What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-01 compared with 2022-08-02 · 101 added, 107 removed, 364 unchanged (36% of the section changed)

35 unchanged sentences

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

June 30, 2022 and 2021

September 30, 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.

43 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 derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 68.6% and 77.3% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended June 30, 2022 and 2021, respectively, and 69.9% and 78.6% for the six months ended June 30, 2022 and 2021, respectively.

We combine the benefits

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 66.7% and 76.5% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended September 30, 2022 and 2021, respectively, and 68.8% and 77.9% for the nine months ended September 30, 2022 and 2021, respectively.

VIEMED HEALTHCARE, INC.

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

June 30, 2022 and 2021

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

September 30, 2022 and 2021

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 territories through a cost efficient launch that reduces location expenses.

1 unchanged sentence

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

As of June 30, 2022, we employed 284 licensed RTs, representing approximately 40% of our company-wide employee count.

As of September 30, 2022, we employed 280 licensed RTs, representing approximately 39% 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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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 six months ended June 30, 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.

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.

While governmental and other restrictions have not had a material impact on our consolidated operating results for the nine months ended September 30, 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.

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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.

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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.

In December 2021, President Biden signed into law legislation that extended the suspension on

VIEMED HEALTHCARE, INC.

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

June 30, 2022 and 2021

the 2 percent payment sequestration through March 31, 2022.

September 30, 2022 and 2021

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

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 returned to 2 percent on July 1, 2022.

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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 69.9% of total traditional revenue, excluding COVID-19 response sales and services, for the six months ended June 30, 2022).

Rental revenue from ventilator products represents a significant portion of our revenues (approximately 68.8% of total traditional revenue, excluding COVID-19 response sales and services, for the nine months ended September 30, 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.

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Dollars, except vent patients)

For the quarter ended June 30,

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

For the quarter ended September 30,

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

Financial Information:

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

June 30, 2022 and 2021

September 30, 2022 and 2021

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021:

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2022 and 2021:

The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30,

2022 % of Total Revenue 2021 % of Total Revenue $

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Net income $ 1,055 3.0 % $ 1,789 6.1 % $ (734) (41.0) %

The following table summarizes our revenue for the three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

The following table summarizes our revenue for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30,

2022 % of Total Revenue 2021 % of Total Revenue $

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Total net revenue $ 35,759 100.0 % $ 29,285 100.0 % $ 6,474 22.1 %

For the three months ended June 30, 2022, net revenue totaled $33.3 million, an increase of $5.9 million (or 21.6%) from the comparable period in 2021.

For the three months ended September 30, 2022, net revenue totaled $35.8 million, an increase of $6.5 million (or 22.1%) from the comparable period in 2021.

Excluding COVID-19 response sales and services revenue, net revenue increased $7.9 million (or 28.5%) from the comparable period in 2021.

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

The increase across all categories is due to organic expansion in new and existing territories.

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

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

June 30, 2022 and 2021

During the three months ended June 30, 2022, net revenue from COVID-19 response sales and services totaled $0.2 million, compared to $1.1 million during the comparable three month period in 2021.

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

The amount of COVID-19 response sales and services revenue is expected to be lower through the end of 2022 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.

September 30, 2022 and 2021

During the three months ended September 30, 2022, no revenue was derived from COVID-19 response sales and services, compared to $1.5 million during the comparable three month period in 2021.

The magnitude and persistence of future COVID-19 response sales and services revenue remains uncertain and is dependent on the intensity and length of the COVID-19 pandemic and the demand for ongoing services from primarily governmental customers.

As we continue to expand geographically into new territories 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.

1 unchanged sentence

Cost of revenue and gross profit

For the three months ended June 30, 2022, cost of revenue totaled $12.9 million, an increase of $3.1 million (or 32.2%) from the comparable period in 2021.

Overall gross profit percentage decreased from 64.3% in the three months ended June 30, 2021 to 61.2% in the three months ended June 30, 2022.

For the three months ended September 30, 2022, cost of revenue totaled $14.1 million, an increase of $3.2 million (or 29.4%) from the comparable period in 2021.

Overall gross profit percentage decreased from 62.8% in the three months ended September 30, 2021 to 60.5% in the three months ended September 30, 2022.

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

1 unchanged sentence

Selling, general and administrative expense

For the three months ended June 30, 2022, selling, general and administrative expenses totaled $17.5 million, an increase of $4.7 million (or 36.1%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue increased to 52.6% for the three months ended June 30, 2022 compared to 47.0% for the three months ended June 30, 2021.

For the three months ended September 30, 2022, selling, general and administrative expenses totaled $17.7 million, an increase of $4.4 million (or 33.3%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue increased to 49.4% for the three months ended September 30, 2022 compared to 45.3% for the three months ended September 30, 2021.

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

Our full time employee count increased from 575 on June 30, 2021 to 715 on June 30, 2022, an increase of 24.3%.

Our full time employee count increased from 597 on September 30, 2021 to 722 on September 30, 2022, an increase of 20.9%.

Employee compensation expenses increased $3.8 million (or 52%) as a result of the increase in our employee headcount, volume based sales commissions, and an increase in market based individual compensation rates.

Included in this amount is a $0.5 million increase related to the remeasurement of phantom stock liability associated with the increase in share price.

Included in this amount is a $0.5 million increase in phantom stock expense associated with the remeasurement of the phantom stock liability based on share price movement.

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.

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Research and development

For the three months ended June 30, 2022, research and development expense totaled $0.7 million, an increase of $0.1 million (or 15.3%) 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.

For the three months ended September 30, 2022, research and development expense totaled $0.7 million, an increase of $0.1 million (or 16.3%) 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 remain stable for the remainder of 2022 .

Stock-based compensation

For the three months ended June 30, 2022, stock-based compensation totaled $1.3 million, remaining consistent with the comparable period in 2021.

For the three months ended September 30, 2022, stock-based compensation totaled $1.3 million, remaining consistent with 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 June 30, 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.

As a result of low levels of interest bearing debt, net interest expense is immaterial in the three months ended September 30, 2022 and September 30, 2021, and is expected to remain immaterial through the end of 2022.

VIEMED HEALTHCARE, INC.

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

June 30, 2022 and 2021

September 30, 2022 and 2021

Provision for income taxes

For the three months ended June 30, 2022, the provision for income taxes was a $0.4 million expense, compared to a $1.2 million expense during the 2021 period.

For the three months ended September 30, 2022, the provision for income taxes was a $0.5 million expense, compared to a $1.4 million expense during the 2021 period.

The decrease in income tax expense was primarily due to a decrease in non-deductible compensation expenses.

Our annual estimated effective tax rate for 2022 is 29.4%.

For the three months ended June 30, 2022, net income was $1.0 million, a decrease of $0.6 million (or 38.3%) from the comparable period in 2021.

Net income as a percentage of net revenue decreased from 5.7% for the three months ended June 30, 2021 to 2.9% for the three months ended June 30, 2022, primarily due to changes in the product mix as a result of diversification and increases of direct and indirect costs driven by market forces within the supply and labor environments.

Comparison of the Six Months Ended June 30, 2022 and 2021:

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

Excluding the effect of discrete items, our annual estimated effective tax rate for 2022 is 29.7%.

For the three months ended September 30, 2022, net income was $1.1 million, a decrease of $0.7 million (or 41.0%) from the comparable period in 2021.

Net income as a percentage of net revenue decreased from 6.1% for the three months ended September 30, 2021 to 3.0% for the three months ended September 30, 2022, primarily due to changes in the product mix as a result of diversification and increases of direct and indirect costs driven by market forces within the supply and labor environments.

Comparison of the Nine Months Ended September 30, 2022 and 2021:

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

2022 % of Total Revenue 2021 % of Total Revenue $

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

June 30, 2022 and 2021

The following table summarizes our revenue for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

September 30, 2022 and 2021

The following table summarizes our revenue for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

2022 % of Total Revenue 2021 % of Total Revenue $

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Total net revenue $ 101,324 100.0 % $ 85,100 100.0 % $ 16,224 19.1 %

For the six months ended June 30, 2022, revenue totaled $65.6 million, an increase of $9.8 million (or 17.5%) from the comparable period in 2021.

For the nine months ended September 30, 2022, revenue totaled $101.3 million, an increase of $16.2 million (or 19.1%) from the comparable period in 2021.

Non-COVID-19 related net revenue increased $19.5 million (or 24.5%) from the comparable period in 2021.

2 unchanged sentences

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

The increase across all categories is due to organic expansion in new and existing territories.

During the six months ended June 30, 2022, net revenue from COVID-19 response sales and services totaled $2.3 million, compared to $4.1 million during the comparable six month period in 2021.

During the nine months ended September 30, 2022, net revenue from COVID-19 response sales and services totaled $2.3 million, compared to $5.5 million during the comparable nine month period in 2021.

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

1 unchanged sentence

Cost of revenue and gross profit

For the six months ended June 30, 2022, cost of revenue totaled $25.4 million, an increase of $5.0 million (or 24.4%) from the comparable period in 2021.

Overall gross profit percentage decreased from 63.4% for the six months ended June 30, 2021 to 61.2% for the six months ended June 30, 2022.

Excluding COVID-19 response sales and services, gross profit percentage for the six months ended June 30, 2022 was 61.6%.

For the nine months ended September 30, 2022, cost of revenue totaled $39.5 million, an increase of $8.2 million (or 26.1%) from the comparable period in 2021.

Overall gross profit percentage decreased from 63.2% for the nine months ended September 30, 2021 to 61.0% for the nine months ended September 30, 2022.

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

1 unchanged sentence

Selling, general and administrative expense

For the six months ended June 30, 2022, selling, general and administrative expenses totaled $33.3 million, an increase of $5.9 million (or 21.6%) from the comparable period in 2021.

Selling, general, and administrative expenses as a percentage of revenue increased slightly to 50.8% for the six months ended June 30, 2022 compared to 49.1% for the six months ended June 30, 2021.

For the nine months ended September 30, 2022, selling, general and administrative expenses totaled $51.0 million, an increase of $10.3 million (or 25.4%) from the comparable period in 2021.

Selling, general, and administrative expenses as a percentage of revenue increased to 50.3% for the nine months ended September 30, 2022 compared to 47.8% for the nine months ended September 30, 2021.

Our full time employee count increased from 575 on June 30, 2021 to 715 on June 30, 2022, an increase of 24.3%.

Employee compensation expenses increased $3.6 million (or 22%) as a result of the increase in our employee headcount, volume-based sales commissions, and an increase in

Our full time employee count increased from 597 on September 30, 2021 to 722 on September 30, 2022, an increase of 20.9%.

Employee compensation expenses

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2022 and 2021

market based individual compensation rates.

Included in this amount is a $0.9 million increase related to the remeasurement of phantom stock liability associated with the increase in share price.

September 30, 2022 and 2021

increased $7.6 million (or 32%) as a result of the increase in our employee headcount, volume-based sales commissions, and an increase in market based individual compensation rates.

Included in this amount is a $1.4 million increase in phantom stock expense associated with the remeasurement of the phantom stock liability based on share price movement.

1 unchanged sentence

Research and development

For the six months ended June 30, 2022, research and development expense totaled $1.3 million, an increase of $0.4 million (or 41.4%) 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.

For the nine months ended September 30, 2022, research and development expense totaled $2.0 million, an increase of $0.5 million (or 31.8%) 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 remain stable for the remainder of 2022.

Stock-based compensation

For the six months ended June 30, 2022, stock-based compensation totaled $2.6 million, remaining relatively unchanged from the comparable period in 2021.

For the nine months ended September 30, 2022, stock-based compensation totaled $3.9 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 six months ended June 30, 2022, 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.

For the nine months ended September 30, 2022, net interest expense totaled $0.2 million.

As a result of low levels of interest bearing debt, interest expense is expected to remain immaterial through the end of 2022.

Provision for income taxes

For the six months ended June 30, 2022, the provision for income taxes was a $1.2 million expense, compared to a $1.0 million benefit during the 2021 period.

The slight increase in the overall effective tax rate was due to the effect of discrete deductible compensation expenses during the prior year interim period.

Our annual estimated effective tax rate for 2022 is 29.4%.

For the six months ended June 30, 2022, net income was $2.7 million, a decrease of $0.5 million (or 16.0%) from the comparable period in 2021.

Net income as a percentage of revenue decreased from 5.8% for the six months ended June 30, 2021 to 4.2% for the six months ended June 30, 2022, primarily due to changes in the product mix as a result of diversification and increases of direct and indirect costs driven by market forces within the supply and labor environments.

For the nine months ended September 30, 2022, the provision for income taxes was a $1.6 million expense, compared to a $2.4 million expense during the 2021 period.

The slight decrease in the overall effective tax rate was due to the effect of discrete non-deductible compensation expenses during the prior year interim period.

Excluding the effect of discrete items, our annual estimated effective tax rate for 2022 is 29.7%.

For the nine months ended September 30, 2022, net income was $3.8 million, a decrease of $1.3 million (or 24.9%) from the comparable period in 2021.

Net income as a percentage of revenue decreased from 5.9% for the nine months ended September 30, 2021 to 3.7% for the nine months ended September 30, 2022, primarily due to changes in the product mix as a result of diversification and increases of direct and indirect costs driven by market forces within the supply and labor environments.

Non-GAAP Financial Measures

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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.

– Depreciation may be useful for investors to consider because it generally represents the wear and tear on the property and equipment used in our operations.

However, we do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating costs.

– Depreciation may be useful for investors to consider because it generally represents the wear and tear on the property and

VIEMED HEALTHCARE, INC.

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

June 30, 2022 and 2021

September 30, 2022 and 2021

equipment used in our operations.

However, we do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating costs.

– The amount of interest expense we incur or interest income we generate may be useful for investors to consider and may result in current cash inflows or outflows.

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

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

Net Income $ 1,055 $ 967 $ 1,762 $ 4,087 $ 1,789 $ 1,566 $ 1,684 $ 5,071

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Liquidity and Capital Resources

Cash and cash equivalents at June 30, 2022 was $21.9 million, compared to $28.4 million at December 31, 2021.

Cash and cash equivalents at September 30, 2022 was $21.5 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 June 30, 2022.

Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully undrawn as of September 30, 2022.

VIEMED HEALTHCARE, INC.

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

June 30, 2022 and 2021

September 30, 2022 and 2021

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

Six Months Ended June 30,

Nine Months Ended September 30,

Net Cash provided by (used in):

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Net Cash Provided by Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2022 was $12.1 million, primarily resulting from net income of $2.7 million, increased by non-cash net income adjustments of $14.4 million, increased by a change in net operating liabilities of $0.3 million, and decreased by a change in net operating assets of $6.0 million.

Net cash provided by operating activities during the nine months ended September 30, 2022 was $20.1 million, primarily resulting from net income of $3.8 million, increased by non-cash net income adjustments of $21.6 million, increased by a change in net operating liabilities of $4.1 million, decreased by a change in net operating assets of $10.3 million, and increased by $0.9 million of distributions from equity method investments.

The non-cash net income adjustments primarily consisted of $7.8 million of provision for uncollectible accounts, $11.3 million of depreciation, $3.9 million of stock-based compensation, $0.9 million gain on equity investments and a $0.7 million change in deferred tax asset.

The primary changes in working capital were an increase in gross accounts receivable of $7.8 million, offset by an increase in income taxes payable of $1.4 million and an increase in inventory of $1.0 million.

The primary changes in working capital were an increase in gross accounts receivable of $10.0 million and an increase in other assets of $2.9 million, offset by an increase in accrued liabilities of $3.2 million, a decrease in income taxes receivable of $1.8 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 six months ended June 30, 2021 was $8.8 million, resulting from net income of $3.3 million, non-cash net income adjustments of $12.0 million, and an increase in net operating liabilities of $3.4 million, which was partially offset by an increase in net operating assets of $3.1 million.

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

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.

The changes in operating liabilities primarily consisted of an increase in accounts payable of $0.4 million and an increase in accrued liabilities of $3.8 million.

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 adjustments 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 adjustments primarily consisted of $5.3 million in the provision for uncollectible accounts, $8.2 million of depreciation, $0.3 million of gains 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 Used in Investing Activities

Net cash used in investing activities during the six months ended June 30, 2022 was $10.5 million, consisting of $11.0 million of purchases of property and equipment, partially offset by $0.6 million of sales proceeds from the disposal of property and equipment.

Net cash used in investing activities during the nine months ended September 30, 2022 was $16.6 million, consisting of $17.3 million of purchases of property and equipment and $0.1 million in equity investments, partially offset by $0.9 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.

Cash purchases of property and equipment represents a $4.2 million, or 32.0%, increase year over year.

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 COVID-19 response sales proceeds from the disposal of property and equipment.

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 of equity investments, partially offset by $0.5 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 six months ended June 30, 2021 were $5.1 million.

Net Cash Used in Financing Activities

Net cash used in financing activities during the six months ended June 30, 2022 was $8.1 million.

For the six months ended June 30, 2022, the Company repurchased and canceled 1,350,567 common shares at a cost of $7.0 million pursuant to the Share Repurchase Program authorized by the Board of Directors on March 7, 2022 (the "2022 Share Repurchase Program").

Net cash used in financing activities during the six months ended June 30, 2022 also consisted of $0.9 million in principal payments on the Term Note (as defined below).

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 and $1.7 million in repayments of finance lease liabilities, partially offset by $0.1 million of proceeds from the exercise of stock options.

Net cash used in financing activities during the nine months ended September 30, 2022 was $10.4 million.

For the nine months ended September 30, 2022, the Company repurchased and canceled 1,673,620 common shares at a cost of $8.9 million pursuant to the Share Repurchase Program authorized by the Board of Directors on March 7, 2022 (the "2022 Share Repurchase Program").

Net cash used in financing activities during the nine months ended September 30, 2022 also consisted of $1.3 million in principal payments on the Term Note (as defined below).

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, $2.1 million in repayments of finance lease liabilities, and $1.4 million for shares repurchased and canceled for tax withholding in connection with RSUs vested in the period.

VIEMED HEALTHCARE, INC.

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

June 30, 2022 and 2021

September 30, 2022 and 2021

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 June 30, 2022 or December 31, 2021.

There were no borrowings against this line of credit at September 30, 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.

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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, 2022.

The Company was in compliance with all covenants under the Commercial Business Term Loan Agreement in effect at September 30, 2022.

Commercial Term Notes

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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.

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

The Term Note matures on September 19, 2022 and is secured by substantially all of our assets.

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

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

The Term Note matured on September 19, 2022 at which time the entire unpaid balance of principal and accrued interest was repaid in full.

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 June 30, 2022:

The following table presents our material contractual obligations and commitments to make future payments as of September 30, 2022:

Within 12 Months Beyond 12 Months

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Total $606 $4,957

We anticipate that our operating cash flows will satisfy our material cash requirements for the 12 months after June 30, 2022.

Except for the funding of potential acquisitions and investments, we anticipate that our operating cash flows will satisfy our material cash requirements for the 12 months after September 30, 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.

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

June 30, 2022 and 2021

September 30, 2022 and 2021

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 $351,000 and $283,000 for the three months ended June 30, 2022 and 2021, respectively, and $622,000 and $457,000 for the six months ended June 30, 2022 and 2021, respectively.

Matching employer contributions to the 401(k) plan totaled $259,000 and $185,000 for the three months ended September 30, 2022 and 2021, respectively, and $882,000 and $642,000 for the nine months ended September 30, 2022 and 2021, respectively.

Off balance sheet arrangements

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

For the six months ended June 30, 2022, our assessment considered business and market disruptions caused by the COVID-19 pandemic and estimates of expected emerging credit and collectability trends.

For the nine months ended September 30, 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 $9.4 million and $7.3 million as of June 30, 2022 and 2021, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Our allowance for doubtful accounts was $8.5 million and $7.1 million as of September 30, 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

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VIEMED HEALTHCARE, INC.

June 30, 2022 and 2021

September 30, 2022 and 2021

Quantitative and Qualitative Disclosures About Market Risk

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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