What changed in this filing

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Item 1. Financial Statements

2023-05-08 compared with 2022-11-01 · 237 added, 309 removed, 454 unchanged (55% of the section changed)

4 unchanged sentences

Dollars, except outstanding shares)

September 30, 2022 At

March 31, 2023 At

December 31, 2022

2 unchanged sentences

Cash and cash equivalents $ 23,544 $ 16,914

Accounts receivable, net of allowance for doubtful accounts of $ 8,516 and $ 7,031 at September 30, 2022 and December 31, 2021, respectively

2 14,982 12,823

Inventory, net of inventory reserve of $ 0 and $ 1,418 at September 30, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 11,040 and $ 8,483 at March 31, 2023 and December 31, 2022, respectively

2 16,320 15,379

Inventory 2 3,447 3,574

Income tax receivable — 26

4 unchanged sentences

Equity investments 2 1,994 2,155

Debt investment 2 2,057 2,000

Deferred tax asset 9 3,844 3,119

5 unchanged sentences

Deferred revenue 4,698 4,624

Income taxes payable 1,247 —

Accrued liabilities 4 12,817 11,092

Current portion of lease liabilities 5 397 495

Current portion of long-term debt 5 165 1,480

Total current liabilities $ 23,421 $ 18,861

2 unchanged sentences

Long-term lease liabilities 5 162 199

Long-term debt 5 4,156 4,306

Total long-term liabilities $ 1,172 $ 1,088

4 unchanged sentences

unlimited authorized;

38,102,547 and 39,640,388 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

38,276,389 and 38,049,739 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

7 $ 17,096 $ 15,123

Additional paid-in capital 12,087 12,125

Accumulated other comprehensive income (loss) 56 ( 278 )

Retained earnings 70,858 69,846

6 unchanged sentences

Dollars, except share and per share amounts)

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

Three Months Ended March 31,

Note 2023 2022

7 unchanged sentences

Depreciation 240 237

Loss on disposal of property and equipment 292 145 168 304

Other expense (income) ( 57 ) ( 32 ) ( 721 ) ( 85 )

Gain on disposal of property and equipment ( 22 ) ( 14 )

Other (income) expense, net ( 81 ) ( 441 )

Income from operations $ 1,934 $ 2,248

1 unchanged sentence

Income from equity method investments ( 35 ) ( 323 )

Interest expense, net of interest income 5 ( 42 ) ( 75 ) ( 165 ) ( 249 )

Interest (income) expense, net 5 ( 49 ) 64

Net income before taxes 2,018 2,507

21 unchanged sentences

Stock-based compensation - restricted stock — — 485 — — 485

Exercise of options 16,586 65 — — — 65

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

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

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

Net income — — — — 1,684 1,684

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

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

Share-based compensation - restricted stock — — 238 — — 238

Exercise of options 11,011 47 — — — 47

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

Net income — — — — 1,566 1,566

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

Stock-based compensation - options 1051 1,051

Stock-based compensation - restricted stock 251 251

Shares issued for vesting of restricted stock units 67,010 334 ( 334 ) — — —

Change in accumulated other comprehensive income (loss), net of tax 21 21

Net income 1,789 1,789

Shareholders' equity, September 30, 2021 39,630,446 $ 13,957 $ 6,501 $ ( 330 ) $ 69,248 $ 89,376

See accompanying notes to the condensed consolidated financial statements

VIEMED HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in thousands of U.S.

Dollars, except share and per share amounts)

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

Shares Amount Retained

Shareholders' equity, December 31, 2021 39,640,388 $ 14,014 $ 7,749 $ ( 278 ) $ 73,335 $ 94,820

Stock-based compensation - options — — 820 — — 820

Stock-based compensation - restricted stock — — 485 — — 485

Shares issued for vesting of restricted stock 67,010 334 ( 334 ) — — —

Shares redeemed to pay income tax ( 23,742 ) — — — ( 119 ) ( 119 )

Shares repurchased under the share repurchase program ( 389,878 ) — — — ( 1,887 ) ( 1,887 )

Change in accumulated other comprehensive income (loss), net of tax — — — 163 — 163

Change in accumulated other comprehensive loss, net of tax — — — 163 — 163

Net income — — — — 1,762 1,762

Shareholders' equity, March 31, 2022 39,293,778 $ 14,348 $ 8,720 $ ( 115 ) $ 73,091 $ 96,044

Stock-based compensation - options — — 757 — — 757

Stock-based compensation - restricted stock — — 514 — — 514

Shares repurchased under the share repurchase program ( 960,689 ) — — — ( 5,114 ) ( 5,114 )

Change in accumulated other comprehensive income (loss), net of tax — — — 59 — 59

Net income — — — — 967 967

Shareholders' equity, June 30, 2022 38,333,089 $ 14,348 $ 9,991 $ ( 56 ) $ 68,944 $ 93,227

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

Shares Amount Retained

Shareholders' equity, December 31, 2022 38,049,739 $ 15,123 $ 12,125 $ — $ 69,846 $ 97,094

Stock-based compensation - options — — 348 — — 348

3 unchanged sentences

Shares redeemed to pay income tax ( 64,756 ) — — — ( 505 ) ( 505 )

Shares repurchased under the share repurchase program ( 323,053 ) — — — ( 1,857 ) ( 1,857 )

Change in accumulated other comprehensive income (loss), net of tax — — — 112 — 112

Net income — — — — 1,517 1,517

Shareholders' equity, September 30, 2022 38,102,547 $ 14,927 $ 10,808 $ 56 $ 68,118 $ 93,909

Shareholders' equity, March 31, 2023 38,276,389 $ 17,096 $ 12,087 $ — $ 70,858 $ 100,041

See accompanying notes to the condensed consolidated financial statements

2 unchanged sentences

(Expressed in thousands of U.S.

Nine Months Ended September 30,

Three Months Ended March 31,

Note 2023 2022

5 unchanged sentences

Change in inventory reserve — ( 1,418 )

Share-based compensation expense 7 3,885 3,845

Stock-based compensation expense 7 1,391 1,305

Distributions of earnings received from equity method investments 196 221

Income from equity method investments ( 35 ) ( 323 )

Loss on disposal of property and equipment 168 304

Deferred income tax expense 745 2,410

Income from debt investment ( 57 ) —

Gain on disposal of property and equipment ( 22 ) ( 14 )

Deferred income tax (benefit) expense ( 725 ) 745

Net change in working capital

Increase in accounts receivable ( 5,072 ) ( 4,221 )

Decrease (increase) in inventory 697 ( 196 )

Increase in prepaid expenses and other assets ( 2,870 ) ( 2,259 )

Increase in trade payables 33 2,638

Decrease in inventory 127 1,372

Decrease (increase) in prepaid expenses and other assets 449 ( 68 )

Increase (decrease) in trade payables 641 ( 467 )

Increase in deferred revenue 74 135

Increase (decrease) in accrued liabilities 3,170 ( 3,711 )

Increase in accrued liabilities 1,846 58

Change in income tax payable/receivable 1,273 1,217

9 unchanged sentences

Principal payments on term note 5 — ( 433 )

Shares redeemed to pay income tax 7 ( 143 ) ( 1,434 )

Shares repurchased under the share repurchase program 7 — ( 1,887 )

Shares redeemed to pay income tax 7 ( 505 ) ( 119 )

Repayments of lease liabilities — ( 21 )

Net cash used in financing activities $ ( 10,396 ) $ ( 4,770 )

Net decrease in cash and cash equivalents ( 6,930 ) ( 4,114 )

Net cash provided by (used in) financing activities $ 39 $ ( 2,499 )

Net increase in cash and cash equivalents 6,630 840

Cash and cash equivalents at beginning of year 16,914 28,408

2 unchanged sentences

Cash paid during the period for interest $ 42 $ 66

Cash paid (received) during the period for income taxes, net of refunds $ ( 920 ) $ 1,760

Supplemental disclosures of non-cash transactions

Net non-cash changes to finance leases $ — $ 42

Net non-cash changes to operating leases $ 150 $ 372

Cash (received) paid during the period for income taxes, net of refunds $ ( 40 ) $ 1,217

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

March 31, 2023 and 2022

Nature of Business and Operations

Viemed Healthcare, Inc.

(the "Company"), through its subsidiaries, is a provider of in-home durable medical equipment ("DME") and post-acute respiratory healthcare services in the United States.

(the "Company"), through its subsidiaries, is a provider of home medical equipment ("HME") and post-acute respiratory healthcare services in the United States.

The Company’s service offerings are focused on effective in-home treatment with clinical practitioners providing therapy and counseling to patients in their homes using cutting edge technology.

The Company currently serves patients in 49 states in the United States.

The Company currently serves patients in all 50 states of the United States.

The Company was incorporated under the Business Corporations Act (British Columbia) on December 14, 2016.

1 unchanged sentence

Kaliste Saloom Road, Lafayette, Louisiana 70508.

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

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

public company reporting requirements.

24 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

March 31, 2023 and 2022

Segment Reporting

The Company’s chief operating decision-makers ("CODMs") are its Chief Executive Officer and Chief Operating Officer, who make resource allocation decisions and assess performance based on financial information presented on an aggregate basis.

There are no segment managers who are held accountable by the chief operating decision-makers, or anyone else, for any planning, strategy and key decision-making regarding operations.

The corporate office is responsible for contract negotiation with vendors and payors, corporate compliance with healthcare laws and regulations, and revenue cycle management, among other corporate supporting functions.

Accordingly, the Company has a single reportable segment and operating segment structure based on ASC 280, Segment Reporting .

Accounts receivable

4 unchanged sentences

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

For the nine months ended September 30, 2022, the Company's evaluation takes into consideration such factors as historical bad debt and billing modification experience, national and local economic trends and conditions, industry and regulatory conditions, other collection indicators and information about disaggregated receivables.

For the three months ended March 31, 2023, our evaluation takes into consideration such factors as historical bad debt and billing modification experience, national and local economic trends and conditions, industry and regulatory conditions, other collection indicators and information about disaggregated receivables.

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

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

September 30, 2022 September 30, 2021

March 31, 2023 March 31, 2022

Balance, beginning of year $ 8,483 $ 7,031

2 unchanged sentences

Balance, end of period $ 11,040 $ 8,484

Included in accounts receivable at September 30, 2022 are amounts due from Medicare and Medicaid representing 36 % and 10 %, respectively, and 46 % combined, of total outstanding receivables.

Included in accounts receivable at March 31, 2023 are amounts due from Medicare and Medicaid, representing 35 % and 10 %, respectively, and 45 % combined, of total outstanding receivables.

As of December 31, 2022, 48 % of total outstanding receivables were amounts due from Medicare and Medicaid.

Revenues from Medicare and Medicaid as percentages of the Company's traditional revenue streams, excluding COVID-19 response sales and services, for the three and nine months ended September 30, 2022 and 2021 were as follows:

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

2022 2021 2022 2021

Revenues from Medicare and Medicaid as percentages of the Company's traditional revenue streams, excluding COVID-19 response sales and services, for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

Medicare revenues 45 % 49 %

Medicaid revenues 9 % 9 %

Total Medicare and Medicaid 54 % 62 % 56 % 65 %

Inventory represents non-serialized respiratory supplies that consist of equipment parts, consumables, and associated product supplies and is expensed at the time of sale or use.

Total Medicare and Medicaid revenues 54 % 58 %

Inventory represents non-serialized supplies that consist of equipment parts, consumables, and associated product supplies and is expensed at the time of sale or use.

The Company values inventory at the lower of cost or net realizable value.

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

Inventory is presented net of a reserve balance of $ 0 and $ 1,418,000 at September 30, 2022 and December 31, 2021, respectively, that relates to COVID-19 response supplies.

During the nine months ended September 30, 2022, these supplies were determined to be unavailable for sale due to expiration.

Accordingly, the previously established inventory reserves were eliminated upon disposal.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

March 31, 2023 and 2022

Property and equipment

7 unchanged sentences

Equity investments

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

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

The following table details the Company’s equity investments:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Equity method investments $ 655 $ 816

4 unchanged sentences

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

Distributions received from the investee reduce the Company’s carrying value of the investment.

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

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

No events or changes have occurred as of September 30, 2022 that would affect the carrying value of equity method investments.

No events or changes have occurred as of March 31, 2023 that would impair the carrying value of equity method investments.

Other equity investments include an equity interest in VeruStat, Inc., a remote patient monitoring entity, and an equity interest in DMEscripts, LLC, an e-prescribing platform.

2 unchanged sentences

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

The Company was not aware of any impairment or observable price change adjustments that needed to be made as of September 30, 2022 on its investments in equity securities without a readily determinable fair value.

Comprehensive income

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

The Company's comprehensive income represents net income adjusted for unrealized gains and losses on derivative instruments, net of tax.

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

The Company was not aware of any impairment or observable price change adjustments that needed to be made as of March 31, 2023 on its investments in equity securities without a readily determinable fair value.

Debt Investment

The Company's debt investment is a variable rate secured convertible note issued by Healthcare DX, Inc.

(d/b/a ModoHealth) on December 21, 2022, classified as an available-for-sale debt instrument.

Accrued interest is due upon the 18 month maturity of the note and is included in the amortized cost basis at each reporting period.

At each financial statement date until a conversion event, the debt instrument is required to be remeasured at fair value.

Changes in unrealized gains and losses are included in accumulated other comprehensive income, net of tax effect, until realized.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

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

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

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

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

March 31, 2023 and 2022

Comprehensive income

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

The Company's comprehensive income represents net income adjusted for unrealized gains and losses on derivative instruments, net of tax.

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

Revenue recognition

Revenue from a customer consists of the sale and rental of home medical equipment and medical services.

Revenue from a customer consists of sales and rentals of home medical equipment and patient medical services.

Patient revenues are billed to and collections received from Medicare, Medicaid, third-party insurers, co-insurance and patient-pay.

6 unchanged sentences

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

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

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

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

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

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

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

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

The Company recognizes equipment rental revenue over the non-cancelable lease term, which varies based on the type of equipment rental, less estimated adjustments, in accordance with Topic 842.

1 unchanged sentence

The Company would first consider the lease classification issue (sales-type lease or operating lease) and then appropriately recognize or defer rental revenue over the lease term .

Revenues associated with external staffing services are accrued on an hourly basis and are recorded based on the determination of whether the Company is acting as a principal or an agent.

In arrangements in which the Company manages customers' supplemental workforce needs utilizing its own network of healthcare professionals, the Company is determined to be a principal and includes the contractual gross billings in revenues with a corresponding increase to cost of revenues for worksite employee payroll costs associated with these services.

Alternatively, when the Company acts as agent in the performance of workforce management, revenue is recorded based on contractually agreed upon fees or commissions with no associated cost of revenues.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

March 31, 2023 and 2022

Revenues associated with external staffing services are accrued on an hourly basis and are recorded based on the determination of whether the Company is acting as a principal or an agent.

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

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

2022 2021 2022 2021

Revenue from rentals

Three Months Ended March 31,

Revenue from rentals under Topic 842

Ventilator rentals, non-invasive and invasive $ 25,147 $ 21,518

Other durable medical equipment rentals 6,906 4,359

Revenue from sales and services

Revenue from sales and services under Topic 606

Equipment and supply sales

3,649 2,415 9,931 6,258

COVID-19 response sales and services

— 1,452 2,278 5,542

Service revenues

2,359 515 5,839 1,505

Total revenues $ 39,556 $ 32,255

Revenue Accounting under Topic 842

The Company leases DME such as non-invasive and invasive ventilators, positive airway pressure ("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 Company leases HME such as non-invasive and invasive ventilators, positive airway pressure ("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.

1 unchanged sentence

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

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

The lease term begins on the date equipment is 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.

4 unchanged sentences

Revenue Accounting under Topic 606

The Company sells DME, replacement parts and supplies to customers and recognizes revenue based on contractual payment rates as determined by the payors at the point in time where control of the good or service is transferred through delivery to the customer.

The Company sells HME, replacement parts and supplies to customers and recognizes revenue based on contractual payment rates as determined by the payors at the point in time where 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.

3 unchanged sentences

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

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

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

The Company does not generally contract with uninsured customers.

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

For staffing services, performance obligations in the staffing agreements are satisfied over time when the customer simultaneously receives and consumes the benefits provided.

Accordingly, revenues from staffing services are recognized on an hourly basis as services are rendered by the job site employee in both principal and agent arrangements.

The transaction price therefore is predominantly based

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

March 31, 2023 and 2022

on contractual payment rates as determined by the payors.

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

For staffing services, performance obligations in the staffing agreements are satisfied over time when the customer simultaneously receives and consumes the benefits provided.

Accordingly, revenues from staffing services are recognized on an hourly basis as services are rendered by the job site employee in both principal and agent arrangements.

The Company determines its estimates of contractual allowances and discounts based upon contractual agreements, its policies and historical experience.

6 unchanged sentences

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

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

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

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

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

The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of September 30, 2022.

The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of March 31, 2023.

Stock-based compensation

5 unchanged sentences

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

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

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

Interest rate swaps

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

The Company utilized an interest rate swap contract to reduce exposure to fluctuations in variable interest rates for future interest payments on the 2019 Term Note (as defined below).

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

1 unchanged sentence

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.

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

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

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

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

The Company is subject to income taxes in numerous jurisdictions.

Significant judgment is required in determining the provision for

To the extent that interest rate swaps are determined to be ineffective, the

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

income taxes.

March 31, 2023 and 2022

Company would recognize the changes in the estimated fair value of swaps in interest and other non-operating expenses, net in its Condensed Consolidated Statements of Income.

During the year ended December 31, 2022, the Company settled its interest rate swap in connection with the refinancing of its credit facilities and recognized the realized gain of $ 0.2 million in Other Income.

The Company is subject to income taxes in numerous U.S.

jurisdictions.

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

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

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

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

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

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

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

Changes in tax law or changes in the way tax law is interpreted may also impact the Company's effective tax rate as well as the Company's 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.

Deferred income tax assets or liabilities are measured using 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.

1 unchanged sentence

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.

CARES Act Funds Received

The Company 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 2022.

Department of Health and Human Services ("HHS") 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.

There is no US GAAP guidance for for-profit health care entities that receive government grants that are not in the form of an income tax credit, revenue from a contract with a customer or a loan.

As such, for-profit entities must determine the appropriate accounting treatment by analogy to other guidance such as International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, in International Financial Reporting Standards.

Under IAS 20, the Company determined that upon receipt of funds, it fully complied with the conditions attached to the grant.

The Company recognized the distributions received from the Provider Relief Fund in the income statement in full during the period of receipt.

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

The Company is not aware of any such modifications as of March 31, 2023.

Recently adopted accounting pronouncements

On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments.

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

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

While the adoption of ASC 326 could result in a higher allowance recorded in the future for credit losses on receivables within the scope of the standard due to the prescribed measurement principles, the impact of the adoption on the Company's consolidated financials statements was not material.

Recently issued accounting pronouncements

2 unchanged sentences

In other words, an emerging growth company can selectively delay the adoption of all accounting standards until those standards would otherwise apply to private companies.

The Company has elected to utilize this exemption and, as a result, the Company's condensed consolidated financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

To date, however, the Company has not delayed the adoption of any accounting standards except as noted below.

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

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

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

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

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

The standard is effective for fiscal years beginning after December 15, 2022 for smaller reporting companies based on the Company's designation as of November 2019, including interim periods within those annual periods, with early adoption permitted.

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

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

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

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

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

The Company has a commercial term note that references LIBOR and the Company is currently evaluating how this standard may be applied to specific contract modifications through December 31, 2022.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosure by Business Entities about Government Assistance, which improves the transparency of government assistance received by most business entities by requiring the disclosure of:

(1) the types of government assistance received;

(2) the accounting for such assistance;

and (3) the effect of the assistance on a business entity's financial statements.

This guidance will be effective for the annual periods beginning after December 15, 2021.

The Company expects to satisfy the disclosure requirements when the the standard becomes effective in with respect to its consolidated financial statements for the year ended December 31, 2022.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

March 31, 2023 and 2022

has elected to utilize this exemption and, as a result, the Company's condensed consolidated financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

To date, however, the Company has not delayed the adoption of any accounting standards except as noted below.

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

In September 2022, the FASB issued ASU No.

6 unchanged sentences

The following table details the Company’s fixed assets:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Medical equipment $ 96,848 $ 93,893

6 unchanged sentences

Property and equipment, net of accumulated depreciation and amortization $ 68,438 $ 68,437

Depreciation in the amount of $ 3,829,000 and $ 2,656,000 is included in cost of revenue for the three months ended September 30, 2022 and 2021, respectively, and in the amount of $ 10,486,000 and $ 7,574,000 for the nine months ended September 30, 2022 and 2021, respectively.

At December 31, 2021, cost and accumulated depreciation on equipment acquired under finance lease obligations was $ 47,000 and $ 5,000 , respectively.

At September 30, 2022, there were no outstanding finance lease obligations .

Depreciation in the amount of $ 4,522,000 and $ 3,160,000 is included in cost of revenue for the three months ended March 31, 2023 and 2022, respectively.

At March 31, 2023 and December 31, 2022, there were no outstanding finance lease obligations.

Medical equipment purchases with a cost of $ 1,709,000 and $ 738,000 were included in accounts payable at March 31, 2023 and December 31, 2022, respectively.

Current Liabilities

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Accrued trade payables $ 2,398 $ 2,254

5 unchanged sentences

Total accrued liabilities $ 12,817 $ 11,092

Debt and Lease Liabilities

Senior Credit Facility

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

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

Line of Credit

The Company maintains a line of credit in the amount of $ 10.0 million that expires May 1, 2023 under the Commercial Business Loan Agreement.

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, 2022 or December 31, 2021.

Commercial Term Notes

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

March 31, 2023 and 2022

2018 Senior Credit Facility

On February 20, 2018, the Company entered a Commercial Business Loan Agreement (the "2018 Senior Credit Facility") that provided for Term Loans and Lines of Credit with Hancock Whitney Bank.

Until November 29, 2022, the Company maintained a line of credit in the amount of $ 10.0 million under the 2018 Senior Credit Facility.

On May 30, 2019, the Company entered into a term note (“Building Term Note”) under the 2018 Senior Credit Facility in the principal amount of $ 4.8 million.

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

Beginning July 1, 2019, the Company began making monthly payments towards the outstanding balance.

The Building Term Note matures on May 30, 2026 and is secured by substantially all of the assets of the borrower, including the real property acquired with the proceeds of the Building Term Note.

The Building Term Note bears interest at a variable rate equal to the one month ICE LIBOR index plus a margin of 2.45 % per annum.

The Company is required to maintain a loan to value ratio of 85 % with respect to the appraised value of the real property.

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

On September 19, 2019, the Company entered into an additional loan agreement providing for a term note (the “Term Note") under the Commercial Business Loan Agreement in the principal amount of $ 5.0 million.

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

On September 19, 2019, the Company entered into an additional loan agreement providing for a term note (the “2019 Term Note") under the 2018 Senior Credit Facility in the principal amount of $ 5.0 million and bearing an annual interest rate of 4.60 %.

The proceeds of the 2019 Term Note were utilized 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.

The Company incurred immaterial financing costs related to the Building Term Note.

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

The recorded balances associated with these term notes are as follows:

September 30, 2022 December 31, 2021

Notes payable $ 4,321 $ 5,786

Current portion of notes payable ( 165 ) ( 1,480 )

Net long-term notes payable $ 4,156 $ 4,306

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

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

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

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

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

September 30, 2022 December 31, 2021

Lease liabilities $ 456 $ 732

Current portion of lease liabilities ( 220 ) ( 464 )

Net long-term lease liabilities $ 236 $ 268

There are no finance lease liabilities associated with outstanding supplier finance program obligations at September 30, 2022.

The 2019 Term Note matured on September 19, 2022 at which time the entire unpaid balance of principal and interest was repaid in full.

In connection with the entry in to the 2022 Senior Credit Facilities on November 29, 2022, the Company retired the 2018 Senior Credit Facility, and repaid all outstanding interest and principal in full.

2022 Senior Credit Facilities

On November 29, 2022, the Company refinanced its existing borrowings under the 2018 Senior Credit Facility and entered into a new credit agreement (the "2022 Senior Credit Facilities") with the lenders from time to time party thereto, and Regions Bank, as administrative agent (the "Administrative Agent") and collateral agent, that provides for an up to $ 30.0 million revolving credit facility (the "2022 Revolving Credit Facility") and an up to $ 30.0 million delayed draw term loan facility (the "2022 Term Loan Facility"), both maturing in November 2027.

The proceeds of the 2022 Revolving Credit Facility may be used to refinance existing indebtedness, for working capital purposes, capital expenditures and other general corporate purposes (including permitted acquisitions), and to pay transaction fees, costs and expenses related to the 2022 Senior Credit Facilities.

The proceeds of the 2022 Term Loan Facility and any additional term loans established in accordance with the 2022 Senior Credit Facilities may be used to finance permitted acquisitions and to pay transaction fees, costs and expenses related to such acquisitions.

The interest rates per annum applicable to the 2022 Senior Credit Facilities are Term SOFR (as defined in the 2022 Senior Credit Facilities) plus an applicable margin, which ranges from 2.625 % to 3.375 %, or, at the option of the Company, a Base Rate (as defined in the 2022 Senior Credit Facilities) plus an applicable margin, which ranges from 1.625 % to 2.375 %.

The 2022 Senior Credit Facilities require the Company to comply with certain affirmative, as well as certain negative covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company to incur indebtedness, grant liens, make investments, engage in acquisitions, mergers or consolidations and pay dividends and other restricted payments.

The 2022 Senior Credit Facilities also include certain financial covenants, which generally include, but are not limited to the following :

• Consolidated Total Leverage Ratio ( defined generally as total indebtedness to adjusted EBITDA) of not greater than (i) for any fiscal quarter ending during the period from the closing date to and including December 31, 2024, 2.75 to 1.0 and (ii) for any fiscal quarter ending on and after March 31, 2025, 2.50 to 1.0, subject to certain adjustments following a material acquisition.

• Consolidated Fixed Charge Coverage Ratio ( defined generally as (a) adjusted EBITDA minus capital expenditures minus cash taxes to (b) the sum of scheduled principal payments plus cash interest expense plus restricted payments) of not less than 1.25 :1.0.

The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at March 31, 2023.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

Operating lease liabilities

The Company has recognized operating lease liabilities that relate primarily to the lease of land and buildings.

These leases contain renewal options that we have not included as part of the Company's assessment of the lease term as it is not reasonably certain that we will exercise these options.

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

At September 30, 2022, the weighted average lease term was approximately 2.29 years.

Operating rental expenses were $ 138,000 and $ 388,000 for the three and nine months ended September 30, 2022, respectively, and $ 194,000 and $ 570,000 for the three and nine months ended September 30, 2021, respectively.

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

March 31, 2023 and 2022

The 2022 Senior Credit Facilities includes provisions permitting the Company from time to time to, subject to certain terms and conditions, increase the aggregate amount of commitments under the 2022 Revolving Credit Facility and/or establish one or more additional term loans under the 2022 Term Loan Facility, in each case, with additional commitments from existing lenders or new commitments from financial institutions acceptable to the Administrative Agent in its reasonable discretion;

provided, that, (a) the aggregate principal amount of any increases in the 2022 Revolving Credit Facility, and (b) the aggregate principal amount of all additional term loans under the 2022 Term Loan Facility established after the closing date will not exceed $ 30.0 million.

Financing costs and commitment fees related to the 2022 Senior Credit Facilities are capitalized and amortized over the term of the loans using the effective interest method.

There were no outstanding borrowings under the 2022 Senior Credit Facilities at March 31, 2023 or December 31, 2022.

Fair Value Measurement

10 unchanged sentences

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

The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

At September 30, 2022

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2023 and 2022

The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:

At March 31, 2023

(In thousands) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Money market mutual funds $ 15,538 $ — $ — $ 15,538

Interest rate swap — 251 — 251

Available for sale debt instrument — — 2,057 2,057

Total $ 15,538 $ — $ 2,057 $ 17,595

3 unchanged sentences

Money market mutual funds $ 11,005 $ — $ — $ 11,005

Interest rate swap $ ( 200 ) $ — $ ( 200 )

Available for sale debt instrument — — 2,000 2,000

Total $ 11,005 $ — $ 2,000 $ 13,005

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2022 and 2021

Derivative instruments and hedging activities

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

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

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

As of September 30, 2022, the Company holds one interest rate swap contract which matures on May 30, 2026 and has a notional amount of $ 4.4 million.

This contract is designated as a cash flow hedge.

In the first nine months of 2022, ineffective portions of the hedge were immaterial.

The fair value was $ 0.3 million (determined based on Level 2 inputs) and is included in other long-term assets as of September 30, 2022.

Available for Sale Debt Instrument

The fair value of the Company’s available for sale debt instrument approximates its amortized cost basis due to the short maturity and indexed interest rate terms.

The fair value is classified within Level 3 in the fair value hierarchy as the Company evaluates adjustments using a combination of observable and unobservable inputs, such as operating results of the counterparty as well observable prices in transactions of debt and equity instruments of the issuing counterparty when available.

As of March 31, 2023, the analysis resulted in no adjustments to the carrying value impacting unrealized gains or losses.

All changes to measured fair value during the period were the result of accrued interest.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

3 unchanged sentences

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

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

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

2 unchanged sentences

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2023 and 2022

Shareholders' Equity

Authorized share capital

The Company’s authorized share capital consists of an unlimited number of common shares .

The Company’s authorized share capital consists of an unlimited number of common shares, with no stated par value .

Issued and outstanding share capital

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

The authorized stock consists of an unlimited number of common shares with no stated par value, of which 38,102,547 and 39,640,388 shares were issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

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").

The Company also acquired and cancelled 27,712 common shares at a cost of $ 0.1 million to satisfy employee income tax withholding associated with RSUs vesting during the nine months ended September 30, 2022.

The authorized stock consists of an unlimited number of common shares with no stated par value, of which 38,276,389 and 38,049,739 shares were issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023, the Company acquired and cancelled 64,756 common shares at a cost of $ 0.5 million to satisfy employee income tax withholding associated with RSUs vesting.

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

4 unchanged sentences

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

As of September 30, 2022, the Company had outstanding options of 4,568,803 and RSUs of 631,437 associated with common shares under the Omnibus Plan.

As of March 31, 2023, the Company had outstanding options of 4,368,000 and RSUs of 1,130,000 associated with common shares under the Omnibus Plan.

The following table summarizes stock-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Stock-based compensation - options $ 348 $ 820

Stock-based compensation - restricted stock units 1,043 485

Total $ 1,391 $ 1,305

At March 31, 2023, there was approximately $ 1,189,000 of total unrecognized pre-tax stock option expense under the Company's equity compensation plans, which is expected to be recognized over a weighted-average period of 1.53 years.

As of March 31, 2023, there was approximately $ 5,922,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.48 years.

VIEMED HEALTHCARE, INC.

2 unchanged sentences

Dollars, except per share amounts)

September 30, 2022 and 2021

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

Stock-based compensation - options $ 767 $ 1,051 $ 2,344 $ 3,127

Stock-based compensation - restricted stock units 542 251 1,541 718

Total $ 1,309 $ 1,302 $ 3,885 $ 3,845

At September 30, 2022, there was approximately $ 2.4 million of total unrecognized pre-tax stock option expense under the Company's equity compensation plans, which is expected to be recognized over a weighted-average period of 1.87 years.

As of September 30, 2022, there was approximately $ 2.2 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.12 years.

The following table summarizes stock option activity for the nine months ended September 30, 2022:

March 31, 2023 and 2022

The following table summarizes stock option activity for the three months ended March 31, 2023:

Number of options

2 unchanged sentences

Balance December 31, 2022 4,497 $ 5.26 6.9 years $ 11,356

Issued 764 5.29

Exercised ( 108 ) 5.19

Expired / Forfeited ( 21 ) 6.68

Balance September 30, 2022 4,569 $ 5.23 7.1 years $ 6,025

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

(2) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of the Company's common stock on the last trading day of the period ($ 6.00 ).

The aggregate intrinsic value of options outstanding was $ 6.0 million and options exercisable were $ 5.4 million at September 30, 2022.

For the nine months ended September 30, 2022, 15,087 shares of common stock were issued pursuant to the exercise of stock options.

At September 30, 2022, the Company had 2,868,668 exercisable stock options outstanding with a weighted average exercise price of $ 4.46 and a weighted average remaining contractual life of 6.3 years.

Balance March 31, 2023 4,368 $ 5.26 6.7 years $ 19,264

(1) For presentation purposes, stock options issued with a Canadian dollar exercise price have been translated to U.S.

dollars based on the prevailing exchange rate on the date of grant.

(2) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of the Company's common shares on the last trading day of the period ($ 9.66 ).

The aggregate intrinsic value of options outstanding was $ 19,263,947 and options exercisable was $ 16,609,299 at March 31, 2023.

For the three months ended March 31, 2023, 108,370 common shares were issued pursuant to the exercise of stock options.

At March 31, 2023, the Company had 3,521,000 exercisable stock options outstanding with a weighted average exercise price of $ 4.95 and a weighted average remaining contractual life of 6.2 years.

At December 31, 2022, the Company had 2,841,000 exercisable stock options outstanding with a weighted average exercise price of $ 4.53 and a weighted average remaining contractual life of 6.1 years.

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

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

The assumptions used to determine the grant date fair value of the stock options granted during the nine months ended September 30, 2022 were as follows:

Exercise price $ 5.21 - $ 6.34

Risk-free interest rate 1.41 % - 2.85 %

Expected volatility 57.59 % - 57.95 %

Expected term 5.49 - 5.58 years

Expected dividend yield Nil

Fair value on date of grant $ 2.74 - $ 3.42

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2022 and 2021

The fair value of the stock options has been charged to the Consolidated Statements of Income and Comprehensive Income and credited to additional paid-in capital over the vesting period, using the grant date fair value based on the Black-Scholes option pricing model.

The assumptions used to determine the grant date fair value of stock options include exercise price, risk-free interest rates, expected volatility, and average life of an option.

The risk-free interest rates are based on the rates available at the time of the grant for zero-coupon U.S.

government issues with a remaining term equal to the option’s expected life.

The average life of an option is based on both historical and projected exercise and lapsing data.

Expected volatility is based on implied volatilities from traded options on the Company's common shares and historical volatility of the Company's common shares over the expected life of the option.

There were no issuances of options during three months ended March 31, 2023.

Restricted stock units

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

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

The Company accounts for RSUs using fair value.

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

1 unchanged sentence

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

The following table summarizes RSU activity for the nine months ended September 30, 2022:

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

Weighted average remaining contractual life Aggregate intrinsic value (2)

The following table summarizes RSU activity for the three months ended March 31, 2023:

Number of RSUs (000's) Weighted average grant price Weighted average remaining contractual life Aggregate intrinsic value (1)

Balance December 31, 2022 629 $ 5.62 0.88 years $ 4,755

2 unchanged sentences

Expired / Forfeited ( 18 ) 6.71

Balance September 30, 2022 631 $ 5.62 1.12 years $ 3,789

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

Balance March 31, 2023 1,130 $ 7.01 1.48 years $ 10,915

(1) The aggregate intrinsic value of time-based RSUs outstanding was based on the Company's closing stock price on the last trading day of the period ($ 9.66 ).

During the three months ended September 30, 2022, the Company issued 119,830 RSUs with a vesting term of three years and a fair value of $ 0.7 million.

During the nine months ended September 30, 2022, the Company issued 580,962 RSUs with a vesting term of three years and a fair value of $ 3.1 million.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2023 and 2022

During the three months ended March 31, 2023, the Company issued 702,206 RSUs with a vesting term of three years and a fair value of $ 7.87 per share.

Phantom share units

3 unchanged sentences

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

The following table summarizes phantom share unit activity for the nine months ended September 30, 2022:

The following table summarizes phantom share unit activity for the three months ended March 31, 2023:

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

3 unchanged sentences

Expired / Forfeited ( 17 ) $ ( 165 )

Balance September 30, 2022 520 $ 3,121

Balance March 31, 2023

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

The market price of the Company's stock was $ 6.00 on September 30, 2022.

The market price of the Company's stock was $ 9.66 on March 31, 2023.

The change in fair value of the phantom share units has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and recorded as a liability included in accrued liabilities and long-term accrued liabilities.

The total liability associated with phantom share units at September 30, 2022 is $ 1.2 million, with $ 0.8 million of this amount included in current accrued liabilities and the remaining portion of $ 0.4 million included in long-term accrued liabilities.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2022 and 2021

The total liability associated with phantom share units at March 31, 2023 is $ 3,158,126 , with $ 2,147,652 of this amount included in current accrued liabilities and the remaining portion of $ 1,010,474 included in long-term accrued liabilities.

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

The following table summarizes expense (benefit) associated with the phantom share units for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

The following table summarizes expense associated with the phantom share units for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Selling, general, and administrative $ 1,149 $ 411

The Company paid cash settlements of $ 1.4 million and $ 6.3 million during the nine months ended September 30, 2022 and 2021, respectively, pertaining to vestings of cash-settled phantom share units.

The Company paid cash settlements of $ 578,000 and $ 13,000 during the three months ended March 31, 2023 and 2022, pertaining to vestings of cash-settled phantom share units.

Commitments and Contingencies

4 unchanged sentences

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2023 and 2022

Legal Proceedings

7 unchanged sentences

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

The Court has set a deadline to complete discovery of July 17, 2023, and has set a date for a non-jury trial on October 30, 2023.

The Company continues to believe that it has valid legal and equitable grounds to recover its outstanding prepayment as a result of Vyaire’s failure to deliver the vast majority of the respiratory equipment referenced in the Purchase Order.

1 unchanged sentence

Although a loss may be reasonably possible, the Company does not have sufficient information to determine the amount or range of reasonably possible loss with respect to the Reconventional Demand given that the dispute is in the early stages of the legal process.

As of September 30, 2022, outstanding funds in the amount of $ 0.9 million related to undelivered respiratory equipment are included within other long-term assets.

As of March 31, 2023, outstanding funds in the amount of $ 0.9 million related to undelivered respiratory equipment are included within other long-term assets.

Governmental and Regulatory Matters

From time to time the Company is involved in various external governmental investigations, audits and reviews.

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2022 and 2021

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

In May of 2021, a final report and recommendation (“Report”) was issued by the OIG regarding an audit by OIG of claims relating to 100 of the Company’s non-invasive ventilation at home (“NIVH”) patients.

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

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

The Company firmly believed that the Report ignored each patient’s diagnosis and supporting documentation of that diagnosis from treating and prescribing physicians and applied clinical guidelines that were contrary to CMS’s accepted standard of care.

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

3 unchanged sentences

Based on its review, the QIC determined that approximately 77 % of the claims it reviewed were medically necessary and properly payable under Medicare rules and regulations, overturning OIG’s and the MACs' initial recommendations and determinations.

As a result of the QIC's reconsideration findings, reduced and recalculated principal overpayment requests totaling $ 1.1 million have been issued by the MACs.

In order to limit the assessment of interest during the appeals period, the Company has remitted the associated funds to the MACs .

A hearing with an Administrative Law Judge with respect to the Company's appeals was conducted on November 1, 2022.

The Company is awaiting a decision from the Administrative Law Judge and intends to continue to defend itself vigorously through the remaining appeals processes which include, in successive order, Medicare Appeals Council review, and ultimately through Federal Court, if necess ary.

The timing of additional appeals beyond reconsideration are subject to workload constraints of the reviewing body.

Based on the current facts and circumstances as the Company understands them, and the nature of the requests, the Company has determined that a loss is not probable but may be reasonably possible.

Accordingly, no related accrual has been recorded.

The funds remitted to the MACs are recorded in other long-term assets.

The Company estimates that a possible loss, if any, will not exceed the amount of the recalculated overpayment requests.

For the nine months ended September 30, 2022, the Company recorded income tax expense of $ 1.6 million.

Excluding the impact of the discrete taxes, the effective rate for the nine months ended September 30, 2022 is 29.7 %.

As a result of the QIC's reconsideration findings, reduced and recalculated principal overpayment requests totaling $ 1.1 million were issued by the MACs.

In order to limit the assessment of interest during the appeals period, the Company remitted the associated funds to the MACs.

In December 2022, an Administrative Law Judge overturned all of the remaining appealed claims and instructed the MACs to refund all funds previously remitted by the Company.

Accordingly, the funds remitted to the MACs are recorded in Prepaid expenses and other assets at December 31, 2022 and were received during the three months ended March 31, 2023.

For the three months ended March 31, 2023, the Company recorded an income tax expense of $ 0.5 million, which includes a discrete tax benefit of $ 0.1 million associated with stock-based compensation arrangements.

Excluding the impact of the discrete tax benefit, the effective rate for the three months ended March 31, 2023 is 28.4 %.

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

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

At September 30, 2022 and 2021, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months.

The Company's effective tax rate is based on forecasted annual results which may fluctuate significantly through the rest of the year.

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

March 31, 2023 and 2022

At March 31, 2023 and 2022, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months.

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

7 unchanged sentences

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

VIEMED HEALTHCARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dollars, except per share amounts)

September 30, 2022 and 2021

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Numerator - basic and diluted:

9 unchanged sentences

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

Subsequent Events

On April 18, 2023, the Company entered into a definitive stock purchase agreement (the "Purchase Agreement") to acquire 100% of the equity interests of Home Medical Products, Inc., a home medical equipment provider which operates throughout Tennessee and in Alabama and Mississippi.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

September 30, 2022 and 2021

March 31, 2023 and 2022

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

What changed 10-Q

Item 1. Financial Statements