Black Bear Medical Group, Inc.
NorCal Respiratory, Inc.
Black Bear Medical NH, Inc.
Northwest Medical, LLC
Care Medical Atlanta, LLC
Oxygen Plus
Care Medical of Athens, Inc.
Patient-Aids, Inc.
Care Medical of Augusta, LLC
Patient Home Monitoring, Inc
Care Medical of Gainesville, LLC
QHM Holdings Inc.
Care Medical Partners, LLC
QHM Investments I, LLC
Care Medical Savannah, LLC
Quipt Home Medical Inc.
Central Oxygen, Inc.
Rejuvenight, LLC
Coastal Med-Tech Corp.
Resource Medical, Inc.
Cooley Medical Equipment, Incorporated
Resource Medical Group Charleston, LLC
Focus Respiratory, LLC
Resource Medical Group, LLC
Good Night Medical, LLC
Respicare, Inc.
Good Night Medical of Ohio, LLC
Riverside Medical, Inc.
Good Night Medical of Texas, Inc
RTA Homecare, LLC
Great Elm Healthcare, LLC
Semo Drugs - Care Plus of Mo, Inc.
Health Technology Resources, LLC
Sleep Health Diagnostics, LLC
Heartland Health Therapy, LLC
Sleepwell, LLC
Heckman Healthcare Service & Supplies Inc.
Southeastern Biomedical Services, LLC
Hometown Medical LLC
Southern Pharmaceutical Corporation
IRB Medical Equipment, LLC
Thrift Home Care, Inc.
Legacy Oxygen and Home Care Equipment, LLC
Tuscan, Inc.
Mayhugh Drugs, Inc.
United Respiratory Services, LLC
Use of estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s management reviews these estimates, judgments, and assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted prospectively in the period in which the estimates are revised. Actual results could differ from those estimates.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Estimates where management has made subjective judgments and where there is significant risk of material adjustments to assets and liabilities in future accounting periods include fair value measurements for financial instruments and share-based transactions, useful lives and impairment of non-financial assets (property and equipment, goodwill, and intangible assets), provision for expected credit losses, fair value measurements for assets and liabilities acquired in business acquisitions, and calculation of deferred taxes.
Accounts receivable
Due to the nature of our industry and the reimbursement environment in which the Company operates, certain estimates are required to record total net revenues and accounts receivable at their net realizable values, including estimating variable consideration. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements, contractual terms, and the uncertainty of reimbursement amounts for certain services may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application, claim denial, or account review. Net realizable values are estimated based on a number of factors, including age of the receivables, changes in customer payment patterns, historical experience, industry trends, and current economic conditions. The balance of Accounts receivable, net was $34,697,000, $29,116,000, and $25,978,000 as of September 30 2025, 2024, and 2023, respectively.
As of September 30, 2025, the Company has 18% of its accounts receivable with Medicare. As this is a US government program, the Company believes there is very little credit risk associated with these balances. No customer represented more than 10% of outstanding accounts receivable.
Inventory
Inventory is stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. The Company’s inventory consists of finished goods purchased from vendors; therefore, no labor or overhead is included in the inventory cost. Inventory is subsequently recorded within cost of inventory sold on the consolidated statements of operations at the time the inventory is sold. Inventory is transferred to property and equipment as rental equipment at the time of rental revenue recognition.
The Company reviews inventory for obsolete, redundant, and slow-moving goods, and any such inventories are written down to their estimated net realizable value.
Property, equipment, and right-of-use assets
Property and equipment are stated at cost less accumulated depreciation. Major renewals and improvements are capitalized in the property accounts, while maintenance and repairs which do not extend the useful life of the respective assets, are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
The estimated useful lives of the assets are as follows:
Description
Estimated Useful Life
Rental equipment
-
5 years
Vehicles
-
5 years
Leasehold improvements
Life of lease 1
-
11 years
Office and technology equipment
5 years
Buildings
25 years
Right-of-use real estate
Life of lease 2
-
11 years
Right-of-use vehicles
Life of lease 2
-
7 years
Depreciation of rental equipment commences once it has been delivered to a patient and put in use. Property and equipment and other non-current assets with definite useful lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Intangible assets
The Company has recorded various intangible assets consisting of customer relationships, customer contracts, trade names and non-compete agreements, in connection with various business acquisitions. Customer relationships are recognized based on the estimated fair value given to the long-term associations with referral sources such as doctors, hospitals, and sleep centers. Customer contracts are recognized at the estimated fair value of the present value of expected future customer billings based on the statistical life of a customer. Trade names are recognized at the estimated fair value associated with the trade name of the acquired company. Non-compete agreements are recognized at the estimated fair value associated with the non-compete agreements entered into by the sellers of acquired companies. Definite life intangible assets are amortized on a straight-line basis over the estimated useful lives of the related assets as follows:
Description
Estimated Useful Life
Customer relationships
-
20 years
Customer contracts
2 years
Trade names
10 years
Non-compete agreements
5 years
The Company reviews the estimates for useful lives on an annual basis, or more frequently if events during the year indicate that a change may be required, with consideration given to technological obsolescence and other relevant business factors. A change in management’s estimates could impact depreciation/amortization expense and the carrying value of property and equipment and intangible assets.
The Company periodically evaluates the recoverability of long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the assets are evaluated in relation to the operating performance and future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and discount rates, reflecting varying degrees of perceived risk, which are Level 3 unobservable inputs. The Company did not have any long-lived asset impairments in the years ended September 30, 2025 or 2024.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Goodwill impairment
The Company tests goodwill for impairment on an annual basis on July 1, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. The Company determines the fair value of our reporting units using the income approach (a Level 3 fair value input) and market approach (a Level 2 fair value input) to valuation, as well as other generally accepted valuation methodologies. The income approach utilizes a discounted cash flow analysis using management’s assumptions. The market approach compares the reporting unit to similar companies with the assumption that companies operating in the same industry will share similar characteristics and that company values will correlate to those characteristics. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized equal to the difference between the carrying amount and the estimated fair value of the reporting unit. The Company concluded that there was no impairment of goodwill during the years ended September, 30, 2025 or 2024.
The income approach uses cash flow projections based upon a financial forecast approved by management, covering a five-year period. Cash flows for the years thereafter are extrapolated using the estimated terminal growth rate. The risk premiums expected by market participants related to uncertainties about the industry and assumptions relating to future cash flows may differ or change quickly, depending on economic conditions and other events.
Equity method investee
The Company, through QHM Investments I, LLC, acquired an ownership interest in DMEScripts, LLC (“DMEScripts”). As of September 30, 2025, the Company has cumulatively invested $1,710,000 and has a 7.0% ownership interest in DMEScripts. DMEScripts is an independent e-prescribe company in the US that automates the medical equipment ordering process. This technology is dedicated to improving the patient, prescriber, and provider experience by eliminating inefficiencies and reducing paperwork. The investment in DMEScripts is accounted for using the equity method.
The Company applies the equity method of accounting for investments when it determines it has a significant influence, but not a controlling interest in the investee. Significant influence is determined by considering key factors such as ownership interest, representation on the board of directors, participation in policy making decisions, business relationship and material intra-entity transactions, among other factors.
The equity method investment is reported at cost and adjusted each period for the Company’s share of the investee's income (loss). The Company records “share of loss in equity method investment” on the consolidated statements of income (loss) for its pro rata share ownership percentage of the investee’s net loss.
Foreign currency transactions
Transactions in foreign currencies are initially recorded at the foreign currency spot rate or the rate realized in the transaction. Monetary items are translated at the foreign currency spot rate as of the reporting date and exchange differences from monetary items are recognized in profit or loss. Non-monetary items that are not carried at fair value are translated using the exchange rates at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The assets and liabilities of foreign operations are translated into US dollars at the rate of exchange prevailing at the reporting date and their statements of operations are translated at the average monthly rates of exchange.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Revenue recognition
Revenues are billed to, and collections are received from customers. Because of continuing changes in the health care industry and third-party reimbursement, the consideration receivable from these insurance companies is variable as these billings can be challenged by the payor. Therefore, the amount billed by the Company is reduced to an estimate of the amount that the Company believes will be ultimately allowed by the insurance contract, including co-pays and deductibles. This estimate involves significant judgment including an analysis of past collections and historical modification rates. Management regularly reviews the actual claims approved by the insurance companies, adjusting estimated revenue as necessary.
The Company does not offer warranties to customers in excess of the manufacturer’s warranty. Any taxes due upon sale of the products or services are not recognized as revenue. The Company records deferred revenue on the consolidated statement of financial position for the unelapsed portion of the rental month that exists as of the balance sheet date. All of the deferred revenue as of September 30, 2024 was recognized during the year ended September 30, 2025.
Rental of medical equipment
Revenue that is generated from equipment that the Company rents to patients is primarily recognized over the noncancelable rental period, typically one month, and commences on delivery of the equipment to the patients. Revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and patients. Rental revenue, less estimated adjustments, is recognized as earned on a straight-line basis over the noncancellable lease term.
Sales of medical equipment and supplies
The Company sells equipment, consumable supplies, and replacement parts to customers and recognizes revenue on delivery, as at that point all performance obligations have been met.
Shipping and handling
The Company provides shipping and handling at no charge in sending product to customers. The Company does not consider this a separate performance obligation since these shipping and handling activities occur before the customer obtains control of the goods. The shipping and handling are considered activities to fulfill the entity’s promise to transfer the goods and are expensed within operating expenses.
Stock-based compensation
The Company grants stock options and restricted stock units to employees, members of the Board of Directors, and consultants. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense on a straight-line basis over the vesting period. Fair value is measured using the Black-Scholes Model. In estimating fair value, management is required to make certain assumptions and estimates, such as the expected life of units, volatility of the Company’s future share price, risk-free interest rates, and future dividend yields, at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results. The Company has elected to recognize the effect of forfeitures in compensation cost when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited. Further, the Company has elected to use the contractual term as the expected term. Compensation expense is recognized on a straight-line basis, by amortizing the grant date fair value over the vesting period for each separately vesting portion of the award.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Fair value measurement
Financial instruments carried at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1 - Where financial instruments are traded in active financial markets, fair value is determined by reference to the appropriate quoted market price at the reporting date. Active markets are those in which transactions occur in significant frequency and volume to provide pricing information on an ongoing basis;
Level 2 - If there is no active market, fair value is established using valuation techniques, including discounted cash flow models. The inputs to these models are taken from observable market data where possible, including recent arm’s length market transactions and comparisons to the current fair value of similar instruments, but where this is not feasible, inputs such as liquidity risk, credit risk, and volatility are used; and
Level 3 - In this level, fair value determinations are made with inputs other than observable market data.
There were no transfers between the levels of fair value hierarchy during the years ended September 30, 2025 or 2024.
The carrying amounts that have been reported in the accompanying consolidated balance sheets for cash approximate its fair value due to its highly liquid nature.
Loss per share
The Company presents basic and diluted loss per share data for its ordinary shares. Basic loss per share is calculated by dividing the net loss by the weighted average number of Common Shares outstanding during the period. Contingently issuable shares (including shares held in escrow) are not considered outstanding common shares and consequently are not included in the loss per share calculations. The Company’s potentially dilutive common share equivalents are stock options and restricted stock units. The years ended September 30, 2025 and 2024 were periods of net losses, therefore, the potentially dilutive common share equivalents are excluded in the determination of dilutive net loss per share because their effect is antidilutive. In order to determine diluted loss per share, it is assumed that any proceeds from the exercise of dilutive instruments would be used to repurchase common shares at the average market price during the period.
Leases
Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified assets.
The Company’s operating leases are for real estate and range from 2 to 11 years. The Company’s finance leases are for vehicles and range from 2 to 7 years.
The Company’s leases include fixed payments, as well as in some cases, scheduled base rent increases over the term of the lease. Certain leases require variable payments of common area maintenance, operating expenses, and real estate taxes applicable to the property. Variable payments are excluded from the measurements of lease liabilities and are expensed as incurred. Any tenant improvement allowances received from the lessor are recorded as a reduction to rent expense over the term of the lease. Some of the Company’s vehicle lease agreements contain residual value guarantees.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
The Company determines if an arrangement is a lease at the inception of the contract. Lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term for those arrangements where there is an identified asset, and the contract conveys the right to control its use. The right-of-use asset is measured at the initial amount of the lease liability. Right-of-use assets are included in property and equipment in the Company's consolidated balance sheets.
Operating lease expense is recognized on a straight-line basis over the term of the lease. Finance lease cost includes a.) depreciation, which is recognized on a straight-line basis over the expected life of the right-of-use asset and included in depreciation in the Company’s consolidated statements of income (loss), and b.) interest expense, which is recognized following an effective interest rate method and is included in interest expense in the Company’s consolidated statements of income (loss).
The Company’s real estate operating leases do not provide an implicit rate that can be easily determined. Therefore, the Company applies its incremental borrowing rate to the lease based on the information available at the commencement date. This estimate impacts the carrying amount of the lease liabilities and the interest expense recorded on the consolidated statement of income (loss). Vehicle finance leases are recorded at the interest rate implicit in the lease based on the current value and the estimated residual value of the vehicle.
Certain leases include one or more options to renew or terminate the lease at the Company’s discretion. When the Company recognizes a lease, it assesses the lease term based on the conditions of the lease and determines whether it is probable that it will choose to extend the lease at the end of the initial lease term. This estimate could affect future results if the Company extends the lease or exercises an early termination option.
The Company accounts for non-lease and lease components to which they relate as a single lease component. Additionally, the Company recognized lease payments under short-term leases with an initial term of twelve months or less, as well as low value assets, as an expense on a straight-line basis over the lease term without recognizing the lease liability and ROU asset.
Income taxes
Deferred taxes are determined based on the differences between the financial statement amounts and the tax bases using rates as enacted in the laws. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized.
Interest and penalties related to unrecognized tax benefits are recognized in the tax provision. Liabilities for uncertain tax positions are recognized when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. There are not any material interest or penalties during any of the years presented.
Business combinations
The Company accounts for business combinations using the acquisition method when control is obtained by the Company. The Company measures the consideration transferred, the assets acquired, and the liabilities assumed in a business combination at their acquisition-date fair values. Acquisition-related costs are recognized as expenses in the periods in which the costs are incurred, and the services are received. The excess of the consideration transferred to obtain control, over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed, is recognized as goodwill as of the acquisition date.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Contingent consideration for a business combination is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as a liability is measured at subsequent reporting dates at fair value with the corresponding gain or loss being recognized in profit or loss.
Noncontrolling interest
The Company owns 60% of Hart and has determined that it has control of Hart. Therefore, its financial statements are included in the Company’s consolidated financial statements, with the noncontrolling 40% noncontrolling interest reflected as a line item on the consolidated statements of financial position, income (loss) and changes in shareholders’ equity.
Financial instruments concentration of credit risk
The Company maintains cash with various major financial institutions which generally exceeds federally insured limits. The Company performs periodic evaluations of the financial institutions in which its cash is invested.
Derivatives financial instruments
The Company is exposed to risks related to changes in interest rates. The financial risk management program is designed to manage the exposure arising from cash flow variability and uses derivative financial instruments to minimize this risk. The Company does not enter into derivative financial instruments for trading or speculative purposes.
The Company’s derivative instruments consist of interest rate swap contracts. Derivative instruments are recorded in the consolidated balance sheets and the changes in the fair values of these interest rate swap contracts are recorded on the consolidated statements of income/(loss).
Recently adopted accounting pronouncements
Effective October 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting ("Topic 280"), which requires disclosure of incremental segment information, including significant segment expenses that are regularly provided to the chief operating decision maker and to disclose how reported measures of segment profit or loss are used in assessing segment performance and allocating resources. The new disclosures are included as Note 14.
Recently issued accounting pronouncements
The Company is an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of all accounting standards until those standards would otherwise apply to private companies. The Company has elected to utilize this exemption and, as a result, the consolidated financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. To date, however, the Company has not delayed the adoption of any accounting standards except as noted below. Section 107 of the JOBS Act provides that the Company can elect to opt out of the extended transition period at any time, which election is irrevocable.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid by jurisdiction. The ASU is effective for public business entities' annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
In March 2024, the FASB issued ASU No. 2024-01, Compensation-Stock Compensation ("Topic 718"), which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of ASC 718. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures.
3.Acquisitions of and investment in businesses
Acquisition of Mediserve Medical Equipment of Kingsport, Inc
On July 1, 2025, the Company, through QHM Holdings Inc., acquired 100% of Mediserve Medical Equipment of Kingsport, Inc. (“Mediserve”). Mediserve is a Tennessee-based company with operations in two states in the same industry as the Company. The purchase price was $2,616,000, comprised of $2,466,000 in cash at closing to the sellers, plus $150,000, the present value of a $160,000 holdback. The cash at closing was paid from cash on hand. The Company has determined that the transaction is an acquisition of a business under ASC 805 Business Combinations, and it has been accounted for by applying the acquisition method. The Company expensed $173,000 of professional fees in conjunction with the acquisition for the fiscal year ended September 30, 2025.
The unaudited pro forma revenues and net income (loss) for Mediserve for the year ended September 30, 2025 as if the acquisition had occurred on October 1, 2024, was approximately $6,600,000 and ($100,000), respectively, of which approximately $1,600,000 and $0 were recognized during the year ended September 30, 2025.
The fair value of the acquired assets and liabilities is provisional as of September 30, 2025 pending final evaluations of assets and liabilities and is as follows:
Accounts receivable
$
Inventory
Property, equipment, and right of use assets
1,903
Goodwill
Accrued liabilities
(17)
Deferred revenue
(170)
Lease liabilities
(313)
Net assets acquired
$
2,616
Cash paid at closing
$
2,466
Holdback payable
Consideration paid or payable
$
2,616
The goodwill is attributable to expected synergies from the combining operations. All of the goodwill is deductible for income tax purposes.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Acquisition of Controlling Interest of Hart
Effective September 1, 2025, the Company, through QHM Holdings Inc., acquired a 60% interest in Hart. Hart is a Michigan-based company with operations in two states in the same industry as the Company. The total value of Hart, net of cash, was $30,939,000, and the Company acquired its 60% ownership through the payment of $17,372,000 in cash to the sellers and a debt payoff of $3,261,000 at closing. The cash was obtained through borrowings on the senior credit facility (“the Facility”) described in Note 9. The Company has determined that it has a controlling interest of Hart and accounted the transaction as an acquisition under ASC 805, with the noncontrolling interest shown as noncontrolling interest. The Company expensed $473,000 of professional fees in conjunction with the acquisition during the fiscal year ended September 30, 2025.
The unaudited pro forma revenues and net income (loss) for Hart for the year ended September 30, 2025, as if the acquisition had occurred on October 1, 2024, was approximately $65,000,000 and ($600,000), respectively, of which approximately $5,700,000 and $400,000 were recognized during the year ended September 30, 2025.
The fair value of the acquired assets and liabilities is provisional as of September 30, 2025 pending final evaluations of assets and liabilities and is as follows:
Accounts receivable
$
7,307
Inventory
2,194
Prepaid and other current assets
Property, equipment, and right of use assets
10,376
Goodwill
10,640
Intangible asset - customer relationships (20 year amortization)
11,960
Intangible asset - trade name (10 year amortization)
3,500
Intangible asset - non-compete agreements (5 year amortization)
Accounts payable
(10,467)
Accrued liabilities
(2,104)
Deferred revenue
(876)
Lease liabilities
(2,217)
Net assets acquired
$
30,939
Minority interest
(11,581)
Consideration for controlling interest
$
19,358
Cash paid at closing
$
20,633
Cash acquired
(1,275)
Consideration paid or payable
$
19,358
The goodwill is attributable to expected synergies from the combining operations. All of the goodwill is deductible for income tax purposes.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Purchase price payable
The purchase price payable included on the consolidated statements of financial position relates to holdbacks of Mediserve and others from prior years, less payments and adjustments made. Below is the movement in purchase price payable for the years ended September 30, 2025 and 2024:
Balance, September 30, 2023
$
1,457
Accretion of interest
Derecognition of purchase price payable
(550)
Payments
(944)
Balance, September 30, 2024
$
-
Acquisition of Mediserve
Accretion of interest
Payments
-
Balance, September 30, 2025
$
4.Prepaid and other current assets
Following is a summary of prepaid and other current assets as of September 30, 2025 and 2024:
As at September 30,
As of September 30,
Vendor rebates
$
1,989
$
2,798
Prepaid insurance
1,422
1,904
Prepaid income taxes
1,283
Other
Total
$
5,096
$
6,911
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
5.Property, equipment, and right-of-use assets
Following is a summary of property, equipment, and right-of-use assets as of September 30, 2025 and 2024:
As at September 30,
As of September 30,
Rental equipment
$
77,843
$
64,568
Vehicles
3,785
3,296
Leasehold improvements
2,381
2,403
Office and technology equipment
1,736
1,130
Buildings
Land
Projects in process
Property and equipment, gross
86,816
72,847
Less: accumulated depreciation
(40,760)
(35,462)
Property and equipment, net
$
46,056
$
37,385
Right-of-use assets, real estate (Operating lease)
$
27,689
$
23,510
Right-of-use assets, vehicles (Financing lease)
5,279
5,498
Right-of-use assets, gross
32,968
29,008
Less: accumulated amortization
(14,575)
(12,533)
Right-of-use assets, net
$
18,393
$
16,475
Rental equipment transferred from inventory during the fiscal years ended September 30, 2025 and 2024 was $37,058,000 and $33,566,000, respectively. For the years ended September 30, 2025 and 2024, the Company obtained equipment loans (Note 9) of $23,828,000 and $25,304,000, respectively. As of September 30, 2025 and 2024, amounts in ending accounts payable were $1,950,000 and $0, respectively. Remaining rental equipment transferred from inventory of $11,280,000 and $8,262,000 for the years ended September 30, 2025 and 2024, respectively, were paid in cash.
6.Goodwill and intangible assets
Goodwill continuity
Following is the activity in goodwill for the years ended September 30, 2025 and 2024:
Balance, September 30, 2023
$
52,825
Adjustments related to final purchase price allocation for Southern acquisition
(2,092)
Balance, September 30, 2024
$
50,733
Acquisition of Mediserve
Acquisition of Hart
10,640
Balance, September 30, 2025
$
61,560
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Intangible assets
Following is a summary of intangible assets as of September 30, 2025 and 2024:
As of September 30,
As of September 30,
Customer relationships
$
91,048
$
79,088
Trade names
15,081
11,581
Customer contracts
3,851
3,851
Non-compete agreements
Intangible assets, gross
110,890
95,230
Less: accumulated amortization
(33,330)
(27,277)
Intangible assets, net
$
77,560
$
67,953
As of September 30, 2025, estimated annual amortization for intangible assets for each of the next five years and thereafter is approximately:
Estimated
Year Ending September 30,
Amortization
$
6,764
6,711
6,582
6,575
6,514
Thereafter
44,414
Intangible assets, net
$
77,560
7.Accounts payable and accrued liabilities
Following is a summary of accounts payable and accrued liabilities as of September 30, 2025 and 2024:
As of September 30,
As of September 30,
Accounts payable
$
38,431
$
29,310
Accrued compensation
5,724
4,576
Other
2,543
1,477
Total
$
46,698
$
35,363
8.Deferred revenue
Activity for deferred revenue for the years ended September 30, 2025 and 2024 is as follows:
For the year ended
For the year ended
September 30, 2025
September 30, 2024
Beginning balance
$
3,568
$
4,511
Acquisitions
1,046
-
Operations
(21)
(943)
Ending balance
$
4,593
$
3,568
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
9.Long-term debt and lease liabilities
Senior credit facility
The Company has a $110,000,000 Facility with a group of US banks that matures in September 2027. The Facility consists of a delayed-draw term loan facility of $85,000,000, of which $83,600,000 has been drawn (including $17,400,000 for the acquisition of Hart); a term loan of $5,000,000, which was drawn at closing; and a $20,000,000 revolving credit facility. The Facility is secured by substantially all assets of the Company and is subject to certain financial covenants, with which the Company was in compliance as of September 30, 2025.
A summary of the balances on the Facility as of September 30, 2025 and 2024 is as follows:
As of
As of
September 30, 2025
September 30, 2024
Delayed-draw term loan
$
72,383
$
58,400
Term loan
4,250
4,500
Revolving credit facility
10,950
6,323
Total principal
87,583
69,223
Deferred financing costs
(948)
(1,430)
Net carrying value
$
86,635
$
67,793
Current portion
$
4,155
$
3,248
Long-term portion
82,480
64,545
Net carrying value
$
86,635
$
67,793
As of September 30, 2025, scheduled future repayments of the Facility are as follows:
Year Ending September 30,
Amount
$
4,320
83,263
Total
$
87,583
The delayed-draw term loan and the term loan are bearing interest at a weighted average 6.7% as of September 30, 2025. The rate is based on a secured overnight financing rate (“SOFR”), with a floor of 0.5%, plus a spread of 2.1% to 2.85% (2.4% as of September 30, 2025) based on the Company’s leverage ratio and will reprice within three months. The revolving credit facility is bearing interest at 7.0% as of September 30, 2025 and will reprice within three months. The Facility also has fees for unused availability of 0.75% for the delayed-draw term loan and 0.25% for the revolving credit facility. The fair value of the Facility was determined considering market conditions, credit worthiness and the current terms of debt, which is considered Level 2 on the fair value hierarchy. Due to the near-term repricing of the interest rates, the fair value of the Facility approximates the principal value as of September 30, 2025 and 2024.
To manage the risks of the cash flows related to interest expense, the Company entered into several interest rate swaps on $54,000,000 of the principal amount of the Facility. The swaps carry a fixed SOFR of 3.4% to 4.4%, resulting in a weighted combined rate of 6.6%.
The swaps are settled quarterly and mature on September 30, 2026 and at the Facility’s maturity. Any difference between the Facility’s SOFR rate and the swap’s rate is recorded as interest expense. For the year ended September 30, 2025 and
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
2024, a reduction of $228,000 and $311,000 to interest expense was recorded in the consolidated statements of income (loss), respectively.
As of September 30, 2025, the fair value of the interest rate swap liability, which was determined using Level 2 inputs of market conditions on future expected interest rates, credit worthiness, and the current terms of debt, was $670,000 as compared to $1,122,000 as of September 30, 2024 and is recorded in derivative liability - interest rate swap in the condensed consolidated statements of financial position. The Company has recorded the changes in fair value of derivative liability - interest rate swaps on the consolidated statements of income (loss).
Interest expense on the Facility, including the impact of the interest rate swap agreements, was $5,095,000 and $5,346,000 for the years ended September 30, 2025 and 2024, respectively.
The Company has incurred financing costs to obtain and maintain the Facility, which is reflected as a reduction of the outstanding balance and will be amortized as interest expense using the effective interest method over the life of the Facility. During the years ended September 30, 2025 and 2024, $563,000 and $513,000 of amortization of deferred financing costs was recorded, respectively.
Equipment Loans
The Company is offered financing arrangements from the Company’s suppliers and the supplier’s designated financial institution, in which payments for certain invoices or products can be financed and paid over an extended period. The financial institution pays the supplier when the original invoice becomes due, and the Company pays the third-party financial institution over a period of time. In most cases, the supplier accepts a discounted amount from the financial institution and the Company repays the financial institution the face amount of the invoice with no stated interest, in twelve equal monthly installments. The Company uses its incremental borrowing rate of 6.6% to 8.0% to impute interest on these arrangements, which resulted in interest expense of $800,000 and $985,000 for the years ended September 30, 2025 and 2024, respectively. The discount of the carrying amount from the face value of the loans is $252,000 as of September 30, 2025. The Company has also assumed equipment loans in conjunction with several of its acquisitions.
There are no covenants with the loans and the carrying value of the equipment that is pledged as security against the loans is $22,153,000 and $22,871,000 as of September 30, 2025 and 2024, respectively.
Following is the activity in equipment loans for the years ended September 30, 2025 and 2024:
Year Ended
Year Ended
September 30, 2025
September 30, 2024
Beginning Balance
$
12,859
14,347
Additions:
Operations
23,828
25,304
Repayments
(24,472)
(26,792)
Ending Balance
12,215
12,859
Current portion
12,212
12,804
Long-term portion
$
$
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Leases Liabilities
The Company enters into leases for real estate and vehicles. Real estate leases are operating leases and are valued at the net present value of the future lease payments at the incremental borrowing rate. Vehicle leases are finance leases and recorded at the rate implicit in the lease based on the current value and the estimated residual value of the vehicle, if any.
Below is the movement in lease liabilities for the years ended September 30, 2025 and 2024 respectively:
Operating
Finance
Total
Balance, September 30, 2023
$
16,236
$
2,914
$
19,150
Additions during the period:
Operations
4,229
1,975
6,204
Lease terminations
(438)
-
(438)
Repayments
(4,187)
(1,579)
(5,766)
Balance, September 30, 2024
$
15,840
$
3,310
$
19,150
Additions during the period:
Acquisitions
2,074
2,530
Operations
3,953
4,795
Lease terminations
(82)
-
(82)
Repayments
(5,015)
(1,436)
(6,451)
Balance, September 30, 2025
$
16,770
$
3,172
$
19,942
Future payments pursuant to lease liabilities are as follows:
Year Ending September 30,
Operating
Finance
Total
$
6,548
$
1,531
$
8,079
5,028
1,054
6,082
3,395
4,118
2,345
2,567
1,025
Thereafter
-
Gross lease payments
19,077
3,572
22,649
Less amounts relating to interest
(2,307)
(400)
(2,707)
Lease liabilities
$
16,770
$
3,172
$
19,942
The components of finance lease expense are as follows:
Years ended September, 30
Classification
Finance lease expense:
Amortization of lease assets
Depreciation
$
1,120
$
1,262
Interest on lease liabilities
Interest expense
Total finance lease cost
$
1,370
$
1,524
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
Other information relating to leases is as follows:
As of
As of
September 30, 2025
September 30, 2024
Weighted average remaining lease term (years)
Operating leases
3.8
4.1
Finance leases
2.7
2.8
Weighted average discount rate
Operating leases
7.2
%
7.4
%
Finance leases
8.7
%
8.5
%
10.Shareholders’ Equity
Authorized share capital
The Company’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares issuable in series. The preferred shares issuable in series will have the rights, privileges, restrictions, and conditions assigned to the series upon the Board of Directors approving their issuance.
Issued share capital
The Company has only one class of common shares outstanding. Common shares are classified as equity, and costs related to the issuance of shares are recognized as a reduction of equity.
Employee, director, and consultant options
The Company has a stock option plan, which it uses for grants to directors, officers, employees, and consultants. Options granted under the plan are non-assignable and may be granted for a term not exceeding ten years. Stock options having varying vesting periods, and the options granted during the year ended September 30, 2025 vest quarterly over eight or twelve quarters.
A summary of stock options is provided below:
Weighted
Number of options (000’s)
average exercise price
Balance, September 30, 2023
3,957
C$
4.49
Exercised
(520)
1.50
Expired
(31)
7.35
Forfeited
(4)
8.48
Balance, September 30, 2024
3,402
C$
4.91
Issued
3.40
Expired
(49)
6.98
Balance, September 30, 2025
3,778
C$
4.70
At September 30, 2025, the Company had 3,351,583 vested stock options with a weighted average exercise price of C$4.76.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
The fair value of the stock options granted during the year ended September 30, 2025 was C$3.40. The Company used the Black-Scholes option pricing model calculated using the following assumptions:
Year Ended
September 30,
Share price at grant date
C$3.40
Risk-free interest rate
4.25%
Expected volatility
242.4%
Expected life of option
10 years
Expected dividend yield
Nil
Restricted stock units
The Company also grants restricted stock units to directors, officers, employees, and consultants. Each unit represents the right to ‎receive one common share, and vests over a period of one to two years from the grant date and are generally settled in the calendar year after vesting. The number of shares issued was less than the number of units settled due to the officers’ election to receive a reduced number of shares to satisfy their tax withholding obligations. These tax withholdings resulted in cash outflows of $0 and $213,000 for the years ended September 30, 2025 and 2024, respectively.
The fair values of the restricted stock units on the date of grant are discounted to reflect the difference between the vesting dates and the expected issuance dates, to be expensed over the respective vesting periods with an increase to contributed surplus.
A summary of restricted stock units is provided below:
Number
Weighted average
of units (000’s)
grant-date price
Balance, September 30, 2023
1,034
C$
8.34
Settled
(515)
8.38
Balance, September 30, 2024
C$
8.30
Granted
2,479
3.40
Settled
(415)
8.30
Balance, September 30, 2025
2,583
C$
3.60
Unrecognized compensation expense related to nonvested shares of stock options and restricted stock was $3,026,000 at September 30, 2025 and will be recognized over the remaining weighted average vesting period of 0.6 years. For the years ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense as follows:
Year Ended
Year Ended
September 30,
September 30,
Restricted stock units
$
3,336
$
1,639
Stock options
Stock-based compensation expense
$
4,035
$
2,484
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
11.Commitments and Contingencies
From time to time, the Company is involved in various legal proceedings and investigations arising in the ordinary course of business, including those relating to proxy contests and other actions of activist shareholders, employment matters, relationships with clients and contractors, intellectual property disputes and other business matters. The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and if one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that period could be materially adversely affected.
The Company has received a civil investigative demand (“CID”) from the Department of Justice (“DOJ”) through the US Attorney’s Office for the Northern District of Georgia pursuant to the False Claims Act regarding an investigation concerning whether the Company may have caused the submission of false claims to government healthcare programs for CPAP equipment. The Company is cooperating with the investigation. No assurance can be given as to the timing or outcome of the DOJ’s investigation.
In April 2024, the Company received a subpoena from the SEC to provide certain documents related to the Company and the DOJ investigation, CID, and financial reporting and disclosure matters. The SEC concluded its investigation in November 2024 and, based on the information it had at such time, the SEC advised that it did not intend to recommend an enforcement action by it against the Company.
12.Operating expenses
Year Ended
Year Ended
September 30,
September 30,
Payroll and employee benefits
$
79,326
$
78,905
Facilities
5,817
5,623
Billing
12,691
11,030
Professional fees
7,023
6,288
Outbound freight
5,618
5,466
Vehicle fuel and maintenance
4,736
4,675
Bank and credit card fees
2,287
2,121
Technology
1,972
1,592
Insurance
1,476
1,549
All other
4,511
5,293
Total operating expenses
$
125,457
$
122,542
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
13.Income taxes
The Company’s US and foreign income before taxes were as follows:
Year Ended
Year Ended
September 30,
September 30,
US
$
(6,453)
$
(1,770)
Foreign
(4,007)
(4,884)
$
(10,460)
$
(6,654)
The details of the Company’s income tax provision (benefit) are set forth below:
Year Ended
Year Ended
September 30,
September 30,
Current provision (benefit):
Federal
$
-
$
-
Foreign
-
-
State
(233)
(233)
Deferred provision (benefit):
Federal
Foreign
-
-
State
(27)
Provision for income taxes
$
$
The reconciliation of the Company’s income taxes calculated at the US federal statutory rate to its effective tax rate is set forth below:
Year Ended
Year Ended
September 30,
September 30,
US federal statutory rate
21.0
%
21.0
%
State taxes, net of federal benefit
(1.9)
3.2
Statutory rate differential attributable to foreign operations
2.3
1.6
Executive compensation
-
(3.4)
Stock-based compensation
(10.1)
3.2
Change in valuation allowance
(8.5)
(24.1)
Other permanent differences
(5.1)
(3.1)
Effective income tax rate
(2.3)
%
(1.6)
%
The Company prepared the income tax rate reconciliation using the income tax rate of US, determined using management’s judgment that the primary economic environment in which it will derive its revenues and expenses incurred to generate those revenues is the US. The statutory rate differential attributable to foreign operations is derived from local country taxes levied on the Company’s operations in Canada.
The change in valuation allowance relates to the Company’s deferred tax assets that it generated or utilized during the current year as well as changes in the Company’s assessment regarding its likelihood of using its deferred tax assets. The Company considered all the positive and negative evidence available to determine whether it is more likely than not that tax benefit from utilization of the deferred
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
tax assets will ultimately be realized. Based upon that evidence, the Company determined that only a portion of its deferred tax assets will be utilized in the future to offset taxable income generated by the reversal of its deferred tax liabilities.
Deferred tax
The Company’s deferred tax assets (liabilities) are comprised of the following:
Year Ended
Year Ended
September 30,
September 30,
Deferred tax assets:
Net and capital operating loss carryforwards
$
19,474
$
16,469
Goodwill
9,984
11,551
Lease liabilities
4,494
4,777
Interest expense
3,707
2,459
Accrued and stock-based compensation
2,733
3,146
Accounts receivable
1,075
2,074
Share issuance costs
Other
Total deferred tax assets
42,272
41,980
Deferred tax assets valuation allowances
(19,792)
(19,089)
Deferred tax asset, net
$
22,480
$
22,891
Deferred tax liabilities:
Property, equipment, and right of use assets, net
$
(9,985)
$
(9,080)
Intangible assets, net
(12,782)
(14,013)
Total deferred tax liabilities
$
(22,767)
$
(23,093)
Net deferred tax assets (liabilities)
$
(287)
$
(202)
The activity of the Company’s valuation allowance is as follows:
Year Ended
Year Ended
September 30,
September 30,
Balance at beginning of year
$
(19,089)
$
(17,667)
Increases
(703)
(1,422)
Balance at end of year
$
(19,792)
$
(19,089)
The US loss carryforwards of approximately $18,000,000 expire in 2029 through 2038 whereas the remaining US loss of approximately $28,000,000 can be carried forward indefinitely.
The Canadian non-capital loss carryforwards of approximately $28,000,000 have various expiry dates starting in 2027 through 2045. The net capital losses of approximately $1,000,000 can be carried forward indefinitely.
The Company does not have unrecognized tax benefits due to uncertain tax positions. Management has determined that it is more likely than not that all tax positions that the Company has recorded in its income tax provision and tax returns would be sustained upon examination by the taxing authorities. There are no audits currently in progress.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
14. Segment reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. We have determined our CODM is our Chief Executive Officer.
We have one operating and one reportable segment, representing our consolidated business that helps organizations design, automate, and optimize important business processes from start to finish. We generate revenue from customers primarily through the sale and rental of equipment, as discussed in Note 2 - Revenue recognition. Our reportable segment determination is based on our management and internal reporting structure, the nature of the product and services we offer, and the financial information evaluated regularly by our CODM.
The CODM uses operating income (loss) and net loss reported on the consolidated statements of income (loss) to assess performance for the segment and decide how to allocate resources. In addition, the CODM reviews the expense categories presented on the consolidated statements of income (loss) to manage the Company’s operations. Operating income (loss) and net loss are used to evaluate profitability trends in the business, and the CODM considers budget-to-actual variances for both profit measures when making decisions about allocating capital and resources. Further, the measure of segment assets is total assets as reported on the consolidated statements of financial position.
15.Related party transactions
The Company (through indirect wholly-owned subsidiaries) has six leases for office, warehouse, and retail space with a rental company affiliated with the Company’s Chief Executive Officer, the majority of which were entered into in 2015, prior to such subsidiaries being acquired by the Company and prior to the Chief Executive Officer joining the Company, and five of which were renewed effective October 1, 2022. The leases have a combined area of 74,520 square feet. Lease payments under these leases were approximately $65,000 and $63,000 per month for the twelve months ended September 30, 2025 and 2024, respectively, with increases on October 1 of each year equal to the greater of (i) the Consumer Price Index for All Urban Consumers (CPI-U), and (ii) 3%. One lease expires in June 2026 and the remaining five leases expire on September 30, 2029.
16. Subsequent event
On December 14, 2025, the Company entered into an Arrangement Agreement (the “Arrangement Agreement”) to be acquired by 1567208 B.C. Ltd. and REM Aggregator, LLC (collectively, “Purchaser”), entities affiliated with Kingswood Capital Management, LP (“Kingswood”). Under the terms of the Arrangement Agreement, Purchaser will acquire all of the issued and outstanding common shares of the Company (the “Shares”) pursuant to a Plan of Arrangement (the Arrangement) under the Business Corporations Act (British Columbia) (the BCBCA) for US$3.65 per Share.
At the effective time of the Arrangement (the “Effective Time”), each Share, other than any Shares exchanged by shareholders who may properly exercise dissent rights under the BCBCA, will be deemed to be transferred to Purchaser in consideration for the right to receive a cash payment from the Purchaser in the amount equal to US$3.65, without interest.
The transaction is expected to close during the first half of 2026, subject to customary closing conditions, including receipt of shareholder, regulatory, and court approvals. Upon completion of the transaction, the Company will become a privately-held company.
Quipt Home Medical Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025 and 2024
(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts)
If the Arrangement is consummated, the Shares will be de-listed from The Nasdaq Capital Market and the Toronto Stock Exchange and de-registered under the Securities Exchange Act of 1934, as amended, and the Company will cease to be a Canadian “reporting issuer”, as soon as practicable following the Effective Time.
Pursuant to the terms of an equity commitment letter entered into by and between Purchaser and Kingswood and delivered to the Company at the signing of the Arrangement Agreement (the “ECL”), Purchaser has obtained equity commitments from Kingswood for the transactions contemplated by the Arrangement Agreement, the aggregate proceeds of which Purchaser will use to fund the consideration payable at closing and thereafter, all fees, costs, expenses and other amounts payable by Purchaser in connection with the transactions contemplated by the transactions contemplated by the Arrangement Agreement (the Commitment). The ECL includes a guarantee from Kingswood to the Company, on the terms and conditions set forth in the ECL.
Each option exercisable to acquire one or more Shares from the Company (a Company Option), outstanding immediately prior to the Effective Time (whether vested or unvested) will be deemed to be unconditionally vested and exercisable and will, without any further action by or on behalf of a holder of the Company Option, be deemed to be surrendered and transferred by such holder to the Company in consideration for the right to receive a cash payment from the Company in an amount equal to the excess, if any, of US$3.65 over the exercise price of such option, less any amounts the Company is required to withhold for taxes, without interest. Any option for which the exercise price is equal to or greater than US$3.65 will be cancelled for no consideration.
Each of the Company’s restricted share units (a Company RSU) outstanding immediately prior to the Effective Time (whether vested or unvested) will, without any further action by or on behalf of the holder of any such Company RSU, be deemed to be transferred by such holder to the Company in consideration for the right to receive a cash payment from the Company in the amount equal to US$3.65, less any amounts the Company is required to withhold for taxes, without interest.
The Arrangement Agreement also provides customary restrictions on the Company’s ability to solicit alternative acquisition proposals from third parties and engage in discussions or negotiations with third parties regarding such proposals. Notwithstanding these restrictions, the Company may under certain circumstances provide information to and participate in discussions or negotiations with third parties with respect to an unsolicited acquisition proposal that constitutes or could reasonably be expected to constitute or lead to a Superior Proposal (as defined in the Arrangement Agreement).

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of disclosure controls and procedures.
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act) are designed to provide reasonable assurance that (i) information required to be disclosed by the Company in reports that it files or submits to the Canadian securities regulatory authorities or the SEC, as applicable, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company’s reports filed with the Canadian securities regulatory authorities or the SEC, as applicable, is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and its Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure. It should be noted that, because of inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.
As required by paragraph (b) of Rule 13a-15 under the Exchange Act, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s report on internal control over financial reporting.
Management of the Company is responsible for establishing and maintaining adequate "ICFR" (as such term is defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) and "internal control over financial reporting" (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) (together, “ICFR”). Our internal control over financial reporting is a process that is designed under the supervision of our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures recorded by us are being made only in accordance with authorizations of our management and Board of Directors; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
We completed the acquisitions of Mediserve on July 1, 2025 and Hart effective September 1, 2025. We are continuing to integrate our internal controls and procedures with Mediserve and Hart. As permitted by the SEC staff guidance for newly acquired businesses, our report on our internal control over financial reporting for the year ended September 30, 2025, includes a scope exception for the acquired Mediserve and Hart businesses. Mediserve and Hart accounted for 18% of total assets as of September 30, 2025, and 3% of total revenues of the Company for the year ended September 30, 2025.
Management has conducted its evaluation of the effectiveness of internal control over financial reporting as of September 30, 2025, based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing the operational effectiveness of our internal control over financial reporting. Management reviewed the results of the assessment with the Audit Committee of the Board of Directors. Based on its assessment and review with the Audit Committee, management concluded that, as of September 30, 2025, the Company’s internal control over financial reporting was effective.
Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting (as described in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
During the three months ended September 30, 2025, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K.
Insider Trading Arrangements and Policies
The Company has insider trading policies and procedures that govern the purchase, sale and other dispositions of its securities by directors, officers and employees, as well as by the Company itself. The Company believes these policies and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item is incorporated by reference to the 2026 Proxy Statement filed pursuant to Regulation 14A, which will be filed no later than 120 days after September 30, 2025.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to the 2026 Proxy Statement filed pursuant to Regulation 14A, which will be filed no later than 120 days after September 30, 2025.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
The information required by this item is incorporated by reference to the 2026 Proxy Statement filed pursuant to Regulation 14A, which will be filed no later than 120 days after September 30, 2025.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions and Director Independence.
The information required by this item is incorporated by reference to the 2026 Proxy Statement filed pursuant to Regulation 14A, which will be filed no later than 120 days after September 30, 2025.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to the 2026 Proxy Statement filed pursuant to Regulation 14A, which will be filed no later than 120 days after September 30, 2025.
PART IV

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
1. Financial Statements:
The following Consolidated Financial Statements of Quipt Home Medical Corp. and subsidiaries, management’s report and the report of the independent registered public accounting firm are incorporated by reference in Part II, Item 8 of this Form 10-K.
● Report of Independent Registered Public Accounting Firm
● Consolidated Statements of Financial Position
● Consolidated Statements of Income (Loss)
● Consolidated Statements of Shareholders’ Equity
● Consolidated Statements of Cash Flows
● Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
These schedules are omitted because of the absence of the conditions under which they are required or because the information is set forth in the Consolidated Financial Statements or Notes thereto.
Exhibits
2.1*
Equity Purchase Agreement, dated August 11, 2025, by and among QHM Holdings Inc., IRB Medical Equipment, LLC, dba Hart Medical Equipment, and Hart HoldCo, LLC
3.1#
Notice of Articles (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
3.2
Articles (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
10.1
Amended and Restated Credit and Guaranty Agreement dated September 16, 2022 (incorporated by reference to Exhibit 99.1 to the Registrant’s Report on Form 6-K filed on January 24, 2023)
10.2
Membership Interest Purchase Agreement dated January 3, 2023 (incorporated by reference to Exhibit 99.4 to the Registrant’s Report on Form 6-K filed on January 24, 2023)
10.3*†˄
Employment Agreement with Gregory Crawford
10.4*†˄
Employment Agreement with Hardik Mehta
10.5†
2019 Stock Option Plan, as amended and form of stock option agreement there under (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 filed on July 16, 2021)
10.6†
2021 Equity Incentive Plan (incorporated by reference to Exhibit 99.99 to the Registrant’s Registration Statement on Form 40-F filed on May 14, 2021)
10.6.1†
Form of Stock Option Agreement under 2021 Equity Incentive Plan (incorporated by reference to Exhibit 99.3 to the Registrant’s Registration Statement on Form S-8 filed on July 16, 2021)
10.6.2†
Form of Restricted Stock Unit Agreement under 2021 Equity Incentive Plan (incorporated by reference to Exhibit 99.5 to the Registrant’s Registration Statement on Form S-8 filed on July 16, 2021)
10.7†
2024 Equity Inventive Plan (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 filed on April 12, 2024)
10.7.1†
Form of Stock Option Agreement under 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.8.1 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
10.7.2†
Form of Restricted Stock Unit Agreement under 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.8.2 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
10.8†
Form of the Indemnity Agreement between the Registrant and each of its directors and executive officers (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
10.9#
Cooperation Agreement, dated March 3, 2025, by and between Quipt Home Medical Corp. and David L. Kanen, Philotimo Fund, LP and Kanen Wealth Management, LLC (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on March 4, 2025)
10.10*†
Retention Bonus Agreement with Thomas Roehrig
Insider Trading Policy (incorporated by reference to Exhibit 19 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
21*
Subsidiaries of the Registrant
23*
Consent of BDO USA, P.C.
31.1*
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**
Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Policy for Recovery of Erroneously Awarded Incentive Compensation (incorporated by reference to Exhibit 97 to the Registrant’s Annual Report on Form 10-K filed on December 16, 2024)
101‎.INS*‎
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101. PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
Cover Page Interactive Data File (formatted as Inline XBRL and incorporated by reference to Exhibit 101)
†
Represents a management contract or compensatory plan or arrangement.
*
Filed herewith.
**
This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Quipt Home Medical Corp. specifically incorporates it by reference.
#
Certain information contained in this exhibit has been redacted pursuant to Item 601(a)(6) of Regulation S-K.
˄
Portions of this exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K as the Registrant has determined that (i) the omitted information is not material, and (ii) the omitted material is of the type that the Registrant treats as private or confidential.