What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-07 · 132 added, 131 removed, 360 unchanged (42% of the section changed)

53 unchanged sentences

our status as an emerging growth company;

and the occurrence of natural and unnatural catastrophic events

and the occurrence of natural and unnatural catastrophic events or health epidemics or concerns, and claims resulting from such events or concerns, as well as other general economic, market and business conditions;

and other factors beyond our control.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

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;

and other factors beyond our control.

September 30, 2024 and 2023

General Matters

11 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 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 derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 54.8% and 57.3% of our revenue for the three months ended September 30, 2024 and 2023, respectively, and 55.9% and 59.9% for the nine months ended September 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 June 30, 2024, we employed 392 licensed RTs, representing approximately 35% of our company-wide employee count.

As of September 30, 2024, we employed 398 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.

4 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Trends Affecting our Business

34 unchanged sentences

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

June 30, 2024 and 2023

September 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 June 30,

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

For the quarter ended September 30,

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

Financial Information:

15 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Results of Operations

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,

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

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

Three Months Ended September 30,

2024 % of Total Revenue 2023

10 unchanged sentences

Other expense (income), net

563 1.0 % (2) — % 565 NM

(276) (0.5) % (41) (0.1) % (235) 573.2 %

Income from operations 5,628 9.7 % 4,206 8.5 % 1,422 33.8 %

2 unchanged sentences

96 0.2 % 270 0.5 % (174) (64.4) %

Interest income (expense), net

Interest expense, net

(225) (0.4) % (237) (0.5) % 12 (5.1) %

6 unchanged sentences

$ 3,878 6.7 % $ 2,919 5.9 % $ 959 32.9 %

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

Three Months Ended June 30,

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

Three Months Ended September 30,

2024 % of Total Revenue 2023

% of Total Revenue $

Net revenue from rentals

Revenue from rentals

Ventilator rentals, non-invasive and invasive $ 31,772 54.8 % $ 28,322 57.3 % $ 3,450 12.2 %

Other home medical equipment rentals 12,459 21.5 % 11,119 22.6 % 1,340 12.1 %

Net revenue from sales and services

Revenue from sales and services

Equipment and supply sales 8,440 14.6 % 7,742 15.7 % 698 9.0 %

Service revenues 5,333 9.2 % 2,219 4.5 % 3,114 140.3 %

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.

Total revenue

$ 58,004 100.0 % $ 49,402 100.0 % $ 8,602 17.4 %

For the three months ended September 30, 2024, revenue totaled $58.0 million, an increase of $8.6 million (or 17.4%) from the comparable period in 2023.

The primary driver of this growth was our ventilator rental revenue, which increased by $3.5 million (or 12.2%) 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.

Additionally, services revenue saw a notable increase of $3.1 million (or 140.3%) primarily due to the expansion of our healthcare staffing services.

Rental revenue from other Home Medical Equipment (HME) contributed an increase of $1.3 million (or 12.1%) driven by growing demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services.

Equipment and supply sales increased by $0.7 million (or 9.0%) largely driven by the success of our sleep resupply program.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

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.

September 30, 2024 and 2023

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

For the three months ended September 30, 2024, cost of revenue totaled $23.6 million, an increase of $4.8 million (or 25.4%) from the comparable period in 2023.

Gross profit percentage decreased from approximately 61.9% in the three months ended September 30, 2023 to approximately 59.3% in the three months ended September 30, 2024.

The change 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 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.

Selling, general, and administrative expenses as a percentage of revenue improved to 46.0% for the three months ended September 30, 2024 compared to 47.9% for the three months ended September 30, 2023.

Selling, general and administrative expenses totaled $26.7 million for the three months ended September 30, 2024, an increase of $3.0 million (or 12.8%) from the comparable prior period.

The improvement in selling, general, and administrative expenses as a percentage of revenue is attributable to economies of scale and improvements in operational efficiencies.

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.

Employee compensation expenses increased $3.0 million (or 18.6%) as a result of the increase in our employee headcount and increases in market-based compensation.

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.

For the three months ended September 30, 2024, research and development expense totaled $0.8 million, an increase of $0.2 million from the comparable period in 2023.

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.

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.

For the three months ended September 30, 2024, stock-based compensation totaled $1.7 million, an increase of 17.8% 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.

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 decline.

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.

For the three months ended September 30, 2024, gain on disposal of property and equipment totaled $0.5 million compared to loss on disposal of property and equipment of $0.3 million for the three months ended September 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.

For the three months ended September 30, 2024, income from investments totaled $0.1 million compared to $0.3 million for the three months ended September 30, 2023.

The change is primarily due to a $0.1 million impairment recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.

2 unchanged sentences

(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.

September 30, 2024 and 2023

Interest expense, net

For both the three months ended September 30, 2023 and September 30, 2024, net interest expense totaled $0.2 million.

As a result of continued repayments on debt, 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.

For the three months ended September 30, 2024, the provision for income taxes was a $1.6 million expense, compared to $1.3 million during the comparable period in 2023.

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.

Our annual estimated effective tax rate for 2024 is 30.3%.

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.

For the three months ended September 30, 2024, net income was $3.9 million, an increase of $1.0 million (or 33.8%) from the comparable period in 2023.

Net income as a percentage of revenue increased from 5.9% for the three months ended September 30, 2023 to 6.7% for the three months ended September 30, 2024.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

(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,

September 30, 2024 and 2023

Comparison of the Nine Months Ended September 30, 2024 and 2023:

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

Nine Months Ended September 30,

% of Total Revenue 2023

15 unchanged sentences

(954) (0.6) % 442 0.3 % (1,396) (315.8) %

Interest income (expense), net

Interest expense, net

(629) (0.4) % (168) (0.1) % (461) 274.4 %

5 unchanged sentences

$ 6,949 4.2 % $ 6,766 5.1 % $ 183 2.7 %

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

Six Months Ended June 30,

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

Nine Months Ended September 30,

% of Total Revenue 2023

% of Total Revenue $

Net revenue from rentals

Revenue from rentals

Ventilator rentals, non-invasive and invasive $ 91,404 55.9 % $ 79,181 59.9 % $ 12,223 15.4 %

1 unchanged sentence

35,604 21.8 % 26,441 20.0 % 9,163 34.7 %

Net revenue from sales and services

Revenue from sales and services

Equipment and supply sales 21,956 13.4 % 19,287 14.6 % 2,669 13.8 %

Service revenues 14,598 8.9 % 7,360 5.5 % 7,238 98.3 %

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

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.

Total revenue

$ 163,562 100.0 % $ 132,269 100.0 % $ 31,293 23.7 %

For the nine months ended September 30, 2024, revenue totaled $163.6 million, an increase of $31.3 million (or 23.7%) from the comparable period in 2023.

The primary driver of this growth was our ventilator rental revenue, which increased by $12.2 million (or 15.4%) 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.

Additionally, rental revenue from other Home Medical Equipment (HME) increased by $9.2 million (or 34.7%) due to an expanding patient base, robust demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services.

Equipment and supply sales grew by $2.7 million (or 13.8%) largely attributable to the success of our sleep resupply program and the addition of HMP’s resupply program.

3 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Cost of revenue and gross profit

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.

For the nine months ended September 30, 2024, cost of revenue totaled $66.5 million, an increase of $14.9 million (or 28.9%) from the comparable period in 2023.

Gross profit percentage decreased from approximately 61.0% in the nine months ended September 30, 2023 to approximately 59.3% in the nine months ended September 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 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 974 on June 30, 2023 to 1,121 on June 30, 2024, an increase of 15.1%.

Selling, general, and administrative expenses as a percentage of revenue improved to 47.7% for the nine months ended September 30, 2024 compared to 48.4% for the nine months ended September 30, 2023.

Selling, general and administrative expenses totaled $78.0 million for the nine months ended September 30, 2024, an increase of $14.0 million (or 21.9%) from the comparable period in 2023.

The improvement in selling, general, and administrative expenses as a percentage of revenue is attributable to economies of scale and improvements in operational efficiencies.

Our full time employee count increased from 988 on September 30, 2023 to 1,142 on September 30, 2024, an increase of 15.6%.

Employee compensation expenses increased $10.1 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 both the six months ended June 30, 2023 and June 30, 2024, research and development expense totaled $1.5 million.

For the nine months ended September 30, 2024, research and development expense totaled $2.3 million, an increase of $0.1 million from the comparable period in 2023.

Stock-based compensation

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.

For the nine months ended September 30, 2024, stock-based compensation totaled $4.8 million, an increase of 10.4% 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.

1 unchanged sentence

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.

For the nine months ended September 30, 2024, gain on disposal of property and equipment totaled $0.8 million compared to loss on disposal of property and equipment of $0.4 million for the nine months ended September 30, 2023.

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

1 unchanged sentence

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.

For the nine months ended September 30, 2024, other expense (income), net totaled $0.3 million, an increase of $0.4 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.

1 unchanged sentence

(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.

September 30, 2024 and 2023

For the nine months ended September 30, 2024, expense from investments totaled $1.0 million compared to income from investments of $0.4 million for the nine months ended September 30, 2023.

The change is primarily due to impairments of $1.4 million recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.

Interest expense, net

For the nine months ended September 30, 2024, net interest expense totaled $0.6 million compared to interest income of $0.2 million for the nine months ended September 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.

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

Provision for income taxes

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.

For the nine months ended September 30, 2024, the provision for income taxes was a $2.9 million expense, compared to $2.5 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 30.3%.

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.

For the nine months ended September 30, 2024, net income was $7.0 million, an increase of $0.2 million (or 3.2%) from the comparable period in 2023.

Net income as a percentage of revenue decreased from 5.1% for the nine months ended September 30, 2023 to 4.3% for the nine months ended September 30, 2024, primarily due to non-operating 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)

June 30, 2024 and 2023

September 30, 2024 and 2023

Non-GAAP Financial Measures

The Company uses Adjusted EBITDA, which is a financial measure that is not prepared in accordance with generally accepted accounting principles in the United States ("GAAP") to analyze its financial results and believes that it is useful to investors, as a supplement to GAAP measures.

The Company uses Adjusted EBITDA, which is a financial measure that is not prepared in accordance with generally accepted accounting principles in the United States ("GAAP").

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

Management believes Adjusted EBITDA provides helpful information with respect to the Company’s operating performance as viewed by management, including a view of the Company’s business that is not dependent on the impact of the Company’s capitalization structure and items that are not part of the Company’s day-to-day operations.

1 unchanged sentence

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 depreciation and amortization of capitalized assets, net interest expense (income), stock based compensation, transactions costs, impairment of assets, and taxes.

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.

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.

Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations;

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

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

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

Net income attributable to Viemed Healthcare, Inc.

14 unchanged sentences

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.

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.

Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations;

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

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Liquidity and Capital Resources

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

Cash and cash equivalents at September 30, 2024 was $11.3 million, compared to $12.8 million at December 31, 2023.

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

6 unchanged sentences

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.

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

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, 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 provided by operating activities during the nine months ended September 30, 2024 was $24.1 million, resulting from net income of $7.0 million, increased by net income adjustments of $20.8 million and offset by an increase in non-cash working capital of $3.7 million.

The net income adjustments primarily consisted of $19.0 million of depreciation and amortization, $4.8 million of stock-based compensation, a $3.5 million change in deferred tax asset, and an impairment loss on debt investment of $1.3 million.

The primary change in non-cash working capital was an increase in net accounts receivable of $8.2 million, partially offset by an increase in accrued liabilities of $2.4 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 and amortization, $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 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.

Net cash used in investing activities during the nine months ended September 30, 2024 was $21.5 million.

Net cash used for capital expenditures during the period was $18.5 million and consisted of $25.9 million of purchases of property and equipment, offset by $7.4 million of sales proceeds from the disposal of property and equipment.

Net cash used for capital expenditures represents a $2.5 million, or 15.4%, increase year over year.

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.

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

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.

September 30, 2024 and 2023

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 for capital expenditures during the period was $16.0 million and consisted of $18.2 million of purchases of property and equipment, 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.

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.

Net Cash Provided by (used in) Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2024 was $4.1 million.

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

Subsequent to the HomeMed acquisition, principal payments on the 2022 Revolving Credit Facility were $5.0 million.

Principal payments on the 2022 Term Loan Facility (as defined below) were $0.2 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.

Additionally, principal payments on acquired loans were $0.8 million during the nine months ended September 30, 2024.

The Company acquired and cancelled 142,489 common shares at a cost of $1.1 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, 2024 were $0.4 million.

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 of HMP, 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, 2024 were $1.2 million.

Sources of Liquidity

5 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 $4.8 million and $5.0 million , respectively, as of June 30, 2024.

Outstanding borrowings under the 2022 Term Loan Facility were $4.7 million as of September 30, 2024.

There were no outstanding borrowings under the 2022 Revolving Credit Facility as of September 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%.

1 unchanged sentence

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.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2024 and 2023

September 30, 2024 and 2023

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 June 30, 2024.

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

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

Within 12 Months Beyond 12 Months

3 unchanged sentences

Total $ 2,172 $ 7,132

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.

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, 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.

10 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 $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.

Matching employer contributions to the 401(k) plan totaled $358,000 and $316,000 for the three months ended September 30, 2024 and 2023, respectively, and $1,230,000 and $1,050,000 for the nine months ended September 30, 2024 and 2023, respectively.

Off balance sheet arrangements

The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its results of operations or financial condition.

Accounting and Disclosure Matters

Critical Accounting Estimates

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.

VIEMED HEALTHCARE, INC.

1 unchanged sentence

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Accounting and Disclosure Matters

Critical Accounting Estimates

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

13 unchanged sentences

VIEMED HEALTHCARE, INC.

June 30, 2024 and 2023

September 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