What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-08 compared with 2022-11-01 · 163 added, 259 removed, 206 unchanged (67% of the section changed)

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Actual results and timing of events could differ from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

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

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

Forward-Looking Statements

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unanticipated expenses;

commercial or governmental disputes or claims;

commercial disputes or claims;

limitations on insurance coverage or other reimbursement;

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Accordingly, readers should not place undue reliance on forward-looking statements.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

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.

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the general business, market and economic conditions in the regions in which the we operate;

the impact of the COVID-19 pandemic and of the actions taken by governmental authorities, individuals and companies in response to the pandemic on our business, financial condition and results of operations, including on our patient base, revenues, employees, and equipment and supplies;

the impact of the COVID-19 pandemic and the actions taken by governmental authorities, individuals and companies in response to the pandemic on our business, financial condition and results of operations, including on our patient base, revenues, employees, and equipment and supplies;

significant capital requirements and operating risks that we may be subject to;

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our novel business model;

the risk that the clinical application of treatments that demonstrate positive results in a study may not be positively replicated or that such test results may not be predictive of actual treatment results or may not result in the adoption of such treatments by providers;

the state of the capital markets;

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possible new drug discoveries;

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

dependence on key suppliers;

granting of permits and licenses in a highly regulated business;

low profit market segments;

disruptions in or attacks (including cyber-attacks) on our information technology, internet, network access or other voice or data communications systems or services;

the evolution of various types of fraud or other criminal behavior to which we are exposed;

the failure of third parties to comply with their obligations;

difficulty integrating newly acquired businesses;

the impact of new and changes to, or application of, current laws and regulations;

the overall difficult litigation and regulatory environment;

the overall difficult litigation and regulatory

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2023 and 2022

increased competition;

changes in foreign currency rates;

increased funding costs and market volatility due to market illiquidity and competition for funding;

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

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

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

public company reporting requirements.

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

Based on the annual assessment performed on June 30, 2022, the Company met the re-entry thresholds to qualify as a "smaller reporting company" under Rule 12b-2 of the Exchange Act, and, as such, has elected to comply with certain reduced U.S.

public company reporting requirements.

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

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Our respiratory care programs are designed specifically for payors to have the ability to treat patients in the home for less total cost and with a superior quality of care.

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 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.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

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.

Our services include respiratory disease management (through the rental of various HME devices), neuromuscular care, 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 63.6% and 71.3% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended March 31, 2023 and 2022, respectively.

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

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

Our licensed RTs currently serve patients in 49 states.

We currently serve patients in all 50 states.

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

As of September 30, 2022, we employed 280 licensed RTs, representing approximately 39% of our company-wide employee count.

As of March 31, 2023, we employed 305 licensed RTs, representing more than 40% 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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We expect to continue to be a solution to the rising health costs in the United States by offering more cost effective, home based solutions while increasing the quality of life for patients fighting serious respiratory diseases.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2023 and 2022

Trends Affecting our Business

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

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

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

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

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

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.

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.

On January 30, 2023, the U.S.

government announced that it plans to end the COVID-19 Public Health Emergency ("COVID-19 PHE") on May 11, 2023.

Food and Drug Administration has announced in the Federal Register that the Emergency Use Authorization for certain ventilators and PAP and RAD devices will be in effect until November 7, 2023, 180 days beyond the end of the COVID-19 PHE.

At the end of the COVID-19 PHE, many waivers and flexibilities available during the COVID-19 pandemic will become unavailable.

While COVID-19 related measures have not had a material impact on our consolidated operating results for the three months ended March 31, 2023, we cannot predict at this time the impact that the end of the COVID-19 PHE will have on our business and financial condition.

It is also possible that the U.S.

government will ultimately decide not to end the COVID-19 PHE on May 11, 2023, creating additional uncertainties about our future business and financial condition.

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

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

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

For additional information, see Part II - Item 1A.

“Risk Factors.”

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

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

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

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

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

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

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

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

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.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

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.

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

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The impact of these rules and regulations are unknown and may affect us.

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

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 68.8% of total traditional revenue, excluding COVID-19 response sales and services, for the nine months ended September 30, 2022).

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

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

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

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

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

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

The current Round 2021 contracts expire on December 31, 2023 and CMS has not announced a new round of competitive bidding.

Historically, CMS announces new rounds of competitive bidding and starts the process approximately 18 months prior to the contract start date.

The CARES Act introduced a new blended rate for HME furnished in non-rural or contiguous non-competitive bidding areas that is based on 75% of the adjusted fee schedule amount and 25% of the unadjusted fee schedule amount.

The Consolidated Appropriations Act, 2023 further extended the 75/25 blended Medicare reimbursement rate in non-competitive bidding/non-rural areas through the end of the COVID-19 PHE or December 31, 2023, whichever is later, after which it will revert to 100% of the Medicare fee schedule.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2023 and 2022

The CARES Act also provided 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.

The Statutory Pay-As-You-Go Act of 2010 ("PAYGO") required that automatic payment cuts of 4% be put into place if a statutory action is projected to create a net increase in the deficit over either five or 10 years.

The enactment of the American Rescue Plan Act in 2021 would have triggered PAYGO sequestration in 2021.

In the Protecting Medicare & American Farmers from Sequester Cuts Act, Congress delayed the PAYGO sequestration until January 1, 2023.

The Consolidated Appropriations Act, 2023 further prevented implementation of the PAYGO Medicare 4% sequester through the end of 2024.

If not renewed, the PAYGO payment adjustment could have an adverse effect on our business, financial condition and results of operations.

In its 2023 DMEPOS Fee Schedule, CMS also announced the fee schedule adjustment based on the annual change to the Consumer Pricing Index for all urban areas.

Items that were subject to the competitive bidding program in former competitive bidding areas will receive a 6.4% reimbursement rate increase.

Items that were subject to the competitive bidding program in non-competitive bidding areas will receive a 9.1% reimbursement rate increase.

Items not subject to the competitive bidding program will receive an 8.7% reimbursement rate increase.

While we cannot predict what Medicare payment rates or coverage determinations will be in effect in future years, changes to payment rates or benefit coverages may materially impact its financial condition and results of operations.

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

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Dollars, except vent patients)

For the quarter ended September 30,

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

For the quarter ended March 31,

2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021

Financial Information:

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

September 30, 2022 and 2021

March 31, 2023 and 2022

Results of Operations

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,

Comparison of the Three Months Ended March 31, 2023 and 2022:

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

2023 % of Total Revenue 2022 % of Total Revenue $

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Depreciation 240 0.6 % 237 0.7 % 3 1.3 %

Loss (gain) on disposal of property and equipment 292 0.8 % 145 0.5 % 147 101.4 %

Other expense (income) (57) (0.2) % (32) (0.1) % (25) 78.1 %

Gain on disposal of property and equipment (22) (0.1) % (14) (0.1) % (8) 57.1 %

Other income (81) (0.2) % (441) (1.4) % 360 (81.6) %

Income from operations 1,934 4.9 % 2,248 7.0 % (314) (14.0) %

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Income from equity method investments (35) (0.1) % (323) (1.0) % 288 (89.2) %

Interest expense, net (42) (0.1) % (75) (0.3) % 33 (44.0) %

Interest (income) expense (49) (0.1) % 64 0.2 % (113) (176.6) %

Net income before taxes 2,018 5.1 % 2,507 7.8 % (489) (19.5) %

Provision (benefit) for income taxes 456 1.3 % 1,386 4.7 % (930) (67.1) %

Provision for income taxes 501 1.3 % 745 2.3 % (244) (32.8) %

Net income $ 1,517 3.8 % $ 1,762 5.5 % $ (245) (13.9) %

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

Three Months Ended September 30,

The following table summarizes our revenue for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

2023 % of Total Revenue 2022 % of Total Revenue $

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Total net revenue $ 39,556 100.0 % $ 32,255 100.0 % $ 7,301 22.6 %

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.

For the three months ended March 31, 2023, revenue totaled $39.6 million, an increase of $7.3 million (or 22.6%) from the comparable period in 2022.

Excluding COVID-19 response sales and services revenue, net revenue increased $9.4 million (or 31.2%) from the comparable period in 2022.

The net revenue increase was comprised of an increase in ventilator rental revenue of $2.6 million (or 12.0%), rental revenue from other DME of $2.3 million (or 63.5%), equipment and supply sales of $1.2 million (or 51.1%), and service revenue of $1.8 million (or 358.1%).

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

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

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.

The net revenue growth was driven by an increase in ventilator rental revenue of $3.6 million (or 16.9%) due to our organic growth in active ventilator patient base.

In addition to the ventilator rental revenue growth, net revenue growth was also driven by an increase in rental revenue from other DME of $2.5 million (or 58.4%), consisting of rental revenue from continued national expansion of PAP, oxygen therapy, and percussion vest activities.

Equipment and supply sales increased by $1.7 million (or 56.9%), primarily driven by the success of our PAP resupply program and other sleep offerings.

Service revenues increased by $1.5 million (or 119.8%) primarily due to the growth of healthcare staffing services.

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, is contributing significantly to the diversity of our overall revenue mix.

VIEMED HEALTHCARE, INC.

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

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.

March 31, 2023 and 2022

There were no COVID-19 response sales and services during the three months ended March 31, 2023, compared to $2.1 million during the three months ended March 31, 2022.

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.

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

Cost of revenue and gross profit

For the three months ended September 30, 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.

We expect our gross profit percentage for our normal operations to remain relatively consistent with the current quarter through the end of 2022.

For the three months ended March 31, 2023, cost of revenue totaled $15.6 million, an increase of $3.0 million (or 24.3%) from the comparable period in 2022.

Overall gross profit percentage decreased from approximately 61.2% in the three months ended March 31, 2022 to approximately 60.7% in the three months ended March 31, 2023.

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

As a result of subsiding inflationary cost pressures and the positive effects of seasonality in collection rates, gross profit percentage for our normal operations is expected to increase through the end of 2023, partially offset by the impacts of continued product and service diversification.

Selling, general and administrative expense

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 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 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.

We expect that current year selling, general and administrative expenses will decline as a percentage of revenue through the end of 2022 as costs stabilize relative to revenue growth.

For the three months ended March 31, 2023, selling, general and administrative expenses totaled $19.8 million, an increase of $4.0 million (or 25.3%) from the comparable prior period.

Excluding COVID-19 related revenues, selling, general and administrative

expenses as a percentage of revenue decreased to 50.0% for the three months ended March 31, 2023 compared to 52.3% for the three months ended March 31, 2022.

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

Our full time employee count increased from 662 on March 31, 2022 to 765 on March 31, 2023, an increase of 15.6%.

Employee compensation expenses increased $3.6 million (or 33.0%) as a result of higher compensation expense associated with an overall increase in our employee headcount and increases in incentive and volume based compensation.

Also included in the employee compensation expense increases was a $0.7 million increase related to the impact of our phantom stock plan.

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

During the three months ended March 31, 2023, our stock price increased by 27.7% compared to a decrease of 4.5% for the prior comparable period.

We expect that current year selling, general and administrative expenses as a percentage of revenue will improve through the end of 2023 as costs stabilize relative to revenue growth.

Research and development

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 .

For the three months ended March 31, 2023, research and development expense totaled $0.8 million, an increase of $0.1 million (or 23.4%) from the comparable period in 2022.

As we continue to invest in research and development related projects to support our technology initiatives, we expect that the associated costs will remain consistent in 2023 relative to 2022 costs.

Stock-based compensation

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

For the three months ended March 31, 2023, stock-based compensation totaled $1.4 million, an increase of 6.6% from the comparable period in 2022.

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.

Revenue growth has historically exceeded the growth in stock-based compensation and stock-based compensation as a percentage of revenue is expected to continue to decline.

Interest expense, net

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.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2022 and 2021

Provision for income taxes

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.

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 $

Revenue $ 101,324 100.0 % $ 85,100 100.0 % $ 16,224 19.1 %

Cost of revenue 39,540 39.0 % 31,352 36.8 % 8,188 26.1 %

Gross profit 61,784 61.0 % 53,748 63.2 % 8,036 15.0 %

Selling, general and administrative 50,989 50.3 % 40,653 47.8 % 10,336 25.4 %

Research and development 1,974 1.9 % 1,498 1.8 % 476 31.8 %

Stock-based compensation 3,885 3.8 % 3,845 4.5 % 40 1.0 %

Depreciation 771 0.8 % 618 0.7 % 153 24.8 %

Loss (gain) on disposal of property and equipment 168 0.2 % 304 0.4 % (136) NM

Other expense (income) (721) (0.7) % (85) (0.1) % (636) 748.2 %

Income from operations 4,718 4.7 % 6,915 8.1 % (2,197) (31.8) %

Non-operating expenses

Income from equity method investments 853 0.8 % 782 0.9 % 71 NM

Interest expense, net (165) (0.2) % (249) (0.3) % 84 (33.7) %

Net income before taxes 5,406 5.3 % 7,448 8.8 % (2,042) (27.4) %

Provision for income taxes 1,622 1.6 % 2,409 2.8 % (787) NM

Net income $ 3,784 3.7 % $ 5,039 5.9 % $ (1,255) (24.9) %

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

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 $

Net revenue from rentals

Ventilator rentals, non-invasive and invasive $ 68,123 67.2 % $ 61,962 72.8 % $ 6,161 9.9 %

Other durable medical equipment rentals 15,153 15.0 % 9,833 11.5 % 5,320 54.1 %

Net revenue from sales and services

Equipment and supply sales 9,931 9.8 % 6,258 7.4 % 3,673 58.7 %

COVID-19 response sales and services 2,278 2.2 % 5,542 6.5 % (3,264) (58.9) %

Service revenues 5,839 5.8 % 1,505 1.8 % 4,334 288.0 %

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

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.

The net revenue increase was comprised of an increase in ventilator rental revenue of $6.2 million (or 9.9%), rental revenue from other DME of $5.3 million (or 54.1%), equipment and supply sales of $3.7 million (or 58.7%), and service revenue of $4.3 million (or 288.0%).

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

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

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

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.

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

Cost of revenue and gross profit

For the 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.

We expect our gross profit percentage for our normal operations to remain relatively consistent with the current quarter through the end of 2022.

Selling, general and administrative expense

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 597 on September 30, 2021 to 722 on September 30, 2022, an increase of 20.9%.

Employee compensation expenses

For the three months ended March 31, 2023, the provision for income taxes was $0.5 million, compared to a $0.7 million during the comparable 2022 period.

The decrease in income tax expense was primarily due to the impact of discrete tax benefits associated with stock-based compensation between periods.

Excluding discrete items, our annual estimated effective tax rate for 2023 is 28.4%.

For the three months ended March 31, 2023, net income was $1.5 million, a decrease of $0.2 million (or 13.9%) from the comparable period in 2022.

Net income as a percentage of net revenue decreased from 5.5% for the three months ended March 31, 2022 to 3.8% for the three months ended March 31, 2023, primarily due to the benefits of COVID-19 related activities and Provider Relief Fund income in the three months ended March 31, 2022.

VIEMED HEALTHCARE, INC.

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

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.

We expect that current year selling, general and administrative expenses will decline as a percentage of revenue through the end of 2022 as costs stabilize relative to revenue growth.

Research and development

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 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.

Revenue growth has historically exceeded the growth in stock based compensation and stock-based compensation as a percentage of revenue is expected to continue to decline.

Interest expense, net

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 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.

March 31, 2023 and 2022

Non-GAAP Financial Measures

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

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

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

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.

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

– Stock-based compensation may be useful for investors to consider because it is an estimate of the non-cash component of compensation received by the Company’s directors, officers, employees and consultants.

However, stock-based compensation is being excluded from our operating expenses because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the Company’s long-term benefit over multiple periods.

While strategic decisions, such as those to issue stock-based awards are made to further our long-term strategic objectives and do impact our earnings under GAAP, these items affect multiple periods and management is not able to change or affect these items within any period.

– Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes and may reduce or increase the amount of funds otherwise available for use.

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

Beginning with financial results reported for periods in fiscal year 2023, Adjusted EBITDA also excludes transaction costs and expenses related to acquisition and integration efforts associated with recently announced or completed acquisitions.

This modification enables investors to compare period-over-period results on a more consistent basis without the effects of acquisitions.

We have recast Adjusted EBITDA for prior periods when reported to conform to the modified presentation.

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

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

For the quarter ended March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021

Net Income $ 1,517 $ 2,438 $ 1,055 $ 967 $ 1,762 $ 4,087 $ 1,789 $ 1,566

Depreciation 4,762 4,373 4,120 3,740 3,397 3,120 2,867 2,716

Interest expense 42 59 64 69 75 83 91 100

Stock-based compensation 1,309 1,271 1,305 1,305 1,302 1,236 1,307 1,301

Income tax expense (benefit) 456 421 745 968 1,386 1,246 (223) 151

Interest (income) expense (49) 32 42 59 64 69 75 83

Stock-based compensation (a)

1,391 1,317 1,309 1,271 1,305 1,305 1,302 1,236

Transaction costs (b)

206 — — — — — — —

Income tax expense 501 1,146 456 421 745 968 1,386 1,246

Adjusted EBITDA $ 8,328 $ 9,306 $ 6,982 $ 6,458 $ 7,273 $ 9,549 $ 7,419 $ 6,847

(a) Represents non-cash, equity-based compensation expense associated with option and RSU awards.

(b) Represents transaction costs and expenses related to acquisition and integration efforts associated with recently announced or completed acquisitions.

Use of Non-GAAP Financial Measures

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

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

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

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

Liquidity and Capital Resources

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 September 30, 2022.

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

Liquidity and Capital Resources

Cash and cash equivalents at March 31, 2023 was $23.5 million, compared to $16.9 million at December 31, 2022.

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

In addition, our existing 2022 Senior Credit Facilities were fully undrawn as of March 31, 2023.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net Cash provided by (used in):

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Financing activities 39 (2,499)

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

Net increase in cash and cash equivalents $ 6,630 $ 840

Net Cash Provided by Operating Activities

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 $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 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 provided by operating activities during the three months ended March 31, 2023 was $10.5 million, resulting from net income of $1.5 million and non-cash net income adjustments of $9.6 million and an increase in net operating liabilities of $3.8 million, which was offset by an increase in net operating assets of $4.5 million.

The non-cash net income adjustments primarily consisted of $4.1 million in change of allowance for doubtful accounts, $4.8 million of depreciation, and $1.4 million of stock-based compensation.

The primary changes in working capital were an increase in gross accounts receivable of $5.1 million and decrease in other assets of $0.4 million, partially offset by an increase in accrued liabilities of $1.8 million and an increase in trade payables of $0.6 million

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

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

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

Included in our operating cash flows for the three months ended March 31, 2022 is the receipt of $0.4 million in Provider Relief Funds.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2023 and 2022

Net Cash Used in Investing Activities

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.

Net cash used in investing activities during the three months ended March 31, 2023 was $3.9 million, consisting of $4.7 million of purchases of property and equipment, partially offset by $0.8 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 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.

Cash purchases of property and equipment represents an increase of $0.7 million, or 18.1%, year over year.

Net cash used in investing activities during the three months ended March 31, 2022 was $3.8 million, consisting of $4.0 million of purchases of property and equipment, partially offset by $0.3 million of sales proceeds from the disposal of property and equipment.

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

Net Cash Used in Financing Activities

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.

Net Cash Provided By (used in) Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2023 was nil.

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 during the three months ended March 31, 2023.

Proceeds from the exercise of options during the three months ended March 31, 2023 were $0.5 million.

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

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

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

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

Senior Credit Facilities

On November 29, 2022, the Company refinanced its existing borrowings under the prior Commercial Business Loan Agreement with Hancock Whitney Bank 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 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.

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

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, will 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.

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(Tabular amounts expressed in thousands of US 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.

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.

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.

Commercial Term Notes

On May 30, 2019, the Company entered into an amendment to the loan agreement providing for a term note (the “Building Term Note”) in favor of Hancock Whitney Bank in the principal amount of $4.8 million.

The proceeds of the Building Term Note were used to purchase a building to utilize as a new corporate headquarters for the Company.

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

The Building Term Note matures on May 30, 2026 and is secured by substantially all of our assets, 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 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 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.

March 31, 2023 and 2022

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 September 30, 2022:

The following table presents our material contractual obligations and commitments to make future payments as of March 31, 2023:

Within 12 Months Beyond 12 Months

Debt Obligations, including interest $ 368 $ 4,708

Lease Obligations $ 397 $ 162

Total $606 $4,957

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.

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 March 31, 2023.

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.

3 unchanged sentences

Any additional equity financing may be dilutive to our stockholders.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2022 and 2021

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

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

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

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

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

Retirement Plan

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

Matching employer contributions to the 401(k) plan totaled $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.

Matching employer contributions to the 401(k) plan totaled $409,000 and $271,000 for the three months ended March 31, 2023 and 2022, respectively.

Off balance sheet arrangements

14 unchanged sentences

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

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 $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.

Our allowance for doubtful accounts was $11.0 million and $8.5 million as of March 31, 2023 and 2022, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2023 and 2022

Recently Issued Accounting Pronouncements

1 unchanged sentence

VIEMED HEALTHCARE, INC.

September 30, 2022 and 2021

March 31, 2023 and 2022

Quantitative and Qualitative Disclosures About Market Risk

This item is not applicable to smaller reporting companies.

Not Applicable.

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