What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-03 compared with 2021-05-03 · 223 added, 165 removed, 333 unchanged (54% of the section changed)

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On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic.

Based on the duration and severity of the impacts of the COVID-19 pandemic, including but not limited to any negative economic conditions arising from the pandemic, our ability to assess potential patients in hospitals and set up and treat patients in the home, and the impacts of government actions and administrative regulations on the healthcare industry and broader economy, including through existing and any future stimulus efforts, we are uncertain of the ultimate impact COVID-19 could have on our business, financial condition and results of operations.

The impact of COVID-19 on our financial results are discussed in more detail below.

We are closely monitoring the impact of the COVID-19 pandemic on our business.

The suspension of Medicare sequestration through December 31, 2021 (resulting in a 2% increase in Medicare payments to all providers) and recent regulatory guidance from CMS expanding telemedicine and reducing documentation requirements during the emergency period are expected to result in increased revenues for certain products and services.

However, based on the duration and severity of the impacts of the COVID-19 pandemic, including but not limited to any negative economic conditions arising from the pandemic, our ability to assess potential patients in hospitals and set up and treat patients in the home, and the impacts of government actions and administrative regulations on the healthcare industry and broader economy, including through existing and any future stimulus efforts, we are uncertain of the ultimate impact COVID-19 could have on our business, financial condition and results of operations.

Forward-Looking Statements

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unanticipated expenses;

commercial disputes or claims;

limitations on insurance coverage;

commercial or governmental disputes or claims;

limitations on insurance coverage or other reimbursement;

and availability of cash flow to fund capital requirements.

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

March 31, 2021 and 2020

June 30, 2021 and 2020

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

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the availability of funds and resources to pursue operations;

decline of reimbursement rates;

reductions in reimbursement rates and audits of reimbursement claims by various governmental and private payor entities;

dependence on few payors;

possible new drug discoveries;

dependence on key suppliers;

dependence on key suppliers and the recall of certain Royal Philips BiPAP and CPAP devices and ventilators that we distribute and sell;

granting of permits and licenses in a highly regulated business;

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critical accounting estimates and changes to accounting standards, policies, and methods used by us;

the impact of the previously disclosed restatement and correction of our previously issued financial statements;

the previously disclosed identified material weakness in our internal control over financial reporting and our ability to remediate that material weakness;

the initiation of legal or regulatory proceedings with respect to the restatement and corrections;

the adverse effects on our business, results of operations, financial condition and stock price, as a result of the restatement and correction process;

our status as an emerging growth company and a smaller reporting company;

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

March 31, 2021 and 2020

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 79.9% of our traditional revenue, excluding COVID-19 response sales and services, and 82.5% of our traditional revenue, excluding the COVID-19 response sales and services, for the three months ended March 31, 2021 and 2020, respectively.

June 30, 2021 and 2020

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 77.3% and 81.9% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended June 30, 2021 and 2020, respectively, and 78.6% and 82.0% for the six months ended June 30, 2021 and 2020, respectively.

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

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

We expect to grow through expansion of existing service areas as well as in new regions through a cost efficient launch that reduces location expenses.

Our licensed RTs currently serve patients in 46 states.

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

As of March 31, 2021, we employed 267 licensed RTs, representing more than 51% of our company-wide employee count.

As of June 30, 2021, we employed 285 licensed RTs, representing approximately 50% of our company-wide employee count.

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

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Employee and patient safety is our first priority, and as a result, we put preparedness plans in place for our employees, especially our clinical personnel, and modified our clinical protocols to limit unnecessary patient encounters in order to ensure the safety of our employees as well as the safety of our patients.

These measures do not appear to be negatively impacting our patient attrition rate at this time, but we cannot assure you that future governmental policies and initiatives will not significantly disrupt our operations or adversely affect our ability to provide services to our patients in the future.

These measures have not had a material adverse impact on our consolidated operating results for the three months ended June 30, 2021, but we have experienced curtailment of revenue growth in certain of our product categories due to the disruption in our access to physician and facility referral sources.

This curtailment was slightly offset by revenue related to COVID-19 response sales and services.

We cannot assure you that future governmental policies and initiatives will not significantly disrupt our operations or adversely affect our ability to provide services to our patients in the future.

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

While governmental and other restrictions have not had a material impact on our consolidated operating results for the three months ended March 31, 2021, it is possible that more significant disruptions could occur if the COVID-19 pandemic continues for a prolonged period of time and we cannot assure you that demand for our products and services will continue or that we will be able to maintain operations, including sufficient personnel, supply chains and distribution channels to continue to satisfy demand for our products and services.

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

Broad economic factors resulting from the current COVID-19 pandemic, including high unemployment and underemployment levels and reduced consumer spending and confidence, could also affect our service mix, revenue mix, payor mix and patient base, as well as our ability to collect outstanding receivables.

Business closures and layoffs in the geographic areas in which we operate may lead to increases in the uninsured and under insured populations and adversely affect demand for our services, as well as the ability of patients and other payors to pay for services rendered.

Any increase in the amount or deterioration in the collectability of patient accounts receivable will adversely affect our financial results and require an increased level of working capital.

In addition, we may experience supply chain disruptions, including delays and price increases in equipment and supplies.

Staffing, equipment and supplies shortages may also impact our ability to assess potential patients in hospitals and set up and treat patients in the home.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

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

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was signed into law on March 27, 2020, provides a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief and government loans, grants and investments.

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1868 into law, which further extended the suspension of Medicare sequestration until December 31, 2021.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

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

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

The overall impact that COVID-19 will continue to have on our consolidated results of operations in future periods remains uncertain and difficult to predict and will depend on, among other factors, the duration and severity of the pandemic, as well as any negative economic conditions arising from the pandemic, our ability to assess potential patients in hospitals and set up and treat patients in the home and the impacts of government actions and administrative regulations on the healthcare industry and broader economy, including through existing and any future stimulus efforts.

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

If COVID-19 continues to spread or if the response to contain the COVID-19 pandemic is unsuccessful, we could experience a material adverse effect on our business, financial condition, and results of operations.

For additional information, see Part II.

“Risk Factors.”

In 2019, CMS announced the inclusion of noninvasive ventilator products on the list of products subject to the competitive bidding program for Round 2021, which covers the period of January 1, 2021 through December 31, 2023.

Rental revenue from ventilator products represents a significant portion of our revenues (approximately 81% of total traditional revenue, excluding COVID-19 response sales and services, in 2020).

Rental revenue from ventilator products represents a significant portion of our revenues (approximately 78.6% of total traditional revenue, excluding COVID-19 response sales and services, for the six months ended June 30, 2021).

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

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

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

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

The next competitive bidding round is anticipated to begin no sooner than January 1, 2024.

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

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

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Dollars, except vent patients)

For the quarter ended March 31,

2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019

For the quarter ended June 30,

2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019

Financial Information:

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(2) Vent Patients represents the number of active ventilator patients on recurring billing service at the end of each calendar quarter.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

Results of Operations

Comparison of the Three Months Ended March 31, 2021 and 2020:

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2021 and 2020:

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

2021 % of Total Revenue 2020 % of Total Revenue $

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Loss (gain) on disposal of property and equipment 83 0.3 % (1,458) (3.4) % 1,541 NM

Other income (21) (0.1) % — — % (21) NM

Other expense (income) (32) (0.1) % (3,574) (8.3) % 3,542 (99.1) %

Income from operations 2,664 9.7 % 12,859 30.0 % (10,195) (79.3) %

Non-operating expenses

Loss (gain) from equity method investments (220) (0.8) % 27 0.1 % (247) NM

Loss (gain) from equity method investments (231) (0.8) % (42) (0.1) % (189) 450.0 %

Interest expense, net 83 0.3 % 135 0.3 % (52) (38.5) %

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Net income $ 1,566 5.7 % $ 19,412 45.3 % $ (17,846) (91.9) %

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

The following table summarizes our revenue for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table summarizes our revenue for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

2021 % of Total Revenue 2020 % of Total Revenue $

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Total net revenue $ 27,399 100.0 % $ 42,854 100.0 % $ (15,455) (36.1) %

For the three months ended March 31, 2021, revenue totaled $28.4 million, an increase of $4.6 million (or 19.4%) from the comparable period in 2020.

For the three months ended June 30, 2021, net revenue totaled $27.4 million, a decrease of $15.5 million (or 36.1%) from the comparable period in 2020.

Excluding COVID-19 response sales and services revenue, net revenue increased $3.1 million (or 13.5%) from the comparable period in 2020.

The net revenue growth was primarily driven by an increase in ventilator rental revenue of $1.6 million (or 8.3%) and rental revenue from other DME of $0.8 million (or 37.5%).

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

Non-COVID-19 related equipment sales and services combined increased by $0.3 million (or 18.3%) from the comparable period in 2020, primarily as a result of increasing demand for respiratory supplies for our PAP and non-invasive vent patients.

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

During the three months ended March 31, 2021, net revenue of COVID-19 response sales and services totaled $3.0 million, consisting primarily of personal protective equipment and contact tracing services.

While we expect further COVID-19 response related revenue during the remainder of 2021, the quantity is expected to be lower and impact of such revenue remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment, supplies, and services from other suppliers.

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

Cost of revenue and gross profit

For the three months ended March 31, 2021, cost of revenue totaled $10.7 million, an increase of $2.4 million (or 29.3%) from the comparable period in 2020.

For the three months ended March 31, 2021, COVID-19 response sales and services accounted for $1.9 million (or 17.7%) of these costs, compared to $0.6 million (or 6.9%) of these costs from the comparable period in 2020.

Gross profit percentage decreased from approximately 65.3% in the three months ended March 31, 2020 to approximately 62.4% in the three months ended March 31, 2021.

The decreased margins were primarily the result of the above mentioned COVID-19 response sales and services which contributed a weighted average gross profit percentage of 36.2%.

Excluding COVID-19 response sales and services, gross profit percentage for the three months ended March 31, 2021 and 2020 was 65.5% and 66.2%, respectively.

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

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

We believe it to be in the long term interest of our patients and the business to continue to employ these essential employees.

We expect our gross profit percentage for our normal operations (non-COVID-19 related) to remain relatively consistent with the current quarter through the end of 2021.

The non-COVID-19 related net revenue growth was primarily driven by an increase in ventilator rental revenue of $1.4 million (or 7.1%) and rental revenue from other DME of $1.0 million (or 44.4%) related to oxygen therapy and PAPs.

Non-COVID-19 related equipment sales and services combined increased by $0.8 million (or 39.5%) from the comparable three month period in 2020, primarily as a result of increasing demand for home sleep studies and respiratory supplies for our PAP patients.

VIEMED HEALTHCARE, INC.

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

March 31, 2021 and 2020

June 30, 2021 and 2020

During the three months ended June 30, 2021, net revenue of COVID-19 response sales and services totaled $1.1 million, compared to $19.7 million during the comparable three month period in 2020 during the height of the pandemic.

Current period COVID-19 response sales and services consist primarily of contact and vaccination tracing services.

While we expect further COVID-19 response related revenue during the remainder of 2021, the incremental revenue is expected to decline and impact of such revenue remains uncertain and dependent on the length and intensity of the COVID-19 pandemic and the availability of such equipment, supplies, and services from other suppliers.

As we continue to expand geographically and further penetrate existing territories, we expect growth in our active ventilator patient base and ventilator rental revenue, as well as in our other growing respiratory offerings, though in the short term we anticipate growth to occur at a slightly slower rate than historically realized.

Cost of revenue and gross profit

For the three months ended June 30, 2021, cost of revenue totaled $9.8 million, a decrease of $7.2 million (or 42.3%) from the comparable period in 2020.

For the three months ended June 30, 2021, COVID-19 response sales and services accounted for $0.7 million (or 7.4%) of these costs, compared to $9.2 million (or 54.3%) of these costs from the comparable period in 2020.

Gross profit percentage increased from 60.5% in the three months ended June 30, 2020 to 64.3% in the three months ended June 30, 2021.

Excluding COVID-19 response sales and services, gross profit percentage for the three months ended June 30, 2021 and 2020 was 65.5% and 66.6%, respectively.

The reduction in overall gross profit percentage is due to fluctuations in product and service mix, including the significant increase in net revenue for non-ventilator related products and services.

We expect our gross profit percentage for our normal operations (non-COVID-19 related) to remain relatively consistent with the current quarter through the end of 2021.

Selling, general and administrative expense

For the three months ended March 31, 2021, selling, general and administrative expenses totaled $14.5 million, an increase of $3.9 million (or 37.2%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue increased to 51.1% for the three months ended March 31, 2021 compared to 44.4% for the three months ended March 31, 2020.

The increase in overall selling, general and administrative expense as compared to the prior period is attributable to additional employee related expenses to accommodate the overall growth of the Company.

Our full time employee count increased from 469 on March 31, 2020 to 528 on March 31, 2021, an increase of 12.6%.

Employee compensation expenses increased $3.9 million (or 76.7%) as a result of higher incentive-based compensation and an overall increase in our employee headcount.

Also included in the employee compensation expense increases was a $3.2 million increase related to the impact of our phantom stock plan.

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

During the three months ended March 31, 2021, our stock price increased by 30.4% compared to a decrease of 23.2% for the previous period.

During the three months ended March 31, 2021, volatility of our stock price resulted in higher comparable expenses related to these awards of $2.5 million compared to a benefit of $0.7 million in the prior comparable period.

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

We expect that selling, general and administrative expenses will stabilize through the end of 2021, resulting in a reduction of selling, general and administrative expenses as a percentage of revenue.

For the three months ended June 30, 2021, selling, general and administrative expenses totaled $12.9 million, a decrease of $3.5 million (or 21.6%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue increased to 47.0% for the three months ended June 30, 2021 compared to 38.3% for the three months ended June 30, 2020.

The decrease in overall selling, general and administrative expense as compared to the prior period is primarily attributable to a decrease in employee related expenses associated with variable and incentive based compensation, including share based phantom stock compensation.

Variable and incentive compensation declined $6.0 million from the comparable period, including a $4.4 million decrease related to the remeasurement of the impact of our phantom stock plan.

As we continue to grow into new markets and increase our employee count, we expect selling, general and administrative expenses will grow proportionally as a percentage of revenue through the end of 2021.

Research and development

For the three months ended March 31, 2021, research and development expense totaled $0.3 million, an increase of $0.2 million (or 94.8%) from the comparable period in 2020.

For the three months ended June 30, 2021, research and development expense totaled $0.6 million, an increase of $0.3 million (or 115.1%) from the comparable period in 2020.

As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will continue to increase in 2021 relative to 2020 costs.

Loss on disposal of property and equipment

For the three months ended March 31, 2021, we recorded a loss on disposal of property and equipment of $0.1 million, compared to a gain of $1.2 million during the comparable period in 2020.

During the three months ended March 31, 2020, as a result of our COVID-19 response efforts, certain of our previously placed in service property and equipment was sold and substantial gains resulting from these disposals was recognized.

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

For the three months ended June 30, 2021, we recorded a loss on disposal of property and equipment of $0.1 million, compared to a gain of $1.5 million during the comparable period in 2020.

During the three months ended June 30, 2020, as a result of our COVID-19 response efforts, certain of our previously placed in service property and equipment was sold and gains resulting from these disposals was recognized.

We expect disposals of equipment to generally remain consistent with historical trends.

Other expense (income)

During the three months ended June 30, 2020, we recorded income from the receipt of Provider Relief Fund payments of $3.5 million in April 2020.

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

There was no receipt of payments from the Provider Relief Fund during the three months ended June 30, 2021.

We expect other expense (income) to remain at immaterial levels.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

Stock-based compensation

For the three months ended March 31, 2021, stock-based compensation totaled $1.3 million, an increase of $0.2 million (or 13.6%) from the comparable period in 2020.

This increase is attributable to the expense of additional stock-based awards during 2021.

For the three months ended June 30, 2021, stock-based compensation totaled $1.2 million, remaining consistent with the comparable period in 2020.

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

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Interest expense, net

For the three months ended March 31, 2021, net interest expense totaled $0.1 million, a decrease of $0.1 million (or 42.4%) from the comparable period in 2020.

For the three months ended June 30, 2021, net interest expense totaled $0.1 million, a decrease of $0.1 million (or 38.5%) from the comparable period in 2020, as a result of declines in index rates associated with loans.

We expect net interest expense to remain relatively consistent with the current quarter through the end of 2021.

Provision (benefit) for income taxes

For the three months ended March 31, 2021, the provision for income taxes was a $0.2 million benefit, compared to a $0.2 million expense during the 2020 period.

The decrease in income tax expense was primarily due to a discrete tax benefit of $0.9 million for excess tax benefits associated with stock-based compensation arrangements.

Excluding discrete items, our annual estimated effective tax rate for 2021 is 43.7%.

For the three months ended June 30, 2021, the provision for income taxes was a $1.2 million expense, compared to a $6.6 million benefit during the 2020 period.

At June 30, 2020, the Company determined that it was more likely than not that deferred tax assets would be realized, and during the three month period ended June 30, 2020, made an adjustment to the deferred tax asset valuation allowance, which resulted in a net benefit for the period.

Our annual estimated effective tax rate for 2021 is 44.1%.

For the three months ended June 30, 2021, net income was $1.6 million, a decrease of $17.8 million (or 91.9%) from the comparable period in 2020.

Net income as a percentage of net revenue decreased from 45.3% for the three months ended June 30, 2020 to 5.7% for the three months ended June 30, 2021, primarily due to the decrease in COVID-19 related activities and the comparative benefit from income taxes in the prior period, as described above.

Comparison of the Six Months Ended June 30, 2021 and 2020:

The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

2021 % of Total Revenue 2020 % of Total Revenue $

Revenue $ 55,815 100.0 % $ 66,660 100.0 % $ (10,845) (16.3) %

Cost of revenue 20,448 36.6 % 25,180 37.8 % (4,732) (18.8) %

Gross profit 35,367 63.4 % 41,480 62.2 % (6,113) (14.7) %

Selling, general and administrative 27,393 49.1 % 27,005 40.5 % 388 1.4 %

Research and development 922 1.7 % 445 0.7 % 477 107.2 %

Stock-based compensation 2,543 4.6 % 2,347 3.5 % 196 8.4 %

Depreciation 407 0.7 % 410 0.6 % (3) (0.7) %

Loss (gain) on disposal of property and equipment 159 0.3 % (2,627) (3.9) % 2,786 NM

Other expense (income) (53) (0.1) % (3,574) (5.4) % 3,521 (98.5) %

Income from operations 3,996 7.2 % 17,474 26.2 % (13,478) (77.1) %

Non-operating expenses

Loss (gain) from equity method investments (451) (0.8) % (15) — % (436) NM

Interest expense, net 174 0.3 % 293 0.4 % (119) (40.6) %

Net income before taxes 4,273 7.7 % 17,196 25.8 % (12,923) (75.2) %

Provision (benefit) for income taxes 1,023 1.8 % (6,459) (9.7) % 7,482 NM

Net income $ 3,250 5.8 % $ 23,655 35.5 % $ (20,405) (86.3) %

VIEMED HEALTHCARE, INC.

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

March 31, 2021 and 2020

For the three months ended March 31, 2021, net income was $1.7 million, a decrease of $2.6 million (or 60.3%) from the comparable period in 2020.

Net income as a percentage of net revenue decreased from 17.8% for the three months ended March 31, 2020 to 5.9% for the three months ended March 31, 2021, primarily due to the increased selling, general and administrative expenses, as described above.

June 30, 2021 and 2020

The following table summarizes our revenue for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

2021 % of Total Revenue 2020 % of Total Revenue $

Net revenue from rentals

Ventilator rentals, non-invasive and invasive $ 40,656 72.9 % $ 37,651 56.5 % $ 3,005 8.0 %

Other durable medical equipment rentals 6,234 11.2 % 4,409 6.6 % 1,825 41.4 %

Net revenue from sales and services

Equipment and supply sales 3,876 6.9 % 3,272 4.9 % 604 18.5 %

COVID-19 response sales and services 4,091 7.3 % 20,752 31.1 % (16,661) (80.3) %

Service revenues 958 1.7 % 576 0.9 % 382 66.3 %

Total net revenue $ 55,815 100.0 % $ 66,660 100.0 % $ (10,845) (16.3) %

For the six months ended June 30, 2021, revenue totaled $55.8 million, a decrease of $10.8 million (or 16.3%) from the comparable period in 2020.

Non-COVID-19 related net revenue increased $5.8 million (or 12.7%) from the comparable period in 2020.

Ventilator rental revenue increased $3.0 million (or 8.0%) due to our growth in active ventilator patient base.

In addition to the ventilator rental revenue growth, rental revenue from other DME grew $1.8 million (or 41.4%) from oxygen therapy and PAPs.

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

Non-COVID-19 related equipment sales and services combined increased by $1.0 million (or 25.6%) from the comparable period in 2020, primarily as a result of increasing demand for home sleep studies and associated supplies for our PAP patients.

Cost of revenue and gross profit

For the six months ended June 30, 2021, cost of revenue totaled $20.4 million, a decrease of $4.7 million (or 18.8%) from the comparable period in 2020.

For the six months ended June 30, 2021 and 2020, gross profit percentage increased from 62.2% to 63.4%.

Excluding COVID-19 response sales and services, gross profit percentage for the six months ended June 30, 2021 was 65.5%.

We expect our gross profit percentage for our normal operations (non-COVID-19 related) to remain relatively consistent with the current quarter through the end of 2021.

Selling, general and administrative expense

For the six months ended June 30, 2021, selling, general and administrative expenses totaled $27.4 million, an increase of $0.4 million (or 1.4%) from the comparable period in 2020.

Excluding COVID-19 related revenues, selling, general and administrative expenses as a percentage of net revenue decreased to 53.0% for the six months ended June 30, 2021, compared to 58.8% for the six months ended June 30, 2020.

The change in overall selling, general and administrative expense as compared to the prior year period is attributable to lower variable and incentive based employee compensation and higher employee related expenses to accommodate the overall growth of the Company, as our full time employee count increased to 575 at June 30, 2021, compared to 459 at June 30, 2020, an increase of 25.3%.

We expect selling, general and administrative expenses will grow proportionally as a percentage of revenue through the end of 2021.

Research and development

For the six months ended June 30, 2021, research and development expense totaled $0.9 million, an increase of $0.5 million (or 107.2%) from the comparable period in 2020.

As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will continue to increase in 2021 relative to 2020 costs.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

Loss on disposal of property and equipment

For the six months ended June 30, 2021, we recorded a loss on disposal of property and equipment of $0.2 million, compared to a gain of $2.6 million during the comparable period in 2020.

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

As a result, during the six months ended June 30, 2020, we recorded sales proceeds on used equipment of $5.0 million which resulted in a net gain on disposal for related equipment of $3.5 million, partially offset by a loss of $0.8 million on property and equipment unrelated to COVID-19.

We expect disposals of equipment to generally remain consistent with historical trends through the remainder of the year.

Other expense (income)

During six months ended June 30, 2020, we recorded income from the receipt of Provider Relief Fund payments of $3.5 million in April 2020.

There was no receipt of payments from the Provider Relief Fund during the six months ended June 30, 2021.

Stock-based compensation

For the six months ended June 30, 2021, stock-based compensation totaled $2.5 million, an increase of $0.2 million (or 8.4%) from the comparable period in 2020.

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

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

Interest expense, net

For the six months ended June 30, 2021, net interest expense totaled $0.2 million, a decrease of $0.1 million from the comparable period in 2020, as a result of declines in index rates associated with loans.

We expect net interest expense to remain materially consistent through the end of 2021.

Provision (benefit) for income taxes

For the six months ended June 30, 2021, the provision for income taxes was a $1.0 million expense, compared to a $6.5 million benefit during the 2020 period.

At June 30, 2020, the Company determined that it was more likely than not that deferred tax assets would be realized, and during the six month period ended June 30, 2020, made an adjustment to the deferred tax asset valuation allowance, which resulted in a net benefit for the period.

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

For the six months ended June 30, 2021, net income was $3.3 million, a decrease of $20.4 million (or 86.3%) from the comparable period in 2020.

Net income as a percentage of revenue decreased from 35.5% for the six months ended June 30, 2020 to 5.8% for the six months ended June 30, 2021, driven by a decrease in COVID-19 related sales and the comparative benefit from income taxes in the prior period, as described above.

Non-GAAP Financial Measures

Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets.

We believe that one of the most important measures for our company is Adjusted EBITDA.

Adjusted EBITDA is a non-GAAP financial measure.

We believe Adjusted EBITDA provides helpful information with respect to our operating performance as viewed by management, including a view of our business that is not dependent on the impact of our capitalization structure and items that are not part of our day-to-day operations.

Management uses Adjusted EBITDA (i) to compare our operating performance on a consistent basis, (ii) to calculate incentive compensation for our employees, (iii) for planning purposes including the preparation of our internal annual operating budget, and (iv) to evaluate the performance and effectiveness of our operational strategies.

Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating performance in the same manner as management.

The Company uses Adjusted EBITDA, which is a financial measure that is not prepared in accordance with generally accepted accounting principles in the United States ("GAAP") to analyze its financial results and believes that it is useful to investors, as a supplement to U.S.

GAAP measures.

Management believes Adjusted EBITDA provides helpful information with respect to the Company’s operating performance as viewed by management, including a view of the Company’s business that is not dependent on the impact of the Company’s capitalization structure and items that are not part of the Company’s day-to-day operations.

Management uses Adjusted EBITDA (i) to compare the Company’s operating performance on a consistent basis, (ii) to calculate incentive compensation for the Company’s employees, (iii) for planning purposes, including the preparation of the Company’s internal annual operating budget, and (iv) to evaluate the performance and effectiveness of the Company’s operational strategies.

Accordingly, management believes that Adjusted EBITDA provides useful information in understanding and evaluating the Company’s operating performance in the same manner as management.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

In calculating Adjusted EBITDA, certain items (mostly non-cash) are excluded from net income including interest, taxes and depreciation of property and equipment.

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However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

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

For the quarter ended March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019

For the quarter ended June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019

Net Income $ 1,566 $ 1,684 $ 5,071 $ 2,804 $ 19,412 $ 4,243 $ 2,388 $ 2,853

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Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses.

Adjusted EBITDA has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP.

It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of the Company's liquidity, and may not be comparable to other similarly titled measures of other businesses.

Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP.

Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations;

and other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

Liquidity and Capital Resources

Cash and cash equivalents at March 31, 2021 was $31.1 million, compared to $31.0 million at December 31, 2020.

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

Cash and cash equivalents at June 30, 2021 was $31.2 million, compared to $31.0 million at December 31, 2020.

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

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

Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully undrawn as of March 31, 2021.

Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully undrawn as of June 30, 2021.

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

Three Months Ended March 31,

Six Months Ended June 30,

Net Cash provided by (used in):

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Financing activities (3,883) (5,016)

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

Net increase in cash and cash equivalents $ 170 $ 16,352

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2021 was $4.6 million, resulting from net income of $1.7 million and non-cash net income adjustments of $5.4 million and an increase in net operating liabilities of $0.4 million, which was partially offset by an increase in net operating assets of $2.8 million.

Net cash provided by operating activities during the six months ended June 30, 2021 was $8.8 million, resulting from net income of $3.3 million and non-cash net income adjustments of $12.0 million, which was partially offset by a decrease in net operating liabilities of $3.4 million and an increase in net operating assets of $3.1 million.

The non-cash net income adjustments primarily consisted of $3.4 million in change of allowance for doubtful accounts, $5.3 million of depreciation, $0.2 million of loss on disposal of property and equipment, $2.5 million of stock-based compensation, $0.5 million gain on equity investments and $1.0 million change in deferred tax asset.

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $2.7 million, an increase in prepaid expenses and other current assets of $0.2 million, partially offset by a decrease in inventory of $0.1 million.

The changes in operating liabilities primarily consisted of an increase in accounts payable of $0.4 million, partially offset by a decrease in accrued liabilities of $0.1 million.

Net cash provided by operating activities during the three months ended March 31, 2020 was $0.6 million, resulting from net income of $4.2 million, non-cash net income adjustments of $5.0 million, and an increase in net operating liabilities of $1.5 million, which was partially offset by an increase in net operating assets of $10.1 million.

The non-cash net income adjustments primarily consisted of $2.8 million in change of allowance for doubtful accounts, $2.1 million of depreciation and $1.2 million of stock-based compensation.

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $6.8 million, which was partially offset by a decrease in inventory of $0.4 million.

The changes in operating liabilities primarily consisted of a decrease in accounts payable of $3.6 million, partially offset by an increase in accrued liabilities of $2.4 million.

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

Additionally, prepaid expenses and other current assets increased as a result of deposits related to ventilator supplies.

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $3.2 million and an increase in inventory of $0.2 million, partially offset by a decrease in prepaid expenses and other assets of $0.3 million.

The changes in operating liabilities primarily consisted of an increase in accounts payable of $0.4 million, and an increase in deferred revenue of $0.3 million, partially offset by a decrease in accrued liabilities of $3.8 million and a decrease in income tax payable of $0.3 million.

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

The non-cash net income adjustments primarily consisted of $5.6 million in change of allowance for doubtful accounts, $4.3 million of depreciation, $2.6 million of gains on disposal of property and equipment, change in deferred tax asset of $7.8 million and $2.3 million of stock-based compensation.

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $5.1 million and an increase in inventory of $5.2 million.

The changes in operating liabilities primarily consisted of an increase in accounts payable of $2.0 million and an increase in accrued liabilities of $3.8 million.

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

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

Net Cash Used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2021 was $1.7 million, consisting of $1.8 million of purchases of property and equipment, partially offset by $0.1 million of sales proceeds from the disposal of property and equipment.

Net cash used in investing activities during the six months ended June 30, 2021 was $4.8 million, consisting of $5.0 million of purchases of property and equipment, partially offset by $0.3 million of sales proceeds from the disposal of property and equipment.

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

Combining cash purchases of property and equipment and equipment financed through finance leases, our total capital expenditures for the three months ended March 31, 2021 were $1.8 million.

Combining cash purchases of property and equipment and equipment financed through finance leases, our total capital expenditures for the six months ended June 30, 2021 were $5.1 million.

This represents a $3.6 million, or 41.3%, decrease year over year.

Net cash used in investing activities during the three months ended March 31, 2020 was $1.7 million, consisting of $4.2 million of purchases of property and equipment, partially offset by $2.5 million of COVID-19 response sales proceeds from the disposal of property and equipment.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

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

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

Combining cash purchases of property and equipment of $4.2 million and equipment financed through finance leases of $3.0 million, our total capital expenditures for the three months ended March 31, 2020 were $7.2 million.

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

Net Cash Used in Financing Activities

Net cash used in financing activities during the three months ended March 31, 2021 was $2.8 million, consisting of $0.4 million in principal payments on the Term Note (as defined below), $1.0 million in repayments of finance lease liabilities, and $1.4 million for shares redeemed and canceled for tax withholding in connection with RSUs vested in the period.

Net cash used in financing activities during the three months ended March 31, 2020 was $3.8 million, consisting of $0.4 million in proceeds from the new Term Note, partially offset by $3.4 million in repayments of finance lease liabilities.

Net cash used in financing activities during the six months ended June 30, 2021 was $3.9 million, consisting of $0.8 million in principal payments on the Term Note (as defined below), $1.7 million in repayments of finance lease liabilities, and $1.4 million for shares redeemed and canceled for tax withholding in connection with RSUs vested in the period.

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

Line of Credit

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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.

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

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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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

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 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 June 30, 2021.

Commercial Term Notes

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Sources of funds

Our cash provided by operating activities in the three months ended March 31, 2021 was $4.6 million compared to $0.6 million in the three months ended March 31, 2020.

Our cash provided by operating activities in the six months ended June 30, 2021 was $8.8 million compared to $22.0 million in the six months ended June 30, 2020.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

HHS Provider Relief Funds

The Company received $3.5 million of Provider Relief Funds from the HHS that was provided to eligible healthcare providers out of the $100 billion Public Health and Social Services Emergency Fund provided for in the CARES Act.

During the quarter ending June 30, 2020, the Company received $3.5 million of Provider Relief Funds from the HHS that was provided to eligible healthcare providers out of the $100 billion Public Health and Social Services Emergency Fund provided for in the CARES Act.

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

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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.

As of March 31, 2021, we had cash and cash equivalents of $31.1 million.

As of June 30, 2021, we had cash and cash equivalents of $31.2 million.

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

Over the past two years, our revenue has increased significantly from year-to-year and, as a result, our cash provided by operating activities has increased over time and now is a significant source of capital to the business, which we expect to continue in the future.

Our cash provided by operating activities has accumulated over time and now is a significant source of capital to the business.

We may need to raise additional funds to support our investing operations, and such funding may not be available to us on acceptable terms, or at all.

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Any additional equity financing may be dilutive to our stockholders.

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.

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.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

Leases under which we assume substantially all the risks and rewards of ownership are classified as capital leases.

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

Matching employer contributions to the 401(k) plan totaled $174,000 and $179,000 for the three months ended March 31, 2021 and 2020, respectively.

Matching employer contributions to the 401(k) plan totaled $283,000 and $223,000 for the three months ended June 30, 2021 and 2020, respectively, and $457,000 and $402,000 for the six months ended June 30, 2021 and 2020, respectively.

Off balance sheet arrangements

The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its results of operations or financial condition.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

Accounting and Disclosure Matters

19 unchanged sentences

Revenue Accounting under Topic 606

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

We sell DME, replacement parts and supplies to customers and recognize revenue based on contractual payment rates as determined by the payors at the point in time when control of the good or service is transferred through delivery to the customer.

1 unchanged sentence

We also provide sleep study services to customers and recognize revenue when the sleep study results are complete, satisfying the performance obligation.

In response to the COVID-19 pandemic, we 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 we expect to receive in exchange for the goods and services provided.

In response to the COVID-19 pandemic, we 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 we expect 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 we are ultimately paid.

7 unchanged sentences

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

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

2 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.

We do 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.

We do not have any partially or unfilled performance obligations related to contracts with customers and as such, we have no contract liabilities as of March 31, 2021.

We do not have any partially or unfilled performance obligations related to contracts with customers and as such, we have no contract liabilities as of June 30, 2021.

Allowance for doubtful accounts

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

Our allowance for doubtful accounts was $8.0 million and $10.2 million as of March 31, 2021 and 2020, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Our allowance for doubtful accounts was $7.3 million and $9.3 million as of June 30, 2021 and 2020, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Stock-based compensation

3 unchanged sentences

The expense of such stock-based compensation awards is recognized using the graded vesting attribution method over the vesting period.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2021 and 2020

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.

7 unchanged sentences

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2021 and 2020

We are subject to income taxes in numerous jurisdictions.

13 unchanged sentences

VIEMED HEALTHCARE, INC.

March 31, 2021 and 2020

June 30, 2021 and 2020

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis