What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-03 · 215 added, 161 removed, 513 unchanged (42% of the section changed)

4 unchanged sentences

Dollars, except outstanding shares)

March 31, 2021 At

June 30, 2021 At

December 31, 2020

2 unchanged sentences

Cash and cash equivalents $ 31,151 $ 30,981

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

Accounts receivable, net of allowance for doubtful accounts of $ 7,288 and $ 9,013 at June 30, 2021 and December 31, 2020, respectively

2 12,134 12,373

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

Inventory, net of inventory reserve of $ 1,284 and $ 1,353 at June 30, 2021 and December 31, 2020, respectively

2 2,558 2,310

26 unchanged sentences

unlimited authorized;

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

39,588,299 and 39,185,182 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

7 $ 13,696 $ 9,181

9 unchanged sentences

Dollars, except share and per share amounts)

Three Months Ended March 31,

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

Note 2021 2020 2021 2020

8 unchanged sentences

Loss (gain) on disposal of property and equipment 83 ( 1,458 ) 159 ( 2,627 )

Other income ( 21 ) —

Other expense (income) ( 32 ) ( 3,574 ) ( 53 ) ( 3,574 )

Income from operations $ 2,664 $ 12,859 $ 3,996 $ 17,474

30 unchanged sentences

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

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

Share-based compensation - restricted stock — — 263 — — 263

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

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

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

9 unchanged sentences

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

Stock-based compensation - options — — 998 — — 998

Stock-based compensation - restricted stock — — 238 — — 238

Exercise of options 11,011 47 — — — 47

Change in accumulated other comprehensive loss, net of tax — — — ( 6 ) — ( 6 )

Net income — — — — 1,566 1,566

Shareholders' equity, June 30, 2021 39,588,299 $ 13,696 $ 5,460 $ ( 351 ) $ 67,459 $ 86,264

See accompanying notes to the condensed consolidated financial statements

2 unchanged sentences

(Expressed in thousands of U.S.

Three Months Ended March 31,

Six Months Ended June 30,

Note 2021 2020

4 unchanged sentences

Change in allowance for doubtful accounts 2 3,402 5,578

Change in inventory reserve ( 4 ) —

Share-based compensation 7 2,543 2,347

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

Distributions of earnings received from equity method investments 123 —

(Gain) on equity method investments ( 451 ) ( 15 )

Loss (gain) on disposal of property and equipment 159 ( 2,627 )

2 unchanged sentences

Increase in accounts receivable ( 3,163 ) ( 5,073 )

Decrease (increase) in inventory 94 ( 425 )

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

Increase in inventory ( 248 ) ( 5,220 )

Increase (decrease) in prepaid expenses and other assets 311 ( 329 )

Increase in trade payables 362 2,044

Increase in deferred revenue 13 79

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

Increase in income tax payable — 195

Increase (decrease) in deferred revenue 333 ( 36 )

(Decrease) increase in accrued liabilities ( 3,800 ) 3,765

(Decrease) increase in income tax payable ( 340 ) 1,404

Net cash provided by operating activities $ 8,811 $ 21,988

11 unchanged sentences

Net cash used in financing activities $ ( 3,883 ) $ ( 5,016 )

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

Net increase in cash and cash equivalents 170 16,352

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

4 unchanged sentences

Supplemental disclosures of non-cash transactions

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

Property and equipment financed through operating leases $ 85 $ 31

Net non-cash changes to finance lease balances $ 12 $ 2,883

Net non-cash changes to operating lease balances $ 355 $ 57

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 2020

June 30, 2021 and 2020

Nature of Business and Operations

8 unchanged sentences

public company reporting requirements.

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.

The Company’s common shares are traded in the U.S.

on the Nasdaq Capital Market under the symbol VMD and in Canada on the Toronto Stock Exchange ("TSX") under the symbol VMD.TO.

Summary of Significant Accounting Policies

23 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 2020

June 30, 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 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 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 doubtful accounts in future periods.

For the six months ended June 30, 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 complexity of many third-party billing arrangements, patient qualification for medical necessity of equipment and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded.

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

March 31, 2021 March 31, 2020

June 30, 2021 June 30, 2020

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

2 unchanged sentences

Balance, end of period $ 7,288 $ 9,345

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 months ended March 31, 2021 and 2020 were as follows:

Three Months Ended March 31,

Included in accounts receivable at June 30, 2021 are amounts due from Medicare and Medicaid which represent 39 % and 13 %, respectively, and 52 % combined, of total outstanding receivables.

As of December 31, 2020, 46 % of total outstanding receivables were due from Medicare and Medicaid.

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 six months ended June 30, 2021 and 2020 were as follows:

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

2021 2020 2021 2020

Medicare revenues 54 % 57 % 57 % 58 %

4 unchanged sentences

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

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.

Inventory is presented net of a reserve balance of $ 1,284,000 and $ 1,353,000 at June 30, 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.

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.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 2020

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

Description Estimated Useful Lives

Medical Equipment 1 - 10 Years

Computer Equipment 5 Years

Office Furniture & Fixtures 5 - 10 Years

Leasehold Improvements Shorter of Useful Life or Lease

Vehicles 5 Years

Building 15 - 39 Years

Land Indefinite Life

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.

June 30, 2021 and 2020

Equity investments

1 unchanged sentence

The following table details the Company’s equity investments:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Equity method investments $ 462 $ 134

5 unchanged sentences

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.

No events or changes have occurred as of June 30, 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.

1 unchanged sentence

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.

The Company was not aware of any impairment or observable price change adjustments that needed to be made as of June 30, 2021 on its investments in equity securities without a readily determinable fair value.

Comprehensive income

2 unchanged sentences

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

As a result of the “backward tracing” prohibition in ASC 740, certain previously measured unrealized gains or losses have resulted in the existence of "dangling" amounts within other comprehensive income.

The Company has elected the individual security approach to the release of these effects.

Under the individual security approach, dangling amounts are tracked on a security-by-security basis and cleared out of the other comprehensive income balance upon sale of each individual security.

During the periods presented, none of the individual securities associated with a dangling balance were sold.

Revenue recognition

3 unchanged sentences

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

June 30, 2021 and 2020

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

11 unchanged sentences

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

Three Months Ended March 31,

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

2021 2020 2021 2020

Revenue from rentals

3 unchanged sentences

Equipment and supply sales

2,108 1,637 3,876 3,272

COVID-19 response sales and services

1,136 19,712 4,091 20,752

Service revenues

546 266 958 576

Total revenues $ 27,399 $ 42,854 $ 55,815 $ 66,660

3 unchanged sentences

The Company considers these rentals to be operating leases.

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.

5 unchanged sentences

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

June 30, 2021 and 2020

Revenue Accounting under Topic 606

3 unchanged sentences

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.

In response to the COVID-19 pandemic, the Company began offering contact and vaccine 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 and vaccine 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 equipment sales, sleep study services or contact tracing services.

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

The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of June 30, 2021.

Stock-based compensation

5 unchanged sentences

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.

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 equivalent Company's stock value at the end of each period and records a liability based on the percentage of requisite service.

Interest rate swaps

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

June 30, 2021 and 2020

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

16 unchanged sentences

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

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

Recently adopted accounting pronouncements

12 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.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

June 30, 2021 and 2020

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

14 unchanged sentences

The following table details the Company’s fixed assets:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Medical equipment $ 66,207 $ 63,307

6 unchanged sentences

Property and equipment, net of accumulated depreciation and amortization $ 54,354 $ 55,056

Depreciation in the amount of $ 2,509,000 and $ 1,985,000 is included in cost of revenue for the three months ended June 30, 2021 and 2020, respectively, and in the amount of $ 4,918,000 and $ 3,910,000 for the six months ended June 30, 2021 and 2020, respectively.

Included in medical equipment above is equipment acquired under finance lease obligations whose cost and accumulated depreciation at June 30, 2021 total $ 4,365,000 and $ 851,000 , respectively.

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

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

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.

June 30, 2021 and 2020

Current Liabilities

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Accrued trade payables $ 2,256 $ 1,252

7 unchanged sentences

Senior Credit Facility

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

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

Line of Credit

1 unchanged sentence

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

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

There were no borrowings against this line of credit at June 30, 2021 or December 31, 2020.

Commercial Term Notes

17 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 2020

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

March 31, 2021 December 31, 2020

June 30, 2021 and 2020

The recorded balances associated with these term notes, which have terms greater than twelve months, are as follows:

June 30, 2021 December 31, 2020

Notes payable $ 6,726 $ 7,632

4 unchanged sentences

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 was in compliance with all covenants under the Commercial Business Term Loan Agreement in effect at June 30, 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:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Lease liabilities $ 1,872 $ 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 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.

The Company's weighted average interest rate was 4.74 % and 2.75 % for all finance lease liabilities outstanding as of June 30, 2021 and 2020, respectively.

At June 30, 2021 and 2020, the weighted average lease term was approximately 0.30 years and 0.90 years, respectively.

Interest expense related to these finance lease obligations for the three and six months ended June 30, 2021 amounted to $ 11,000 and $ 31,000 , respectively.

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

Operating lease liabilities

2 unchanged sentences

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

At March 31, 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.

At June 30, 2021, the weighted average lease term was approximately 3.42 years.

Operating rental expenses were $ 190,000 and $ 375,000 for the three and six months ended June 30, 2021, respectively, and $ 201,000 and $ 385,000 for the three and six months ended June 30, 2020, respectively.

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

2 unchanged sentences

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.

Total rental payments for the use of these properties were $ 59,000 and $ 113,000 for the three and six months ended June 30, 2021, respectively, and $ 61,000 and $ 121,000 for the three and six months ended June 30, 2020, respectively.

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

3 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 2020

June 30, 2021 and 2020

Fair Value Measurement

1 unchanged sentence

ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

There are three levels to the hierarchy based on the reliability of inputs, as follows:

4 unchanged sentences

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

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

Due to their short-term nature, the carrying amounts reported in the Consolidated Balance Sheets approximate the fair value of cash and cash equivalents.

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company measures certain assets and liabilities at fair value on a recurring basis.

There were no transfers between fair value measurement levels during any presented period.

The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020:

At June 30, 2021

(In thousands) Level 1 Level 2 Level 3 Total

Recurring Fair Value Measurements:

Money market mutual funds $ 25,994 $ — $ — $ 25,994

Interest rate swap — ( 298 ) — ( 298 )

Total $ 25,994 $ ( 298 ) $ — $ 25,696

At December 31, 2020

(In thousands) Level 1 Level 2 Level 3 Total

Recurring Fair Value Measurements:

Money market mutual funds $ 25,662 $ — $ — $ 25,662

Interest rate swap — ( 433 ) — ( 433 )

Total $ 25,662 $ ( 433 ) $ — $ 25,229

Derivative instruments and hedging activities

2 unchanged sentences

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.

As of June 30, 2021, the Company holds one interest rate swap contract which matures on May 30, 2026 and 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.

In the first six 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 June 30, 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)

June 30, 2021 and 2020

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain assets and liabilities at fair value on a nonrecurring basis.

These assets and liabilities include equity method investments and other equity investments.

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.

The Company's other equity investments are holdings in a privately-held company without a readily determinable market value.

The Company remeasures equity securities without readily determinable fair value at fair value when an orderly transaction is identified for an identical or similar investment of the same issuer in accordance with Topic 820.

ASU 2019-04 states that the measurement alternative is a nonrecurring fair value measurement.

Accordingly, other equity investments without readily determinable fair value are classified within Level 3 in the fair value hierarchy because the Company estimates the value using a combination of observable and unobservable inputs, including valuation ascribed to the issuing company in subsequent financing rounds, volatility in the results of operations of the issuers and rights and obligations of the holdings we own.

The Company had no material adjustments of assets and liabilities measured at fair value on a nonrecurring basis during any of the periods presented.

There were no transfers between fair value measurement levels during any presented period.

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 39,577,288 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 authorized stock consists of an unlimited number of common shares with no stated par value, of which 39,588,299 and 39,185,182 shares were issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

For the six months ended June 30, 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

3 unchanged sentences

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.

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,

As of June 30, 2021, the Company had outstanding options of 3,799,000 and RSUs of 180,000 associated with common shares under the Omnibus Plan.

The following table summarizes stock-based compensation for the three and six months ended June 30, 2021 and 2020 (in thousands):

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

2021 2020 2021 2020

Stock-based compensation - options $ 998 $ 933 $ 2,076 $ 1,824

1 unchanged sentence

Total $ 1,236 $ 1,196 $ 2,543 $ 2,347

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:

At June 30, 2021, there was approximately $ 4,547,000 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 2.21 years.

As of June 30, 2021, there was approximately $ 584,000 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 0.91 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)

June 30, 2021 and 2020

The following table summarizes stock option activity for the six months ended June 30, 2021:

Number of options

5 unchanged sentences

Expired / Forfeited ( 59 ) 8.89

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

Balance June 30, 2021 3,799 $ 5.23 7.9 years $ 7,293

(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 ($ 7.15 ).

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.

The aggregate intrinsic value of options outstanding was $ 7,293,000 and options exercisable were $ 6,666,000 at June 30, 2021.

For the six months ended June 30, 2021, 27,597 shares of common stock were issued pursuant to the exercise of stock options.

At June 30, 2021, the Company had 1,867,000 exercisable stock options outstanding with a weighted average exercise price of $ 3.58 and a weighted average remaining contractual life of 7.0 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.

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:

The assumptions used to determine the grant date fair value of the stock options granted during the six months ended June 30, 2021 were as follows:

Exercise price $ 8.57 - $ 9.70

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

The Company accounts for RSUs using fair value.

The Company accounts for RSUs using fair value as of the date of issuance.

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.

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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:

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

June 30, 2021 and 2020

The following table summarizes RSU activity for the six months ended June 30, 2021:

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

4 unchanged sentences

Expired / Forfeited ( 10 ) 6.80

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

Balance June 30, 2021 180 $ 7.74 0.91 years $ 1,288

(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 ($ 7.15 ).

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.

During the three months ended June 30, 2021, the Company issued no RSUs.

During the six months ended June 30, 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

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

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

Number of phantom share units (000's)

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 following table summarizes phantom share unit activity for the six months ended June 30, 2021:

Number of phantom share units (000's) Value of share equivalents (1)

Balance December 31, 2020 985 $ 7,642

Issued 394 3,766

Vested ( 656 ) ( 6,282 )

Expired / Forfeited ( 55 ) ( 390 )

Balance March 31, 2021 951

Balance June 30, 2021 668 $ 4,777

(1) The value of outstanding share equivalents at the beginning of the period is based on the market price of the Company’s stock at that time, the value of issued share equivalents is based on the market price of the Company’s stock at issuance, the value of vested share equivalents is based on the cash paid at the time of vesting, the values of expired/forfeited share equivalents and outstanding share equivalents at the end of the period and are based on the market price of the Company's stock at the end of the period.

The market price of the Company's stock was $ 7.15 on June 30, 2021.

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.

The total liability associated with phantom share units at June 30, 2021 is $ 1,421,000 , with $ 1,026,000 of this amount included in current accrued liabilities and the remaining portion of $ 395,000 included in long-term accrued liabilities.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 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 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.

June 30, 2021 and 2020

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,

The following table summarizes expense (benefit) associated with the phantom share units for the three and six months ended June 30, 2021 and 2020 (in thousands):

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

2021 2020 2021 2020

Selling, general, and administrative $ ( 106 ) $ 4,308 $ 2,359 $ 3,611

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.

The Company paid cash settlements of $ 6,282,000 and $ 4,201,000 during the six months ended June 30, 2021 and 2020, respectively, pertaining to vestings of cash-settled phantom share units.

Commitments and Contingencies

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”).

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

Legal Proceedings

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

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

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

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 determined that a loss related to the Reconventional Demand is not probable, and thus have not accrued a liability related to this claim.

Although a loss may be reasonably possible, 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 June 30, 2021, outstanding funds in the amount of $ 0.9 million related to undelivered respiratory equipment are included within other long-term assets.

Governmental and Regulatory Matters

From time to time we are involved in various external governmental investigations, audits and reviews.

Reviews, audits and investigations of this sort can lead to government actions, which can result in the assessment of recoupment of reimbursement, civil or criminal fines or penalties, or other sanctions, including restrictions or changes in the way we conduct business, loss of licensure or exclusion from participation in government healthcare programs.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

March 31, 2021 and 2020

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.

June 30, 2021 and 2020

In May of 2021, a final report and recommendation (“Report”) was issued by the U.S.

Department of Health and Human Services Office of the Inspector General (“OIG”) regarding an audit by OIG of claims relating to one hundred (100) of the Company’s non-invasive ventilation at home (“NIVH”) patients.

The OIG asserted that most of the sampled Medicare claims submitted for the monthly rental of non-invasive ventilators did not comply with Medicare requirements.

The Company firmly believes that the Report ignores each patient’s diagnosis and supporting documentation of that diagnosis from treating and prescribing physicians and applies clinical guidelines that are contrary to CMS’s accepted standard of care.

In late June of 2021, the Company received initial request letters from DME Medicare Administrative Contractors referencing the Report and requesting repayment of purported overpayments.

The Company has responded to each initial request by submitting a rebuttal and by filing a redetermination appeal as prescribed by the initial request letters and by statute, and the Company intends to continue to defend itself vigorously through Redetermination appeals, Reconsideration appeals, Administrative Law Judge appeals, Medicare Appeals Council review, and ultimately through Federal Court, if necessary.

Based on initial discussions with CMS, a review of the current facts and circumstances as we understand them, and the nature of the requests, we have determined that a loss is not probable but may be reasonably possible.

Accordingly, no related accrual has been recorded.

The value of the population of associated claims within the 4-year reopening period prescribed by statute is less th an $ 9 million.

Man agement estimates that a possible loss, if any, will not exceed this amount.

It is possible that the ultimate resolution of this matter, if unfavorable, could materially and adversely affect the Company’s consolidated financial position, consolidated results of operations, or consolidated cash flows.

For the six months ended June 30, 2021, the Company recorded income tax expense of $ 1.0 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 six months ended June 30, 2021 is 44.1 %.

The effective rate differs from the amount computed by applying the statutory federal and state income tax rates to ordinary income before the provision for income taxes due to permanent non-deductible differences, 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.

During the six months ended June 30, 2020, the Company released a valuation allowance associated with deferred tax assets, resulting in a 6.5 million benefit during that period.

At June 30, 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.

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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.

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.

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 and the vesting of RSUs are used to purchase common shares at the prevailing market rate.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

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 .

June 30, 2021 and 2020

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

Three Months Ended March 31,

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

2021 2020 2021 2020

Numerator - basic and diluted:

8 unchanged sentences

Diluted weighted-average number of shares 41,028,742 40,814,238 40,849,311 40,103,016

Anti-dilutive shares excluded from the calculation consisted of dilutive employee stock options that were de minimis in all periods presented.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

March 31, 2021 and 2020

June 30, 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