What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-06 · 227 added, 103 removed, 264 unchanged (56% of the section changed)

57 unchanged sentences

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

March 31, 2024 and 2023

June 30, 2024 and 2023

or health epidemics or concerns, and claims resulting from such events or concerns, as well as other general economic, market and business conditions;

7 unchanged sentences

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

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.

4 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 57.7% and 63.6% of our revenue for the three months ended March 31, 2024 and 2023, respectively.

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 55.4% and 59.4% of our revenue for the three months ended June 30, 2024 and 2023, respectively, and 56.5% and 61.4% for the six months ended June 30, 2024 and 2023, 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

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

As of March 31, 2024, we employed 373 licensed RTs, representing approximately 36% of our company-wide employee count.

As of June 30, 2024, we employed 392 licensed RTs, representing approximately 35% 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.

1 unchanged sentence

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)

June 30, 2024 and 2023

Trends Affecting our Business

3 unchanged sentences

As technological advancements and awareness drive the adoption of these specialized devices, we believe the HME markets, particularly in respiratory and OSA, are positioned for continuous expansion, offering promising opportunities for both providers and consumers alike.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2024 and 2023

The aging population remains a pivotal driver for the industry, as the elderly, constituting a substantial portion of HME patients, are expected to represent a higher percentage of the overall population.

29 unchanged sentences

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

March 31, 2024 and 2023

June 30, 2024 and 2023

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

1 unchanged sentence

Dollars, except vent patients)

For the quarter ended March 31,

2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022

For the quarter ended June 30,

2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022

Financial Information:

12 unchanged sentences

(2) Vent Patients represents the number of active ventilator patients on recurring billing service at the end of each calendar quarter.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2024 and 2023

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023:

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

2024 % of Total Revenue 2023 % of Total Revenue $

Comparison of the Three Months Ended June 30, 2024 and 2023:

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

2024 % of Total Revenue 2023

% of Total Revenue $

Revenue $ 54,965 100.0 % $ 43,311 100.0 % $ 11,654 26.9 %

7 unchanged sentences

Loss (gain) on disposal of property and equipment (545) (1.0) % 117 0.3 % (662) (565.8) %

213 0.4 % (22) (0.1) % 235 (1068.2) %

Other income, net

(26) (0.1) % (81) (0.2) % 55 (67.9) %

Other expense (income), net

563 1.0 % (2) — % 565 NM

Income from operations 3,616 6.6 % 2,901 6.7 % 715 24.6 %

Non-operating income and expenses

Income from equity method investments (67) (0.1) % (35) (0.1) % (32) 91.4 %

Interest expense (income), net

Income (expense) from investments

(1,117) (2.0) % 137 0.3 % (1,254) (915.3) %

Interest income (expense), net

(254) (0.5) % 20 — % (274) (1370.0) %

Net income before taxes 2,245 4.1 % 3,058 7.1 % (813) (26.6) %

Provision for income taxes

768 1.4 % 728 1.7 % 40 5.5 %

Net income 1,477 2.7 % 2,330 5.4 % (853) (36.6) %

Net income attributable to noncontrolling interest 9 — % — — % 9 NM

Net income attributable to Viemed Healthcare, Inc.

$ 1,468 2.7 % $ 2,330 5.4 % $ (862) (37.0) %

The following table summarizes our revenue for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

2024 % of Total Revenue 2023

% of Total Revenue $

Net revenue from rentals

Ventilator rentals, non-invasive and invasive $ 30,445 55.4 % $ 25,712 59.4 % $ 4,733 18.4 %

Other home medical equipment rentals 12,211 22.2 % 8,419 19.5 % 3,792 45.0 %

Net revenue from sales and services

Equipment and supply sales 7,378 13.4 % 6,778 15.6 % 600 8.9 %

Service revenues 4,931 9.0 % 2,402 5.5 % 2,529 105.3 %

Total net revenue $ 54,965 100.0 % $ 43,311 100.0 % $ 11,654 26.9 %

For the three months ended June 30, 2024, net revenue totaled $55.0 million, an increase of $11.7 million (or 26.9%) from the comparable period in 2023.

The primary driver of this growth was our ventilator rental revenue, which increased by $4.7 million (or 18.4%) due to higher patient volumes associated with strong demand for ventilation services.

Additionally, rental revenue from other Home Medical Equipment (HME) increased by $3.8 million (or 45.0%) attributable to an expanding patient census and robust demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services.

Equipment and supply sales grew by $0.6 million (or 8.9%) largely driven by the success of our sleep resupply program.

Furthermore, services revenue experienced an increase of $2.5 million (or 105.3%), primarily due to the growth of healthcare staffing offerings.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

March 31, 2024 and 2023

The following table summarizes our revenue for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

2024 % of Total Revenue 2023 % of Total Revenue $

June 30, 2024 and 2023

While ventilator rentals continue to make up the majority of our revenue, the organic and acquired growth of PAP and oxygen related sales, as well as our healthcare staffing offerings, is contributing 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.

Cost of revenue and gross profit

For the three months ended June 30, 2024, cost of revenue totaled $22.1 million, an increase of $4.9 million (or 28.3%) from the comparable period in 2023.

Gross profit percentage decreased from approximately 60.3% in the three months ended June 30, 2023 to approximately 59.8% in the three months ended June 30, 2024.

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

Gross profit percentage is expected to remain relatively stable in upcoming periods due to subsiding inflationary cost pressures and the positive effects associated with reimbursement rates, offset by some decreases associated with product and service diversification.

Selling, general and administrative expense

Selling, general, and administrative expenses as a percentage of revenue increased to 48.2% for the three months ended June 30, 2024 compared to 47.5% for the three months ended June 30, 2023.

Selling, general and administrative expenses totaled $26.5 million for the three months ended June 30, 2024, an increase of $5.9 million (or 28.9%) from the comparable prior period.

The overall increase in 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.

Employee compensation expenses increased $3.6 million (or 23.8%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation.

Legal and professional fees also increased by $0.7 million (or 99.4%) as a result of integrated audit fees and legal services.

We expect that current year selling, general and administrative expenses as a percentage of revenue will remain stable through the end of 2024 due to increased efficiencies and costs optimization efforts relative to revenue growth.

Research and development

For both the three months ended June 30, 2023 and June 30, 2024, research and development expense totaled $0.8 million.

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 2024 relative to 2023 costs, declining as a percentage of revenue.

Stock-based compensation

For the three months ended June 30, 2024, stock-based compensation totaled $1.6 million, an increase of 10.1% from the comparable period in 2023.

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.

Historically, revenue growth has outpaced the growth in stock-based compensation, and as a result, the percentage of stock-based compensation relative to revenue is expected to continue declining.

Loss (gain) on disposal of property and equipment

For the three months ended June 30, 2024, gain on disposal of property and equipment totaled $0.5 million compared to loss on disposal of property and equipment of $0.1 million for the three months ended June 30, 2023.

The gain primarily resulted from proceeds related to the sale of recalled ventilators back to the manufacturer.

We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.

Other expense (income), net

For the three months ended June 30, 2024, other expense (income), net totaled $0.6 million, an increase of $0.6 million from the comparable period in 2023.

The increase in other expense (income), net is primarily due to an impairment of a litigation receivable of $0.9 million determined to be unrealizable as a result of the counterparty's bankruptcy proceedings.

Income (expense) from investments

For the three months ended June 30, 2024, expense from investments totaled $1.1 million compared to income from investments of $0.1 million for the three months ended June 30, 2023.

The change is primarily due to a $1.3 million impairment recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2024 and 2023

Interest income (expense), net

For the three months ended June 30, 2024, net interest expense totaled $0.3 million, an increase of $0.3 million from the comparable period in 2023.

The increase in net interest expense is primarily due to outstanding borrowings as a result of debt issued to fund acquisitions.

However, with anticipated debt repayments, we expect a reduction in quarterly net interest expense for the remainder of 2024.

Provision for income taxes

For the three months ended June 30, 2024, the provision for income taxes was a $0.8 million expense, compared to $0.7 million during the comparable period in 2023.

The resulting increase 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.

Our annual estimated effective tax rate for 2024 is 30.9%.

For the three months ended June 30, 2024, net income was $1.5 million, a decrease of $0.9 million (or 36.6%) from the comparable period in 2023.

Net income as a percentage of net revenue decreased from 5.4% for the three months ended June 30, 2023 to 2.7% for the three months ended June 30, 2024, primarily due to fair value impairments of a debt investment and outstanding litigation funds receivable.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2024 and 2023

Comparison of the Six Months Ended June 30, 2024 and 2023:

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

% of Total Revenue 2023

% of Total Revenue $

Revenue $ 105,558 100.0 % $ 82,867 100.0 % $ 22,691 27.4 %

Cost of revenue 42,864 40.6 % 32,757 39.5 % 10,107 30.9 %

Gross profit 62,694 59.4 % 50,110 60.5 % 12,584 25.1 %

Selling, general and administrative 51,317 48.6 % 40,325 48.7 % 10,992 27.3 %

Research and development 1,508 1.4 % 1,538 1.9 % (30) (2.0) %

Stock-based compensation 3,052 2.9 % 2,862 3.5 % 190 6.6 %

Depreciation and amortization

792 0.8 % 538 0.6 % 254 47.2 %

Loss (gain) on disposal of property and equipment (332) (0.3) % 95 0.1 % (427) (449.5) %

Other expense (income), net

537 0.5 % (83) (0.1) % 620 (747.0) %

Income from operations 5,820 5.5 % 4,835 5.8 % 985 20.4 %

Non-operating income and expenses

Income (expense) from investments

(1,050) (1.0) % 172 0.2 % (1,222) (710.5) %

Interest income (expense), net

(404) (0.4) % 69 0.1 % (473) (685.5) %

Net income before taxes 4,366 4.1 % 5,076 6.1 % (710) (14.0) %

Provision for income taxes 1,286 1.2 % 1,229 1.5 % 57 4.6 %

Net income 3,080 2.9 % 3,847 4.6 % (767) (19.9) %

Net income attributable to noncontrolling interest 9 — % — — % 9 NM

Net income attributable to Viemed Healthcare, Inc.

$ 3,071 2.9 % $ 3,847 4.6 % $ (776) (20.2) %

The following table summarizes our revenue for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

% of Total Revenue 2023

% of Total Revenue $

Net revenue from rentals

1 unchanged sentence

Other home medical equipment rentals

23,145 21.9 % 15,325 18.5 % 7,820 51.0 %

Net revenue from sales and services

2 unchanged sentences

Total net revenue $ 105,558 100.0 % $ 82,867 100.0 % $ 22,691 27.4 %

For the three months ended March 31, 2024, revenue totaled $50.6 million, an increase of $11.0 million (or 27.9%) from the comparable period in 2023.

The net revenue increase was comprised of increases in ventilator rental revenue of $4.0 million (or 16.1%) , rental revenue from other HME of $4.0 million (or 58.3%) , equipment and supply sales of $1.4 million (or 28.8%) , and service revenues of $1.6 million (or 58.2%) .

The growth in other home 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.

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

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

For the six months ended June 30, 2024, revenue totaled $105.6 million, an increase of $22.7 million (or 27.4%) from the comparable period in 2023.

The primary driver of this growth was our ventilator rental revenue, which increased by $8.8 million (or 17.2%) due to higher patient volumes associated with strong demand for ventilation services.

Additionally, rental revenue from other Home Medical Equipment (HME) increased by $7.8 million (or 51.0%) due to an expanding patient base, robust demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services, and the acquisition of HMP on June 1, 2023.

Equipment and supply sales grew by $2.0 million (or 17.1%) largely attributable to the success of our sleep resupply program and the addition of HMP’s resupply program.

Furthermore, services revenue experienced an increase of $4.1 million (or 80.2%), primarily due to the growth of healthcare staffing offerings.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2024 and 2023

Cost of revenue and gross profit

For the three months ended March 31, 2024, cost of revenue totaled $20.8 million, an increase of $5.2 million (or 33.7%) from the comparable period in 2023.

Gross profit percentage decreased from approximately 60.7% in the three months ended March 31, 2023 to approximately 58.9% in the three months ended March 31, 2024.

For the six months ended June 30, 2024, cost of revenue totaled $42.9 million, an increase of $10.1 million (or 30.9%) from the comparable period in 2023.

Gross profit percentage decreased from approximately 60.5% in the six months ended June 30, 2023 to approximately 59.4% in the six months ended June 30, 2024.

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

1 unchanged sentence

Selling, general and administrative expense

Selling, general and administrative expenses as a percentage of revenue decreased to 49.0% for the three months ended March 31, 2024 compared to 50.0% for the three months ended March 31, 2023.

Selling, general and administrative expenses totaled $24.8 million for the three months ended March 31, 2024, an increase of $5.1 million (or 25.6%) from the comparable period in 2023 .

Selling, general, and administrative expenses as a percentage of revenue was 48.6% for the six months ended June 30, 2024 compared to 48.7% for the six months ended June 30, 2023.

Selling, general and administrative expenses totaled $51.3 million for the six months ended June 30, 2024, an increase of $11.0 million (or 27.3%) from the comparable period in 2023.

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.

Our full time employee count increased from 765 on March 31, 2023 to 1,030 on March 31, 2024, an increase of 35%, which was partially due to the acquisition of HMP on June 1, 2023.

Employee compensation expenses increased $3.4 million (or 24%) a s a result of the increase in our employee headcount and increases in incentive and volume based compensation.

We expect that current year selling, general and administrative expenses as a percentage of revenue will continue to improve through the end of 2024 due to increased efficiencies and costs stabilization relative to revenue growth.

Our full time employee count increased from 974 on June 30, 2023 to 1,121 on June 30, 2024, an increase of 15.1%.

Employee compensation expenses increased $7.0 million (or 24%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation.

Research and development

For the three months ended March 31, 2023 and March 31, 2024, research and development expense totaled $0.8 million.

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 2024 relative to 2023 costs.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

March 31, 2024 and 2023

For both the six months ended June 30, 2023 and June 30, 2024, research and development expense totaled $1.5 million.

Stock-based compensation

For the three months ended March 31, 2024, stock-based compensation totaled $1.4 million, an increase of 2.9% from the comparable period in 2023.

For the six months ended June 30, 2024, stock-based compensation totaled $3.1 million, an increase of 6.6% from the comparable period in 2023.

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.

Historically, revenue growth has outpaced the growth in stock-based compensation, and as a result, the percentage of stock-based compensation relative to revenue is expected to continue declining.

Loss (gain) on disposal of property and equipment

For the six months ended June 30, 2024, gain on disposal of property and equipment totaled $0.3 million compared to loss on disposal of property and equipment of $0.1 million for the six months ended June 30, 2023.

The gain primarily resulted from proceeds related to the sale of recalled ventilators back to the manufacturer.

We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.

Other expense (income), net

For the six months ended June 30, 2024, other expense (income), net totaled $0.5 million, an increase of $0.6 million from the comparable period in 2023.

Income (expense) from investments

For the six months ended June 30, 2024, expense from investments totaled $1.1 million compared to income from investments of $0.2 million for the six months ended June 30, 2023.

The change is primarily due to a $1.3 million impairment recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

June 30, 2024 and 2023

Interest income (expense), net

For the six months ended June 30, 2024, net interest expense totaled $0.4 million compared to interest income of $0.1 million for the six months ended June 30, 2023.

The increase in net interest expense is primarily due to outstanding borrowings as a result of debt issued to fund acquisitions.

However, with anticipated debt repayments, we expect a reduction in net interest expense for the remainder of 2024.

Provision for income taxes

For the three months ended March 31, 2023 and March 31, 2024, the provision for income taxes was $0.5 million.

Excluding discrete items, our annual estimated effective tax rate for 2024 is 29.2% .

For the three months ended March 31, 2024, net income was $1.6 million, an increase of $0.1 million (or 5.7%) from the comparable period in 2023.

Net income as a percentage of net revenue decreased slightly from 3.8% for the three months ended March 31, 2023 to 3.2% for the three months ended March 31, 2024.

For the six months ended June 30, 2024, the provision for income taxes was a $1.3 million expense, compared to $1.2 million during the comparable period in 2023.

The resulting increase 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.

Our annual estimated effective tax rate for 2024 is 30.9%.

For the six months ended June 30, 2024, net income was $3.1 million, a decrease of $0.8 million (or 19.9%) from the comparable period in 2023.

Net income as a percentage of net revenue decreased from 4.6% for the six months ended June 30, 2023 to 2.9% for the six months ended June 30, 2024, primarily due to fair value impairments of a debt investment and outstanding litigation funds receivable.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

March 31, 2024 and 2023

June 30, 2024 and 2023

Non-GAAP Financial Measures

3 unchanged sentences

Accordingly, management believes that Adjusted EBITDA provides useful information in understanding and evaluating the Company’s operating performance in the same manner as management.

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

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.

In calculating Adjusted EBITDA, certain items (mostly non-cash) are excluded from net income including depreciation and amortization of capitalized assets, net interest expense (income), stock based compensation, transactions costs, impairment of assets, and taxes.

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 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022

Net Income $ 1,603 $ 3,477 $ 2,919 $ 2,330 $ 1,517 $ 2,438 $ 1,055 $ 967

For the quarter ended June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022

Net income attributable to Viemed Healthcare, Inc.

$ 1,468 $ 1,603 $ 3,477 $ 2,919 $ 2,330 $ 1,517 $ 2,438 $ 1,055

Depreciation & amortization

1 unchanged sentence

Interest expense (income) 254 150 256 237 (20) (49) 32 42

150 256 237 (20) (49) 32 42 59

Stock-based compensation (a)

2 unchanged sentences

221 110 61 177 94 206 — —

Impairment of assets (c)

2,173 — — — — — — —

Income tax expense 768 518 1,599 1,320 728 501 1,146 456

2 unchanged sentences

(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

7 unchanged sentences

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

March 31, 2024 and 2023

June 30, 2024 and 2023

Liquidity and Capital Resources

Cash and cash equivalents at March 31, 2024 was $7.3 million , compared to $12.8 million at December 31, 2023.

Cash and cash equivalents at June 30, 2024 was $8.8 million , compared to $12.8 million at December 31, 2023.

Typically, our principal source of liquidity is the collection of our patient accounts receivable.

2 unchanged sentences

The Company has also historically utilized short term financing arrangements with suppliers that could be extended over a longer term if there was a need for additional liquidity.

The Company uses Change Healthcare, a subsidiary of UnitedHealth Group, to submit patient claims to certain non-Medicare payors for reimbursement.

The Company had historically utilized Change Healthcare, a subsidiary of UnitedHealth Group, to submit patient claims to certain non-Medicare payors for reimbursement.

UnitedHealth Group announced that on February 21, 2024, Change Healthcare’s information technology systems were impacted by a cybersecurity incident.

While the incident did not impact our day-to-day operations or the delivery of patient care, submissions of patient claims to certain payors were delayed.

As of the end of the first quarter of 2024, the Company has resumed claims submission to several affected payors and utilized alternative platforms for the majority of its claims.

However, the delayed claims submissions resulted in a reduction of our operating cash flow and an increase to our accounts receivable during the three months ended March 31, 2024.

Although this incident did not impact our day-to-day operations or patient care delivery, it did cause delays in submitting patient claims to certain payors.

By the end of the second quarter of 2024, the Company had replaced Change Healthcare as its clearinghouse and resumed claims submissions using alternative platforms for all claims.

However, the delayed claims submissions resulted in a temporary reduction of our operating cash flow and an increase to our accounts receivable during the six months ended June 30, 2024.

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

Three Months Ended March 31,

Six Months Ended June 30,

Net Cash provided by (used in):

2 unchanged sentences

Financing activities 1,143 11,303

Net increase (decrease) in cash and cash equivalents

$ (5,530) $ 6,630

Net decrease in cash and cash equivalents $ (4,032) $ (6,690)

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2024 was $1.2 million, resulting from net income of $1.6 million, increased by net income adjustments of $7.9 million and offset by an increase in non-cash working capital of $8.3 million.

The net income adjustments primarily consisted of $6.3 million of depreciation and amortization and $1.4 million of stock-based compensation.

The primary changes in non-cash working capital were an increase in net accounts receivable of $6.0 million and a decrease in accrued li abilities of $3.6 million, partially offset by an increase in trade payables of $0.6 million.

The increase in accounts receivable was primarily driven by the cybersecurity incident at Change Healthcare, which resulted in delays to submissions of patient claims to certain payors.

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, increased by net income adjustments of $5.5 million and a decrease in non-cash working capital of $3.5 million.

The net income adjustments primarily consisted of $4.8 million of depreciation and amortization and $1.4 million of stock-based compensation.

The primary changes in working capital were an increase in accrued liabilities of $1.8 million and an increase in income taxes payable of $1.3 million, partially offset by an increase in net accounts receivable of $0.9 million.

Net cash provided by operating activities during the six months ended June 30, 2024 was $11.4 million, resulting from net income of $3.1 million, increased by net income adjustments of $16.5 million and offset by an increase in non-cash working capital of $8.2 million.

The net income adjustments primarily consisted of $12.6 million of depreciation and amortization, $3.1 million of stock-based compensation, and a net loss from debt investment of $1.2 million.

The primary changes in non-cash working capital were an increase in net accounts receivable of $8.2 million and a net change in income tax receivable of $2.6 million, partially offset by an increase in trade payables of $1.1 million.

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 net income adjustments of $12.3 million and a change in non-cash working capital of $2.0 million.

The net income adjustments primarily consisted of $10.0 million of depreciation and amortization, $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 non-cash working capital were an increase in net accounts receivable of $0.5 million, and 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 Used in Investing Activities

Net cash used in investing activities during the six months ended June 30, 2024 was $16.5 million.

Net cash used in investing activities during the period consisted of $14.9 million of purchases of property and equipment, partially offset by $1.4 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 38.9%, increase year over year.

Net cash used in investing activities also included $3.0 million of net cash paid for the acquisition of HomeMed.

VIEMED HEALTHCARE, INC.

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

March 31, 2024 and 2023

Net Cash Used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2024 was $5.4 million, consisting of $6.0 million of purchases of property and equipment, partially offset by $0.6 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 an increase of $1.3 million, or 28.3%, year over year.

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.

June 30, 2024 and 2023

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 period also included $10.8 million of purchases of property and equipment, partially offset by $1.8 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.

Net Cash Provided By (used in) Financing Activities

Net cash used in financing activities during the three months ended March 31, 2024 was $1.3 million.

During the three months ended March 31, 2024, principal payments on the 2022 Senior Credit Facilities (as defined below) were $0.1 million.

Additionally, principal payments on acquired loans were $0.5 million during the three months ended March 31, 2024.

The Company acquired and cancelled 128,362 common shares at a cost of $1.0 million to satisfy employee income tax withholding associated with RSUs vesting during the three months ended March 31, 2024.

Proceeds from the exercise of options during the three months ended March 31, 2024 were $0.3 million.

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 Provided by Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2024 was $1.1 million.

For the six months ended June 30, 2024, proceeds from the 2022 Revolving Credit Facility (as defined below) were $3.0 million, which was used to fund the HomeMed acquisition.

Principal payments on the 2022 Term Loan Facility (as defined below) were $0.1 million.

Additionally, principal payments on acquired loans were $0.7 million during the six months ended June 30, 2024.

The Company acquired and cancelled 129,983 common shares at a cost of $1.0 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, 2024 were $0.3 million.

Net cash provided by financing activities during the six months ended June 30, 2024 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, 2024 were $1.2 million.

Sources of Liquidity

Our principal source of liquidity is our operating cash flow, which is supplemented by extended payment terms from our suppliers and amounts available under the 2022 S enior Credit Facilities.

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.

On May 28, 2024, the Company entered into a First Amendment to the 2022 Senior Credit Facilities that (a) extends the delayed draw term loan commitment expiration date to November 29, 2025, from its initial expiration date of May 29, 2024, and (b) provides for other technical amendments.

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.

Outstanding borrowings under the 2022 Term Loan Facility and 2022 Revolving Credit Facility were $4.8 million and $2.0 million , respectively, as of March 31, 2024.

Outstanding borrowings under the 2022 Term Loan Facility and 2022 Revolving Credit Facility were $4.8 million and $5.0 million , respectively, as of June 30, 2024.

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

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

The 2022 Senior Credit Facilities 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, 2024.

VIEMED HEALTHCARE, INC.

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

March 31, 2024 and 2023

Sources of Funds

Cash provided by operating activities during the three months ended March 31, 2024 was $1.2 million compared to $10.5 million during the three months ended March 31, 2023.

June 30, 2024 and 2023

The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at June 30, 2024.

Our principal uses of cash are funding the purchase of rental assets and other capital purchases, the repayment of debt, funding of acquisitions, 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.

The following table presents our material contractual obligations and commitments to make future payments as of March 31, 2024:

The following table presents our material contractual obligations and commitments to make future payments as of June 30, 2024:

Within 12 Months Beyond 12 Months

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Lease Obligations

$ 2,247 $ 10,104

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, 2024.

Total $ 2,581 $ 13,382

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 June 30, 2024.

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

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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 $535,000 and $409,000 for the three months ended March 31, 2024 and 2023, respectively.

Matching employer contributions to the 401(k) plan totaled $338,000 and $325,000 for the three months ended June 30, 2024 and 2023, respectively, and $873,000 and $735,000 for the six months ended June 30, 2024 and 2023, respectively.

Off balance sheet arrangements

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

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

The more significant of these policies are summarized in Note 2 to our consolidated financial statements included in

VIEMED HEALTHCARE, INC.

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

March 31, 2024 and 2023

Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

June 30, 2024 and 2023

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

The more significant of these policies are summarized in Note 2 to our consolidated financial statements included in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

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

11 unchanged sentences

VIEMED HEALTHCARE, INC.

March 31, 2024 and 2023

June 30, 2024 and 2023

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