Medical Depot Holdings Inc.

Overview Key strengths Key risks Established market position as a seller of durable medical equipment (DME) for home care to U.S. retailers. Persistently high financial leverage of more than 10x. Diverse product portfolio and customer base. Low margin and limited barriers to entry given its commodity like products. Limited capacity for underperformance, especially amid an inflationary environment. We project the company will report a slight decline in its revenue in 2022 due to a reduction in the demand for its respiratory products amid the waning of COVID-19-related concerns, which will be somewhat offset by increased demand for its DME, like walkers and wheelchairs. We also forecast Medical Depot will report a contraction of 120 basis points (bps)-150 bps in its

...Our rating on Medical Depot reflects our expectation that the unfavorable macroeconomic environment, including ongoing supply chain disruptions, cost inflation, and rising interest rates, will burden its profitability and cash flow and lead to persistently high leverage. We project the company will report a slight decline in its revenue in 2022 due to a reduction in the demand for its respiratory products amid the waning of COVID-19-related concerns, which will be somewhat offset by increased demand for its DME, like walkers and wheelchairs. We also forecast Medical Depot will report a contraction of 120 basis points (bps)-150 bps in its EBITDA margin in 2022 because of increasing freight and supply costs, which it will partially offset with price increases. The contraction in the company's EBITDA margin will lead it to sustain high S&P Global Ratings-adjusted leverage of about 13x in 2022. In addition to the decline in its margin, we anticipate Medical Depot's working capital uses, stemming...

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