What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-04 compared with 2020-08-04 · 184 added, 180 removed, 411 unchanged (47% of the section changed)

36 unchanged sentences

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

June 30, 2020 and 2019

September 30, 2020 and 2019

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, including those identified under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and the other documents we file with the SEC, including under “Item 1A.

2 unchanged sentences

the general business, market and economic conditions in the regions in which the we operate;

the impact of the COVID-19 pandemic and of the actions taken by governmental authorities, individuals and companies in response to the pandemic on our business, financial condition and results of operations, including on the our patient base and revenues, employees, and equipment and supplies;

the impact of the COVID-19 pandemic and of the actions taken by governmental authorities, individuals and companies in response to the pandemic on our business, financial condition and results of operations, including on our patient base and revenues, employees, and equipment and supplies;

we may be subject to significant capital requirements and operating risks;

45 unchanged sentences

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

June 30, 2020 and 2019

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 86.1% of our traditional revenue, excluding the COVID-19 response sales, and 86.4% of our revenue for the three months ended June 30, 2020 and 2019, respectively, and 84.3% and 87.9% for the six months ended June 30, 2020 and 2019, respectively.

September 30, 2020 and 2019

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 80.2% of our traditional revenue, excluding the COVID-19 response sales and services, and 84.5% of our revenue for the three months ended September 30, 2020 and 2019, respectively, and 82.9%, excluding the COVID-19 response sales and services, and 86.7% for the nine months ended September 30, 2020 and 2019, respectively.

We combine the benefits of home ventilation support with licensed Respiratory Therapists ("RTs") to drive improved patient outcomes and reduce costly hospital readmissions.

We expect to use an organic growth model whereby expansion is accomplished through existing service areas as well as in new regions through a cost efficient launch that reduces location expenses.

Our licensed RTs currently serve patients in over 35 states.

Our licensed RTs currently serve patients in 36 states.

We expect to continue to employ more RTs in order to assure our high service model is accomplished in the home.

As of June 30, 2020, we employed more than 249 licensed RTs, representing more than 52% of our company-wide employee count.

As of September 30, 2020, we employed approximately 258 licensed RTs, representing more than 52% of our company-wide employee count.

By focusing overhead costs on personnel that service the patient rather than physical location costs, we anticipate efficiently scaling our business in regions that are currently not being effectively serviced.

8 unchanged sentences

In addition, our current ability to assess potential patients in hospitals varies by hospital and city, but overall our business of setting up new patients in the home is continuing although at lower levels than in recent periods.

In late May and early June, many state governments began a phased reopening of their economies while adhering to new guidelines and enhanced safety measures, including social distancing and face mask protocols.

Many state governments have begun a phased reopening of their economies while adhering to new guidelines and enhanced safety measures, including social distancing and face mask protocols.

However, certain states have paused or reversed plans to reopen their economies as new cases of COVID-19 have been on the rise in recent weeks.

To date there has been minimal disruption to our normal operations, though it is possible that more significant disruptions could occur if the COVID-19 pandemic continues for a prolonged period of time.

While governmental and other restrictions have not had a material impact on our consolidated operating results for the nine months ended September 30, 2020, it is possible that more significant disruptions could occur if the COVID-19 pandemic continues for a prolonged period of time.

The COVID-19 pandemic has resulted in a significant economic downturn in the United States and globally and has also led to significant disruptions and volatility in capital and financial markets.

7 unchanged sentences

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

June 30, 2020 and 2019

September 30, 2020 and 2019

We believe we presently have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times, such as limiting discretionary spending across the organization.

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As a result, we received a payment from the Provider Relief Fund of $3.5 million in April 2020.

Payments from the Provider Relief Fund are intended to compensate healthcare providers for lost revenues and incremental expenses incurred in response to the COVID-19 pandemic and are not required to be repaid provided the recipients attest to and comply with certain terms and conditions, including limitations on balance billing and not using Provider Relief Fund funds to reimburse expenses or losses that other sources are obligated to reimburse .

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

Payments from the Provider Relief Fund are intended to compensate healthcare providers for lost revenues and incremental expenses incurred in response to the COVID-19 pandemic.

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 our ability to comply and may require the return of funds.

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

The CARES Act also provides for a temporary suspension of the 2% payment sequestration adjustment currently applied to all Medicare fee-for-service claims.

2 unchanged sentences

As part of the CARES Act legislation, certain Payroll Protection Program ("PPP") loans were authorized for small businesses to pay their employees, subject to potential debt forgiveness.

Our company evaluated the PPP extensively and after evaluation, decided not to submit a PPP loan application.

We evaluated the PPP extensively and after evaluation, decided not to submit a PPP loan application.

We are continuing to monitor any effects or requirements that may result from the CARES Act as many of the provisions in the CARES Act are temporary and may require us to modify our operations and compliance procedures.

2 unchanged sentences

To the extent these provisions will expire as stated in the CARES Act, we will be required to unwind any changes.

While the overall impact of COVID-19 on our consolidated results of operations for the six months ended June 30, 2020 has resulted in an overall increase in revenues related to additional product sales during the period, the overall impact that COVID-19 will have on our consolidated results of operations throughout 2020 remains 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.

While the overall impact of COVID-19 on our consolidated results of operations for the nine months ended September 30, 2020 has resulted in an overall increase in revenues related to additional product sales and services during the period, the overall impact that COVID-19 will have on our consolidated results of operations throughout the remainder of 2020 remains 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.

We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, liquidity and capital resources.

5 unchanged sentences

At the end of 2019, approximately 19% of ventilator product-related revenue was set to be subject to the competitive bidding process under Medicare.

On March 9, 2020, CMS announced that due to the COVID-19 pandemic, the President's exercise of the Defense Production Act, public concern regarding access to ventilators, and the non-invasive ventilators product category being new to the competitive bidding program, non-invasive ventilators were removed as a product category from Round 2021 and this removal from the competitive bidding process is expected to last three years.

As a result of this announcement, we retain the ability to continue to furnish non-invasive ventilators for all of our Medicare accredited areas, however, we are uncertain if vents will be included in future competitive bidding programs.

On October 27, 2020, CMS announced that it has removed 13 of the 15 remaining product categories from Round 2021, including oxygen and PAP devices, because the payment amounts did not achieve expected savings.

The next competitive bidding round is anticipated to begin on January 1, 2024.

As a result of these announcements, we retain the ability to continue to furnish non-invasive ventilators and oxygen and PAP devices for all of our Medicare accredited areas, however, we are uncertain if non-invasive ventilators and oxygen and PAP devices will be included in future competitive bidding programs.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2020 and 2019

September 30, 2020 and 2019

The below table highlights summary financial and operational metrics for the last eight quarters.

1 unchanged sentence

Dollars, except vent patients)

For the quarter ended June 30,

2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018

For the quarter ended September 30,

2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018

Financial Information:

13 unchanged sentences

Results of Operations

Comparison of the Three Months Ended June 30, 2020 and 2019:

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2020 and 2019:

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

2020 % of Total Revenue 2019 % of Total Revenue $

6 unchanged sentences

Depreciation 202 0.6 % 193 0.9 % 9 4.7 %

(Gain) loss on disposal of property and equipment (1,458) (3.4) % 85 0.4 % (1,543) NM

Loss on disposal of property and equipment 203 0.6 % 167 0.8 % 36 21.6 %

Other (income) expense (19) (0.1) % 1 — % (20) NM

1 unchanged sentence

Non-operating expenses

Unrealized (gain) loss on warrant conversion liability — — % 268 1.3 % (268) (100.0) %

Unrealized (gain) on warrant conversion liability — — % (800) (3.9) % 800 (100.0) %

(Gain) loss from equity investment (21) (0.1) % 26 0.1 % (47) NM

1 unchanged sentence

Net income before taxes 3,945 11.8 % 2,904 14.3 % 1,041 35.8 %

(Benefit) provision for income taxes (6,646) (15.5) % 24 0.1 % (6,670) NM

Net income $ 19,412 45.3 % $ 1,326 6.5 % $ 18,086 NM

Provision for income taxes 1,141 3.4 % 51 0.3 % 1,090 NM

Net income $ 2,804 8.4 % $ 2,853 14.0 % $ (49) (1.7) %

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2020 and 2019

The following table summarizes our revenue for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

September 30, 2020 and 2019

The following table summarizes our revenue for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

2020 % of Total Revenue 2019 % of Total Revenue $

4 unchanged sentences

Equipment and supply sales 1,890 5.7 % 1,349 6.6 % 541 40.1 %

COVID-19 response sales 19,712 46.0 % — — % 19,712 100.0 %

COVID-19 response sales and services 8,553 25.6 % — — % 8,553 100.0 %

Service revenues 393 1.2 % 357 1.8 % 36 10.1 %

Total net revenue $ 33,447 100.0 % $ 20,368 100.0 % $ 13,079 64.2 %

For the three months ended June 30, 2020, revenue totaled $42.9 million, an increase of $22.5 million (or 110.8%) from the comparable period in 2019.

The revenue growth was primarily driven by COVID-19 response sales of $19.7 million.

For the three months ended September 30, 2020, revenue totaled $33.4 million, an increase of $13.1 million (or 64.2%) from the comparable period in 2019.

The revenue growth was primarily driven by COVID-19 response sales and services of $8.6 million.

In response to the COVID-19 pandemic, we have been working in close cooperation with state agencies and hospital systems to source urgently needed medical equipment such as ventilators, ventilator supplies, other respiratory equipment, and personal protective equipment.

During the three months ended June 30, 2020, the $19.7 million of COVID-19 response sales consisted primarily of PAPs, ventilators and associated supplies and personal protective equipment.

We expect further COVID-19 response sales during the remainder of 2020, but the quantity and impact of such sales remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment and supplies from other suppliers.

Excluding the COVID-19 response sales, net revenue increased $2.8 million (or 13.9%) from the comparable period in 2019.

The increase was primarily driven by increased ventilator rental revenue of $2.3 million (or 13.3%) coinciding with our active ventilator patient base growing from 7,130 as of June 30, 2019 to 7,705 as of June 30, 2020, an increase of 8%.

During the three months ended September 30, 2020, the $8.6 million of COVID-19 response sales and services consisted primarily of PAPs, ventilators, associated supplies, personal protective equipment, and contact tracing services.

We expect further COVID-19 response related revenue during the remainder of 2020, but the quantity and impact of such revenue remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment, supplies, and services from other suppliers.

Excluding the COVID-19 response sales and services revenue, net revenue increased $4.5 million (or 22.2%) from the comparable period in 2019.

The increase was primarily driven by an increase in ventilator rental revenue of $2.7 million (or 16.0%).

Rental revenue from other DME grew $1.2 million (or 82.8%) quarter over quarter.

This growth was largely attributable to our percussion vests, PAPs, and oxygen concentrators.

As we continue to expand geographically into new states and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and ventilator rental revenue, as well as in our other respiratory products, though in the short term we anticipate growth to occur at a slower rate than in recent periods as a result of the pandemic.

Non-COVID-19 related equipment sales and services combined decreased by $0.7 million (or 46.5%) year over year as the majority of our sales force shifted its focus to assist state agencies and hospitals in their efforts to procure respiratory equipment and supplies in response to the COVID-19 pandemic.

We expect that such equipment sales and services will continue to be impacted for the duration of the pandemic.

This growth was largely attributable to product revenue from percussion vests, PAPs, and oxygen therapy.

Non-COVID-19 related equipment sales and services combined increased by $0.6 million (or 33.8%) year over year primarily as a result of increasing demand for respiratory supplies, specifically for PAP resupply patients, that are less impacted by the ongoing pandemic.

As we continue to expand geographically into new states and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and ventilator rental revenue, as well as in our other growing respiratory offerings, though in the short term we anticipate growth to continue to occur at a slower rate than in recent periods as a result of the pandemic.

Cost of revenue and gross profit

For the three months ended June 30, 2020, cost of revenue totaled $16.9 million, an increase of $11.2 million (or 197.7%) from the comparable period in 2019.

COVID-19 response sales accounted for $9.2 million (or 54.3%) of these costs.

For the three months ended June 30, 2020 and 2019, gross profit percentage decreased from approximately 72.0% to approximately 60.5%.

The decreased margins were primarily the result of the above mentioned COVID-19 response sales which contributed a weighted average gross profit percentage of 53.4%.

Excluding COVID-19 response sales, gross profit percentage for the three months ended June 30, 2020 was 66.6%.

The reduction in gross profit percentage is also due in part to direct labor cost for respiratory therapists.

For the three months ended September 30, 2020, cost of revenue totaled $14.0 million, an increase of $7.7 million (or 121.5%) from the comparable period in 2019.

COVID-19 response sales and services accounted for $5.6 million (or 39.8%) of these costs.

For the three months ended September 30, 2020 and 2019, gross profit percentage decreased from approximately 69.0% to approximately 58.2%.

The decreased margins were primarily the result of the above mentioned COVID-19 response sales and services which contributed a weighted average gross profit percentage of 34.8%.

Excluding COVID-19 response sales and services, gross profit percentage for the three months ended September 30, 2020 was 66.2%.

The reduction in gross profit percentage is partly a reflection of our current product mix, but is also due in part to direct labor cost for respiratory therapists.

While our active ventilator patient base growth was impacted by the current pandemic in the short term, we have not experienced a corresponding change in the number of respiratory therapists employed.

4 unchanged sentences

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

June 30, 2020 and 2019

September 30, 2020 and 2019

Selling, general & administrative expense

For the three months ended June 30, 2020, selling, general and administrative expenses totaled $16.4 million, an increase of $4.9 million (or 42.7%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue decreased to 38.3% for the three months ended June 30, 2020 compared to 56.7% for the three months ended June 30, 2019.

Excluding the impact of the COVID-19 response sales, selling, general, and administrative expenses as a percentage of revenue was 71.0% for the three months ended June 30, 2020.

For the three months ended September 30, 2020, selling, general and administrative expenses totaled $13.6 million, an increase of $3.3 million (or 32.4%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue decreased to 40.5% for the three months ended September 30, 2020 compared to 50.2% for the three months ended September 30, 2019.

Selling general and administrative expenses for the three months ended September 30, 2020 include $512,000 for direct selling expenses related to COVID-19 response sales and services.

Excluding both the impact of the COVID-19 response sales and services and direct expenses, selling, general, and administrative expenses as a percentage of revenue was 52.4% for the three months ended September 30, 2020.

The increase in overall selling, general and administrative expense as compared to the prior year period is attributable to additional employee related expenses to accommodate the overall growth of the Company, as well as additional public company expenses relating to our NASDAQ listing in August 2019, partially offset by a decrease in travel, meals, and entertainment due to COVID-19 related restrictions.

Employee compensation expenses increased $3.9 million (or 44.7%) as our full time employee count increased to 459 on June 30, 2020 from 357 on June 30, 2019, an increase of 28.6%.

Additionally, $1.6 million of the employee compensation expense increase was the result of the impact of our phantom stock plan.

Employee compensation expenses increased $0.9 million (or 14.5%) as a result of higher incentive based compensation and an overall increase in our employee headcount.

Our full time employee count increased from 411 on September 30, 2019 to 499 on September 30, 2020, an increase of 21.4%.

Partially offsetting these increases, was a $0.6 million reduction in employee compensation expense related to the impact of our phantom stock plan.

Our phantom stock plan is measured at fair value as of the reporting period and is driven primarily by the number of eligible employees and our stock price.

On June 30, 2020, our stock price closed at $13.01 (CAD$), versus $8.93 (CAD$) on June 30, 2019, driving higher comparable expenses related to these awards in the current period.

Professional fees also increased $0.5 million (or 93%) for the comparable period, driven by higher legal and consulting fees relating to the COVID-19 pandemic.

As we continue to respond to the COVID-19 pandemic, grow new markets and increase our employee count, we expect selling, general, and administrative expenses will trend accordingly.

For the three months ended September 30, 2020 our stock price declined by 10.0% compared to an increase of 2.4% during the three months ended September 30, 2019, resulting in lower comparable expenses related to these awards in the current period.

Additionally, professional fees increased $1.0 million for the comparable period, driven by higher legal and consulting fees and public company expenses.

As we continue to respond to the COVID-19 pandemic, grow into new markets and increase our employee count, we expect selling, general, and administrative expenses will trend accordingly.

We expect that selling, general and administrative expenses, in absolute terms, will remain relatively consistent with the current quarter through the end of 2020.

(Gain) loss on disposal of property and equipment

For the three months ended June 30, 2020, we recorded a gain on disposal of property and equipment of $1.5 million, compared to a loss of $0.1 million during the comparable period in 2019.

As a result of our efforts for the COVID-19 response as described above, certain of our previously placed in service property and equipment was sold.

As a result, during the three months ended June 30, 2020, we recorded sales proceeds on used equipment of $2.5 million which resulted in a net gain on disposal for related equipment of $1.5 million.

We expect disposals of equipment to generally remain consistent with historical trends, with the exception of additional gains that could be realized from any additional COVID-19 response sales, but the impact of such sales remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment and supplies from other suppliers.

Other (income) expense

For the three months ended June 30, 2020, other income totaled $3.6 million.

We received a payment from the Provider Relief Fund of $3.5 million in April 2020.

Loss on disposal of property and equipment

For the three months ended September 30, 2020, we recorded a loss on disposal of property and equipment of $0.2 million.

This was consistent with the prior period and remained less than 1% of revenue.

In prior 2020 periods, as a result of our efforts for the COVID-19 response, certain of our previously placed in service property and equipment was sold and substantial gains resulting from these disposals was recognized.

No such disposals occurred in the current period.

We expect disposals of equipment to generally remain consistent with historical trends, with the exception of any gains that could be realized from any additional COVID-19 response sales, but the impact of such sales remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment and supplies from other suppliers.

Stock-based compensation

For the three months ended June 30, 2020, stock-based compensation totaled $1.2 million, an increase of $0.2 million (or 15.7%) from the comparable period in 2019.

For the three months ended September 30, 2020, stock-based compensation totaled $1.2 million, an increase of $0.2 million (or 16.0%) from the comparable period in 2019.

This increase is attributable to the expense of additional stock-based awards during 2020.

We expect that as we continue to increase our employee count and utilize stock-based awards as an aspect of employee compensation, stock-based compensation expense will increase accordingly.

Stock-based compensation as a percentage of revenue has historically remained under 5%.

Stock-based compensation as a percentage of revenue has historically remained near or below 5%.

Interest expense, net

For the three months ended June 30, 2020, net interest expense totaled $0.1 million, an increase of $0.1 million from the comparable period in 2019.

The increased interest expense results from from the Building Term Note that funded the purchase of the new corporate headquarters in May 2019 and the Term Note used for general corporate purposes that was entered in September 2019.

See "Liquidity and Capital Resources" below for additional information on the Building Term Note and Term Note.

For the three months ended September 30, 2020, net interest expense totaled $0.1 million, which remained consistent with the comparable period in 2019.

We expect net interest expense to remain relatively consistent through the end of 2020.

Provision for income taxes

For the three months ended September 30, 2020, the provision for income taxes was a $1.1 million expense, compared to a $0.1 million expense during the 2019 period.

The increase in income tax expense was primarily due to a higher effective tax rate during the current period.

Excluding the impact of the current year discrete items for the release of valuation allowances and the recognition of a deferred tax asset, our estimated tax rate for the year was 12.3%.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2020 and 2019

(Benefit) provision for income taxes

For the three months ended June 30, 2020, the provision for income taxes was a $6.6 million benefit, compared to a $24,000 expense during the 2019 period.

The decrease in income tax expense was primarily due to a lower effective tax rate which was caused by the release of a valuation allowance and recognition of a deferred tax asset during the current period.

As we continue to incur substantial capital expenditures to acquire medical equipment to accommodate our patient base growth, combined with the deferred tax assets, we expect most near-term cash tax payments for federal and state tax liabilities to remain relatively consistent.

For the three months ended June 30, 2020, net income was $19.4 million, an increase of $18.1 million from the comparable period in 2019.

Net income as a percentage of revenue increased from 6.5% for the three months ended June 30, 2019 to 45.3% for the three months ended June 30, 2020, driven by increased sales revenue, gains on disposal of equipment in response to COVID-19, and receipt of the Provider Relief Funds.

Comparison of the Six Months Ended June 30, 2020 and 2019:

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

September 30, 2020 and 2019

C omparison of the Nine Months Ended September 30, 2020 and 2019:

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

2020 % of Total Revenue 2019 % of Total Revenue $

10 unchanged sentences

Non-operating expenses

Unrealized (gain) loss on warrant conversion liability — — % 437 1.1 % (437) (100.0) %

Loss from equity investment (15) — % 51 0.1 % (66) (129.4) %

Unrealized (gain) on warrant conversion liability — — % (363) (0.6) % 363 (100.0) %

(Gain) loss from equity investment (36) — % 77 0.1 % (113) (146.8) %

Interest expense, net 409 0.4 % 102 0.2 % 307 NM

2 unchanged sentences

Net income $ 26,459 26.4 % $ 6,137 10.4 % $ 20,322 331.1 %

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

The following table summarizes our revenue for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The following table summarizes our revenue for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

2020 % of Total Revenue 2019 % of Total Revenue $

4 unchanged sentences

Equipment and supply sales 3,962 3.9 % 3,202 5.4 % 760 23.7 %

COVID-19 response sales 20,753 31.1 % — — % 20,753 100.0 %

COVID-19 response sales and services 29,306 29.3 % — — % 29,306 100.0 %

Service revenues 983 1.0 % 1,152 2.0 % (169) (14.7) %

Total net revenue $ 100,107 100.0 % $ 58,808 100.0 % $ 41,299 70.2 %

For the six months ended June 30, 2020, revenue totaled $66.7 million, an increase of $28.2 million (or 73.4%) from the comparable period in 2019.

The revenue growth was primarily driven by COVID-19 response sales of $20.8 million as described in more detail above.

Excluding the COVID-19 response sales, net revenue increased $7.5 million (or 19.4%) from the comparable period in 2019.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

For the nine months ended September 30, 2020, revenue totaled $100.1 million, an increase of $41.3 million (or 70.2%) from the comparable period in 2019.

The revenue growth was primarily driven by COVID-19 response sales and services of $29.3 million as described in more detail above.

We expect further COVID-19 response revenue during the remainder of 2020, but the quantity and impact of such revenue remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment and supplies from other suppliers.

Excluding the COVID-19 response sales and services, net revenue increased $12.0 million (or 20.4%) from the comparable period in 2019.

Ventilator rental revenue increased $7.7 million (or 15.1%) due to our organic growth in active ventilator patient base.

In addition to the ventilator rental revenue growth, rental revenue from other durable medical equipment grew $2.5 million (or 125.1%) which primary consisted of increased rentals of percussion vests and oxygen concentrators.

In the short term, we anticipate our growth to occur at a slower rate than in recent periods as a result of the pandemic.

Non-COVID-19 related equipment sales and services combined were materially consistent year over year as the majority of our sales force shifted its focus to assist state agencies and hospitals in their efforts to procure respiratory equipment and supplies in response to the COVID-19 pandemic.

We expect such equipment sales and services will continue to be impacted for the duration of the pandemic.

In addition to the ventilator rental revenue growth, rental revenue from other DME grew $3.7 million (or 107.4%) which primarily consisted of product revenue from percussion vests, PAPs, and oxygen therapy.

Non-COVID-19 related equipment sales and services combined increased by $0.6 million (or 13.6%) year over year primarily as a result of increasing demand for respiratory supplies, specifically for PAP resupply patients, that are less impacted by the ongoing pandemic.

As we continue to expand geographically into new states and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and ventilator rental revenue, as well as in our other growing respiratory offerings, though in the short term we anticipate growth to continue to occur at a slower rate than in recent periods as a result of the pandemic.

Cost of revenue and gross profit

For the six months ended June 30, 2020, cost of revenue totaled $25.2 million, an increase of $14.5 million (or 134.7%) from the comparable period in 2019.

For the six months ended June 30, 2020 and 2019, gross profit percentage decreased from approximately 72.1% to approximately 62.2%.

The lower margins are primarily the result of the high volume of COVID-19 response sales.

For the nine months ended September 30, 2020, cost of revenue totaled $39.2 million, an increase of $22.1 million (or 129.8%) from the comparable period in 2019.

For the nine months ended September 30, 2020 and 2019, gross profit percentage decreased from approximately 71.0% to approximately 60.9%.

The lower margins are primarily the result of the high volume of COVID-19 response sales and services.

Historically the majority of our revenue has come from equipment rentals.

For the six months ended June 30, 2020, COVID-19 response sales accounted for 31.1% of total revenue, thus driving margin lower.

Excluding COVID-19 response sales, gross profit percentage for the six months ended June 30, 2020 was 66.4%.

The reduction in gross profit percentage is also due in part to direct labor cost for respiratory therapists.

For the nine months ended September 30, 2020, COVID-19 response sales and services accounted for 29.3% of total revenue, thus driving margin lower.

Excluding COVID-19 response sales and services, gross profit percentage for the nine months ended September 30, 2020 was 66.3%.

The reduction in gross profit percentage is partly a reflection of our current product mix, but is also due in part to direct labor cost for respiratory therapists.

While our active ventilator patient base growth was impacted by the pandemic in the short term, we have not experienced a corresponding change in the number of respiratory therapists employed.

2 unchanged sentences

Selling, general & administrative expense

For the six months ended June 30, 2020, selling, general and administrative expenses totaled $27.0 million, an increase of $6.0 million (or 28.7%) from the comparable period in 2019.

Selling, general, and administrative expenses as a percentage of revenue decreased to 40.5% for the six months ended June 30, 2020, compared to 54.6% and for the six months ended June 30, 2019.

Excluding the impact of the COVID-19 response sales, selling, general, and administrative expenses as a percentage of revenue was 58.8% for the six months ended June 30, 2020.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

For the nine months ended September 30, 2020, selling, general and administrative expenses totaled $40.6 million, an increase of $9.3 million (or 30.0%) from the comparable period in 2019.

Selling, general, and administrative expenses as a percentage of revenue decreased to 40.5% for the nine months ended September 30, 2020, compared to 53.1% and for the nine months ended September 30, 2019.

Excluding the impact of the COVID-19 response sales and services, selling, general, and administrative expenses as a percentage of revenue was 56.6% for the nine months ended September 30, 2020.

The increase in overall selling, general and administrative expense as compared to the prior year period is attributable to additional employee related expenses to accommodate the overall growth of the Company as well as additional public company expenses relating to our NASDAQ listing in August 2019, partially offset by a decrease in travel, meals, and entertainment due to COVID-19 related restrictions.

Employee compensation increased $3.3 million (or 21%) as our full time employee count increased to 459 at June 30, 2020, compared to 357 at June 30, 2019, an increase of 28.6%.

Included in employee compensation expense is $3.6 million related to of our phantom stock plan compared to $4.6 million from the comparable period in 2019.

Additionally, professional fees increased $1.0 million (or 112%) from the comparable period in 2019, driven by higher legal and consulting fees relating to the COVID-19 pandemic.

Employee compensation increased $2.8 million (or 15%) as a result of higher incentive based compensation and an overall increase in our employee headcount.

Our full time employee count increased from 411 on September 30, 2019 to 499 on September 30, 2020, an increase of 21.4%.

Partially offsetting these increases, was a $1.6 million reduction in employee compensation expense related to the impact of our phantom stock plan.

Our phantom stock plan is measured at fair value as of the reporting period and is driven primarily by the number of eligible employees and our stock price.

For the nine months ended September 30, 2020 our stock price increased by 39.4% compared to an increase of 74.8% during the nine months ended September 30, 2019, resulting in lower comparable expenses related to these awards in the current period.

Additionally, professional fees increased $1.9 million (or 135%) from the comparable period in 2019, driven by higher legal and consulting fees and public company expenses.

As we continue to respond to the COVID-19 pandemic, grow into new markets and increase our employee count, we expect selling, general, and administrative expenses will trend accordingly.

We expect that selling, general and administrative expenses as a percentage of revenue will trend higher towards historical percentages toward the end of 2020.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

(Gain) loss on disposal of property and equipment

For the six months ended June 30, 2020, we recorded a gain on disposal of property and equipment of $2.6 million, compared to a loss of $0.1 million during the comparable period in 2019.

For the nine months ended September 30, 2020, we recorded a gain on disposal of property and equipment of $2.4 million, compared to a loss of $0.3 million during the comparable period in 2019.

As a result of our efforts for the COVID-19 response as described above, certain of our previously placed in service property and equipment was sold.

As a result, during the six months ended June 30, 2020, we recorded sales proceeds on used equipment of $5.0 million which resulted in a net gain on disposal for related equipment of $3.5 million.

As a result, during the nine months ended September 30, 2020, we recorded sales proceeds on used equipment of $5.0 million which resulted in a net gain on disposal for related equipment of $3.5 million.

Other (income) expense

For the six months ended June 30, 2020, other income totaled $3.6 million, an increase of $3.6 million from the comparable prior period.

For the nine months ended September 30, 2020, other income totaled $3.6 million, an increase of $3.6 million from the comparable prior period.

We received a payment from the Provider Relief Fund of $3.5 million in April 2020.

1 unchanged sentence

Stock-based compensation

For the six months ended June 30, 2020, stock-based compensation totaled $2.3 million, an increase of $0.4 million (or 22.6%) from the comparable period in 2019.

For the nine months ended September 30, 2020, stock-based compensation totaled $3.6 million, an increase of $0.6 million (or 20.2%) from the comparable period in 2019.

We expect that as we continue to increase our employee count and utilize stock-based awards as an aspect of employee compensation, stock-based compensation expense will increase accordingly.

Stock-based compensation as a percentage of revenue has historically remained under 5%.

Stock-based compensation as a percentage of revenue has historically remained near or below 5%.

Interest expense, net

For the six months ended June 30, 2020, net interest expense totaled $0.3 million, an increase of $0.2 million from the comparable period in 2019.

We expect net interest expense to increase as a result of the Building Term Note and Term Note described below.

For the nine months ended September 30, 2020, net interest expense totaled $0.4 million, an increase of $0.3 million from the comparable period in 2019.

We expect net interest expense to remain materially consistent through the end of 2020.

(Benefit) provision for income taxes

For the six months ended June 30, 2020, the provision for income taxes was a $6.5 million benefit, compared to a $0.2 million expense during the 2019 period.

For the nine months ended September 30, 2020, the provision for income taxes was a $5.3 million benefit, compared to a $0.2 million expense during the 2019 period.

For the six months ended June 30, 2020, net income was $23.7 million, an increase of $20.4 million from the comparable period in 2019.

Net income as a percentage of revenue increased from 8.5% for the six months ended June 30, 2019 to 35.5% for the six months ended June 30, 2020, driven by increased sales revenue, gains on disposal of equipment in response to COVID-19, and receipt of the Provider Relief Funds.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

Excluding the impact of this current year discrete item, our estimated tax rate for the year was 12.3%.

Non-GAAP Financial Measures

9 unchanged sentences

However, we do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating costs.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

– The amount of interest expense we incur or interest income we generate may be useful for investors to consider and may result in current cash inflows or outflows.

8 unchanged sentences

The following table is a reconciliation of Net income, the most directly comparable GAAP measure, to Adjusted EBITDA, on a historical basis for the periods indicated:

For the quarter ended June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018

For the quarter ended September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018

Net Income $ 2,804 $ 19,412 $ 4,243 $ 2,388 $ 2,853 $ 1,326 $ 1,958 $ 2,968

3 unchanged sentences

Stock-based compensation 1,234 1,196 1,151 908 1,064 1,034 880 804

Income tax (benefit) expense (6,646) 187 58 51 24 138 127 35

Income tax expense (benefit) 1,141 (6,646) 187 58 51 24 138 127

Adjusted EBITDA $ 7,720 $ 16,287 $ 7,869 $ 5,569 $ 4,883 $ 4,116 $ 4,466 $ 4,896

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

Use of Non-GAAP Financial Measures

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Liquidity and Capital Resources

Cash and cash equivalents at June 30, 2020 was $29.7 million, compared to $13.4 million at December 31, 2019.

Based on our current plan of operations, including potential acquisitions, we believe this amount, when combined with expected cash flows from operations and amounts available under our line of credit will be sufficient to fund our growth strategy and to meet our anticipated operating expenses, capital expenditures, and debt service obligations for at least the next 12 months.

Cash and cash equivalents at September 30, 2020 was $32.4 million, compared to $13.4 million at December 31, 2019.

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 undrawn as of June 30, 2020.

Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully undrawn as of September 30, 2020.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

The following table summarizes our cash flows for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

Net Cash provided by (used in):

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Financing activities (7,231) 762

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

Net increase in cash and cash equivalents $ 19,041 $ 2,217

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2020 was $22.0 million, resulting from net income of $23.7 million and non-cash net income adjustments of $1.8 million and an increase in net operating liabilities of $7.2 million, which was partially offset by an increase in net operating assets of $10.6 million.

Net cash provided by operating activities during the nine months ended September 30, 2020 was $29.3 million, resulting from net income of $26.5 million and non-cash net income adjustments of $7.3 million and an increase in net operating liabilities of $5.7 million, which was partially offset by an increase in net operating assets of $10.2 million.

The non-cash net income adjustments primarily consisted of $7.0 million in change of allowance for doubtful accounts, $6.7 million of depreciation, $2.4 million of gains on disposal of property and equipment, change in deferred tax asset of $7.6 million and $3.6 million of stock-based compensation.

1 unchanged sentence

The changes in operating liabilities primarily consisted of an increase in accounts payable of $2.7 million and an increase in accrued liabilities of $2.4 million.

The increase in our operating assets was primarily driven by accounts receivable related to COVID-19 response sales occurring during the quarter.

The increase in our operating assets was primarily driven by accounts receivable related to COVID-19 response sales and services occurring during the period.

Included in our operating cash flows for the period is the receipt of $3.5 million in Provider Relief Funds.

Net cash provided by operating activities during the six months ended June 30, 2019 was $6.0 million, resulting from net income of $3.3 million, non-cash net income adjustments of $9.1 million, and an increase in net operating liabilities of $2.3 million, which was partially offset by an increase in net operating assets of $8.8 million.

Net cash provided by operating activities during the nine months ended September 30, 2019 was $11.7 million, resulting from net income of $6.1 million, non-cash net income adjustments of $14.3 million, and an increase in net operating liabilities of $0.8 million, which was partially offset by an increase in net operating assets of $9.5 million.

The non-cash net income adjustments primarily consisted of $6.9 million in change of allowance for doubtful accounts, $4.4 million of depreciation and $3.0 million of stock-based compensation.

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $7.8 million as a result of increased revenue growth and an increase in inventory of $0.8 million.

The changes in operating liabilities primarily consisted of increases in accounts payable of $1.9 million and deferred revenue of $0.7 million, partially offset by a decrease in accrued liabilities of $0.2 million.

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $9.8 million as a result of increased revenue growth, which was partially offset by a decrease in inventory of $1.6 million.

The changes in operating liabilities primarily consisted of a decrease in accounts payable of $1.8 million, partially offset by increases in accrued liabilities of $1.9 million and deferred revenue of $0.8 million.

Net Cash Used in Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2020 was $3.0 million, consisting of $8.2 million of purchases of property and equipment, partially offset by $5.2 million of COVID-19 response sales proceeds from the disposal of property and equipment.

Purchases of property and equipment were primarily related to medical equipment rented to our patients.

Combining cash purchases of property and equipment of $8.2 million and equipment financed through finance leases of $3.0 million, our total capital expenditures for the nine months ended September 30, 2020 were $11.2 million.

This represents a $14.1 million, (or 55.7%), decrease year over year.

Net cash used in investing activities during the nine months ended September 30, 2019 was $10.2 million, consisting of $10.6 million of purchases of property and equipment, partially offset by $0.4 million of proceeds from the disposal of property and equipment.

Purchases of property and equipment were primarily related to the purchase of our new corporate headquarters in addition to medical equipment rented to our patients.

Combining cash purchases of property and equipment of $10.6 million and equipment financed through finance leases of $14.7 million, our total capital expenditures for the nine months ended September 30, 2019 was $25.3 million.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2020 was $7.2 million, consisting of $1.2 million in principal payments on the Term Note (as defined below) and $7.7 million in repayments of finance lease liabilities, partially offset by $1.8 million proceeds from the exercise of stock options.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2020 and 2019

Net cash used in investing activities during the six months ended June 30, 2020 was $0.6 million, consisting of $5.7 million of purchases of property and equipment, partially offset by $5.1 million of COVID-19 response sales proceeds from the disposal of property and equipment.

Purchases of property and equipment were primarily related to medical equipment rented to our patients.

Combining cash purchases of property and equipment of $5.7 million and equipment financed through finance leases of $2.9 million, our total capital expenditures for the six months ended June 30, 2020 were $8.6 million.

This represents an $8.5 million, (or 49.7%), decrease year over year.

Net cash used in investing activities during the six months ended June 30, 2019 was $7.5 million, consisting of $7.7 million of purchases of property and equipment, partially offset by $0.2 million of proceeds from the disposal of property and equipment.

Purchases of property and equipment were primarily related to the purchase of our new corporate headquarters in addition to medical equipment rented to our patients.

Combining cash purchases of property and equipment of $7.7 million and equipment financed through finance leases of $9.4 million, our total capital expenditures for the six months ended June 30, 2019 was $17.1 million.

Net Cash Used in Financing Activities

Net cash used in financing activities during the six months ended June 30, 2020 was $5.0 million, consisting of $0.8 million in principal payments on the Term Note and $5.9 million in repayments of finance lease liabilities, partially offset by $1.8 million proceeds from the exercise of stock options.

Net cash used in financing activities during the six months ended June 30, 2019 was $1.2 million, consisting of $4.8 million in proceeds to finance the purchase of our corporate headquarters, $4.6 million in repayments of finance lease liabilities and $1.5 million of shares repurchased and canceled under our normal course issuer bid.

September 30, 2020 and 2019

Net cash provided by financing activities during the nine months ended September 30, 2019 was $0.8 million, consisting of $4.8 million in proceeds from the Building Term Note (as defined below) to finance the purchase of our corporate headquarters, $5.0 million in proceeds from the Term Note, partially offset by $7.9 million in repayments of finance lease liabilities and $1.5 million of shares repurchased and canceled under our normal course issuer bid.

Line of Credit

1 unchanged sentence

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.

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

While we currently have no immediate plans to draw on this line of credit, the line of credit allows flexibility in funding our future operations subject to compliance with the covenants described above.

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

Financial Covenant Required Ratio Ratio

Financial Covenant Required Ratio Ratio at September 30, 2020

Total Debt to Adjusted EBITDA (Quarterly) not more than 1.50:1.00 0.35

1 unchanged sentence

Loan-to-Value Ratio (Quarterly) not more than 0.85 0.71

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

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

The Company was in compliance with all covenants under the Commercial Business Loan Agreement in effect at September 30, 2020.

Sources of funds

Our cash provided by operating activities in the six months ended June 30, 2020 was $22.0 million compared to $6.0 million in the six months ended June 30, 2019.

Our cash provided by operating activities in the nine months ended September 30, 2020 was $29.3 million compared to $11.7 million in the nine months ended September 30, 2019.

HHS Provider Relief Funds

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The funds are allocated to eligible healthcare providers for expenses and lost revenue attributable to the COVID-19 pandemic.

The fund payments are grants, not loans, and HHS will not require repayment, but the funds must be used only for grant approved purposes.

As of June 30, 2020, we had cash and cash equivalents of $29.7 million.

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.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

As of September 30, 2020, we had cash and cash equivalents of $32.4 million.

Our principal uses of cash are funding our new rental assets and other capital purchases, operations, and other working capital requirements.

12 unchanged sentences

The Company maintains a 401(k) retirement plan for employees to which eligible employees can contribute a percentage of their pre-tax compensation.

Matching employer contributions to the 401(k) plan totaled $223,000 and $166,000 for the three months ended June 30, 2020 and 2019, respectively, and $402,000 and $335,000 for the six months ended June 30, 2020 and 2019, respectively.

Matching employer contributions to the 401(k) plan totaled $175,000 and $120,000 for the three months ended September 30, 2020 and 2019, respectively, and $577,000 and $455,000 for the nine months ended September 30, 2020 and 2019, respectively.

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.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

Accounting and Disclosure Matters

6 unchanged sentences

We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

Revenue recognition

24 unchanged sentences

The transaction price is initially constrained by the amount of customer co-payments, which are included in the transaction price when considered probable of payment and included in revenue if the product or service has already been provided to the customer.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required to record net revenue and accounts receivable at their net realizable values.

5 unchanged sentences

Any taxes due upon sale of the products or services are not recognized as revenue.

We do not have any partially or unfilled performance obligations related to contracts with customers and as such, we have no contract liabilities as of June 30, 2020.

We do not have any partially or unfilled performance obligations related to contracts with customers and as such, we have no contract liabilities as of September 30, 2020.

Allowance for doubtful accounts

2 unchanged sentences

Specifically, we consider historical realization data including current and historical cash collections, accounts receivable aging trends, other operating trends and relevant business conditions.

Because of continuing changes in the health care industry and third-party reimbursement, it is possible that the estimates could change, which could have a material impact on the operations and cash flows.

Because of continuing changes in the health care industry and third-party

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

reimbursement, it is possible that the estimates could change, which could have a material impact on the operations and cash flows.

If circumstances related to certain customers change or actual results differ from expectations, our estimate of the recoverability of receivables could fluctuate from that provided for in our consolidated financial statements.

A change in estimate could impact bad debt expense and accounts receivable.

Our allowance for doubtful accounts was $9.3 million and $6.9 million as of June 30, 2020 and 2019, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Our allowance for doubtful accounts was $8.8 million and $7.7 million as of September 30, 2020 and 2019, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Stock-based compensation

11 unchanged sentences

To the extent our interest rate swaps are determined to be ineffective, we recognize the changes in the estimated fair value of our swaps in Interest and other non-operating expenses, net on our Condensed Consolidated Statements of Income.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2020 and 2019

We are subject to income taxes in numerous jurisdictions.

10 unchanged sentences

Changes or differences in these estimates or assumptions may result in changes to the current and deferred tax assets and liabilities on the consolidated statements of financial position and a charge to or recovery of income tax expense.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2020 and 2019

Recently Issued Accounting Pronouncements

1 unchanged sentence

VIEMED HEALTHCARE, INC.

June 30, 2020 and 2019

September 30, 2020 and 2019

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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 2. Management’s Discussion and Analysis