What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-01 compared with 2023-08-09 · 96 added, 110 removed, 341 unchanged (38% of the section changed)

33 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

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.

39 unchanged sentences

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 59.4% and 68.6% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended June 30, 2023 and 2022, respectively, and 61.4% and 69.9% for the six months ended June 30, 2023 and 2022, respectively.

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 57.3% and 66.7% of our traditional revenue, excluding COVID-19 response sales and services, for the three months ended September 30, 2023 and 2022, respectively, and 59.9% and 68.8% for the nine months ended September 30, 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.

2 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

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

1 unchanged sentence

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

As of June 30, 2023, we employed 330 licensed RTs, representing approximately 34% of our company-wide employee count.

As of September 30, 2023, we employed 374 licensed RTs, representing approximately 38% 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.

8 unchanged sentences

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 six months ended June 30, 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.

While COVID-19 related measures have not had a material impact on our consolidated operating results for the nine months ended September 30, 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.

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.

21 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

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

12 unchanged sentences

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.

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

Items not subject to the competitive bidding program received 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.

2 unchanged sentences

Dollars, except vent patients)

For the quarter ended June 30,

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

For the quarter ended September 30,

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

Financial Information:

15 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

Results of Operations

Comparison of the Three Months Ended June 30, 2023 and 2022:

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2023 and 2022:

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022:

Three Months Ended September 30,

2023 % of Total Revenue 2022 % of Total Revenue $

15 unchanged sentences

Net income $ 2,919 5.9 % $ 1,055 3.0 % $ 1,864 176.7 %

The following table summarizes our revenue for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

The following table summarizes our revenue for the three months ended September 30, 2023 and 2022:

Three Months Ended September 30,

2023 % of Total Revenue 2022 % of Total Revenue $

4 unchanged sentences

Equipment and supply sales 7,742 15.7 % 3,649 10.2 % 4,093 112.2 %

COVID-19 response sales and services — — % 183 0.5 % (183) (100.0) %

Service revenues 2,219 4.5 % 2,359 6.6 % (140) (5.9) %

Total net revenue $ 49,402 100.0 % $ 35,759 100.0 % $ 13,643 38.2 %

For the three months ended June 30, 2023, net revenue totaled $43.3 million, an increase of $10.0 million (or 30.0%) from the comparable period in 2022.

Excluding COVID-19 response sales and services revenue, net revenue increased $10.2 million (or 30.7%) from the comparable period in 2022.

For the three months ended September 30, 2023, net revenue totaled $49.4 million, an increase of $13.6 million (or 38.2%) from the comparable period in 2022.

The net revenue growth was associated with an increase in ventilator rental revenue of $4.5 million (or 18.7%) which can be primarily attributed to the organic expansion of our 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 $3.5 million (or 71.4%), consisting of rental revenue from continued national expansion of PAP, oxygen therapy, and percussion vest activities.

In addition to the ventilator rental revenue growth, net revenue growth was also driven by an increase in rental revenue from other DME of $5.2 million (or 89.0%), consisting of rental revenue from oxygen therapy, PAP, and percussion vest activities associated with our continued national organic expansion of services and the acquisition of HMP.

Equipment and supply sales increased by $4.1 million (or 112.2%), primarily driven by the continued growth of the PAP resupply program and other sleep offerings.

Service revenues increased by $0.2 million (or 7.5%) 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.

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

As we continue to expand geographically into new territories and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and our other respiratory offerings.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2023 and 2022

There were no COVID-19 response sales and services during the three months ended June 30, 2023, compared to $0.2 million during the three months ended June 30, 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.

The financial results of the acquired operations relating to the recent HMP acquisition (as discussed in Note 3 – Business Combinations) were reflected for just one month during the three months ended June 30, 2023, and primarily impacted sleep related products and services.

We expect the HMP acquisition to have a more meaningful impact in the upcoming quarter when results of operations will be reflected for the entire period.

The HMP acquisition is expected to further enhance our growth and overall profitability.

September 30, 2023 and 2022

Cost of revenue and gross profit

For the three months ended June 30, 2023, cost of revenue totaled $17.2 million, an increase of $4.3 million (or 33.2%) from the comparable period in 2022.

Overall gross profit percentage decreased from 61.2% in the three months ended June 30, 2022 to 60.3% in the three months ended June 30, 2023.

The decline in gross profit percentage is primarily attributable to the migration of our revenue mix, which reflects our deliberate efforts towards product and service diversification, aimed at further enhancing our market position.

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.

For the three months ended September 30, 2023, cost of revenue totaled $18.8 million, an increase of $4.7 million (or 33.5%) from the comparable period in 2022.

Overall gross profit percentage increased from 60.5% in the three months ended September 30, 2022 to 61.9% in the three months ended September 30, 2023.

The change in gross profit percentage is primarily attributable to the migration of our revenue mix, which reflects our deliberate organic and inorganic efforts towards product and service diversification, aimed at further enhancing our market position.

Gross profit percentage is expected to remain relatively stable through the end of 2023 due to subsiding inflationary cost pressures and the positive effects of seasonality in collection rates, partially offset by the impacts of continued product and service diversification.

Selling, general and administrative expense

Selling, general, and administrative expenses as a percentage of revenue decreased to 47.5% for the three months ended June 30, 2023 compared to 52.6% for the three months ended June 30, 2022.

Selling, general and administrative expenses totaled $20.6 million for the three months ended June 30, 2023, an increase of $3.0 million (or 17.3%) from the comparable prior period.

Selling, general, and administrative expenses as a percentage of revenue decreased to 47.9% for the three months ended September 30, 2023 compared to 49.4% for the three months ended September 30, 2022.

Selling, general and administrative expenses totaled $23.7 million for the three months ended September 30, 2023, an increase of $6.0 million (or 33.8%) from the comparable prior period.

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 715 on June 30, 2022 to 974 on June 30, 2023, an increase of 36.2%, which was partially due to the acquisition of HMP on June 1, 2023.

Our full time employee count increased from 722 on September 30, 2022 to 988 on September 30, 2023, an increase of 36.8%, which was partially due to the acquisition of HMP on June 1, 2023.

Employee compensation expenses increased $2.4 million (or 22%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation.

1 unchanged sentence

Research and development

For the three months ended June 30, 2023, research and development expense totaled $0.8 million, an increase of $0.1 million (or 12.8%) from the comparable period in 2022.

For the three months ended September 30, 2023, research and development expense totaled $0.6 million, a decrease of $0.1 million (or 11.5%) 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 associated costs will remain consistent in 2023 relative to 2022 costs.

Stock-based compensation

For the three months ended June 30, 2023, stock-based compensation totaled $1.5 million, an increase of 15.7% from the comparable period in 2022.

For the three months ended September 30, 2023, stock-based compensation totaled $1.5 million, an increase of 11.0% from the comparable period in 2022.

We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will correspondingly rise.

1 unchanged sentence

Interest expense, net

As a result of the issuance of debt to fund the acquisition of HMP, we expect net interest expense to increase accordingly for the remainder of 2023.

For the three months ended September 30, 2023, net interest expense totaled $0.2 million, As a result of continued paydowns on debt issued to fund the acquisition of HMP, we expect quarterly net interest expense to decrease for the remainder of 2023.

Provision for income taxes

For the three months ended June 30, 2023, the provision for income taxes was a $0.7 million expense, compared to $0.4 million during the comparable period in 2022.

For the three months ended September 30, 2023, the provision for income taxes was a $1.3 million expense, compared to $0.5 million during the comparable period in 2022.

The increase in income tax expense was primarily due to the increase in pre-tax income.

Our annual estimated effective tax rate for 2023 is 29.4%.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2023 and 2022

For the three months ended June 30, 2023, net income was $2.3 million, an increase of $1.4 million (or 141.0%) from the comparable period in 2022.

Net income as a percentage of net revenue increased from 2.9% for the three months ended June 30, 2022 to 5.4% for the three months ended June 30, 2023, primarily due to improvements in selling, general, and administrative expenses associated with increased efficiencies and stabilizing costs.

For the three months ended September 30, 2023, net income was $2.9 million, an increase of $1.9 million (or 176.7%) from the comparable period in 2022.

Net income as a percentage of net revenue increased from 3.0% for the three months ended September 30, 2022 to 5.9% for the three months ended September 30, 2023, primarily due to improvements in selling, general, and administrative expenses associated with increased efficiencies and stabilizing costs.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2023 and 2022

Comparison of the Six Months Ended June 30, 2023 and 2022:

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

September 30, 2023 and 2022

Comparison of the Nine Months Ended September 30, 2023 and 2022:

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

2023 % of Total Revenue 2022 % of Total Revenue $

13 unchanged sentences

Net income before taxes 9,315 7.0 % 5,406 5.3 % 3,909 72.3 %

Provision for income taxes 1,229 1.5 % 1,166 1.8 % 63 NM

Provision for income taxes 2,549 1.9 % 1,622 1.6 % 927 57.2 %

Net income $ 6,766 5.1 % $ 3,784 3.7 % $ 2,982 78.8 %

The following table summarizes our revenue for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

The following table summarizes our revenue for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

2023 % of Total Revenue 2022 % of Total Revenue $

4 unchanged sentences

Equipment and supply sales 19,287 14.6 % 9,931 9.8 % 9,356 94.2 %

COVID-19 response sales and services — — % 2,278 3.5 % (2,278) (100.0) %

COVID-19 response sales and services — — % 2,278 2.2 % (2,278) NM

Service revenues 7,360 5.5 % 5,839 5.8 % 1,521 26.0 %

Total net revenue $ 132,269 100.0 % $ 101,324 100.0 % $ 30,945 30.5 %

For the six months ended June 30, 2023, revenue totaled $82.9 million, an increase of $17.3 million (or 26.4%) from the comparable period in 2022.

For the nine months ended September 30, 2023, revenue totaled $132.3 million, an increase of $30.9 million (or 30.5%) from the comparable period in 2022.

Excluding COVID-19 response sales and services revenue, net revenue increased $33.2 million (or 33.5%) from the comparable period in 2022.

The net revenue increase was comprised of an increase in ventilator rental revenue of $11.1 million (or 16.2%), rental revenue from other DME of $11.3 million (or 74.5%), equipment and supply sales of $9.4 million (or 94.2%), and service revenue of $1.5 million (or 26.0%).

The growth in other durable medical equipment rentals and equipment and supply sales has been primarily driven by the continued national expansion of PAP, oxygen therapy, and percussion vest activities.

The growth in other durable medical equipment rentals has been primarily driven by the continued national expansion of PAP, oxygen therapy, and percussion vest activities and the acquisition of HMP.

The increase in equipment sales and supplies is primarily driven by the success of our PAP resupply program and other sleep offerings.

1 unchanged sentence

While ventilator rentals continue to make up the majority of our revenue, the organic and acquired 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.

1 unchanged sentence

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

June 30, 2023 and 2022

There were no COVID-19 response sales and services during the six months ended June 30, 2023, compared to $2.3 million during the comparable six month period in 2022.

September 30, 2023 and 2022

There were no COVID-19 response sales and services during the nine months ended September 30, 2023, compared to $2.3 million during the comparable nine month period in 2022.

Cost of revenue and gross profit

For the six months ended June 30, 2023, cost of revenue totaled $32.8 million, an increase of $7.3 million (or 28.8%) from the comparable period in 2022.

Overall gross profit percentage decreased from 61.2% for the six months ended June 30, 2022 to 60.5% for the six months ended June 30, 2023.

For the nine months ended September 30, 2023, cost of revenue totaled $51.6 million, an increase of $12.1 million (or 30.5%) from the comparable period in 2022.

Overall gross profit percentage of 61.0% remained stable between the nine months ended September 30, 2022 and the nine months ended September 30, 2023.

Selling, general and administrative expense

Selling, general, and administrative expenses as a percentage of revenue decreased to 48.7% for the six months ended June 30, 2023 compared to 50.8% for the six months ended June 30, 2022.

Selling, general and administrative expenses totaled $40.3 million for the six months ended June 30, 2023, an increase of $7.0 million (or 21.1%) from the comparable period in 2022.

Selling, general, and administrative expenses as a percentage of revenue decreased to 48.4% for the nine months ended September 30, 2023 compared to 50.3% for the nine months ended September 30, 2022.

Selling, general and administrative expenses totaled $64.0 million for the nine months ended September 30, 2023, an increase of $13.0 million (or 25.5%) from the comparable period in 2022.

The overall increase in 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 and transaction costs related to the acquisition of HMP.

Our full time employee count increased from 715 on June 30, 2022 to 974 on June 30, 2023, an increase of 36.2%, which was partially due to the acquisition of HMP on June 1, 2023.

Our full time employee count increased from 722 on September 30, 2022 to 988 on September 30, 2023, an increase of 36.8%, which was partially due to the acquisition of HMP on June 1, 2023.

Employee compensation expenses increased $7.8 million (or 25%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation.

Included in this amount is a $0.9 million increase related to the impact of our phantom stock plan which is measured at fair value as of the end of the reporting period based on closing stock price.

During the six months ended June 30, 2023, our stock price increased by 29.3%, resulting in an increase in the accrual of the related phantom stock expense.

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

Research and development

For the six months ended June 30, 2023, research and development expense totaled $1.5 million, an increase of $0.2 million (or 17.9%) from the comparable period in 2022.

For the nine months ended September 30, 2023, research and development expense totaled $2.1 million, an increase of $0.2 million (or 8.0%) 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 associated costs will remain consistent in 2023 relative to 2022 costs.

Stock-based compensation

For the six months ended June 30, 2023, stock-based compensation totaled $2.9 million, an increase of 11.1% from the comparable period in 2022.

For the nine months ended September 30, 2023, stock-based compensation totaled $4.3 million, an increase of 11.1% from the comparable period in 2022.

We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will correspondingly rise.

1 unchanged sentence

Interest expense, net

As a result of the issuance of debt to fund the acquisition of HMP, we expect net interest expense to increase accordingly for the remainder of 2023.

For the nine months ended September 30, 2023, net interest expense totaled $0.2 million.

As a result of continued paydowns on debt issued to fund the acquisition of HMP, we expect quarterly net interest expense to decrease for the remainder of 2023.

Provision for income taxes

For the six months ended June 30, 2023, the provision for income taxes was a $1.2 million expense, compared to $1.2 million during the comparable period in 2022.

For the nine months ended September 30, 2023, the provision for income taxes was a $2.5 million expense, compared to $1.6 million during the comparable period in 2022.

The resulting decrease in the overall effective tax rate as a percentage of pre-tax income was due to the impact of discrete tax benefits associated with stock-based compensation between periods.

3 unchanged sentences

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

June 30, 2023 and 2022

For the six months ended June 30, 2023, net income was $3.8 million, an increase of $1.1 million (or 41.0%) from the comparable period in 2022.

Net income as a percentage of revenue increased from 4.2% for the six months ended June 30, 2022 to 4.6% for the six months ended June 30, 2023, primarily due to improvements in selling, general, and administrative expenses associated with increased efficiencies and stabilizing costs.

September 30, 2023 and 2022

For the nine months ended September 30, 2023, net income was $6.8 million, an increase of $3.0 million (or 78.8%) from the comparable period in 2022.

Net income as a percentage of revenue increased from 3.7% for the nine months ended September 30, 2022 to 5.1% for the nine months ended September 30, 2023, primarily due to improvements in selling, general, and administrative expenses associated with increased efficiencies and stabilizing costs.

Non-GAAP Financial Measures

9 unchanged sentences

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

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

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

Net Income $ 2,919 $ 2,330 $ 1,517 $ 2,438 $ 1,055 $ 967 $ 1,762 $ 4,087

18 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

Liquidity and Capital Resources

Cash and cash equivalents at June 30, 2023 was $10.2 million, compared to $16.9 million at December 31, 2022.

Cash and cash equivalents at September 30, 2023 was $10.1 million, compared to $16.9 million at December 31, 2022.

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.

1 unchanged sentence

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

Six Months Ended June 30,

Nine Months Ended September 30,

Net Cash provided by (used in):

4 unchanged sentences

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2023 was $18.1 million, resulting from net income of $3.8 million, increased by non-cash net income adjustments of $12.3 million and a change in net operating liabilities of $1.7 million, which was offset by a change in net operating assets of $0.3 million.

The non-cash net income adjustments primarily consisted of $10.0 million of depreciation, $2.9 million of stock-based compensation, $0.2 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 net accounts receivable of $0.5 million, an increase in income taxes receivable of $1.0 million, offset by a decrease in other assets of $2.1 million and an increase in accrued liabilities of $1.6 million.

Net cash provided by operating activities during the six months ended June 30, 2022 was $12.1 million, primarily resulting from net income of $2.7 million, increased by non-cash net income adjustments of $8.1 million and a change in net operating liabilities of $0.3 million, and decreased by a change in net operating assets of $0.3 million.

The non-cash net income adjustments primarily consisted of $7.1 million of depreciation, $2.6 million of stock-based compensation, $0.8 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 net accounts receivable of $1.5 million, offset by an increase in income taxes payable of $1.4 million and a decrease in inventory of $1.0 million.

Net cash provided by operating activities during the nine months ended September 30, 2023 was $31.9 million, resulting from net income of $6.8 million, increased by net income adjustments of $20.1 million and a change in net working capital of $5.1 million.

The net income adjustments primarily consisted of $15.9 million of depreciation, $4.3 million of stock-based compensation, $0.8 million of distributions from equity method investments, and a $0.8 million change in deferred tax asset.

The primary changes in working capital were an increase in accrued liabilities of $4.1 million and a decrease in other assets of $1.2 million, offset by an increase in net accounts receivable of $0.5 million.

Net cash provided by operating activities during the nine months ended September 30, 2022 was $20.1 million, primarily resulting from net income of $3.8 million, increased by net income adjustments of $14.7 million and a change in net working capital of $1.6 million.

The net income adjustments primarily consisted of $11.3 million of depreciation, $3.9 million of stock-based compensation, $0.9 million income from equity investments and a $0.7 million change in deferred tax asset.

The primary changes in working capital were an increase in net accounts receivable of $2.2 million and an increase in other assets of $2.9 million, offset by an increase in accrued liabilities of $3.2 million and 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 Used in Investing Activities

Net cash used in investing activities during the six months ended June 30, 2023 was $36.1 million, primarily due to the net cash paid for the acquisition of HMP of $27.1 million.

Net cash used in investing activities during the nine months ended September 30, 2023 was $44.6 million, primarily due to the net cash paid for the acquisition of HMP of $28.6 million.

Net cash used in investing activities during the period also consisted of $18.2 million of purchases of property and equipment, partially offset by $2.1 million of sales proceeds from the disposal of property and equipment.

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

Cash purchases of property and equipment represents a $0.2 million, or 2.1%, decrease year over year.

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

Cash purchases of property and equipment represents a $0.8 million, or 4.8%, increase year over year.

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, partially offset by $0.9 million of sales proceeds from the disposal of property and equipment.

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

2 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

Net Cash Provided by Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2023 was $11.3 million.

For the six months ended June 30, 2023, proceeds from the 2022 Term Loan Facility (as defined below) were $5.0 million and proceeds from the 2022 Revolving Credit Facility (as defined below) were $8.0 million, which were used to partially fund the cash acquisition of HMP.

Principal payments on acquired revolving and term loans were $2.4 million during the six months ended June 30, 2023.

The Company acquired and cancelled 66,734 common shares at a cost of $0.5 million to satisfy employee income tax withholding associated with RSUs vestings while proceeds from the exercise of options during the six months ended June 30, 2023 were $1.2 million.

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

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

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 six months ended June 30, 2022.

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

Net cash provided by financing activities during the nine months ended September 30, 2023 was $5.9 million.

For the nine months ended September 30, 2023, proceeds from the 2022 Term Loan Facility (as defined below) were $5.0 million and proceeds from the 2022 Revolving Credit Facility (as defined below) were $8.0 million, which were used to partially fund the cash acquisition of HMP.

Subsequent to the acquisition, principal payments on the 2022 Revolving Credit Facility were $4.0 million.

Additionally, principal payments on acquired revolving and term loans were $3.8 million during the nine months ended September 30, 2023.

The Company acquired and cancelled 75,235 common shares at a cost of $0.6 million to satisfy employee income tax withholding associated with RSUs vestings while proceeds from the exercise of options during the nine months ended September 30, 2023 were $1.2 million.

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").

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.

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

Senior Credit Facilities

2 unchanged sentences

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.

Outstanding borrowings under the 2022 Term Loan Facility and 2022 Revolving Credit Facility were $5 million and $8 million, respectively, as of June 30, 2023.

Outstanding borrowings under the 2022 Term Loan Facility and 2022 Revolving Credit Facility were $4.9 million and $4.0 million, respectively, as of September 30, 2023.

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%.

3 unchanged sentences

• 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 June 30, 2023.

The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at September 30, 2023.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2023 and 2022

Our principal uses of cash are funding the purchase of rental assets and other capital purchases, funding of business combinations, operations, and other working capital requirements.

The following table presents our material contractual obligations and commitments to make future payments as of June 30, 2023:

Within 12 Months Beyond 12 Months

Debt Obligations, including interest $ 4,374 $ 16,000

Lease Obligations $ 377 $ 257

Total $4,751 $16,257

Except for the funding of potential business combinations and investments, we anticipate that our operating cash flows will satisfy our material cash requirements for the 12 months after June 30, 2023.

September 30, 2023 and 2022

Our principal uses of cash are funding the purchase of rental assets and other capital purchases, the repayment of debt, funding of business combinations, operations, and other working capital requirements.

Our contractual obligations primarily relate to the repayment of existing debt and contractual obligations for operating and finance leases.

Total outstanding borrowings under our debt arrangements as of September 30, 2023 were $9.9 million, of which $1.8 million is due within 12 months.

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.

5 unchanged sentences

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 $325,000 and $351,000 for the three months ended June 30, 2023 and 2022, respectively, and $735,000 and $622,000 for the six months ended June 30, 2023 and 2022, respectively.

Matching employer contributions to the 401(k) plan totaled $316,000 and $259,000 for the three months ended September 30, 2023 and 2022, respectively, and $1,050,000 and $882,000 for the nine months ended September 30, 2023 and 2022, respectively.

Off balance sheet arrangements

10 unchanged sentences

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

June 30, 2023 and 2022

September 30, 2023 and 2022

Allowance for Doubtful Accounts

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If circumstances related to certain customers change or actual results differ from expectations, our estimate of the recoverability of receivables could fluctuate from that provided for in our consolidated financial statements.

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

A change in estimate could impact the provision for uncollectible accounts and accounts receivable.

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 $11.0 million and $9.4 million as of June 30, 2023 and 2022, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Our allowance for doubtful accounts was $11.6 million and $8.5 million as of September 30, 2023 and 2022, respectively, and based on our analysis, we believe the reserve is adequate for any exposure to credit losses.

Recently Issued Accounting Pronouncements

1 unchanged sentence

VIEMED HEALTHCARE, INC.

June 30, 2023 and 2022

September 30, 2023 and 2022

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis