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 11x. 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. High payment-in-kind (PIK) interest on the company?s preferred stock, which constrains leverage improvement. Our 2023 revenue expectations reflect improved demand dynamics and easing supply chain disruptions that we believe will drive stability in North American DME sales and help push through key conversions for portable oxygen concentrators (POCs). However, as demand continues to improve from 2022 levels and supply chain dynamics continue to benefit

...We expect Medical Depot Holdings Inc.'s earnings will improve this year despite muted top- line growth. Our 2023 revenue expectations reflect improved demand dynamics and easing supply chain disruptions that we believe will drive stability in North American DME sales and help push through key conversions for portable oxygen concentrators (POCs). However, as demand continues to improve from 2022 levels and supply chain dynamics continue to benefit operating costs, we expect Medical Depot to experience increased pricing pressure as respiratory equipment suppliers attempt to recover market share losses resulting from the COVID-19 pandemic. Additionally, we believe the company could give back price to its U.S.- based customers following increases in 2021 and 2022 as raw materials and ocean freight costs come down given the commodity-like nature of its products and significant price-based competition. Overall, we expect the improving demand to be offset by pricing pressure in 2023, leading to...

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