What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-04 compared with 2020-05-05 · 248 added, 237 removed, 440 unchanged (52% of the section changed)

4 unchanged sentences

Dollars, except outstanding shares)

March 31, 2020

June 30, 2020 At

December 31, 2019

(Unaudited) (Audited)

Current assets

Cash and cash equivalents $ 29,707 $ 13,355

Accounts receivable, net of allowance for doubtful accounts of $10,196 and $7,782 at March 31, 2020 and December 31, 2019, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 9,345 and $ 7,782 at June 30, 2020 and December 31, 2019, respectively

2 11,029 11,534

Inventory, net 2 6,580 1,360

4 unchanged sentences

Equity method investment 59 13

Deferred tax asset 10 7,825 —

Total long-term assets $ 62,971 $ 54,785

TOTAL ASSETS $ 112,178 $ 82,596

Current liabilities

16 unchanged sentences

unlimited authorized;

38,486,772 and 37,952,660 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

39,082,932 and 37,952,660 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

7 8,414 3,366

Additional paid-in capital 5,448 6,377

8 unchanged sentences

Dollars, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Note 2020 2019 2020 2019

Revenue 2 $ 42,854 $ 20,325 $ 66,660 $ 38,440

Cost of revenue 16,927 5,686 25,180 10,727

Gross profit $ 25,927 $ 14,639 $ 41,480 $ 27,713

Operating Expenses

2 unchanged sentences

Stock-based compensation 7 1,196 1,034 2,347 1,914

Depreciation 205 138 410 267

(Gain) loss on disposal of property and equipment ( 1,458 ) 85 ( 2,627 ) 141

Other (income) expense 9 ( 3,574 ) ( 1 ) ( 3,574 ) ( 2 )

Income from operations $ 12,859 $ 1,664 $ 17,474 $ 3,980

1 unchanged sentence

Unrealized loss on warrant conversion liability 6 — 268 — 437

Loss from equity method investment

(Gain) loss from equity method investment ( 42 ) 26 ( 15 ) 51

Interest expense, net of interest income 5 135 20 293 46

Net income before taxes 12,766 1,350 17,196 3,446

Provision for income taxes

(Benefit) provision for income taxes 10 ( 6,646 ) 24 ( 6,459 ) 162

Net income $ 19,412 $ 1,326 $ 23,655 $ 3,284

Other Comprehensive Income

3 unchanged sentences

Net income per share

Basic 11 $ 0.50 $ 0.04 $ 0.62 $ 0.09

Diluted 11 $ 0.48 $ 0.03 $ 0.59 $ 0.08

Weighted average number of common shares outstanding:

Basic 11 38,665,765 37,686,763 38,348,310 38,165,274

Diluted 11 40,814,238 39,975,307 40,103,016 40,166,855

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

Dollars, except share and per share amounts)

Additional paid-in capital

Accumulated other comprehensive loss

Total Shareholders'

Common Stock Additional paid-in capital Accumulated other comprehensive loss Total Shareholders'

Shares Amount Retained

Shareholders' equity, December 31, 2018 37,500,815 $ 71 $ 5,390 $ — $ 27,110 $ 32,571

1 unchanged sentence

Stock-based compensation - restricted stock — — 302 — — 302

Options exercised

Exercise of options 2,418 4 — — — 4

Shares issued for vesting of restricted stock units 539,965 2,202 ( 2,202 ) — — —

Shares repurchased and canceled under the Normal Course Issuer Bid ( 365,100 ) — — — ( 1,522 ) ( 1,522 )

Net Income — — — — 1,958 1,958

Shareholders' equity, March 31, 2019 37,678,098 $ 2,277 $ 4,068 $ — $ 27,546 $ 33,891

Additional paid-in capital

Accumulated other comprehensive loss

Total Shareholders'

Stock-based compensation - options — — 705 — — 705

Share-based compensation - restricted stock — — 329 — — 329

Exercise of warrants 8,280 16 — — — 16

Exercise of options 4,725 18 — — — 18

Shares issued for vesting of restricted stock units 6,432 39 ( 39 ) — — —

Change in accumulated other comprehensive loss — — — ( 148 ) — ( 148 )

Net Income — — — — 1,326 1,326

Shareholders' equity, June 30, 2019 37,697,535 $ 2,350 $ 5,063 $ ( 148 ) $ 28,872 $ 36,137

Common Stock Additional paid-in capital Accumulated other comprehensive loss Total Shareholders'

Shares Amount Retained

Shareholders' equity, December 31, 2019 37,952,660 $ 3,366 $ 6,377 $ ( 157 ) $ 34,113 $ 43,699

4 unchanged sentences

Change in accumulated other comprehensive loss — — — ( 312 ) — ( 312 )

Net Income — — — — 4,243 4,243

Shareholders' equity, March 31, 2020 38,486,772 $ 6,657 $ 4,252 $ ( 469 ) $ 38,356 $ 48,796

Stock-based compensation - options — — 933 — — 933

Stock-based compensation - restricted stock — — 263 — — 263

Exercise of options 596,160 1,757 — — — 1,757

Change in accumulated other comprehensive loss — — — ( 33 ) — ( 33 )

Net Income — — — — 19,412 19,412

Shareholders' equity, June 30, 2020 39,082,932 $ 8,414 $ 5,448 $ ( 502 ) $ 57,768 $ 71,128

See accompanying notes to the condensed consolidated financial statements

2 unchanged sentences

(Expressed in thousands of U.S.

Three Months Ended March 31,

Six Months Ended June 30,

Note 2020 2019

Cash flows from operating activities

Net income $ 23,655 $ 3,284

Adjustments for:

Depreciation 4,320 2,739

Change in allowance for doubtful accounts 2 5,578 3,859

1 unchanged sentence

Unrealized loss on warrant conversion liability 6 — 437

Loss on equity investment

(Gain) loss on equity investment ( 15 ) 51

(Gain) loss on disposal of property and equipment ( 2,627 ) 141

Deferred income taxes (benefit) ( 7,825 ) —

Net change in working capital

3 unchanged sentences

Increase in trade payables 2,044 1,934

Increase in deferred revenue

Decrease in accrued liabilities

(Decrease) increase in deferred revenue ( 36 ) 690

Increase (decrease) in accrued liabilities 3,765 ( 181 )

Increase (decrease) in income tax payable 1,404 ( 153 )

7 unchanged sentences

Proceeds from exercise of options 1,772 22

Principal payments on notes payable

Proceeds from exercise of warrants — 16

(Principal payments) proceeds on notes payable 5 ( 67 ) 4,837

Principal payments on term note 5 ( 795 ) —

2 unchanged sentences

Net cash used in financing activities $ ( 5,016 ) $ ( 1,198 )

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents 16,352 ( 2,722 )

Cash and cash equivalents at beginning of year 13,355 10,413

11 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

Nature of Business and Operations

On December 21, 2017, Viemed Healthcare, Inc.

(the "Company") consumated Asset and Share Purchase Agreements as well as an Arrangement Agreement ("the Arrangement") with Protech Home Medical Corp.

("PHM") (formerly Patient Home Monitoring Corp.) and was spun-out as a separate public company that owns a 100% interest in Home Sleep Delivered, L.L.C.

("HSD") and Sleep Management, L.L.C.

dba Viemed ("Viemed") through the U.S.

holding company Viemed Inc.

The Company, through its subsidiaries, Viemed and HSD, provides in-home durable medical equipment ("DME") and health care solutions to patients in over 30 states in the United States.

Viemed offers customers requiring respiratory services and related equipment an appropriate selection of home medical products including non-invasive ventilators, positive airway pressure (“PAP”) machines and oxygen units, as well as the services of experienced respiratory therapists.

HSD provides in-home sleep apnea testing, allowing a patient to determine the existence of sleep apnea at home at a fraction of the cost of the traditional sleep lab environment.

Viemed Healthcare, Inc.

(the "Company"), through its subsidiaries, is a provider of in-home durable medical equipment ("DME") and post-acute respiratory healthcare services in the United States.

The Company’s service offerings are focused on effective in-home treatment with clinical practitioners providing therapy and counseling to patients in their homes using cutting edge technology.

The Company currently serves patients in over 35 states in the United States.

The Company was incorporated under the Business Corporations Act (British Columbia) on December 14, 2016.

1 unchanged sentence

Kaliste Saloom Road, Lafayette, Louisiana 70508.

The Company qualifies as a "foreign private issuer," as defined in Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), for the purposes of the informational requirements of the Exchange Act.

Although, as a foreign private issuer, the Company would not be required to do so, the Company will file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the Securities and Exchange Commission (the "SEC"), instead of filing the reporting forms available to foreign private issuers.

As of June 30, 2020, the Company determined that it no longer qualifies as a "foreign private issuer," as defined in Rule 3b-4 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), for the purposes of the informational requirements of the Exchange Act.

As a result, effective January 1, 2021, the Company will become subject to the proxy solicitation rules under Section 14 of the Exchange Act and Regulation FD, and the Company's officers, directors, and principal shareholders will become subject to the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

The Company will continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the Securities and Exchange Commission (the "SEC").

The Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"), and as such, has elected to comply with certain reduced U.S.

15 unchanged sentences

Canadian dollars are indicated as CAD$.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

Functional currency

Management has exercised judgment in selecting the functional currency of each of the entities that it combines based on the primary economic environment in which the entity operates and in reference to the various indicators including the currency that primarily influences or determines the selling prices of goods and services and the cost of those services, including labor, material and other costs and the currency whose competitive forces and regulations mainly determine selling prices.

Management has exercised judgment in selecting the functional currency of each of the entities that it consolidates based on the primary economic environment in which the entity operates and in reference to the various indicators including the currency that primarily influences or determines the selling prices of goods and services and the cost of those services, including labor, material and other costs and the currency whose competitive forces and regulations mainly determine selling prices.

The Company's functional currency was determined to be the U.S.

3 unchanged sentences

All intercompany transactions have been eliminated.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

June 30, 2020 and 2019

Use of estimates

3 unchanged sentences

Actual results could differ from these estimates.

As of March 31, 2020 , the COVID-19 pandemic is ongoing and the impacts of the pandemic on our business, financial condition and results of operations continue to evolve as of the date of this report.

As of June 30, 2020, the COVID-19 pandemic is ongoing and the impacts of the pandemic on our business, financial condition and results of operations continue to evolve as of the date of this report.

As a result, the impacts remain uncertain and difficult to predict and will depend on, among other factors, the duration and severity of the pandemic, as well as any negative economic conditions arising from the pandemic, our ability to assess potential patients in hospitals and set up and treat patients in the home, and the impacts of government actions and administrative regulations on the healthcare industry and broader economy, including through existing and any future stimulus efforts .

6 unchanged sentences

The write-offs are charged against the allowance for doubtful accounts.

For the three months ended March 31, 2020 , our assessment considered business and market disruptions caused by the COVID-19 pandemic and estimates of expected emerging credit and collectability trends.

For the six months ended June 30, 2020, our assessment considered business and market disruptions caused by the COVID-19 pandemic and estimates of expected emerging credit and collectability trends.

The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

The estimates and write-offs for the allowance for doubtful accounts for each reporting period were as follows:

March 31, 2020

March 31, 2019

June 30, 2020 June 30, 2019

Balance, beginning of year $ 7,782 $ 4,266

2 unchanged sentences

Balance, end of period $ 9,345 $ 6,874

As of June 30, 2020 and 2019, no one customer represented more than 10% of outstanding accounts receivable.

The Company does have receivables at June 30, 2020 from Medicare and Medicaid, representing 70 % and 6 %, respectively, and 76 % combined, of total outstanding receivables (December 31, 2019 - 58 %).

As these receivables are both from government programs, there is little credit risk associated with these balances;

however, these receivables are subject to billing modifications and other adjustments and estimates of the amounts of such adjustments are included in the allowance for doubtful accounts.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

As of March 31, 2020 and 2019 , no one customer represented more than 10% of outstanding accounts receivable.

The Company does have receivables at March 31, 2020 from Medicare and Medicaid, representing 49% and 8% , respectively, and 57% combined, of total outstanding receivables ( December 31, 2019 - 58% ).

As these receivables are both from government programs, there is little credit risk associated with these balances;

however, these receivables are subject to billing modifications and other adjustments and estimates of the amounts of such adjustments are included in the allowance for doubtful accounts.

Revenues from Medicare and Medicaid accounted for 64% and 9% , respectively and 73% combined, of the Company's total revenues for the three months ended March 31, 2020 .

Revenues from Medicare and Medicaid accounted for 68% and 9% , respectively, and 77% combined, of the Company's total revenues for the three months ended March 31, 2019 .

June 30, 2020 and 2019

Revenues from Medicare and Medicaid as percentages of the Company's traditional revenue streams, excluding COVID-19 response sales, for the three and six month periods ended June 30, 2020, were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Medicare Revenues 57 % 61 % 61 % 61 %

Medicaid Revenues 9 % 8 % 9 % 8 %

Total Medicare and Medicaid 66 % 69 % 70 % 69 %

Property and equipment

5 unchanged sentences

The estimated useful lives of the property and equipment are as follows:

Estimated Useful Lives

Medical Equipment

Computer Equipment

Office Furniture & Fixtures

Leasehold Improvements

Shorter of Useful Life or Lease

15 - 39 Years

Indefinite Life

Description Estimated Useful Lives

Medical Equipment 1 - 10 Years

Computer Equipment 5 Years

Office Furniture & Fixtures 5 - 10 Years

Leasehold Improvements Shorter of Useful Life or Lease

Vehicles 5 Years

Building 15 - 39 Years

Land Indefinite Life

Depreciation of medical equipment commences at the date of service, which represents the date that the asset has been deployed to a patient’s address and is put in use and continues through the useful life of the asset.

5 unchanged sentences

Our comprehensive income represents net income adjusted for unrealized gains and losses on derivative instruments.

Accumulated other comprehensive loss is presented in the accompanying balance sheets as a component of shareholders' equity.

Accumulated other comprehensive loss is presented on the accompanying Condensed Consolidated Balance Sheets as a component of shareholders' equity.

Revenue recognition

2 unchanged sentences

Revenue is recognized net of contractual adjustments and bad debt based on contractual arrangements with third-party payors, an evaluation of expected collections resulting from the analysis of current and past due accounts, past collection experience in relation to amounts billed and other relevant information.

Contractual adjustments result from the differences between the rates charged for services and reimbursements by government-sponsored healthcare programs and insurance companies for such services.

Contractual adjustments result from the differences between the rates charged for services and reimbursement rates paid by government-sponsored healthcare programs and insurance companies for such services.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

The Company's contracts with customers often include multiple products and services, and the Company evaluates these arrangements to determine the unit of accounting for revenue recognition purposes based on whether the product or service is distinct from other products or services in the arrangement and should be accounted for as a separate performance obligation.

11 unchanged sentences

The revenues from each major source are summarized in the following table:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Revenue from rentals under Topic 842

3 unchanged sentences

Equipment and supply sales

540 1,075 2,072 1,853

COVID-19 response sales (1)

19,712 — 20,753 —

Service revenues

280 459 590 795

Total Revenues $ 42,854 $ 20,325 $ 66,660 $ 38,440

1 unchanged sentence

Revenue Accounting under Topic 842

The Company leases DME such as non-invasive and invasive ventilators, PAP machines, percussion vests, oxygen concentrator units and other small respiratory equipment to customers for a fixed monthly amount on a month-to-month basis.

The Company leases DME such as non-invasive and invasive ventilators, positive airway pressure ("PAP") machines, percussion vests, oxygen concentrator units and other small respiratory equipment to customers for a fixed monthly amount on a month-to-month basis.

The customer generally has the right to cancel the lease at any time during the rental period.

11 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

Revenue Accounting under Topic 606

20 unchanged sentences

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 as of March 31, 2020 .

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 as of June 30, 2020.

Stock-based compensation

7 unchanged sentences

The Company utilizes an interest rate swap contract to reduce exposure to fluctuations in variable interest rates for future interest payments on the Term Note (as defined below).

For determining the fair value of the interest rate swap contract, the Company uses significant other observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.

These fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves.

The Company includes unrealized gains in Prepaid expenses and other assets, as a component of Long-term Assets, and unrealized losses in Accrued Liabilities, as a component of Long-term Liabilities on the Condensed Consolidated Balance Sheets.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

These fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves.

The Company recognizes any differences between the variable interest rate payments and the fixed interest rate settlements from its swap counterparty as an adjustment to interest expense over the life of the swap.

26 unchanged sentences

The Company anticipates adopting this ASU on January 1, 2023 given its smaller reporting company status and is still evaluating the impact of adoption on the consolidated financial statements in future periods.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

June 30, 2020 and 2019

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses.

4 unchanged sentences

Entities that early adopted ASU 2016-13 (Topic ASC 326) may early adopt the amendments.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

In December 2019, the FASB issued ASU No.

8 unchanged sentences

The Company’s fixed assets consist of its medical equipment held for rental, furniture and equipment, real property and related improvements, and vehicles and other various small equipment.

In May 2019, the Company purchased a 77,000 square foot commercial building located in Lafayette, Louisiana to utilize as its new corporate headquarters.

The Building Term Note used to finance this purchase is further discussed in Note 5.

The following table details the Company’s fixed assets:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Medical equipment $ 59,211 $ 56,202

Furniture and equipment 2,468 2,350

Land 2,138 2,138

Buildings 6,304 6,351

Leasehold improvements 290 301

Vehicles 953 1,110

Accumulated depreciation ( 16,277 ) ( 13,680 )

Property and equipment, net of accumulated depreciation $ 55,087 $ 54,772

Depreciation in the amount of $1,925,000 and $1,166,000 is included in cost of revenue for the three months ended March 31, 2020 and 2019 , respectively.

Included in medical equipment above is equipment acquired under capital lease obligations whose cost and accumulated depreciation at March 31, 2020 total $14,374,000 and $1,153,000 , respectively.

Depreciation in the amount of $ 1,985,000 and $ 1,306,000 is included in cost of revenue for the three months ended June 30, 2020 and 2019, respectively, and in the amount of $ 3,910,000 and $ 2,472,000 for the six months ended June 30, 2020 and 2019, respectively.

Included in medical equipment above is equipment acquired under capital lease obligations whose cost and accumulated depreciation at June 30, 2020 total $ 9,093,000 and $ 2,282,000 , respectively.

At December 31, 2019, cost and accumulated depreciation on equipment acquired under capital lease obligations was $ 15,680,000 and $ 1,337,000 , respectively.

Medical equipment purchases with a cost of $899,000 and $2,817,000 was included in accounts payable at March 31, 2020 and December 31, 2019 , respectively.

Medical equipment purchases with a cost of $ 1,448,000 and $ 2,817,000 were included in accounts payable at June 30, 2020 and December 31, 2019, respectively.

Current Liabilities

The Company’s short-term accrued liabilities are included within current liabilities and consist of the following:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Accrued trade payables $ 3,898 $ 1,023

9 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

Debt and lease liabilities

Senior Credit Facility

On February 20, 2018, the Company entered into a two year Commercial Business Loan Agreement for Term Loans and Lines of Credit with Hancock Whitney Bank.

Any amounts advanced will be secured by substantially all of the Company's assets and carried an interest rate of one month ICE LIBOR plus 3.00% , with a 4.00% interest rate floor.

Advances of the line of credit initially were subject to a borrowing base as determined in accordance with the loan agreement, which was based on the value of the Company's accounts receivable balance.

On March 19, 2019, the Company entered into an amendment to the loan agreement increasing the available line of credit from $5.0 million to $10.0 million and extending the expiration date to March 19, 2021.

In addition, the borrowing base restriction was removed from the loan agreement.

On September 19, 2019, in conjunction with the Term Note described below, the Company entered into a third amendment to the loan agreement, which, among other things, replaced the financial covenants in the loan agreement with the following:

Financial Covenant

Required Ratio

Total Debt to Adjusted EBITDA (Quarterly)

not more than 1.50:1.00

Fixed Charge Coverage Ratio (Quarterly)

not less than 1.35:1.00

Loan-to-Value Ratio (Quarterly)

not more than 0.85

On May 1, 2020, the Company entered into a fourth amendment to the loan agreement extending the expiration date to May 1, 2023 and modifying the interest rate on amounts advanced to be equal to the WSJ prime rate plus a margin of 0.50% , with a 3.50% interest rate floor.

The Company was in compliance with all covenants in effect at March 31, 2020 .

There were no borrowings against this line of credit at March 31, 2020 and December 31, 2019 .

On February 20, 2018, the Company entered a Commercial Business Loan Agreement that provides for Term Loans and Lines of Credit with Hancock Whitney Bank.

Line of Credit

The Company maintains a line of credit in the amount of $ 10.0 million that expires May 1, 2023 under the Commercial Business Loan Agreement.

Any amounts advanced on this line will be subject to an interest rate equal to the WSJ prime rate plus a margin of 0.50 %, with a 3.50 % interest rate floor and will be secured by substantially all of the Company's assets.

There were no borrowings against this line of credit at June 30, 2020 or December 31, 2019.

Commercial Term Notes

On May 30, 2019, the Company entered into a second amendment to the loan agreement providing for a term note (the “Building Term Note”) in favor of Hancock Whitney Bank in the principal amount of $4,845,000 .

The proceeds of the Building Term Note were used to purchase a building to utilize as a new corporate headquarters for the Company.

On May 30, 2019, the Company entered into a term note (the “Building Term Note”) under the Commercial Business Loan Agreement in the principal amount of $ 4,845,000 .

The proceeds of the Building Term Note were used to purchase the Company's corporate headquarters.

Beginning July 1, 2019, the Company began making monthly payments towards the outstanding balance.

3 unchanged sentences

In connection with the Building Term Note, the Company entered into an interest rate swap transaction (the "Interest Rate Swap Transaction") with Hancock Whitney Bank effectively fixing the interest rate for the Building Term Note at 4.68 %.

The Company incurred immaterial financing costs related to the real property acquired with the proceeds of the Building Term Note.

These deferred financing costs are amortized over the term of the loan using the effective interest method.

On September 19, 2019, the Company entered into a third amendment to the loan agreement providing for a term note (the “Term Note") in favor of Hancock Whitney Bank in the principal amount of $5,000,000 .

The proceeds of the Term Note will be used for general corporate purposes.

On September 19, 2019, the Company entered into an additional loan agreement providing for a term note (the “Term Note") under the Commercial Business Loan Agreement in the principal amount of $ 5,000,000 .

The proceeds of the Term Note were utilized for general corporate purposes.

Beginning October 19, 2019, the Company started making monthly principal payments of $ 139,000 towards the outstanding balance.

1 unchanged sentence

The Term Note bears interest at the rate of 4.60 % per annum.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

The Company incurred immaterial financing costs related to the above term notes.

These deferred financing costs are amortized over the term of the loans using the effective interest method.

The Company has recognized these term notes, which have terms greater than twelve months, as follows:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Notes payable $ 8,517 $ 9,379

1 unchanged sentence

Net long-term notes payable $ 6,723 $ 7,629

Under the terms of the Commercial Business Loan Agreement, the Company is subject to the following financial covenants:

Financial Covenant Required Ratio Ratio

Total Debt to Adjusted EBITDA (Quarterly) not more than 1.50:1.00 0.45

Fixed Charge Coverage Ratio (Quarterly) not less than 1.35:1.00 17.12

Loan-to-Value Ratio (Quarterly) not more than 0.85 0.72

The Company was in compliance with all covenants in effect at June 30, 2020.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

June 30, 2020 and 2019

The Company has recognized finance lease liabilities for medical equipment and operating leases for land and buildings that have terms greater than twelve months, as follows:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Lease liabilities $ 6,994 $ 10,132

3 unchanged sentences

The Company has various finance leases for equipment with an implied interest rate at fixed rates up to 9.64 %, secured by equipment, due between 2020 and 2022.

The Company's weighted average interest rate was 2.22% and 0.86% for all finance lease liabilities outstanding as of March 31, 2020 and 2019 , respectively.

At March 31, 2020 and 2019 , the weighted average lease term was approximately 0.99 years and 0.83 years , respectively.

Interest expense related to these finance lease obligations for the three months ended March 31, 2020 and March 31, 2019 amounted to $52,000 and $26,000 , respectively.

The Company's weighted average interest rate was 2.75 % and 0.47 % for all finance lease liabilities outstanding as of June 30, 2020 and 2019, respectively.

At June 30, 2020 and 2019, the weighted average lease term was approximately 0.90 years and 0.76 years, respectively.

Interest expense related to these finance lease obligations for the three and six months ended June 30, 2020 amounted to $ 42,000 and $ 94,000 , respectively.

Interest expense related to these finance lease obligations for the three and six months ended June 30, 2019 amounted to $ 20,000 and $ 46,000 , respectively.

Operating lease liabilities

2 unchanged sentences

These lease liabilities are recorded at present value based on a discount rate of 5.50 %, which was based on the Company's incremental borrowing rate at the time of assessment.

At March 31, 2020 , the weighted average lease term was approximately 3.66 years .

Operating rental expenses were $184,000 for the three months ended March 31, 2020 , and $90,000 for the three months ended March 31, 2019 .

At June 30, 2020, the weighted average lease term was approximately 3.52 years.

Operating rental expenses were $ 201,000 and $ 385,000 for the three and six months ended June 30, 2020, respectively, and $ 89,000 and $ 178,000 for the three and six months ended June 30, 2019.

Included within these operating lease liabilities are real property leases for real estate from a related party.

Rental payments under these related party lease agreements are $ 20,000 per month, plus taxes, utilities and maintenance.

Total rental payments for the use of these properties were $61,000 for the three months ended March 31, 2020 , and $61,000 for the three months ended March 31, 2019 .

Total rental payments for the use of these properties were $ 61,000 and $ 121,000 for the three and six months ended June 30, 2020, respectively, and $ 61,000 and $ 121,000 for the three and six months ended June 30, 2019, respectively.

The expense for these related party rents has been included within general and administrative expenses.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

Fair value measurement

9 unchanged sentences

The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

The Company’s cash and cash equivalents are measured using Level 1 inputs and include cash on hand, deposits in banks, certificates of deposit and money market funds.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

June 30, 2020 and 2019

The Company’s cash and cash equivalents are measured using Level 1 inputs and include cash on hand, deposits in banks, and money market funds.

Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate the fair value of cash and cash equivalents.

The fair value of debt is classified as Level 2 for the periods presented and approximates its carrying value.

Pursuant to the Arrangement, PHM common share purchase warrant holders each received one tenth (1/10) of one warrant to purchase one common share of the Company.

The warrants conversion feature is denominated in Canadian dollars which is different from the functional currency of the Company, which is U.S.

During 2019, the Company had warrants to purchase one common share of the Company denominated in Canadian dollars which is different from the functional currency of the Company, which is U.S.

The conversion feature is treated as a derivative financial liability and the fair value movement during the period is recognized in the Condensed Consolidated Statement of Income and Comprehensive Income.

2 unchanged sentences

The warrant derivative financial liability was valued using Level 3 inputs from the fair value hierarchy.

There were no warrants issued during the three month period ended March 31, 2020 .

There were no warrants exercised and no warrants that expired during the three months ended March 31, 2020 .

A summary of the change in fair value of warrant conversion liability is as follows for the period ended March 31, 2019 :

There were no warrants issued or outstanding during the three and six month periods ended June 30, 2020.

A summary of the change in fair value of warrant conversion liability is as follows for the period ended June 30, 2019:

Warrant Conversion Liability

2 unchanged sentences

Unrealized loss on warrant conversion liability 437

Balance March 31, 2019

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

Balance June 30, 2019 $ 800

Derivative instruments and hedging activities

We currently have one interest rate swap contract in place, which became effective on May 31, 2019 and has been designated as a cash flow hedge.

The Company has one interest rate swap contract in place, which became effective on May 31, 2019 and has been designated as a cash flow hedge.

This swap contract matures on May 30, 2026.

This swap contract converts the variable interest rate to a fixed interest rate on borrowings under the Building Term Note.

As of March 31, 2020 , the notional amount of the interest rate swap was $4.7 million and will be amortized over the term of the swap.

The fair value was $0.5 million (determined based on Level 2 inputs) and is included in Accrued liabilities, as a component of Long-term liabilities as of March 31, 2020 .

In the first three months of 2020, losses recognized as a result of ineffectiveness were immaterial.

As of June 30, 2020, the notional amount of the interest rate swap was $ 4.7 million and will be amortized over the term of the swap.

The fair value was $ 0.5 million (determined based on Level 2 inputs) and is included in Accrued liabilities, as a component of Long-term liabilities as of June 30, 2020.

In the first six months of 2020, losses recognized as a result of ineffectiveness were immaterial.

Shareholders' Equity

3 unchanged sentences

The Company has only one class of stock outstanding, common shares.

The authorized stock consists of an unlimited number of common shares with no stated par value, of which 38,486,772 and 37,952,660 shares were issued and outstanding as of March 31, 2020 and December 31, 2019 , respectively.

The authorized stock consists of an unlimited number of common shares with no stated par value, of which 39,082,932 and 37,952,660 shares were issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.

Stock-based compensation

The purpose of the Company's RSU and Option Plans (collectively, the "Plan") is to provide incentive to employees, directors, officers, management companies, and consultants who provide services to the Company or any of its subsidiaries.

The Plan is a “fixed” stock plan, whereby the maximum number of the Company's shares reserved for issuance, combined with any equity securities granted under all other compensation arrangements adopted by the Company, may not exceed 7,582,000 shares (equal to 20% of the issued and outstanding shares of the Company as of the date of the adoption of the Plan).

As of March 31, 2020 , the Company had outstanding issuances of options of 3,638,000 and restricted stock units of 701,088 under the Plan.

The following table summarizes stock-based compensation for the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31,

Stock-based compensation - options

Stock-based compensation - restricted stock units

At March 31, 2020 , there was approximately $5,012,000 of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized over a weighted-average period of 2.49 years .

As of March 31, 2020 , there was approximately $920,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 0.90 years .

The purpose of the Company's RSU and Option Plans (collectively, the "Former Plan") is to provide incentive to employees, directors, officers, management companies, and consultants who provide services to the Company or any of its subsidiaries.

The Former Plan is a “fixed” stock plan, whereby the maximum number of the Company's shares reserved for issuance, combined with any equity securities granted under all other compensation arrangements adopted by the Company, may not exceed 7,582,000 shares (equal to 20 % of the issued and outstanding shares of the Company as of the date of the adoption of the Plan).

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

The following table summarizes stock option activity for the three months ended March 31, 2020 :

June 30, 2020 and 2019

As of June 30, 2020, the Company had outstanding issuances of options of 3,040,000 and restricted stock units of 701,000 under the Former Plan.

Effective June 11, 2020 (the "Effective Date"), the Company’s shareholders approved the Company's 2020 Long Term Incentive Plan (the "Omnibus Plan"), and the Former Plan was frozen.

No future awards will be made under the Former Plan, and the common shares that were not settled or awarded under the ‎Former Plan as of the Effective Date are available for awards under the Omnibus Plan.

The maximum number of common ‎shares that are available for awards under the Omnibus Plan ‎and under any other security based compensation arrangements adopted by the Company, including the ‎Former Plan, may not exceed 7,758,000 shares (equal to 20 % of the issued and outstanding common shares of the Company on the ‎Effective Date).

The maximum amount of the foregoing common shares that may be awarded under the Omnibus Plan as “incentive stock options” is 2,600,000 Common Shares.

The following table summarizes stock-based compensation for the three and six months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Stock-based compensation - options $ 933 $ 705 $ 1,824 $ 1,283

Stock-based compensation - restricted stock units 263 329 523 631

Total $ 1,196 $ 1,034 $ 2,347 $ 1,914

At June 30, 2020, there was approximately $ 4,078,000 of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized over a weighted-average period of 2.26 years.

As of June 30, 2020, there was approximately $ 628,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 0.65 years.

The following table summarizes stock option activity for the six months ended June 30, 2020:

Number of options

Weighted average exercise price (CAD$)

Weighted average remaining contractual life

Aggregate Intrinsic Value (1)

Balance December 31, 2019

(000's) Weighted average exercise price (CAD$) Weighted average remaining contractual life Aggregate Intrinsic Value (1)

Balance December 31, 2019 2,683 $ 4.36 6.7 years $ 7,790

Issued 964 7.44

Exercised ( 601 ) 4.07

Expired / Forfeited ( 6 ) 6.63

Balance March 31, 2020

Balance June 30, 2020 3,040 $ 5.39 8.2 years $ 16,999

(1) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period.

The aggregate intrinsic value of options outstanding was $3,684,000 and options exercisable were $3,018,000 at March 31, 2020 .

For the three months ended March 31, 2020 , 4,737 shares of common stock were issued pursuant to the exercise of stock options.

At March 31, 2020 , the Company had 1,641,000 exercisable stock options outstanding with a weighted average exercise price of CAD $4.00 and a weighted average remaining contractual life of 5.2 years .

The aggregate intrinsic value of options outstanding was $ 16,999,000 and options exercisable were $ 6,926,000 at June 30, 2020.

For the six months ended June 30, 2020, 600,897 shares of common stock were issued pursuant to the exercise of stock options.

At June 30, 2020, the Company had 1,043,000 exercisable stock options outstanding with a weighted average exercise price of CAD $ 3.96 and a weighted average remaining contractual life of 6.8 years.

At December 31, 2019, the Company had 1,037,000 exercisable stock options outstanding with a weighted average exercise price of CAD $ 3.83 and a weighted average remaining contractual life of 3.5 years.

The fair value of the stock options has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and credited to additional paid-in capital over the vesting period, using the Black-Scholes option pricing model calculated using the following assumptions for issuances during the three months ended March 31, 2020 :

Exercise price ($CAD)

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

June 30, 2020 and 2019

Exercise price ($CAD) $ 7.44 ($CAD)

Risk-free interest rate 1.63 %

Expected volatility 65.73 %

Expected life of options

Expected dividend yield

Fair value on date of grant ($USD)

Expected life of options 10 years

Expected dividend yield Nil

Fair value on date of grant ($USD) $ 4.10 ($USD)

Restricted stock units

The Company has a restricted stock unit plan ("RSU Plan"), which it uses for grants to directors, officers, and employees.

Under the Plan, the Company also grants restricted stock units to directors, officers, and employees.

The Company accounts for restricted stock units using fair value.

The fair value of the restricted stock units has been charged to the consolidated statements of income and comprehensive income and credited to additional paid-in capital over the vesting period, based on the stock price on the date of grant.

The fair value of the restricted stock units has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and credited to additional paid-in capital over the vesting period, based on the stock price on the date of grant.

Restricted stock units vest generally over a one or three -year period.

The Company accounts for forfeitures on restricted stock units under ASU 2016-09 and recognizes forfeitures in the period in which they occur.

The following table summarizes restricted stock unit activity for the three months ended March 31, 2020 :

Number of Restricted Stock Units (000's)

Weighted average grant price (CAD$)

Weighted average remaining contractual life

Aggregate Intrinsic Value (1)

Balance December 31, 2019

The following table summarizes restricted stock unit activity for the six months ended June 30, 2020:

Number of Restricted Stock Units (000's) Weighted average grant price (CAD$) Weighted average remaining contractual life Aggregate Intrinsic Value (1)

Balance December 31, 2019 1,139 $ 2.74 0.55 years $ 7,129

Issued 92 7.44

Vested ( 530 ) 2.54

Expired / Forfeited — —

Balance March 31, 2020

Balance June 30, 2020 701 $ 3.64 0.65 years $ 6,699

(1) The aggregate intrinsic value of time-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period .

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

During the three months ended March 31, 2020 , the Company issued 92,088 restricted stock units, with a vesting term of one to three years and a fair value of $5.66 ($USD) per share.

During the three months ended June 30, 2020, the Company did no t issue any restricted stock units.

During the six months ended June 30, 2020, the Company issued 92,088 restricted stock units, with a vesting term of one to three years and a fair value of $ 5.66 ($USD) per share.

Phantom share units

2 unchanged sentences

Phantom share units vest annually over a three -year period.

The following table summarizes phantom share unit activity for the three months ended March 31, 2020 :

The following table summarizes phantom share unit activity for the six months ended June 30, 2020:

Number of Phantom Share Units (000's)

Balance December 31, 2019 1,350

Vested ( 601 )

Expired / Forfeited ( 53 )

Balance March 31, 2020

Balance June 30, 2020 1,042

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

June 30, 2020 and 2019

The change in fair value of the phantom share units has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and recorded as a liability included in accrued liabilities and long-term accrued liabilities, using a valuation method with the following inputs:

Three Months Ended

March 31, 2020

$ 6.61 (CAD$)

Remaining life of phantom share units

0.11 - 2.11 Years

Six Months Ended

June 30, 2020

Share price $ 13.01 (CAD$)

Remaining life of phantom share units 0.86 - 2.86 Years

Calculated fair value of phantom share units $ 4,699

The total liability associated with phantom share units at March 31, 2020 is $4,593,000 , with $1,882,000 of this balance included in long-term accrued liabilities and the remaining portion of $2,711,000 in current accrued liabilities.

The total liability associated with phantom share units at June 30, 2020 is $ 4,699,000 , with $ 4,171,000 of this amount included in current accrued liabilities and the remaining portion of $ 528,000 included in long-term accrued liabilities.

Accrued liability and related expense is determined at each reporting period based on the stock price at period end.

Purchase Commitments

As of March 31, 2020 , the Company has non-cancellable purchase order commitments in the amount of $5.5 million for respiratory equipment.

At March 31, 2020 and 2019 , the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months.

As of June 30, 2020, the Company had non-cancellable purchase order commitments in the amount of $ 5.0 million for respiratory equipment.

An outstanding deposit in the amount of $ 863,000 related to such purchase order commitments is included within other current assets.

On July 29, 2020, the Company filed a legal complaint formally requesting a refund of this remaining deposit as the Company believes the supplier is unable to deliver the contracted equipment.

The Company is unable to predict what action, if any, might result related to this claim and a loss is not considered probable at June 30, 2020.

"CARES" Act Funds Received

The CARES Act created a Provider Relief Fund to support health care-related expenses or lost revenue attributable to the COVID-19 pandemic.

The Company received $ 3.5 million of the Provider Relief Funds in April 2020 and has recognized this amount within other income on its Condensed Consolidated Statements of Income.

The Department of Health and Human Services has stated that Provider Relief Fund payments are not loans and will not need to be repaid.

However, as a condition to the receipt of funds, the Company and any other providers must agree to a detailed set of terms and conditions.

CMS has indicated that the terms and conditions may be subject to ongoing changes and reporting.

To the extent that reporting requirements and terms and conditions are modified, it may affect the Company’s ability to comply and may require the return of funds.

In accordance with the terms of acceptance for the grant, the Company has utilized these funds to prevent, prepare for, and respond to the COVID-19 pandemic.

At June 30, 2020 and 2019, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

The Coronavirus Aid, Relief and Economic Security Act ("CARES Act") which was signed into law on March 27, 2020 includes various income and payroll tax provisions.

As of March 31, 2020 , the CARES Act has not had a material impact on our condensed consolidated financial statements, however, the Company is still analyzing these provisions of the CARES Act.

As of June 30, 2020, the CARES Act has not had a material impact on our condensed consolidated financial statements, however, the Company is still analyzing these provisions of the CARES Act.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

The Company is subject to U.S.

3 unchanged sentences

Our effective tax rate is based on forecasted annual results which may fluctuate significantly through the rest of the year, in particular due to the uncertainty in our annual forecasts resulting from the unpredictable impact of the COVID-19 pandemic on our operating results.

The primary component of the annual effective tax rate relates to the Company's current state income taxes, as the Company continues to generate taxable losses for U.S.

federal income tax purposes.

Financial Risk Factors

Risk management

In the normal course of business, the Company is exposed to a number of risks that can affect its operating performance.

ASC 820—Fair Value Measurements and Disclosures creates a single definition of fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements.

ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement is to estimate the price at which an orderly transaction to sell an asset or to transfer the liability would take place between market participants at the measurement date under current market conditions.

Assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

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 .

Each subsidiary places its cash with one major financial institution .

At times , the cash in the financial institution is temporarily 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 , directly from patients or for rebates due from manufacturers.

Receivables generally are collected within industry norms for third - party payors and from manufacturers.

The Company continuously monitors collections from its clients and maintains an allowance for bad debts based upon lifetime expected credit losses.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due .

The Company’s approach in managing liquidity is to ensure , to the extent possible , that it will have sufficient liquidity to meet its liabilities when due by continuously monitoring actual and budgeted cash flows, and monitoring financial market conditions for signs of weakness.

As of March 31, 2020 , the Company faced no material liquidity risk and is able to meet all of its current financial obligations as they become due and payable.

The Company had $26,146,000 and $25,912,000 of current liabilities that are due within one year as of March 31, 2020 and December 31, 2019 , respectively.

The Company had $30,151,000 and $27,811,000 of current assets as of March 31, 2020 and December 31, 2019 , respectively, in addition to positive cash flow from operations.

The Company utilizes short term leases with a major supplier that could be extended over a longer term if there was a need for additional liquidity.

Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully available as of March 31, 2020 , subject to compliance with certain covenants.

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 .

Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with registered US financial institutions .

The Company considers this risk to be immaterial.

The interest on finance leases and the Term Note are not subject to cash flow interest rate risk as these instruments bear interest at fixed rates .

In connection with the Building Term Note, the Company entered into an Interest Rate Swap Transaction with Hancock Whitney Bank for a fixed rate of 4.68% , thereby transforming the variable interest rate exposure into a fixed rate obligation.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts expressed in thousands of U.S.

Dollars, except per share amounts)

March 31, 2020 and 2019

Included in the annual estimated effective tax rate of ( 32.81 )% is a discrete item described below accounting for ( 44.61 )% of the rate.

The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

Pursuant to ASC 740, any change in judgment relating to the beginning of the year valuation allowance balance should be recognized discretely in continuing operations in the interim period in which the change occurs.

At June 30, 2020, the Company determined that it was more likely than not that the deferred tax asset would be realized, and made an adjustment to the deferred tax asset valuation allowance, which reduced the provision for income taxes.

The Company has recorded a provisional income tax benefit of $ 6.5 million in its Condensed Consolidated Statements of Income and Comprehensive Income for the six months ended June 30, 2020.

Earnings Per Share

2 unchanged sentences

The following reflects the earnings and share data used in the basic and diluted earnings per share computations:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Numerator - basic and diluted:

9 unchanged sentences

Subsequent Events

"CARES" Act Funds Received

The CARES Act created a Provider Relief Fund to support health care-related expenses or lost revenue attributable to the COVID-19 pandemic.

The Company received $3.5 million of the Provider Relief Funds in April 2020.

The Department of Health and Human Services has stated that Provider Relief Fund payments are not loans and will not need to be repaid.

However, as a condition to the receipt of funds, the Company and any other providers must agree to a detailed set of terms and conditions.

CMS has indicated that the terms and conditions may be subject to ongoing changes and reporting.

To the extent that reporting requirements and terms and conditions are modified, it may affect the Company’s ability to comply and may require the return of funds.

In accordance with the terms of acceptance for the grant, we expect to utilize these funds to prevent, prepare for, and respond to the COVID-19 pandemic.

Conversion of Accounts Payable into Short-term Capital Lease

Subsequent to June 30, 2020, the Company entered into a capital lease agreement with a third party and, as a result, $ 2.8 million of accounts payable was converted to a short-term lease payable.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

(Tabular amounts expressed in thousands of US Dollars, except per share amounts)

March 31, 2020 and 2019

June 30, 2020 and 2019

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements