What changed in this filing

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Item 1. Business

2021-03-03 compared with 2020-03-04 · 88 added, 88 removed, 209 unchanged (46% of the section changed)

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Viemed Healthcare, Inc.

(“Viemed” or the “Company”), through its indirect wholly-owned subsidiaries, Sleep Management, L.L.C.

(“Sleep Management”) and Home Sleep Delivered, L.L.C.

(“Home Sleep”, and, together with Sleep Management, the “Sleepco Subsidiaries”), is a participating Medicare durable equipment supplier that provides post-acute respiratory services in the United States.

Viemed’s primary objective is to focus on the growth of the business of the Sleepco Subsidiaries and thereby solidify its position as one of the largest providers of home therapy for patients suffering from respiratory diseases that require a high level of service, with such programs being designed specifically for payors to have the ability to treat patients in the home for less total cost and with a superior quality of care.

The services of the Sleepco Subsidiaries include respiratory disease management, neuromuscular care, in-home sleep testing and sleep apnea treatment, oxygen therapy, and respiratory equipment rentals.

(the "Company" or "Viemed"), 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 39 states in the United States.

Viemed’s primary objective is to focus on the growth of its business and thereby solidify its position as one of the largest providers of home therapy for patients suffering from respiratory diseases that require a high level of service, with such programs being designed specifically for payors to have the ability to treat patients in the home for less total cost and with a superior quality of care.

Viemed's services include respiratory disease management, neuromuscular care, in-home sleep testing and sleep apnea treatment, oxygen therapy, and respiratory equipment rentals.

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

Viemed expects that it will continue to employ more respiratory therapists in order to assure the high service model is accomplished in the home.

Viemed expects that it will continue to employ more respiratory therapists ("RTs") in order to assure the high service model is accomplished in the home.

By focusing overhead costs to personnel that service the patient rather than physical location costs, Viemed anticipates continuing to efficiently scale its business in regions that are currently not being effectively serviced.

The continued trend of servicing patients in the home rather than in hospitals is aligned with Viemed’s business objectives and management anticipates that this trend will continue to offer growth opportunities for the Company.

Viemed expects to continue to be a solution to the rising health costs in the United States by offering more cost effective home based solutions while increasing the quality of life for patients fighting serious respiratory diseases.

Protech Home Medical Corp., formerly Patient Home Monitoring Corp.

(“PHM”), acquired the Sleepco Subsidiaries in June 2015.

In December 2017 and pursuant to the terms of the Arrangement Agreement (as defined below), the Sleepco Subsidiaries became indirect wholly-owned subsidiaries of Viemed, as described below.

Sleep Management focuses on disease management and improving the quality of life for respiratory patients through clinical excellence, education and technology.

Viemed expects to continue to be a solution to the rising healthcare costs in the United States by offering more cost effective home based solutions while increasing the quality of life for patients fighting serious respiratory diseases.

Viemed focuses on disease management and improving the quality of life for respiratory patients through clinical excellence, education and technology.

Its service offerings are based on effective home treatment with respiratory care practitioners providing therapy and counseling to patients in their homes using cutting edge technology.

Home Sleep focuses on providing in-home sleep testing for sleep apnea sufferers.

Viemed, through the Sleepco Subsidiaries, is one of the largest independent non-invasive ventilator providers in the United States with a service coverage area of 31 states in the United States and prospects to grow.

Viemed currently services the following states:

Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, and West Virginia.

Our Corporate History and Background

Viemed was incorporated under the Business Corporations Act on December 14, 2016 as a wholly-owned subsidiary of PHM, a corporation continued under the Business Corporations Act, in order to effect the transactions contemplated by the Arrangement Agreement and the Purchase and Sale Agreements (as defined below).

On December 22, 2017, Viemed completed an arrangement under the provisions of Division 5 of Part 9 of the Business Corporations Act (the “Arrangement”) involving Viemed, PHM and the security holders of PHM, pursuant to which PHM completed a spin-out of Viemed pursuant to an arrangement agreement dated January 11, 2017 between Viemed and PHM, as amended on October 31, 2017 (the “Arrangement Agreement”).

VIEMED HEALTHCARE, INC.

December 31, 2019 and 2018

As a result of the Arrangement, among other things, shareholders of PHM (the “PHM Shareholders”), as of the close of business on December 21, 2017, received one new common share in the capital of PHM (each, a “New PHM Share”) and one-tenth (1/10) of one common share of Viemed for each common share in the capital of PHM held by such PHM Shareholder immediately before the completion of the Arrangement (the “Effective Time”).

Also in connection with the Arrangement:

(a) for each stock option of PHM held, each option holder that remained employed or engaged by PHM upon completion of the Arrangement received one option to purchase from PHM one New PHM Share (each, a “New PHM Option”) and PHM option holders employed or engaged by Viemed received one New PHM Option (which expired on March 22, 2018) and one tenth (1/10) of one option to purchase from Viemed one common share of Viemed;

and (b) for each common share purchase warrant of PHM held, each warrant holder received one warrant to purchase from PHM one New PHM Share and one tenth (1/10) of one warrant to purchase from Viemed one common share of Viemed.

As a result of the Arrangement, PHM separated into two companies:

Viemed, a participating Medicare durable equipment supplier that provides post-acute respiratory services in the United States;

PHM, a durable medical equipment company that specializes in delivering and servicing home-based medical equipment, including oxygen therapy, sleep apnea treatment and mobility equipment.

To effectuate the Arrangement, in addition to entering into the Arrangement Agreement, on January 11, 2017:

(a) PHM and Viemed entered into an asset purchase agreement (the “Asset Purchase Agreement”);

and (b) PHM Logistics Corporation (“PHM Logistics”), an indirect wholly-owned subsidiary of PHM, and Viemed, Inc., a company existing under the laws of the State of Delaware and a wholly-owned subsidiary of PHM Logistics (“Holdco”), entered into a share purchase agreement (the “Share Purchase Agreement”, and, together with the Asset Purchase Agreement, the “Purchase and Sale Agreements”).

Immediately before the completion of the Arrangement, in accordance with the terms of the Purchase and Sale Agreements, PHM and Viemed affected the reorganization of Viemed whereby:

(i) PHM Logistics transferred all of its equity interests in the Sleepco Subsidiaries to Holdco;

(ii) all of the common stock in the authorized capital of Holdco (the “Holdco Shares”) was transferred to PHM through a series of distributions by PHM’s wholly-owned subsidiaries to their direct shareholders, with the final distribution to PHM as a return of paid-up capital;

and (iii) PHM contributed to Viemed the Holdco Shares on an “as is, where is” basis in exchange for all of the issued and outstanding common shares of Viemed.

Following the completion of the Arrangement, the total number of outstanding common shares of Viemed was equal to the total number of common shares of Viemed distributed pursuant to the Arrangement.

The following chart illustrates Viemed’s corporate structure following the completion of the transactions contemplated by the Arrangement Agreement and the Purchase and Sale Agreements.

VIEMED HEALTHCARE, INC.

December 31, 2019 and 2018

Viemed also focuses on providing in-home sleep testing for sleep apnea sufferers.

Viemed is one of the largest independent non-invasive ventilator providers in the United States with a service coverage area of 39 states in the United States and prospects to grow into further territories.

Corporate History and Background

Viemed’s business, which has been operating since 2006, was acquired by Protech Home Medical Corp., a corporation formerly known as Patient Home Monitoring Corp.

(“PHM”), in June 2015.

Viemed was incorporated under the Business Corporations Act (British Columbia) on December 14, 2016 as a wholly-owned subsidiary of PHM in order to effect the spin-out of Viemed’s business from PHM pursuant to an arrangement under the provisions of Division 5 of Part 9 of the Business Corporations Act (British Columbia).

The spin-out was completed in December 2017.

Corporate Information

The common shares of Viemed trade in Canada on the Toronto Stock Exchange (the "TSX") under the trading symbol “VMD.TO”, and as of August 9, 2019, trade in the United States on the Nasdaq Capital Market under the trading symbol "VMD".

The common shares of Viemed trade in Canada on the Toronto Stock Exchange (the "TSX") under the trading symbol “VMD.TO” and trade in the United States on the Nasdaq Capital Market under the trading symbol "VMD".

Viemed’s registered and records office is located at Suite 2800, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2Z7 Canada and its principal executive office is located at 625 E.

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Information contained on our website is not part of this Annual Report on Form 10-K.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

Products and Services

Viemed’s services, provided through the Sleepco Subsidiaries, include the following:

Viemed’s services include the following:

• Home Medical Equipment :

Viemed provides respiratory and other home medical equipment solutions (primarily through monthly rental arrangements), including home ventilation (invasive and non-invasive), BiPAP (bi-level positive airway pressure) and CPAP (continuous positive airway pressure) devices, percussion vests, and other medical equipment.

Revenue derived from the rental and sale of home medical equipment represented a combined 98.2% and 98.5% of Viemed’s 2019 and 2018 revenue, respectively.

Revenue derived from the rental and sale of home medical equipment represented a combined 98.6% and 98.2%, respectively, of Viemed’s 2020 and 2019 traditional revenue, excluding COVID-19 response sales and services.

Viemed provides home medical equipment through the following service programs:

Respiratory disease management , including Chronic Obstructive Pulmonary Disease (“COPD”) aims to improve quality of life and reduce hospital readmissions by using proven methodology and leading technologies, such as non-invasive ventilation (“NIV”) and other therapies.

Viemed provides ventilation (both invasive and non-invasive), Positive Airway Pressure (“PAP”), and related equipment and supplies to patients suffering from COPD.

Neuromuscular care is focused on helping neuromuscular patients to breathe more comfortably while living an active, healthier life and uses respiratory therapy treatments which can lessen the effort required to breathe.

◦ Respiratory disease management , including treatment of Chronic Obstructive Pulmonary Disease (“COPD”), aims to improve quality of life and reduce hospital readmissions by using proven methodology and leading technologies, such as non-invasive ventilation (“NIV”) and other therapies.

Viemed provides ventilation (both invasive and non-invasive), Positive Airway Pressure (“PAP”), and related equipment and supplies to patients suffering from COPD through a high-touch model.

◦ Neuromuscular care is focused on helping neuromuscular patients breathe more comfortably while living an active, healthier life and uses respiratory therapy treatments which can lessen the effort required to breathe.

◦ Oxygen therapy provides patients with extra oxygen, which is sometimes used to manage certain chronic health problems, including COPD.

Oxygen therapy may be performed at a hospital, at home or in another setting.

Sleep apnea management provides related solutions and/or equipment such as the AutoPAP (an automatic continuous positive airway pressure) and BiPAP (bi-level positive airway pressure) machines.

Oxygen therapy may be performed in the home or in another setting.

◦ Sleep apnea management provides related solutions and/or equipment such as the AutoPAP (automatic continuous positive airway pressure) and BiPAP machines.

• In-home sleep testing :

Viemed provides in home sleep apnea testing services, which is an alternative to the traditional sleep lab testing environment.

These services represented 1.8% and 1.5% of Viemed’s 2019 and 2018 revenue, respectively.

Monthly rental revenue from ventilators and the sale of associated supplies represented approximately 92% and 94% of total revenue for 2019 and 2018 , respectively.

While Viemed plans to continue investigating and introducing new complimentary products and services and further expanding the coverage of existing products, home ventilation (both invasive and non-invasive) will continue to represent the substantial majority of Viemed’s revenue.

These services represented 1.4% and 1.8%, respectively, of Viemed’s 2020 and 2019 traditional revenue, excluding COVID-19 response sales and services.

Monthly rental revenue from ventilators and the sale of associated supplies represented approximately 88% and 92%, respectively, of Viemed's 2020 and 2019 traditional revenue, excluding COVID-19 response sales and services.

While Viemed plans to continue investigating and introducing new complimentary products and services and further expanding the coverage of existing products, home ventilation (both invasive and non-invasive) is expected to continue to represent the substantial majority of Viemed’s revenue.

Patients suffering from neuromuscular or respiratory diseases experience severe difficulty in breathing and require assistance from a ventilator to effectively move air in and out of their lungs.

Invasive and non-invasive ventilation differ in how the air is delivered to the person.

In invasive ventilation, air is delivered via a tube inserted into the windpipe through the mouth.

In non-invasive ventilation, air is delivered through a sealed mask that can be placed over the mouth.

Invasive ventilation delivers air via a tube inserted into the windpipe.

Non-invasive ventilation delivers air through a sealed mask that can be placed over the mouth.

The Centers for Medicare and Medicaid Services (“CMS”) Medicare National Coverage Determinations Manual stipulates that ventilators are covered for the treatment of conditions associated with neuromuscular diseases, thoracic restrictive diseases, and chronic respiratory failure consequent to chronic obstructive pulmonary disease.

Ventilators are also included in Medicare’s Frequently & Substantially Serviced payment category and are reimbursed under the Healthcare Common Procedure Coding System (“HCPCS”) codes E0465 (invasive ventilation), E0466 (non-invasive ventilation) and E0467 (multi-function ventilation).

Viemed’s patients are served by licensed Respiratory Therapists (“RTs”) in each of the 31 states where it provides its services.

Viemed’s patients are served by licensed RTs in each of the 39 states where it provides its services.

Each of these RTs is a member of the American Association for Respiratory Care (“AARC”).

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William Frazier, is a board certified pulmonary disease specialist.

VIEMED HEALTHCARE, INC.

December 31, 2019 and 2018

Viemed sources hardware from vendors such as Respironics (an affiliate of Philips NV) and Resmed, among other vendors, and pairs them with industry leading respiratory therapy.

Viemed sources hardware from vendors such as Respironics (an affiliate of Philips NV) and Resmed and pairs them with industry leading respiratory therapy.

There are few manufacturers of equipment that can be used for home treatment of patients with ventilation respiratory therapy.

The emerging nature of the market presents risks that vendors may not be able to provide equipment to satisfy demand.

Viemed has historically financed certain capital expenditures through a financing company affiliated with its primary vendors, but also has a line of credit of up to $10 million pursuant to a loan agreement with an expiration date of March 19, 2021.

Amounts borrowed under the loan agreement will bear interest at a rate based on one month ICE LIBOR plus 3.00% per annum, with a 4.00% interest rate floor, from the date of advance until paid and any amounts advanced will be secured by substantially all of Viemed’s assets.

Viemed currently has no immediate plans to draw on this facility.

Viemed has historically financed certain capital expenditures through a financing company affiliated with its primary vendors, but also has a line of credit of up to $10.0 million pursuant to a loan agreement with an expiration date of May 1, 2023.

Amounts borrowed under the loan agreement will bear interest at a rate based on 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 Viemed's assets.

While Viemed currently has no immediate plans to draw on this facility, the line of credit allows flexibility in funding future operations.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

Government Regulation

We are subject to extensive government regulation, including numerous laws directed at regulating reimbursement of our products and services under various government programs and preventing fraud and abuse, as more fully described below.

We are subject to extensive government regulation, including numerous laws directed at regulating reimbursement of our products and services under various government and commercial programs and preventing fraud and abuse, as more fully described below.

We maintain certain safeguards intended to reduce the likelihood that we will engage in conduct or enter into arrangements in violation of these restrictions.

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Centers for Medicare and Medicaid Services

CMS requires providers of product or services to attain and maintain accreditation in order to participate in federally funded healthcare programs.

CMS requires providers of products or services to attain and maintain accreditation in order to participate in federally funded healthcare programs.

To attain and maintain accreditation, companies are required to institute policies and procedures that, among other things, formalize the interaction of the company with patients.

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If we are found to be out of compliance with accreditation standards, our enrollment status in the Medicare program could be jeopardized, up to and including termination.

CMS also requires that all durable medical equipment providers who bill the Medicare program maintain a surety bond of $50,000 per National Provider Identifier (“NPI”) number which Medicare has approved for billing privileges.

CMS also requires that all DME providers who bill the Medicare program maintain a surety bond of $50,000 per National Provider Identifier (“NPI”) number which Medicare has approved for billing privileges.

We obtained surety bonds before the October 2009 deadline, and such bonds automatically renew annually.

In order to ensure that Medicare beneficiaries only receive medically necessary and appropriate items and services, the Medicare program has adopted a number of documentation requirements.

For example, the Durable Medical Equipment (“DME”) Medicare Administrative Contractor (“MAC”) Supplier Manuals provide that clinical information from the “patient’s medical record” is required to justify the initial and ongoing medical necessity for the provision of DME.

For example, the DME Medicare Administrative Contractor (“MAC”) Supplier Manuals provide that clinical information from the “patient’s medical record” is required to justify the initial and ongoing medical necessity for the provision of DME.

Some DME MACs, CMS staff and government subcontractors have taken the position, among other things, that the “patient’s medical record” refers not to documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, healthcare facility or other clinician, and that clinical information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity.

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Moreover, auditors’ interpretations of these policies are inconsistent and subject to individual interpretation.

This is then translated to individual supplier significant error rates and aggregated into a Durable Medical Equipment, Prosthetics, Orthotics and Supplies (“DMEPOS”) industry error rate, which is significantly higher than other Medicare provider/supplier types.

This is then translated to individual supplier error rates and aggregated into a Durable Medical Equipment, Prosthetics, Orthotics and Supplies (“DMEPOS”) industry error rate, which is significantly higher than other Medicare provider/supplier types.

High error rates lead to further audit activity and regulatory burdens.

In fact, DME MACs have continued to conduct extensive pre-payment reviews across the DME industry and have determined a wide range of error rates.

DME MACs continue to conduct extensive pre-payment and post-payment reviews across the DME industry and have determined a wide range of error rates.

For example, error rates for continuous positive airway pressure claims have ranged from 50% to 80%.

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We cannot predict the adverse impact, if any, these interpretations of the Medicare documentation requirements or our revised policies might have on our operations, cash flow, and capital resources, but such impact could be material.

VIEMED HEALTHCARE, INC.

December 31, 2019 and 2018

CMS maintains a Master List of Items Frequently Subject to Unnecessary Utilization.

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If CMS requires prior authorization requirements for noninvasive home ventilation, it could materially impact our business.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required the Secretary of Health and Human Services to establish and implement programs under which competitive acquisition areas are established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of durable medical equipment.

Competitive Bidding Process

CMS conducts a competition for each competitive acquisition area under which providers submit bids to supply certain covered items of durable medical equipment.

Under the competitive bidding program, durable medical equipment suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas.

As part of the competitive bidding process, single payment amounts (“SPAs”) replace the current Medicare durable medical equipment fee schedule payment amounts for selected items in certain areas of the country.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required the Secretary of Health and Human Services ("HHS") to establish and implement programs under which competitive acquisition areas are established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of durable medical equipment.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

CMS conducts a competition for each competitive acquisition area under which providers submit bids to supply certain covered items of DME.

Under the competitive bidding program, DME suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas.

As part of the competitive bidding process, single payment amounts (“SPAs”) replace the current Medicare DME fee schedule payment amounts for selected items in certain areas of the country.

The SPAs are determined by using bids submitted by DME suppliers.

CMS has included noninvasive ventilator products on the list of products subject to the competitive bidding program in Round 2021.

There are, however, regulations in place that allow non-contracted providers to continue to provide products and services to their existing customers at the new competitive bidding payment amounts.

In 2019, CMS included non-invasive ventilator products on the list of products subject to the competitive bidding program in Round 2021.

On March 9, 2020, CMS announced that due to the novel coronavirus ("COVID-19") pandemic, the United States 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.

On October 27, 2020, CMS announced that it had 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.

We cannot predict the outcome of the competitive bidding process for contracted supplier selection or the impact of the competitive bidding process on reimbursements to our existing customers.

Several states require that durable medical equipment providers be licensed in order to sell products to patients in that state.

Several states require that DME providers be licensed in order to sell products to patients in that state.

Certain of these states require that durable medical equipment providers maintain an in-state location.

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VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

The Ethics in Patient Referrals Act, commonly known as the “Stark Law,” prohibits a physician from making referrals for certain “designated health services” payable by Medicare to an entity, including a company that furnishes durable medical equipment, in which the physician or an immediate family member of such physician has an ownership or investment interest or with which the physician has entered into a compensation arrangement, unless a statutory exception applies.

The Ethics in Patient Referrals Act, commonly known as the “Stark Law,” prohibits a physician from making referrals for certain “designated health services” payable by Medicare to an entity, including a company that furnishes DME, in which the physician or an immediate family member of such physician has an ownership or investment interest or with which the physician has entered into a compensation arrangement, unless a statutory exception applies.

Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received under a noncompliance arrangement, civil penalties, damages and exclusion from Medicare or other governmental programs.

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We cannot predict the final form that these regulations will take or the effect that the final regulations will have on us.

As a result, our provider arrangements may ultimately be found to be non-compliant with applicable federal law.

As a result, our provider arrangements may ultimately be found to be noncompliant with applicable federal law.

False statements .

The federal false statements statute prohibits knowingly and willfully falsifying, concealing, or omitting a material fact or making any materially false statement in connection with the delivery of healthcare benefits, items, or services.

In addition to criminal penalties, violation of this statute may result in collateral administrative sanctions, including exclusion from participation in Medicare, Medicaid and other federal health care programs.

Federal False Claims Act and Civil Monetary Penalties Law .

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In addition, amendments in 1986 to the Federal False Claims Act have made it easier for private parties to bring whistleblower lawsuits against companies.

The Civil Monetary Penalties Law provides, in part, that the federal government may seek civil monetary penalties against any person who presents or causes to be presented claims to a Federal health care program that the person knows or should know is for an item or services that was not provided as claimed or is false or fraudulent, or the person has made a false statement or used a false record to get a claim paid.

The Civil Monetary Penalties Law provides, in part, that the federal government may seek civil monetary penalties against any person who presents or causes to be presented claims to a Federal healthcare program that the person knows or should know is for an item or services that was not provided as claimed or is false or fraudulent, or the person has made a false statement or used a false record to get a claim paid.

The federal government may also seek civil monetary penalties for a wide variety of other conduct, including offering remuneration to influence a Medicare or Medicaid beneficiary’s selection of providers and violations of the Federal Anti-Kickback Statute.

Although we believe that we are in compliance with the Federal False Claims Act as well as the Civil Monetary Penalties Law, if we are found in violation of the same, include penalties ranging from $11,665 to $23,331 for each false claim violation of the Federal False Claims Act and varying amounts based on the type of violation of the Civil Monetary Penalties Law, plus up to three times the amount of damages that the federal government sustained because of the act of that person.

In addition, the federal government may also seek exclusion from participation in all federal health care programs.

Although we believe that we are in compliance with the Federal False Claims Act as well as the Civil Monetary Penalties Law, if we are found in violation of the same, we could be subject to various liabilities and penalties, including fines ranging from $11,665 to $23,331 for each false claim violation of the Federal False Claims Act and varying amounts based on the type of violation of the Civil Monetary Penalties Law, plus up to three times the amount of damages that the federal government sustained because of the act of that person.

In addition, the federal government may also seek exclusion from participation in all federal healthcare programs.

In addition, we bill Medicare Part B and other insurers directly for each sale to patients.

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VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

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• the Security Standards, which require covered entities to implement and maintain certain security measures to safeguard certain electronic health information, including the adoption of administrative, physical and technical safeguards to protect such information;

the breach notification rules, which require covered entitles to provide notification to affected individuals, the Department of Health and Human Services and the media in the event of a breach of unsecured protected health information.

• the breach notification rules, which require covered entitles to provide notification to affected individuals, the HHS and the media in the event of a breach of unsecured protected health information.

In 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (“ARRA”) which included sweeping changes to HIPAA, including an expansion of HIPAA’s privacy and security standards.

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VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

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Other elements of the ACA, including comparative effectiveness research, an independent payment advisory board and payment systems reform, including shared savings pilots and other reforms, may result in fundamental changes to federal healthcare reimbursement programs.

The Tax Cuts and Jobs Act of 2017 repealed penalties for noncompliance with the requirement for insurance coverage known as the “individual mandate.” This change could affect whether individuals enroll in health plans and could impact insurers with which we contract.

The Tax Cuts and Jobs Act of 2017 ("TCJA") repealed penalties for noncompliance with the requirement for insurance coverage known as the “individual mandate.” This change could affect whether individuals enroll in health plans and could impact insurers with which we contract.

Other changes to the ACA could impact the number of patients who have access to our products.

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VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

CMS, which is the agency within the Department of Health and Human Services that administers both Medicare and Medicaid, has the authority to decline to cover particular products or services if it determines that they are not “reasonable and necessary” for the treatment of Medicare beneficiaries.

CMS, which is the agency within the HHS that administers both Medicare and Medicaid, has the authority to decline to cover particular products or services if it determines that they are not “reasonable and necessary” for the treatment of Medicare beneficiaries.

A coverage determination for a product, which establishes the indications that will be covered, and any restrictions or limitations, can be developed at the national level by CMS through a National Coverage Determination (“NCD”) or at the local level through a Local Coverage Determination (“LCD”) by a regional DME MAC.

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While the NCD for the DME Reference List has been updated, no separate NCD has been issued for ventilators.

Monthly rental revenue from ventilators and the sale of associated supplies represented approximately 92% and 94% of total revenue for 2019 and 2018 , respectively.

Monthly rental revenue from ventilators and the sale of associated supplies represented approximately 88% and 92%, respectively, of traditional revenue, excluding COVID-19 response sales and services, for 2020 and 2019.

Medicare Administrative Contractors responsible for processing durable medical equipment claims have issued LCDs for Respiratory Assist Devices (“RADs”) which contain language describing an overlap in conditions used to determine coverage for RADs and ventilator devices.

These LCDs state that the treatment plan for any individual patient, including the determination to use a ventilator or a bi-level Positive Airway Pressure device, may vary and will be made based upon the specifics of each individual beneficiary’s medical condition.

These LCDs state that the treatment plan for any individual patient, including the determination to use a ventilator or a BiPAP, may vary and will be made based upon the specifics of each individual beneficiary’s medical condition.

Due to this variability, determinations of coverage for our ventilator products are subject to scrutiny of individual medical records and claims.

Revenues from Medicare and Medicaid accounted for 64% and 70% of the total revenues for the year ended December 31, 2019 and 2018 , respectively.

Revenues from Medicare and Medicaid accounted for 73% and 64%, respectively, of traditional revenue, excluding COVID-19 response sales and services, for the years ended December 31, 2020 and 2019.

Because Medicare criteria is extensive, we have a team dedicated to educating prescribers to help them understand how Medicare policy affects their patients and the medical record documentation needed to meet both NCD and LCD requirements.

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VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2020 and 2019

3 unchanged sentences

The respiratory care industry is highly competitive.

While Viemed is one of the top three providers of NIVs and related services in the United States, its current competitors may gain market share, and any new entrants, with greater financial and technical resources, may provide additional competition.

While Viemed is one of the top three providers of NIV and related services in the United States, its current competitors may gain market share, and any new entrants, with greater financial and technical resources, may provide additional competition.

Accordingly, there can be no assurance that Viemed will be able to grow its operations organically to meet the competitive environment.

Significant Customers

For the years ended December 31, 2019 and 2018 , Viemed had no customers that accounted for 10% or more of its consolidated revenues.

For the years ended December 31, 2020 and 2019, Viemed had no customers that accounted for 10% or more of its consolidated traditional revenue streams.

However, Viemed had COVID-19 emergency response sales from a customer that accounted for 13% of total revenue for the year ended December 31, 2020.

Viemed earns revenues by seeking reimbursement from Medicare and private health insurance companies, with the Medicare program of the United States government being the primary entity making payments.

If the Medicare program were to slow payments of Viemed receivables for any reason, Viemed would be adversely impacted.

A majority of the Company’s revenues are derived from the fee for service pricing guidelines set by the CMS.

A majority of the Company’s revenues are derived from the fee-for-service pricing guidelines set by CMS.

These pricing guidelines are subject to change at the discretion of CMS.

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-K

Item 1. Business