What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-03 compared with 2021-11-02 · 156 added, 275 removed, 237 unchanged (65% of the section changed)

4 unchanged sentences

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

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 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.

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

28 unchanged sentences

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

September 30, 2021 and 2020

March 31, 2022 and 2021

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.

10 unchanged sentences

the availability of funds and resources to pursue operations;

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

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

dependence on few payors;

13 unchanged sentences

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

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

our status as an emerging growth company;

and the occurrence of natural and unnatural catastrophic events or health epidemics or concerns, such as the COVID-19 pandemic, and claims resulting from such events or concerns, as well as other general economic, market and business conditions;

6 unchanged sentences

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

We will continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC.

We are an "emerging growth company," as defined in the JOBS Act and a "smaller reporting company" under Rule 12b-2 of the Exchange Act, and as such, we have elected to comply with certain reduced U.S.

We will continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC and with the relevant Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval (SEDAR).

The Company no longer qualifies as a “smaller reporting company” and is required to comply with the larger company disclosure obligations (subject to certain exemptions and relief from various reporting requirements that are applicable to emerging growth companies) beginning in this Quarterly Report on Form 10.

We are an "emerging growth company," as defined in the JOBS Act, and as such, we have elected to comply with certain reduced U.S.

public company reporting requirements.

Unless otherwise noted herein, all references to "$" or "USD" are to the currency of the United States and references to "CAD$" or "Canadian dollars" are to the currency of Canada.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2021 and 2020

We provide an array of home medical equipment, services and supplies, specializing in post-acute respiratory care services in the United States.

2 unchanged sentences

Our services include respiratory disease management (through the rental of various DME devices), in-home sleep testing and sleep apnea treatment, oxygen therapy, and the sale of associated supplies.

We hold an approximate 10% equity interest in VeruStat, Inc, a company focusing on remote patient monitoring (“RPM”).

The investment is part of an ongoing initiative to enable our salesforce to offer a new revenue source to its physician network around the country.

RPM platforms allow physicians to bill for safely monitoring patients inside of the home that are struggling with chronic diseases.

The VeruStat RPM solution can be placed in the home in conjunction with Viemed’s existing patient engagement platform (“PEP”).

During the three months ended September 30, 2021, we formed Viemed Healthcare Staffing LLC, a healthcare staffing division.

The underlying recruiting platform is expected to support internal resource fulfillment as well as external, contractual placement of allied health and nursing professionals.

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 76.5% and 80.2% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended September 30, 2021 and 2020, respectively, and 77.9% and 82.9% for the nine months ended September 30, 2021 and 2020, respectively.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2022 and 2021

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 71.3% of our traditional revenue, excluding COVID-19 response sales and services, and 79.9% of our traditional revenue, excluding the COVID-19 response sales and services, for the three months ended March 31, 2022 and 2021, 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 grow through expansion of 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 territories through a cost efficient launch that reduces location expenses.

Our licensed RTs currently serve patients in 48 states.

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

As of September 30, 2021, we employed 280 licensed RTs, representing approximately 47% of our company-wide employee count.

As of March 31, 2022, we employed 278 licensed RTs, representing more than 42% 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.

3 unchanged sentences

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic.

Various policies and initiatives have been implemented to reduce the transmission of COVID-19, including travel bans and restrictions, the postponement of non-essential medical surgeries, the limiting of access to medical facilities in certain areas, the promotion of social distancing and the adoption of remote working policies.

Various policies and initiatives have been implemented to reduce the transmission of COVID-19, including travel bans and restrictions, the postponement of non-essential medical surgeries, limiting access to medical facilities, and adoption of social distancing and remote working policies.

Local, state and national governments continue to emphasize the importance of essential medical personnel and we remain open to meet the needs of our communities.

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 have not had a material adverse impact on our consolidated operating results for the three months ended September 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.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2021 and 2020

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.

The legislation provides for $175 billion in relief funds to hospitals and other healthcare providers on the front lines of the coronavirus response to support healthcare-related expenses or lost revenue attributable to COVID-19 and to ensure uninsured Americans can get testing and treatment for COVID-19.

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

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.

In addition, our 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, 2022, 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 necessary to satisfy such demand, including sufficient personnel, supply chains and distributions channels.

The COVID-19 pandemic has 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.

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.

The 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.

The legislation provides for relief funds to hospitals and other healthcare providers on the front lines of the coronavirus response to support healthcare-related expenses or lost revenue attributable to COVID-19 and to ensure uninsured Americans can get testing and treatment for COVID-19.

As a result, we received a general distribution payment from the Provider Relief Fund of $3.5 million in April 2020, a targeted distribution payment of $1.5 million in November 2021, and a general distribution payment of $0.4 million in January of 2022.

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

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

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

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

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

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

To the extent that reporting requirements and terms and conditions

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2022 and 2021

are modified, it may affect our ability to comply and may require the return of funds.

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

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

On Wednesday, April 14, 2021, the President signed H.R.

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

In December 2021, President Biden signed into law legislation that extended the suspension on the 2 percent payment sequestration through March 31, 2022.

The payment sequestration adjustment was fixed at 1 percent from April 1, 2022 to June 30, 2022 and it returns to 2 percent on July 1, 2022.

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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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 77.9% of total traditional revenue, excluding COVID-19 response sales and services, for the nine months ended September 30, 2021).

Rental revenue from ventilator products represents a significant portion of our revenues (approximately 71.3% of total traditional revenue, excluding COVID-19 response sales and services, during the three months ended March 31, 2022 ).

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.

1 unchanged sentence

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.

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.

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

1 unchanged sentence

Dollars, except vent patients)

For the quarter ended September 30,

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

For the quarter ended March 31,

2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020

Financial Information:

15 unchanged sentences

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

September 30, 2021 and 2020

March 31, 2022 and 2021

Results of Operations

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

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

Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2022 and 2021:

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

2022 % of Total Revenue 2021 % of Total Revenue $

6 unchanged sentences

Depreciation 237 0.7 % 200 0.7 % 37 18.5 %

Loss on disposal of property and equipment 145 0.5 % 203 0.6 % (58) (28.6) %

Other expense (income) (32) (0.1) % (19) (0.1) % (13) 68.4 %

Other income (455) (1.4) % 55 0.2 % (510) NM

Income from operations 2,248 7.0 % 1,332 4.7 % 916 68.8 %

Non-operating income and expenses

Income from equity method investments (331) (1.1) % (21) (0.1) % (310) 1476.2 %

Income from equity method investments (323) (1.0) % (220) (0.8) % (103) NM

Interest expense, net 64 0.2 % 91 0.3 % (27) (29.7) %

Net income before taxes 2,507 7.8 % 1,461 5.1 % 1,046 71.6 %

Provision for income taxes 1,386 4.7 % 1,141 3.4 % 245 21.5 %

Provision (benefit) for income taxes 745 2.3 % (223) (0.8) % 968 NM

Net income $ 1,762 5.5 % $ 1,684 5.9 % $ 78 4.6 %

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

Three Months Ended September 30,

The following table summarizes our revenue for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

2022 % of Total Revenue 2021 % of Total Revenue $

7 unchanged sentences

Total net revenue $ 32,255 100.0 % $ 28,416 100.0 % $ 3,839 13.5 %

For the three months ended September 30, 2021, net revenue totaled $29.3 million, a decrease of $4.2 million (or 12.4%) from the comparable period in 2020.

For the three months ended March 31, 2022, revenue totaled $32.3 million, an increase of $3.8 million (or 13.5%) from the comparable period in 2021.

Excluding COVID-19 response sales and services revenue, net revenue increased $4.7 million (or 18.5%) from the comparable period in 2021.

The non-COVID-19 related net revenue growth was driven by an increase in ventilator rental revenue of $1.3 million (or 6.7%) and rental revenue from other DME of $0.9 million (or 35.8%) primarily associated with oxygen and PAP rentals.

Non-COVID-19 related equipment sales and services combined increased by $0.6 million (or 28.3%) from the comparable three month period in 2020, primarily as a result of increasing demand for PAPs and respiratory supplies for our PAP patients.

The net revenue growth was driven by an increase in ventilator rental revenue of $1.2 million (or 5.7%), rental revenue from other DME of $1.4 million (or 48.8%), equipment and supply sales of $1.3 million (or 71.8%), and service revenues of $0.8 million (or 202.4%).

The growth in other durable medical equipment rentals and equipment and supply sales has been primarily driven by PAP and oxygen related sales and services.

The increase in service revenue is primarily due to the addition of our healthcare staffing offerings.

While ventilator rentals continue to make up the majority of our revenue, the growth of PAP and oxygen related sales and services over the comparable period in 2021 is contributing significantly to the diversity of overall revenue mix.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

September 30, 2021 and 2020

During the three months ended September 30, 2021, net revenue for COVID-19 response sales and services totaled $1.5 million, compared to $8.6 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 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.

March 31, 2022 and 2021

During the three months ended March 31, 2022, net revenue from COVID-19 response sales and services totaled $2.1 million, consisting primarily of contact and vaccine tracing services.

Compared to the three months ended March 31, 2021, COVID-19 response sales and services declined by $0.9 million (or 29.1%).

While we expect some further COVID-19 response related revenue during the remainder of 2022, 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 our other respiratory offerings, and additional revenue from our new staffing and recruitment division.

While we expect growth for the remainder of the current year to exceed growth in pandemic periods, we anticipate that the rate of growth may be impacted by residual effects of the pandemic.

Cost of revenue and gross profit

For the three months ended September 30, 2021, cost of revenue totaled $10.9 million, a decrease of $3.1 million (or 22.1%) from the comparable period in 2020.

For the three months ended September 30, 2021, COVID-19 response sales and services accounted for $0.9 million (or 7.9%) of these costs, compared to $5.6 million (or 39.8%) of these costs from the comparable period in 2020.

Gross profit percentage increased from 58.2% in the three months ended September 30, 2020 to 62.8% in the three months ended September 30, 2021.

The increase in overall gross profit percentage is due to declines in lower margin COVID-19 response sales and services as well as fluctuations in product and service mix.

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.

For the three months ended March 31, 2022, cost of revenue totaled $12.5 million, an increase of $1.8 million (or 17.2%) from the comparable period in 2021.

For the three months ended March 31, 2022, COVID-19 response sales and services accounted for $1.0 million (or 7.7%) of these costs, compared to $1.9 million (or 17.7%) of these costs from the comparable period in 2021.

Excluding COVID-19 response sales and services, gross profit percentage for the three months ended March 31, 2022 and 2021 was 61.7% and 65.5%, respectively.

Overall gross profit percentage decreased from approximately 62.4% in the three months ended March 31, 2021 to approximately 61.2% in the three months ended March 31, 2022.

The decrease in gross profit percentage is due to migration of the revenue mix associated with product and service diversification.

Excluding COVID-19 response sales and services, gross profit percentage for the three months ended March 31, 2022 and 2021 was 61.7% and 65.5%, respectively.

We expect our gross profit percentage for our normal operations (non-COVID-19 related) to increase slightly through the end of 2022 as a result of growth in lower margin product sales partially offset by growth in higher margin services.

Selling, general and administrative expense

For the three months ended September 30, 2021, selling, general and administrative expenses totaled $13.3 million, a decrease of $0.3 million (or 2.1%) from the comparable prior period.

Excluding COVID-19 related revenues, selling, general and administrative expenses as a percentage of revenue decreased to 47.6% for the three months ended September 30, 2021 compared to 52.4% for the three months ended September 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.

Phantom stock compensation expense also decreased by $0.4 million related to the impact from remeasurement 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.

For the three months ended March 31, 2022, selling, general and administrative expenses totaled $15.8 million, an increase of $1.3 million (or 8.7%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue decreased to 48.9% for the three months ended March 31, 2022 compared to 51.1% for the three months ended March 31, 2021.

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

Our full time employee count increased from 528 on March 31, 2021 to 662 on March 31, 2022, an increase of 25.4%.

Employee compensation expenses increased $0.8 million (or 8.4%) as a result of higher compensation expense associated with an overall increase in our employee headcount, offset by a decrease related to the impact of our phantom stock plan.

The remaining increase in selling, general, and administrative expense over the prior year period is largely due to an increase in auto and travel related expenses associated with increases in travel and in-person activities combined with increasing costs for fuel.

We expect that current year selling, general and administrative expenses will remain materially consistent with the current quarter as a percentage of revenue through the end of 2022.

Research and development

For the three months ended September 30, 2021, research and development expense totaled $0.6 million, an increase of $0.3 million (or 137.0%) from the comparable period in 2020.

For the three months ended March 31, 2022, research and development expense totaled $0.6 million, an increase of $0.3 million (or 86.4%) from the comparable period in 2021.

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 2022 relative to 2021 costs.

Stock-based compensation

For the three months ended September 30, 2021, stock-based compensation totaled $1.3 million, an increase of $0.1 million (or 5.5%) from the comparable period in 2020.

For the three months ended March 31, 2022, stock-based compensation totaled $1.3 million, remaining relatively unchanged from the comparable period in 2021.

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.

1 unchanged sentence

Interest expense, net

For the three months ended September 30, 2021, net interest expense totaled $0.1 million, remaining consistent with the comparable period in 2020.

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

Provision for income taxes

For the three months ended September 30, 2021, the provision for income taxes was a $1.4 million expense, compared to a $1.1 million expense during the 2020 period, an increase of $0.2 million (or 21.5%).

Excluding the benefit of discrete items, our annual estimated effective tax rate for 2021 is 43.4%.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2021 and 2020

For the three months ended September 30, 2021, net income was $1.8 million, a decrease of $1.0 million (or 36.2%) from the comparable period in 2020.

Net income as a percentage of net revenue decreased from 8.4% for the three months ended September 30, 2020 to 6.1% for the three months ended September 30, 2021, primarily due to the decrease in COVID-19 related activities and the increase in the provision for income taxes, as described above.

Comparison of the Nine Months Ended September 30, 2021 and 2020:

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

Nine Months Ended September 30,

2021 % of Total Revenue 2020 % of Total Revenue $

Revenue $ 85,100 100.0 % $ 100,107 100.0 % $ (15,007) (15.0) %

Cost of revenue 31,352 36.8 % 39,174 39.1 % (7,822) (20.0) %

Gross profit 53,748 63.2 % 60,933 60.9 % (7,185) (11.8) %

Selling, general and administrative 40,653 47.8 % 40,555 40.5 % 98 0.2 %

Research and development 1,498 1.8 % 688 0.7 % 810 117.7 %

Stock-based compensation 3,845 4.5 % 3,581 3.6 % 264 7.4 %

Depreciation 618 0.7 % 612 0.6 % 6 1.0 %

Loss (gain) on disposal of property and equipment 304 0.4 % (2,424) (2.4) % 2,728 NM

Other expense (income) (85) (0.1) % (3,593) (3.6) % 3,508 (97.6) %

Income from operations 6,915 8.1 % 21,514 21.5 % (14,599) (67.9) %

Non-operating income and expenses

Income from equity method investments (782) (0.9) % (36) — % (746) NM

Interest expense, net 249 0.3 % 409 0.4 % (160) (39.1) %

Net income before taxes 7,448 8.8 % 21,141 21.1 % (13,693) (64.8) %

Provision (benefit) for income taxes 2,409 2.8 % (5,318) (5.3) % 7,727 NM

Net income $ 5,039 5.9 % $ 26,459 26.4 % $ (21,420) (81.0) %

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2021 and 2020

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

Nine Months Ended September 30,

2021 % of Total Revenue 2020 % of Total Revenue $

Net revenue from rentals

Ventilator rentals, non-invasive and invasive $ 61,962 72.8 % $ 58,672 58.6 % $ 3,290 5.6 %

Other durable medical equipment rentals 9,833 11.5 % 7,184 7.2 % 2,649 36.9 %

Net revenue from sales and services

Equipment and supply sales 6,258 7.4 % 3,962 3.9 % 2,296 58.0 %

COVID-19 response sales and services 5,542 6.5 % 29,306 29.3 % (23,764) (81.1) %

Service revenues 1,505 1.8 % 983 1.0 % 522 53.1 %

Total net revenue $ 85,100 100.0 % $ 100,107 100.0 % $ (15,007) (15.0) %

For the nine months ended September 30, 2021, revenue totaled $85.1 million, a decrease of $15.0 million (or 15.0%) from the comparable period in 2020.

Non-COVID-19 related net revenue increased $8.8 million (or 12.4%) from the comparable period in 2020.

Ventilator rental revenue increased $3.3 million (or 5.6%) due to our growth in active ventilator patient base.

In addition to the ventilator rental revenue growth, rental revenue from other DME grew $2.6 million (or 36.9%) primarily from oxygen therapy and PAPs.

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

Non-COVID-19 related equipment sales and services combined increased by $2.8 million (or 57.0%) from the comparable period in 2020, primarily as a result of increasing demand for home sleep studies, PAPs, and associated supplies for our PAP patients.

Cost of revenue and gross profit

For the nine months ended September 30, 2021, cost of revenue totaled $31.4 million, a decrease of $7.8 million (or 20.0%) from the comparable period in 2020.

For the nine months ended September 30, 2021, COVID-19 response sales and services accounted for $3.5 million (or 11.1%) of these costs, compared to $15.3 million (or 39.1%) of these costs from the comparable period in 2020.

Gross profit percentage increased from 60.9% in the nine months ended September 30, 2020 to 63.2% in the nine months ended September 30, 2021.

The increase in overall gross profit percentage is due to declines in lower margin COVID-19 response sales and services as well as fluctuations in product and service mix.

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 nine months ended September 30, 2021, selling, general and administrative expenses totaled $40.7 million, an increase of $0.1 million (or 0.2%) from the comparable period in 2020.

Excluding COVID-19 related revenues, selling, general and administrative expenses as a percentage of net revenue decreased to 51.1% for the nine months ended September 30, 2021, compared to 56.6% for the nine months ended September 30, 2020.

The decrease in selling, general and administrative expense as a percentage of non-COVID-19 related revenues as compared to the prior year period is attributable to lower variable and incentive based employee compensation partially offset by higher employee related expenses to accommodate the overall growth of the Company, as our full time employee count increased to 597 at September 30, 2021, compared to 499 at September 30, 2020, an increase of 19.6%.

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 nine months ended September 30, 2021, research and development expense totaled $1.5 million, an increase of $0.8 million (or 117.7%) 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.

For the three months ended March 31, 2022 and during the comparable period in 2021, net interest expense totaled $0.1 million.

As a result of low levels of interest bearing debt, we expect net interest expense to remain relatively consistent with the current quarter through the end of 2022.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

September 30, 2021 and 2020

Loss on disposal of property and equipment

For the nine months ended September 30, 2021, we recorded a loss on disposal of property and equipment of $0.3 million, compared to a gain of $2.4 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 during the nine month period ended September 30, 2020.

As a result, we recorded a net gain on disposal for related equipment during the prior comparable period.

We expect disposals of equipment to generally remain consistent with historical trends, excluding COVID-19 related disposals, through the remainder of the year.

Other expense (income)

During nine months ended September 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 nine months ended September 30, 2021.

Stock-based compensation

For the nine months ended September 30, 2021, stock-based compensation totaled $3.8 million, an increase of $0.3 million (or 7.4%) 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 nine months ended September 30, 2021, net interest expense totaled $0.2 million, a decrease of $0.2 million (or 39.1%) 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.

March 31, 2022 and 2021

Provision (benefit) for income taxes

For the nine months ended September 30, 2021, the provision for income taxes was a $2.4 million expense, compared to a $5.3 million benefit during the 2020 period.

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

Excluding the benefit of discrete items, our annual estimated effective tax rate for 2021 is 43.4%.

For the nine months ended September 30, 2021, net income was $5.0 million, a decrease of $21.4 million (or 81.0%) from the comparable period in 2020.

Net income as a percentage of revenue decreased from 26.4% for the nine months ended September 30, 2020 to 5.9% for the nine months ended September 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.

For the three months ended March 31, 2022, the provision for income taxes was $0.7 million, compared to a $0.2 million benefit during the 2021 period.

The increase in income tax expense was primarily due to a discrete tax benefit associated with share based compensation during the 2021 period.

Excluding discrete items, our annual estimated effective tax rate for 2022 is 28.9%.

For the three months ended March 31, 2022, net income was $1.8 million, a increase of $0.1 million (or 4.6%) from the comparable period in 2021.

Net income as a percentage of net revenue decreased from 5.9% for the three months ended March 31, 2021 to 5.5% for the three months ended March 31, 2022, primarily due to the increased income tax expense, as described above.

Non-GAAP Financial Measures

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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)

September 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.

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

Set forth below are descriptions of the financial items that have been excluded from net income to calculate Adjusted EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income.

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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, 2022 and 2021

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

For the quarter ended March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020

Net Income $ 1,762 $ 4,087 $ 1,789 $ 1,566 $ 1,684 $ 5,071 $ 2,804 $ 19,412

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

September 30, 2021 and 2020

March 31, 2022 and 2021

Liquidity and Capital Resources

Cash and cash equivalents at September 30, 2021 was $26.9 million, compared to $31.0 million at December 31, 2020.

Cash and cash equivalents at March 31, 2022 was $29.2 million, compared to $28.4 million at December 31, 2021.

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 September 30, 2021.

Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully undrawn as of March 31, 2022.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net Cash provided by (used in):

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Financing activities (2,499) (2,814)

Net (decrease) increase in cash and cash equivalents $ (4,114) $ 19,041

Net increase in cash and cash equivalents $ 840 $ 116

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the nine months ended September 30, 2021 was $13.8 million, resulting from net income of $5.0 million and non-cash net income changes of $19.1 million, which was partially offset by a decrease in cash resulting from a change in operating assets and liabilities of $10.5 million.

The non-cash net income changes primarily consisted of $5.3 million in change of allowance for doubtful accounts, $8.2 million of depreciation, $0.3 million of loss on disposal of property and equipment, $3.8 million of stock-based compensation, $0.8 million income from equity investments and $2.4 million of deferred income tax expense.

The primary changes in operating assets and liabilities relate to an increase in accounts receivable of $5.6 million, an increase in prepaid expenses and other assets of $2.3 million, an increase in accounts payable of $2.6 million, a net increase in income taxes receivable/(payable) of $1.8 million, and a decrease in accrued liabilities of $3.7 million.

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

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

The uses of cash related to changes in operating assets primarily consisted of an increase in accounts receivable of $7.0 million and an increase in inventory of $1.4 million.

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

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

Net cash provided by operating activities during the three months ended March 31, 2022 was $7.1 million, resulting from net income of $1.8 million and non-cash net income adjustments of $7.4 million and an increase in net operating liabilities of $0.9 million, which was partially offset by an increase in net operating assets of $2.9 million.

The non-cash net income adjustments primarily consisted of $3.4 million in change of allowance for doubtful accounts, $3.4 million of depreciation, $0.7 million in change in deferred tax asset, and $1.3 million of stock-based compensation.

The primary changes in working capital were an increase in gross accounts receivable of $4.2 million, offset by an increase in income taxes payable of $1.2 million and a decrease in inventory of $1.4 million.

Included in our operating cash flows for the period is the receipt of $0.4 million in Provider Relief Funds

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.

The non-cash net income adjustments primarily consisted of $1.8 million in change of allowance for doubtful accounts, $2.6 million of depreciation, $0.1 million of loss on disposal of property and equipment, $1.3 million of stock-based compensation, $0.2 million gain on equity investments and $0.2 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 Used in Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2021 was $13.2 million, consisting of $13.1 million of purchases of property and equipment and $0.6 million in equity investments, partially offset by $0.5 million of sales proceeds from the disposal of property and equipment.

Net cash used in investing activities during the three months ended March 31, 2022 was $3.8 million, consisting of $4.0 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 nine months ended September 30, 2021 were $13.1 million.

This represents a $1.9 million, or 17.1%, increase year over year.

Cash purchases of property and equipment represents a $2.2 million, or 119.1%, increase year over year.

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.

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

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

September 30, 2021 and 2020

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

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

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

March 31, 2022 and 2021

Net Cash Used in Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2021 was $4.8 million, consisting of $1.3 million in principal payments on the Term Note (as defined below), $2.1 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 nine months ended September 30, 2020 was $7.2 million, consisting of $1.2 million in principal payments on the Term Note and $7.7 million in repayments of finance lease liabilities, partially offset by $1.8 million of proceeds from the exercise of stock options.

Net cash used in financing activities during the three months ended March 31, 2022 was $2.5 million.

For the three months ended March 31, 2022, the Company repurchased and canceled 389,878 common shares at a cost of $1.9 million pursuant to the Share Repurchase Program authorized by the Board of Directors on March 7, 2022 (the "2022 Share Repurchase Program").

The Company also acquired and cancelled 23,742 common shares at a cost of $0.1 million to satisfy employee income tax withholding associated with RSUs vesting during the three months ended March 31, 2022.

Net cash used in financing activities during the three months ended March 31, 2022 also consisted of $0.4 million in principal payments on the Term Note (as defined below).

Net cash used in financing activities during the three months ended March 31, 2021 was $2.8 million, consisting of $0.4 million in proceeds from the Term Note, partially offset by $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..

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 September 30, 2021 or December 31, 2020.

There were no borrowings against this line of credit at March 31, 2022 or December 31, 2021.

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.

2 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 September 30, 2021.

The Company was in compliance with all covenants under the Commercial Business Term Loan Agreement in effect at March 31, 2022.

Commercial Term Notes

7 unchanged sentences

On September 19, 2019, the Company entered into a third amendment to the loan agreement providing for a term note (the “Term Note") in favor of Hancock Whitney Bank in the principal amount of $5.0 million.

The proceeds of the Term Note will be used for general corporate purposes.

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

Beginning October 19, 2019, the Company makes monthly payments towards the outstanding balance.

1 unchanged sentence

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

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.

1 unchanged sentence

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

September 30, 2021 and 2020

March 31, 2022 and 2021

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

The following table presents our material contractual obligations and commitments to make future payments as of March 31, 2022:

Within 12 Months Beyond 12 Months

Debt Obligations, including interest $ 1,268 $ 4,893

Lease Obligations $ 346 $ 283

Total $1,614 $5,176

We anticipate that our operating cash flows will satisfy our material cash requirements for the 12 months after March 31, 2022.

In addition to our operating cash flows, we may need to raise additional funds to support our contractual obligations and investing activities beyond such 12 month period, and such funding may not be available to us on acceptable terms, or at all.

If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected.

We may seek to raise additional funds through equity, equity-linked or debt financings.

If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.

Any additional equity financing may be dilutive to our stockholders.

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

Upon initial recognition, the leased asset is measured at an amount equal to the lesser of its fair value and the present value of the minimum lease payments.

Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

The associated lease liability is drawn down over the life of the lease by allocating a portion of each lease payment to the liability with the remainder being recognized as finance charges.

Leases that do not transfer the risks and rewards of ownership to the Company are treated as operating leases and are expensed as incurred.

Retirement Plan

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 $271,000 and $174,000 for the three months ended March 31, 2022 and 2021, 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.

Accounting and Disclosure Matters

Critical Accounting Principles and Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.

We evaluate our estimates on an ongoing basis, including those estimates related to allowance for doubtful accounts, inventory adjustments, impaired assets, income taxes, deferred tax valuation allowances and stock-based compensation costs.

We state these accounting policies in the notes to the consolidated financial statements and at relevant sections in the Management's Discussion and Analysis of Financial Condition and Results of Operations.

The estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results could vary from those estimates under different assumptions or conditions.

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

Revenue recognition

Revenue Accounting under Topic 842

We lease DME such as non-invasive and invasive ventilators, PAP machines, percussion vests, oxygen concentrator units and other small respiratory equipment to customers for a fixed monthly amount on a month-to-month basis.

The customer generally has the right to cancel the lease at any time during the rental period.

The Company considers these rentals to be operating leases.

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

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

Certain customer co-payments are included in revenue when considered probable of payment, which is generally when paid.

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.

Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available.

Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded.

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

Revenue Accounting under Topic 606

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.

The customer and, if applicable, the payors are generally charged at the time that the product is sold.

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 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.

As such, the transaction price is constrained for the difference between the gross charge and what is estimated to be collected from payors and from patients.

The transaction price therefore is predominantly based on contractual payment rates as determined by the payors.

We do not generally contract with uninsured customers.

The payment terms and conditions of customer contracts vary by customer type and the products and services offered.

We determine our estimates of contractual allowances and discounts based upon contractual agreements, our policies and historical experience.

While the rates are fixed for the product or service with the customer and the payors, such amounts typically include co-payments, co-insurance and deductibles, which vary in amounts, and are due from the patient.

We include in the transaction price only the amount that we expect to be entitled, which is substantially all of the payor billings at contractual rates.

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.

We are required to disclose “critical accounting estimates” which are estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and that have had or are reasonably likely to have a material impact on our financial condition or results of operations.

We follow financial accounting and reporting policies that are in accordance with accounting principles generally accepted in the United States.

The more significant of these policies are summarized in Note 2 to our consolidated financial statements included in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Not all significant accounting policies require management to make difficult, subjective or complex judgments.

However, the policy noted below could be deemed to meet the SEC’s definition of a critical accounting estimate.

Allowance for Doubtful Accounts

The Company estimates that a certain portion of receivables from customers may not be collected and maintains an allowance for doubtful accounts.

The Company evaluates the net realizable value of accounts receivable as of the date of Consolidated Balance Sheets.

Specifically, we consider historical realization data, including current and historical cash collections, accounts receivable

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

September 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.

Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available.

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 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 September 30, 2021.

Allowance for doubtful accounts

We estimate that a certain portion of receivables from customers may not be collected and maintain an allowance for doubtful accounts.

We evaluate the net realizable value of accounts receivable as of the date of Consolidated Balance Sheets.

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

March 31, 2022 and 2021

aging trends, other operating trends and relevant business conditions.

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

1 unchanged sentence

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

Our allowance for doubtful accounts was $7.1 million and $8.8 million as of September 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

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

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

Stock-based compensation cost for RSUs are determined at the grant date based on the closing stock price.

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

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

Interest rate swaps

We utilize an interest rate swap contract to reduce our exposure to fluctuations in variable interest rates for future interest payments on Term Note.

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

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

The Company presents a positive ending period fair value of the interest rate swap contract in other long-term assets, as a component of long-term assets, and a negative ending period fair value of the interest rate swap contract in accrued liabilities, as a component of long-term liabilities on the Condensed Consolidated Balance Sheets.

We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from our swap counterparty as an adjustment to interest expense over the life of the swap.

If determined to be effective cash flow hedges, we record the changes in the estimated fair value of the swaps to accumulated other comprehensive income or loss on our Condensed Consolidated Balance Sheets.

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)

September 30, 2021 and 2020

We are subject to income taxes in numerous jurisdictions.

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

Our income tax provisions reflect management’s interpretation of country and state tax laws.

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

We recognize assets and liabilities for taxation when it is probable that we will receive refunds or pay taxes to the relevant tax authority.

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

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

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

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

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

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

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

For the three months ended March 31, 2022, our assessment considered business and market disruptions caused by the COVID-19 pandemic and estimates of expected emerging credit and collectability trends.

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

Our allowance for doubtful accounts was $8.5 million and $8.0 million as of March 31, 2022 and 2021, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Recently Issued Accounting Pronouncements

See Note 2 – Summary of Significant Account Policies of the Notes to Condensed Consolidated Financial Statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.

See Note 2 – Summary of Significant Accounting Policies of our Condensed Consolidated Financial Statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.

VIEMED HEALTHCARE, INC.

September 30, 2021 and 2020

Quantitative and Qualitative Disclosures About Market Risk

This item is not applicable to smaller reporting companies.

March 31, 2022 and 2021

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