What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-03 compared with 2020-11-04 · 240 added, 292 removed, 434 unchanged (55% of the section changed)

4 unchanged sentences

Dollars, except outstanding shares)

September 30, 2020 At

March 31, 2021 At

December 31, 2020

2 unchanged sentences

Cash and cash equivalents $ 31,097 $ 30,981

Accounts receivable, net of allowance for doubtful accounts of $ 8,788 and $ 7,782 at September 30, 2020 and December 31, 2019, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 7,999 and $ 9,013 at March 31, 2021 and December 31, 2020, respectively

2 13,282 12,373

Inventory, net of inventory reserve of $ 805 and $ 0 at September 30, 2020 and December 31, 2019, respectively

Inventory, net of inventory reserve of $ 1,349 and $ 1,353 at March 31, 2021 and December 31, 2020, respectively

2 2,220 2,310

3 unchanged sentences

Property and equipment, net 3 53,996 55,056

Equity method investment 79 13

Equity investments 2 953 733

Deferred tax asset 9 8,918 8,733

Other long-term assets 8 861 863

Total long-term assets $ 64,728 $ 65,385

18 unchanged sentences

unlimited authorized;

39,145,182 and 37,952,660 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

39,577,288 and 39,185,182 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

7 $ 13,649 $ 9,181

9 unchanged sentences

Dollars, except share and per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Note 2021 2020

8 unchanged sentences

Loss (gain) on disposal of property and equipment 76 ( 1,169 )

Other (income) expense 9 ( 19 ) 1 ( 3,593 ) ( 1 )

Other income ( 21 ) —

Income from operations $ 1,332 $ 4,615

Non-operating expenses

Unrealized gain on warrant conversion liability 6 — ( 800 ) — ( 363 )

(Gain) loss from equity method investment ( 21 ) 26 ( 36 ) 77

Loss (gain) from equity method investments ( 220 ) 27

Interest expense, net of interest income 5 91 158

2 unchanged sentences

Net income $ 1,684 $ 4,243

Other Comprehensive Income

Other comprehensive income (loss)

Change in unrealized gain/loss on derivative instruments, net of tax 106 ( 312 )

Other Comprehensive Loss $ 24 $ ( 88 ) $ ( 321 ) $ ( 236 )

Other comprehensive income (loss) $ 106 $ ( 312 )

Comprehensive income $ 1,790 $ 3,931

17 unchanged sentences

Shares issued for vesting of restricted stock units 529,375 3,276 ( 3,276 ) — — —

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

Change in accumulated other comprehensive loss, net of tax ( 312 ) ( 312 )

Net income — — — — 4,243 4,243

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

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

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

Exercise of warrants 8,280 16 — — — 16

Exercise of options 4,725 18 — — — 18

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

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

Net Income — — — — 1,326 1,326

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

Stock-based compensation - options — — 745 — — 745

Stock-based compensation - restricted stock — — 319 — — 319

Exercise of warrants 124,890 245 — — — 245

Exercise of options 35,025 114 — — — 114

Shares issued for vesting of restricted stock units 95,210 657 ( 657 ) — — —

Change in accumulated other comprehensive loss — — — ( 88 ) — ( 88 )

Net Income — — — — 2,853 2,853

Shareholders' equity, September 30, 2019 37,952,660 $ 3,366 $ 5,470 $ ( 236 ) $ 31,725 $ 40,325

See accompanying notes to the condensed consolidated financial statements

VIEMED HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in thousands of U.S.

Dollars, except share and per share amounts)

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

5 unchanged sentences

Shares issued for vesting of restricted stock units 556,840 4,403 ( 4,403 ) — — —

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

Shares redeemed to pay income tax ( 181,320 ) — — — ( 1,434 ) ( 1,434 )

Change in accumulated other comprehensive loss, net of tax — — — 106 — 106

Net income — — — — 1,684 1,684

Shareholders' equity, March 31, 2021 39,577,288 $ 13,649 $ 4,224 $ ( 345 ) $ 65,893 $ 83,421

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

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

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

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

Net Income — — — — 19,412 19,412

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

Stock-based compensation - options — — 945 — — 945

Stock-based compensation - restricted stock — — 289 — — 289

Exercise of options 2,400 8 — — — 8

Shares issued for vesting of restricted stock units 59,850 663 ( 663 ) — — —

Change in accumulated other comprehensive income — — — 24 — 24

Net Income — — — — 2,804 2,804

Shareholders' equity, September 30, 2020 39,145,182 $ 9,085 $ 6,019 $ ( 478 ) $ 60,572 $ 75,198

See accompanying notes to the condensed consolidated financial statements

2 unchanged sentences

(Expressed in thousands of U.S.

Nine Months Ended September 30,

Three Months Ended March 31,

Note 2021 2020

4 unchanged sentences

Change in allowance for doubtful accounts 2 1,819 2,846

Change in inventory reserve ( 4 ) —

Share-based compensation 7 1,307 1,151

Unrealized gain on warrant conversion liability 6 — ( 363 )

(Gain) loss on equity method investment ( 36 ) 77

(Gain) loss on disposal of property and equipment ( 2,424 ) 308

(Gain) loss on equity method investments ( 220 ) 27

Loss (gain) on disposal of property and equipment 76 ( 1,169 )

Deferred income taxes (benefit) ( 222 ) —

1 unchanged sentence

Increase in accounts receivable ( 2,728 ) ( 6,755 )

(Increase) decrease in inventory ( 1,402 ) 1,621

Decrease (increase) in inventory 94 ( 425 )

Increase in prepaid expenses and other current assets ( 161 ) ( 2,952 )

Increase (decrease) in trade payables 2,739 ( 1,813 )

Increase in trade payables 438 3,598

Increase in deferred revenue 13 79

Increase in accrued liabilities 2,397 1,909

Increase (decrease) in income tax payable 282 ( 124 )

Decrease in accrued liabilities ( 77 ) ( 2,361 )

Increase in income tax payable — 195

Net cash provided by operating activities $ 4,628 $ 607

1 unchanged sentence

Purchase of property and equipment ( 1,797 ) ( 4,220 )

Investment in equity method investment ( 30 ) —

Investment in equity investments — ( 32 )

Proceeds from sale of property and equipment 99 2,541

2 unchanged sentences

Proceeds from exercise of options 65 15

Proceeds from exercise of warrants — 261

(Principal payments) net proceeds on notes payable 5 ( 104 ) 4,837

(Principal payments) net proceeds on term note 5 ( 1,199 ) 4,966

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

Principal payments on notes payable 5 ( 37 ) ( 33 )

Principal payments on term note 5 ( 414 ) ( 395 )

Shares redeemed to pay income tax 7 ( 1,434 ) —

Repayments of lease liabilities ( 994 ) ( 3,429 )

Net cash (used in) provided by financing activities $ ( 7,231 ) $ 762

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

Net cash used in financing activities $ ( 2,814 ) $ ( 3,842 )

Net increase (decrease) in cash and cash equivalents 116 ( 4,946 )

Cash and cash equivalents at beginning of year 30,981 13,355

5 unchanged sentences

Property and equipment financed through finance leases $ 12 $ 3,002

Property and equipment financed through leases under FASB ASC 842 $ 57 $ 2,052

Property and equipment financed through operating leases $ 85 $ 31

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

March 31, 2021 and 2020

Nature of Business and Operations

6 unchanged sentences

Kaliste Saloom Road, Lafayette, Louisiana 70508.

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

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

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

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

The Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the "JOBS Act") and a "smaller reporting company" under Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act") and, as such, has elected to comply with certain reduced U.S.

public company reporting requirements.

The Company’s shares are traded in Canada on the Toronto Stock Exchange under the symbol VMD.TO and in the U.S.

The Company’s common shares are traded in Canada on the Toronto Stock Exchange ("TSX") under the symbol VMD.TO and in the U.S.

on the Nasdaq Capital Market under the symbol VMD.

1 unchanged sentence

Principles of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

12 unchanged sentences

Actual results could differ from these estimates.

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

As a result, the impacts remain uncertain and

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

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 .

As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

Accounts receivable

2 unchanged sentences

It is possible that the estimates of the allowance for doubtful accounts could change, which could have a material impact on our operations and cash flows.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

The Company writes off receivables when the likelihood for collection is remote, and when the Company believes collection efforts have been fully exhausted and it does not intend to devote additional resources in attempting to collect.

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

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

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

For the three months ended March 31, 2021, our evaluation takes into consideration such factors as historical bad debt experience, national and local economic trends and conditions, industry and regulatory conditions, other collection indicators and information about disaggregated receivables.

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

September 30, 2020 September 30, 2019

March 31, 2021 March 31, 2020

Balance, beginning of year $ 9,013 $ 7,782

2 unchanged sentences

Balance, end of period $ 7,999 $ 10,196

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

The Company does have receivables at September 30, 2020 from Medicare and Medicaid, representing 59 % and 6 %, respectively, and 65 % combined, of total outstanding receivables (December 31, 2019 - 58 %).

As of March 31, 2021 and 2020, no one customer represented more than 10% of outstanding accounts receivable.

The Company does have receivables at March 31, 2021 from Medicare and Medicaid, representing 30 % and 12 %, respectively, and 42 % combined, of total outstanding receivables (December 31, 2020 - 46 %).

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenues from Medicare and Medicaid as percentages of the Company's traditional revenue streams, excluding COVID-19 response sales and services, for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended March 31,

Medicare revenues 60 % 59 %

4 unchanged sentences

Obsolete and unserviceable inventories are valued at estimated net realizable value .

Inventory is presented net of a reserve balance of $ 805,000 and $ 0 at September 30, 2020 and December 31, 2019, respectively, that relates to COVID-19 response supplies.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

Inventory is presented net of a reserve balance of $ 1,349,000 and $ 1,353,000 at March 31, 2021 and December 31, 2020, respectively, that relates to COVID-19 response supplies.

Property and equipment

4 unchanged sentences

Property and equipment are amortized on a straight-line basis over their estimated useful lives.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

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

7 unchanged sentences

Land Indefinite Life

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

Property and equipment and other non-current assets with definite useful lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Prepaid expenses and other assets

Prepaid expenses and other current assets consists primarily of prepaid expenses such as insurance, rent, and supplier deposits for rental equipment.

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

Property and equipment with definite useful lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Equity investments

Equity investments on the Condensed Consolidated Balance Sheets are comprised of an investment accounted for under the equity method and an equity investment without a readily determinable fair value which is accounted for under the measurement alternative described in ASC 321-10-35-2.

The following table details the Company’s equity investments:

March 31, 2021 December 31, 2020

Equity method investments $ 354 $ 134

Other equity investments 599 599

Balance, end of period $ 953 $ 733

Investments accounted for under the equity method are investments in unconsolidated entities over whose operating and financial policies the Company has the ability to exercise significant influence but not control.

Equity method investments are initially measured at cost in the Condensed Consolidated Balance Sheets with any subsequent adjustments made to the carrying amount of the investment for the Company’s proportionate share of income or loss.

The Company has recognized its share of income or loss on the gain (loss) from equity method investments within non-operating expenses in the Condensed Consolidated Statements of Income.

Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the investments may exceed the fair value.

No events or changes have occurred as of March 31, 2021 that would affect the carrying value of equity method investments.

Other equity investments are investments without a readily determinable fair value which do not qualify for the practical expedient in ASC 820.

For these investments, the Company has elected the measurement alternative which measures the investment at cost, less any impairment.

ASU 2019-04 clarifies that if an entity identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, it must measure its equity investment at fair value in accordance with ASC 820 as of the date that the observable transaction occurred.

The Company was not aware of any impairment or observable price change adjustments that needed to be made as of March 31, 2021 on its investments in equity securities without a readily determinable fair value.

Comprehensive income

Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

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

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

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

Revenue recognition

8 unchanged sentences

These services are paid based on a Medicare determined price that is publicly available on the website for the Centers for Medicare & Medicaid Services (“CMS”).

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

For commercial payors, DME companies must negotiate in-network pricing separately, though in general, the Company’s payors tend to benchmark their contract rates and coverage policies closely to those of Medicare.

The Company considers performance obligations for sales and rentals to be met when the customer receives the equipment, and revenue for rentals is recognized over time, over the respective rental period.

For revenue associated with DME rentals, the Company recognizes revenue in accordance with FASB ASC 842, “Leases,” (Topic 842).

For revenue associated with DME rentals, the Company recognizes revenue in accordance with ASC 842, “Leases,” (Topic 842).

For any DME sales and services, the Company recognizes revenue under FASB ASU 2014-09, “Revenue from Contracts with Customers,” (Topic 606) and related amendments.

3 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Revenue from rentals under Topic 842

Three Months Ended March 31,

Revenue from rentals

Ventilator rentals, non-invasive and invasive $ 20,351 $ 18,792

Other durable medical equipment rentals 2,930 2,131

Revenue from sales and services under Topic 606

Revenue from sales and services

Equipment and supply sales

1,890 1,349 3,962 3,202

COVID-19 response sales and services

8,553 — 29,306 —

Service revenues

393 357 983 1,152

Total revenues $ 28,416 $ 23,806

3 unchanged sentences

The Company considers these rentals to be operating leases.

Under FASB Accounting Standards Codification Topic 842, the Company recognizes rental revenue on operating leases on a straight-line basis over the contractual lease term which varies based on the type of equipment rental.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

Under FASB ASC Topic 842, the Company recognizes rental revenue on operating leases on a straight-line basis over the contractual lease term which varies based on the type of equipment rental.

The lease term begins on the date products are delivered to patients, and revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including Medicare, private commercial payors, and Medicaid.

8 unchanged sentences

For sales of equipment previously placed in service, proceeds associated with these sales are recorded to gain (loss) on disposal of property and equipment.

The Company also provides sleep study services to customers and recognizes revenue when the results of the sleep study are complete as that is when the performance obligation is met.

The transaction price on both equipment sales and sleep studies is the

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

amount that the Company expects to receive in exchange for the goods and services provided.

The Company also provides sleep study services to customers and recognizes revenue when the sleep study results are complete, satisfying the performance obligation.

In response to the COVID-19 pandemic, the Company began offering contact tracing services, which revenues are recognized in the period in which the service has been provided.

The transaction price on equipment sales, sleep studies and contact tracing is the amount that the Company expects to receive in exchange for the goods and services provided.

Due to the nature of the DME business, gross charges are retail charges and generally do not reflect what the Company is ultimately paid.

11 unchanged sentences

Such adjustments are typically identified and recorded at the point of cash application or claim denial.

Returns and refunds are not accepted on either equipment sales or sleep study services.

Returns and refunds are not accepted on equipment sales, sleep study services or contact tracing services.

The Company does not offer warranties to customers in excess of the manufacturer’s warranty.

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

The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of September 30, 2020.

The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of March 31, 2021.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

Stock-based compensation

The Company accounts for its stock-based compensation in accordance with ASC 718 , "Compensation—Stock Compensation" , which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period.

Stock–based compensation cost for stock options are determined at the grant date using the Black-Scholes option pricing model.

Stock-based compensation costs for restricted stock units are determined at the grant date based on the closing stock price.

Stock–based compensation costs for stock options are determined at the grant date using the Black-Scholes option pricing model.

Stock-based compensation costs for restricted stock units ("RSUs") are determined at the grant date based on the closing stock price.

The expense of such stock-based compensation awards is recognized using the graded vesting attribution method over the vesting period and the offsetting credit is recorded as an increase in additional paid-in capital.

1 unchanged sentence

Any excess tax benefit or deficiency is recognized as a component of income taxes and within operating cash flows upon vesting of the share-based award.

For the Company’s phantom share units settled in cash, the Company computes the fair value of the phantom share units using the closing price of the Company's stock at the end of each period and records a liability based on the percentage of requisite service.

Interest rate swaps

2 unchanged sentences

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

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

The Company includes unrealized gains in other long-term assets, as a component of long-term assets, and unrealized losses in accrued liabilities, as a component of long-term liabilities on the Condensed Consolidated Balance Sheets.

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

1 unchanged sentence

To the extent that interest rate swaps are determined to be ineffective, the Company would recognize the changes in the estimated fair value of swaps in interest and other non-operating expenses, net in its Condensed Consolidated Statements of Income.

The Company is subject to income taxes in numerous jurisdictions.

Significant judgment is required in determining the provision for income taxes.

The Company's income tax provisions reflect management’s interpretation of country and state tax laws.

There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business and may remain uncertain for several years after their occurrence.

The Company recognizes assets and liabilities for taxation when it is probable that we will receive refunds from or pay taxes to the relevant tax authority.

Where the final determination of tax assets and liabilities is different from the amounts that were initially recorded, such differences will impact the current and deferred income taxes provision in the period in which such a determination is made.

Changes in tax law or changes in the way tax law is interpreted may also impact our effective tax rate as well as our business and operations.

Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to temporary differences between the financial statement carrying value of assets and liabilities and their respective income tax bases.

Deferred income tax assets or liabilities are measured using enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled.

The calculation of current and deferred income taxes requires management to make estimates and assumptions and to exercise a certain amount of judgment concerning the carrying value of assets and liabilities.

The current and deferred income tax assets and liabilities are also impacted by expectations about future operating results and the timing of reversal of temporary differences as well as possible audits of tax filings by regulatory agencies.

Changes or differences in these estimates or assumptions may result in changes to the current and deferred tax assets and liabilities on the Condensed Consolidated Balance Sheets and a charge to or recovery of income tax expense.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

March 31, 2021 and 2020

Recently adopted accounting pronouncements

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.

The new guidance modifies the disclosure requirements on fair value measurements.

The Company adopted this standard on January 1, 2020 and the adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The new guidance also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The Company adopted this standard on January 1, 2020, which did not have any impact on the Company’s condensed consolidated financial statements.

Recently issued accounting pronouncements

5 unchanged sentences

Section 107 of the JOBS Act provides that the Company can elect to opt out of the extended transition period at any time, which election is irrevocable.

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts.

The ASU will be effective for interim and annual periods beginning January 1, 2020 for issuers and annual periods beginning January 1, 2023 for non-issuers.

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

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

Among other things, the ASU expands the scope of the practical expedient that allows entities to exclude the accrued interest component of amortized cost from various disclosures required by ASC 326 to also include certain disclosures required by Topic 320.

Entities that elect to apply the practical expedient must disclose the total amount of accrued interest that they exclude from their disclosures of amortized cost.

The amendments have the same effective dates as ASU 2016-13 (Topic ASC 326) for entities that have not yet adopted that standard.

For entities that early adopted ASU 2016-13 (Topic ASC 326), the amendments are effective for fiscal years beginning after December 15, 2019 and interim periods therein.

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

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The new guidance also improves consistent application of and simplifies U.S.

GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

The Company is currently evaluating the effect of the new guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments, which is intended to improve financial reporting by requiring earlier recognition of credit losses on certain financial assets.

The standard replaces the current incurred loss impairment model that recognizes losses when a probable threshold is met with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased.

Further, the FASB issued ASU 2019-04 and ASU 2019-05 to provide additional guidance on the credit losses standard.

The standard is effective for fiscal years beginning after December 15, 2022 for smaller reporting companies, including interim periods within those annual periods, with early adoption permitted.

The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

Specifically, the guidance permits an entity, when certain criteria are met, to consider amendments to contracts made to comply with reference rate reform to meet the definition of a modification under GAAP.

It further allows hedge accounting to be maintained and a one-time transfer or sale of qualifying held-to-maturity securities.

The expedients and exceptions provided by the amendments are permitted to be adopted any time through December 31, 2022 and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for certain optional expedients elected for certain hedging relationships existing as of December 31, 2022.

The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

Property and Equipment

1 unchanged sentence

The following table details the Company’s fixed assets:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Medical equipment $ 64,136 $ 63,307

10 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

Depreciation in the amount of $ 2,224,000 and $ 1,465,000 is included in cost of revenue for the three months ended September 30, 2020 and 2019, respectively, and in the amount of $ 6,133,000 and $ 3,937,000 for the nine months ended September 30, 2020 and 2019, respectively.

Included in medical equipment above is equipment acquired under finance lease obligations whose cost and accumulated depreciation at September 30, 2020 total $ 8,087,000 and $ 801,000 , respectively.

March 31, 2021 and 2020

Depreciation in the amount of $ 2,409,000 and $ 1,925,000 is included in cost of revenue for the three months ended March 31, 2021 and 2020, respectively.

Included in medical equipment above is equipment acquired under finance lease obligations whose cost and accumulated depreciation at March 31, 2021 total $ 4,706,000 and $ 793,000 , respectively.

At December 31, 2020, cost and accumulated depreciation on equipment acquired under finance lease obligations was $ 6,900,000 and $ 885,000 , respectively.

Medical equipment purchases with a cost of $ 2,931,000 and $ 2,817,000 were included in accounts payable at September 30, 2020 and December 31, 2019, respectively.

Current Liabilities

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Accrued trade payables $ 1,568 $ 1,252

11 unchanged sentences

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 September 30, 2020 or December 31, 2019.

There were no borrowings against this line of credit at March 31, 2021 or December 31, 2020.

Commercial Term Notes

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

On May 30, 2019, the Company entered into a term note (the “Building Term Note”) under the Commercial Business Loan Agreement in the principal amount of $ 4.8 million.

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

4 unchanged sentences

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

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

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

2 unchanged sentences

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

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

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

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

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

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

March 31, 2021 and 2020

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Notes payable $ 7,181 $ 7,632

1 unchanged sentence

Net long-term notes payable $ 5,323 $ 5,796

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

Financial Covenant Required Ratio Ratio at September 30, 2020

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

Fixed Charge Coverage Ratio (Quarterly) not less than 1.35:1.00 2.75

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

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

Under the Commercial Business Loan Agreement, the Company is subject to several restrictive covenants that, among other things, impose operating and financial restrictions on the Company.

Financial covenants include a Total Debt to Adjusted EBITDA, a Loan-to-Value Ratio and a Fixed Charged Coverage Ratio, as defined in the Credit Agreement.

The Credit Agreement also contains certain customary events of default, including, among other things, failure to make payments when due thereunder and failure to observe or perform certain covenants.

The Company was in compliance with all covenants under the Commercial Business Term Loan Agreement in effect at March 31, 2021.

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Lease liabilities $ 2,436 $ 3,503

3 unchanged sentences

The Company has various finance leases for equipment with an implied interest rate at fixed rates up to 9.61 %, secured by equipment, due between 2021 and 2024.

The Company's weighted average interest rate was 3.17 % and 1.83 % for all finance lease liabilities outstanding as of September 30, 2020 and 2019, respectively.

At September 30, 2020 and 2019, the weighted average lease term was approximately 0.73 years and 1.01 years, respectively.

Interest expense related to these finance lease obligations for the three and nine months ended September 30, 2020 amounted to $ 34,000 and $ 128,000 , respectively.

Interest expense related to these finance lease obligations for the three and nine months ended September 30, 2019 amounted to $ 56,000 and $ 102,000 , respectively.

The Company's weighted average interest rate was 4.69 % and 2.22 % for all finance lease liabilities outstanding as of March 31, 2021 and 2020, respectively.

At March 31, 2021 and 2020, the weighted average lease term was approximately 0.47 years and 0.99 years, respectively.

Interest expense related to these finance lease obligations for the three months ended March 31, 2021 and 2020 amounted to $ 19,000 and $ 52,000 , respectively.

Operating lease liabilities

2 unchanged sentences

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

At September 30, 2020, the weighted average lease term was approximately 3.41 years.

Operating rental expenses were $ 191,000 and $ 575,000 for the three and nine months ended September 30, 2020, respectively, and $ 100,000 and $ 278,000 for the three and nine months ended September 30, 2019.

At March 31, 2021, the weighted average lease term was approximately 3.19 years.

Operating rental expenses were $ 185,000 and $ 184,000 for the three months ended March 31, 2021 and 2020, respectively.

The related assets for operating lease liabilities have been included with property and equipment on the Condensed Consolidated Balance Sheets.

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

On August 1, 2015, the Company entered ten-year triple net lease agreements for office space with an entity that is affiliated with the Company's CEO, Casey Hoyt, and President, Michael Moore.

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

Total rental payments for the use of these properties were $ 54,000 and $ 61,000 for the three months ended March 31, 2021 and 2020, respectively.

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

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

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

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

Total rental payments for the use of these properties were $ 58,000 and $ 180,000 for the three and nine months ended September 30, 2020, respectively, and $ 61,000 and $ 182,000 for the three and nine months ended September 30, 2019, respectively.

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

March 31, 2021 and 2020

Fair Value Measurement

12 unchanged sentences

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

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

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

The change in the value of warrants has been recorded as an unrealized (gain) loss on derivative financial liability in the Condensed Consolidated Statements of Income and Comprehensive Income.

All unexercised warrants expired during the year ended December 31, 2019.

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

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

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

Warrant Conversion Liability

Balance December 31, 2018 $ 363

Warrants issued —

Unrealized gain on warrant conversion liability ( 363 )

Balance September 30, 2019 $ —

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

Derivative instruments and hedging activities

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

This swap contract matures on May 30, 2026.

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

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

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

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

The Company recognizes its interest rate swaps as either assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value.

The valuation of these derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

As of March 31, 2021, the Company holds one interest rate swap contract which matures on May 30, 2026, which has a notional amount of $ 4.6 million.

This contract is designated as a cash flow hedge.

In the first three months of 2021, ineffective portions of the hedge were immaterial.

The fair value was $( 0.3 ) million (determined based on Level 2 inputs) and is included in accrued liabilities, as a component of long-term liabilities as of March 31, 2021.

Shareholders' Equity

3 unchanged sentences

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

The authorized stock consists of an unlimited number of common shares with no stated par value, of which 39,145,182 and 37,952,660 shares were issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.

The authorized stock consists of an unlimited number of common shares with no stated par value, of which 39,577,288 and 39,185,182 shares were issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

For the three months ended March 31, 2021, the Company repurchased and canceled 181,320 common shares at a cost of $ 1.4 million due to tax withholding for RSUs vesting.

The Company’s retained earnings were reduced by the amount paid for the shares repurchased for cancellation.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

Stock-based compensation

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

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

As of September 30, 2020, the Company had outstanding issuances of options of 3,068,000 and restricted stock units of 679,000 under the Former Plan.

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

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

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

Upon approval of the Omnibus Plan, no future awards are available to be made under the Company's previous RSU and Option Plans (collectively, the "Former Plan"), and the common shares that were not settled or awarded under the Former Plan as of the Effective Date are available for awards under the Omnibus Plan.

The maximum number of common shares that are available for awards under the Omnibus Plan and under any other security-based compensation arrangements adopted by the Company, including the Former Plan, may not exceed 7,758,211 shares (equal to 20 % of the issued and outstanding common shares of the Company on the Effective Date).

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

As of March 31, 2021, the Company had outstanding options of 3,835,000 and RSUs of 185,000 associated with common shares under the Omnibus Plan.

The following table summarizes stock-based compensation for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Stock-based compensation - options $ 1,078 $ 891

1 unchanged sentence

Total $ 1,307 $ 1,151

At September 30, 2020, there was approximately $ 3,671,000 of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized over a weighted-average period of 2.16 years.

As of September 30, 2020, there was approximately $ 938,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 0.47 years.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

The following table summarizes stock option activity for the nine months ended September 30, 2020:

At March 31, 2021, there was approximately $ 5,819,000 of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized over a weighted-average period of 2.42 years.

As of March 31, 2021, there was approximately $ 867,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.18 years.

The following table summarizes stock option activity for the three months ended March 31, 2021:

Number of options

5 unchanged sentences

Expired / Forfeited ( 11 ) 7.78

Balance September 30, 2020 3,068 $ 4.29 8.1 years $ 13,867

Balance March 31, 2021 3,835 $ 5.25 8.1 years $ 18,677

(1) For presentation purposes, stock options issued with a CAD exercise price have been translated to USD based on the prevailing exchange rate on the date of grant.

(2) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period ($ 10.12 ).

The aggregate intrinsic value of options outstanding was $ 13,867,000 and options exercisable were $ 5,767,000 at September 30, 2020.

For the nine months ended September 30, 2020, 603,297 shares of common stock were issued pursuant to the exercise of stock options.

At September 30, 2020, the Company had 1,008,000 exercisable stock options outstanding with a weighted average exercise price of $ 2.94 and a weighted average remaining contractual life of 6.8 years.

The aggregate intrinsic value of options outstanding was $ 18,677,000 and options exercisable were $ 12,284,000 at March 31, 2021.

For the three months ended March 31, 2021, 16,586 shares of common stock were issued pursuant to the exercise of stock options.

At March 31, 2021, the Company had 1,878,000 exercisable stock options outstanding with a weighted average exercise price of $ 3.58 and a weighted average remaining contractual life of 7.2 years.

At December 31, 2020, the Company had 971,000 exercisable stock options outstanding with a weighted average exercise price of $ 3.09 and a weighted average remaining contractual life of 6.9 years.

The fair value of the stock options has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and credited to additional paid-in capital over the vesting period, using the Black-Scholes option pricing model calculated using the following assumptions for issuances during the nine months ended September 30, 2020:

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2021 and 2020

The Company accounts for its stock-based compensation in accordance with ASC 718 — Compensation—Stock Compensation, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period.

Stock–based compensation cost for stock options are determined at the grant date using the Black-Scholes option pricing model.

The assumptions used to determine the grant date fair value of the stock options granted during three months ended March 31, 2021 were as follows:

Exercise price $ 8.57

4 unchanged sentences

Fair value on date of grant $ 5.05

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2020 and 2019

Restricted stock units

The Company also grants restricted stock units to directors, officers, and employees.

The Company accounts for restricted stock units using fair value.

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

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

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

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

Number of Restricted Stock Units (000's) Weighted average grant price (1)

The Company also grants RSUs to directors, officers, and employees.

The Company accounts for RSUs using fair value.

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

RSUs vest generally over a one or three -year period.

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

The following table summarizes RSU activity for the three months ended March 31, 2021:

Number of RSUs (000's) Weighted average grant price (1)

Weighted average remaining contractual life Aggregate intrinsic value (2)

3 unchanged sentences

Expired / Forfeited ( 5 ) 5.04

Balance September 30, 2020 679 $ 2.97 0.47 years $ 5,878

(1) All future equity grants will be awarded in USD, therefore, restricted stock units issued with a CAD grant price have been translated to USD based on the prevailing exchange rate on the date of grant for presentation purposes.

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

During the three months ended September 30, 2020, the Company issued 42,147 restricted stock units with a fair value of $ 10.44 per share.

During the nine months ended September 30, 2020, the Company issued 134,235 restricted stock units, with a vesting term of one to three years and a fair value between $ 5.70 and $ 10.44 per share.

Balance March 31, 2021 185 $ 7.76 1.18 years $ 1,875

(1) All future equity grants will be awarded in USD, therefore, RSUs issued with a CAD grant price have been translated to USD based on the prevailing exchange rate on the date of grant for presentation purposes.

(2) The aggregate intrinsic value of time-based RSUs outstanding was based on our closing stock price on the last trading day of the period ($ 10.12 ).

During the three months ended March 31, 2021, the Company issued 63,306 RSUs with a vesting term of three years and a fair value of $ 8.57 per share.

Phantom share units

2 unchanged sentences

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

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

The following table summarizes phantom share unit activity for the three months ended March 31, 2021:

Number of phantom share units (000's)

Balance December 31, 2020 985

Vested ( 601 )

Expired / Forfeited ( 34 )

Balance September 30, 2020 1,019

Balance March 31, 2021 951

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

March 31, 2021 and 2020

The cash-settled phantom share units are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with accrued liability and related expense being recognized over the requisite service period.

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

Nine Months Ended

September 30, 2020

Share price (Nasdaq closing price on September 30, 2020)

Three Months Ended

March 31, 2021

Share price (Nasdaq closing price on March 31, 2021)

Remaining life of phantom share units 0.11 - 2.11 Years

Calculated fair value of phantom share units $ 7,808

The total liability associated with phantom share units at September 30, 2020 is $ 5,159,000 , with $ 4,427,000 of this amount included in current accrued liabilities and the remaining portion of $ 732,000 included in long-term accrued liabilities.

Expense associated with the phantom stock units is recorded in "Selling, general, and administrative" within the unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

The following table summarizes expense associated with the phantom stock units for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The total liability associated with phantom share units at March 31, 2021 is $ 7,808,000 , with $ 6,444,000 of this amount included in current accrued liabilities and the remaining portion of $ 1,364,000 included in long-term accrued liabilities.

The impact associated with the fair value re-measurement of phantom share units is recorded in selling, general and administrative expenses within the unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

The following table summarizes expense associated with the phantom share units for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Selling, general, and administrative $ 2,465 $ ( 697 )

The Company paid cash settlements of $ 4,201,000 and $ 3,386,000 during the nine months ended September 30, 2020 and 2019, respectively, pertaining to vestings of cash-settled phantom stock units.

The Company paid no cash settlements during the three months ended March 31, 2021 and 2020, pertaining to vestings of cash-settled phantom share units.

Commitments and Contingencies

We accrue estimates for resolution of any legal and other contingencies when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies (“ASC 450”).

Legal Proceedings

The Company accrues estimates for resolution of any legal and other contingencies when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies (“ASC 450”).

No less than quarterly, we review the status of each significant matter underlying a legal proceeding or claim and assess our potential financial exposure.

2 unchanged sentences

Furthermore, the outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters.

In March 2020, we (through our subsidiary Sleep Management LLC) entered into a purchase order (the “Purchase Order”) with

Vyaire Medical, Inc.

d/b/a CareFusion Respiratory Technologies (“Vyaire”) for respiratory equipment and paid $ 1.4 million (the “Deposit”) towards the delivery of such respiratory equipment.

As of September 30, 2020, outstanding supplier deposits in the amount of $ 0.9 million related to such Deposit are included within other prepaid and other current assets.

Vyaire has been unable to deliver the vast majority of the respiratory equipment referenced in the Purchase Order.

On July 29, 2020, we (through our subsidiary Sleep Management LLC) filed a lawsuit against Vyaire in the United States District Court for the Western District of Louisiana (the “Court”) seeking a declaratory judgment that the Company is not required to pay any further funds to Vyaire and demanding Vyaire refund all amounts currently held by Vyaire as a result of the Deposit.

On September 23, 2020, Vyaire filed its Defense and Counterclaim (“Counterclaim”) with the Court alleging breach of contract and seeking damages of $ 4.7 million, purportedly for the improper cancellation of the Purchase Order.

On October 16, 2020, we filed an answer and affirmative defenses with the Court in response to the Counterclaim and intend to pursue further legal action.

We continue to believe that we have valid legal and equitable grounds to recover our outstanding Deposit as a result of Vyaire’s failure to deliver the vast majority of the respiratory equipment referenced in the Purchase Order.

We have not concluded that a loss

In March 2020, the Company (through its subsidiary Sleep Management LLC) submitted a purchase order (the “Purchase Order”) to Vyaire Medical, Inc.

d/b/a CareFusion Respiratory Technologies (“Vyaire”) for respiratory equipment.

The Company ultimately prepaid $ 1.4 million towards the delivery of such respiratory equipment.

Vyaire was unable or unwilling to deliver the vast majority of the respiratory equipment referenced in the Purchase Order, and also refused to refund the prepayment amount (less the amounts paid for equipment actually received).

On July 29, 2020, the Company (through its subsidiary Sleep Management LLC) filed a lawsuit against Vyaire in the United States District Court for the Western District of Louisiana (the “Court”).

This lawsuit was dismissed on December 8, 2020 in connection with the commencement of the lawsuit filed by the Company (through its subsidiary Sleep Management) on November 5, 2020, against Vyaire in the 15th Judicial District Court for the Parish of Lafayette, Louisiana (the “State Court”) seeking damages for breach of contract and seeking a declaratory judgment that the Company is not required to pay any further funds to Vyaire.

On December 28, 2020, Vyaire filed its Answer, Affirmative Defenses, and Reconventional Demand (“Reconventional Demand”) with the State Court alleging breach of contract and seeking damages of $ 4.7 million, purportedly for the improper cancellation of the Purchase Order.

The Company filed its Answer to the Reconventional Demand on February 12, 2021 and the parties are currently engaged in discovery.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

related to the Counterclaim is probable, nor have we accrued a liability related to this claim.

Although a loss may be reasonably possible (as defined in ASC 450), we do not have sufficient information to determine the amount or range of reasonably possible loss with respect to the Counterclaim given that the dispute is in the early stages of the legal process.

"CARES" Act Funds Received

The Coronavirus Aid, Relief and Economic Security Act ("CARES Act") created a Provider Relief Fund to support health care-related expenses or lost revenue attributable to the COVID-19 pandemic.

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

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

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

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

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

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

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

March 31, 2021 and 2020

We continue to believe that we have valid legal and equitable grounds to recover our outstanding prepayment as a result of Vyaire’s failure to deliver the vast majority of the respiratory equipment referenced in the Purchase Order.

We have not concluded that a loss related to the Reconventional Demand is probable, nor have we accrued a liability related to this claim.

Although a loss may be reasonably possible (as defined in ASC 450), we do not have sufficient information to determine the amount or range of reasonably possible loss with respect to the Reconventional Demand given that the dispute is in the early stages of the legal process.

As of March 31, 2021, outstanding funds in the amount of $ 0.9 million related to undelivered respiratory equipment are included within other long-term assets.

For the three months ended March 31, 2021, the Company recorded an income tax benefit of $ 0.2 million, which includes a discrete tax benefit of $ 0.9 million for excess tax benefits associated with stock-based compensation arrangements.

Excluding the impact of the discrete tax benefit, the effective rate for the three months ended March 31, 2021 is 43.7 %.

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

At March 31, 2021 and 2020, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months.

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

The CARES Act which was signed into law on March 27, 2020 includes various income and payroll tax provisions.

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

The Company is subject to U.S.

1 unchanged sentence

The Company is generally not subject to examination by taxing authorities for years prior to 2016.

Our annual estimated effective tax benefit rate for 2020 is ( 19.20 )%.

Included in the annual estimated effective tax rate of ( 19.20 )% are discrete permanent differences that make up ( 3.0 )% of the rate and a discrete benefit described below accounting for ( 31.50 )%.

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

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

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

At June 30, 2020, the Company determined that it was more likely than not that the deferred tax asset would be realized, and made an adjustment to the deferred tax asset valuation allowance, which reduced the provision for income taxes by $ 7.8 million.

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

As of March 31, 2021, the CARES Act has not had a material impact on our condensed consolidated financial statements, however, the Company is still analyzing these provisions of the CARES Act.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2020 and 2019

March 31, 2021 and 2020

Earnings Per Share

Income per common share is calculated using earnings for the year divided by the weighted average number of shares outstanding during the year .

Using the treasury stock method, diluted income per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares by assuming the proceeds received from the exercise of stock options, restricted stock units, and warrants are used to purchase common shares at the prevailing market rate.

Using the treasury stock method, diluted income per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares by assuming the proceeds received from the exercise of stock options and the vesting of RSUs are used to purchase common shares at the prevailing market rate.

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Numerator - basic and diluted:

8 unchanged sentences

Diluted weighted-average number of shares 40,663,368 39,677,983

Subsequent Events

Conversion of Accounts Payable into Short-term Capital Lease

Subsequent to September 30, 2020, the Company entered into a capital lease agreement with a third party and, as a result, $ 2.5 million of accounts payable was converted to a short-term lease payable.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

September 30, 2020 and 2019

March 31, 2021 and 2020

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

What changed 10-Q

Item 1. Financial Statements