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Item 7. Management’s Discussion and Analysis

2025-03-10 compared with 2024-03-06 · 114 added, 126 removed, 195 unchanged (55% of the section changed)

3 unchanged sentences

Our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors, including, but not limited to, those discussed in the section entitled “Special Note Regarding Forward-Looking Statements” immediately preceding Part I of this report.

Discussion in this Form 10-K includes results of operations and financial condition for 2024 and 2023 and year-over-year comparisons between 2024 and 2023.

For discussion on results of operations and financial condition pertaining to 2022 and year-over-year comparisons between 2023 and 2022, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

General Matters

In this Annual Report on Form 10-K, unless the context otherwise requires, the terms the "Company," "we," "us" and "our" refer to Viemed Healthcare, Inc.

and its wholly-owned subsidiaries.

and subsidiaries in which it has a controlling financial interest.

We were incorporated on December 14, 2016 pursuant to the Business Corporations Act (British Columbia).

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

As of June 30, 2023, we determined that we no longer qualify as a “smaller reporting company,” but we are not 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) until our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024.

As a result, this Annual Report on Form 10-K is only required to comply with the smaller company disclosure obligations.

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

public company reporting requirements.

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

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

Our services include respiratory disease management (through the rental of various HME devices), neuromuscular care, in-home sleep testing and sleep apnea treatment, oxygen therapy, and the sale of associated supplies.

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 59.2% and 67.9% of our traditional revenue, excluding COVID-19 response sales and services for the years ended December 31, 2023 and 2022, respectively.

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 55.6% and 59.2% of our revenue for the years ended December 31, 2024 and 2023, respectively.

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

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We currently serve patients in all 50 states.

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

Viemed anticipates expanding its workforce of RTs to support the Company's growth and ensure the high service model is maintained in the home.

As of December 31, 2024, we employed 404 licensed RTs, representing approximately 34% 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.

Beyond fulfilling its internal staffing needs, Viemed also provides healthcare staffing and recruitment services, offering tailored workforce solutions to external healthcare institutions and partners seeking qualified clinical professionals.

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 territories that are currently not being effectively serviced.

The continued trend of servicing patients in the home rather than in hospitals is aligned with our business objective and we anticipate that this trend will continue to offer growth opportunities for us.

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.

We expect to continue to be a solution to the rising health care 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.

For the year ended December 31, 2024, we generated revenues of $224.3 million and had net income of $11.4 million, compared to revenues of $183.0 million and net income of $10.2 million for the year ended December 31, 2023.

Excluding COVID-19 response sales and services, net revenue increased $46.5 million (or 34.0%) from the comparable period in 2022.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

Net revenue increased $41.2 million (or 22.5% ) from the comparable period in 2023.

Revenue derived from the rental and sale of home medical equipment represented a combined 91.0% and 94.2%, respectively, of Viemed’s 2024 and 2023 revenue.

Our primary sources of capital to date have been from operating cash flows.

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The consolidation of managed care payors into larger purchasing groups has increased negotiating power, resulting in pricing pressure on HME providers.

In addition to ongoing negotiations contract management with third party payors to secure fair reimbursement, HME providers are engaging in value-based contracting, focusing on outcomes and patient satisfaction.

In addition to ongoing negotiations relating to contract management with third party payors to secure fair reimbursement, HME providers are engaging in value-based contracting, focusing on outcomes and patient satisfaction.

These value-based contracts leverage data analytics to demonstrate the cost-effectiveness and quality of durable medical goods and provide evidence-based data to payors demonstrating the long-term benefits and cost savings associated with the use of certain medical goods.

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Viemed attempts to address these pressures through its inflation-linked reimbursement contracts, negotiation, leveraging its purchasing power and embracing technology, such as its proprietary clinical management platform.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

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

(Tabular amounts expressed in thousands of U.S.

Dollars, except vent patients)

The below table highlights summary financial and operational metrics for the last eight quarters (expressed in thousands of U.S.

Dollars, except operational information).

For the quarter ended December 31,

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Gross Profit % 60 % 59 % 60 % 59 % 63 % 62 % 60 % 61 %

Net Income 3,477 2,919 2,330 1,517 2,438 1,055 967 1,762

Net Income attributable to Viemed Healthcare, Inc.

$ 4,316 $ 3,878 $ 1,468 $ 1,603 $ 3,477 $ 2,919 $ 2,330 $ 1,517

Cash and Cash Equivalents (As of) $ 17,540 $ 11,347 $ 8,807 $ 7,309 $ 12,839 $ 10,078 $ 10,224 $ 23,544

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11,795 11,374 10,905 10,450 10,327 10,244 10,005 9,337

PAP Therapy Patients (3)

21,338 19,478 17,349 15,726 14,900 14,788 13,313 8,097

Sleep Resupply Patients (4)

24,478 22,143 20,185 18,904 18,902 18,544 12,572 7,279

(1) Refer to "Non-GAAP Financial Measures" section below for definition of Adjusted EBITDA.

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

(3) PAP Therapy Patients represents the number of distinct patients billed for PAP therapy services during each calendar quarter.

(4) Sleep Resupply Patients represents the number of distinct patients who received supplies through our sleep resupply program during each calendar quarter.

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 the financial condition or results of operations of the registrant.

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

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Accounts Receivable

Accounts receivable are presented at net realizable values that reflect the consideration we expect to receive which is inclusive of adjustments for price concessions.

Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required in order to record revenues and accounts receivable at their net realizable values.

Accounts receivable are recorded based upon contractually agreed-upon rates, reduced by estimated adjustments for variable consideration for implicit price concessions related to sales revenues and estimated probable losses related to rental revenues.

Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required in order to record revenues and accounts receivable net of these adjustments.

Management’s evaluation takes into consideration such factors as historical realization data, including current and historical cash collections, accounts receivable aging trends, other operating trends and relevant business conditions.

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

If the payment amount received differs from the estimated net realizable amount, an adjustment is made to the net realizable amount in the period that these payment differences are determined.

Business Combinations

The Company applies the acquisition method of accounting for business acquisitions.

The results of operations of the businesses acquired by the Company are included as of the respective acquisition date.

The acquisition-date fair value of the consideration transferred, including the fair value of any contingent consideration, is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

To the extent the acquisition-date fair value of the consideration transferred exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill.

Patient relationships, medical records and patient lists are not reported as separate intangible assets due to the regulatory requirements and lack of contractual agreements, but are part of goodwill.

Customer related relationships are not reported as separate intangible assets, but are also part of goodwill as authorizing physicians are under no obligation to refer the Company’s services to their patients, who are free to change physicians and service providers at any time.

The Company may adjust the preliminary purchase price allocation, as necessary, as it obtains more information regarding asset valuations and liabilities assumed that existed but were not available at the acquisition date, which is generally up to one year after the acquisition closing date.

Acquisition related costs are recognized separately from the business combination and are expensed as incurred.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

If the payment amount received differs from the estimated amount, an adjustment is made in the period that these payment differences are determined.

Results of Operations

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1,483 0.6 % 1,391 0.8 % 92 6.6 %

Loss on disposal of property and equipment 645 0.4 % 346 0.2 % 299 86.4 %

Other income, net

Loss (gain) on disposal of property and equipment

(1,905) (0.8) % 645 0.4 % (2,550) (395.3) %

Other expense (income), net

173 0.1 % (98) (0.1) % 271 (276.5) %

Income from operations 17,900 8.0 % 14,330 7.8 % 3,570 24.9 %

Non-operating income and expenses

Income from equity method investments

Income (expense) from investments

(954) (0.4) % 485 0.3 % (1,439) (296.7) %

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Net income $ 11,409 5.1 % $ 10,243 5.6 % $ 1,166 11.4 %

Net income attributable to noncontrolling interest 144 0.1 % — — % 144 NM

Net income attributable to Viemed Healthcare, Inc.

$ 11,265 5.0 % $ 10,243 5.6 % $ 1,022 10.0 %

The following table summarizes our revenue for the years ended December 31, 2024 and 2023:

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Equipment and supply sales 30,896 13.7 % 25,770 14.1 % 5,126 19.9 %

COVID-19 response sales and services — — % 2,278 1.6 % (2,278) (100.0) %

Service revenues 20,133 9.0 % 10,665 5.8 % 9,468 88.8 %

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For the year ended December 31, 2024, revenue totaled $224.3 million, an increase of $41.2 million (or 22.5%) from the comparable period in 2023.

Excluding COVID-19 response sales and services, net revenue increased $46.5 million (or 34.0%) from the comparable period in 2022.

The net revenue increase was comprised of increases in ventilator rental revenue of $15.5 million (or 16.8%), rental revenue from other HME of $16.9 million (or 78.7%), equipment and supply sales of $11.8 million (or 85.0%), and service revenues of $2.2 million (or 25.9%).

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 Home Medical Products, Inc.

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.

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

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

The primary driver of this growth was our ventilator rental revenue, which increased by $16.3 million (or 15.1%) due to higher patient volumes associated with strong demand for ventilation services.

Additionally, rental revenue from other Home Medical Equipment (HME) increased by $10.3 million (or 27.0%) due to an expanding patient base, robust demand for Positive Airway Pressure (PAP) therapy, oxygen therapy, and percussion vest services.

Equipment and supply sales grew by $5.1 million (or 19.9%) largely attributable to the success of our sleep resupply program, which was further enhanced by the integration of resupply programs from acquisitions.

Furthermore, services revenue experienced an increase of $9.5 million (or 88.8%), primarily due to the growth of healthcare staffing offerings.

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.

Cost of Revenue and Gross Profit

For the year ended December 31, 2024, cost of revenue totaled $91.1 million, an increase of $20.8 million (or 29.7%) from the comparable period in 2023.

Gross profit percentage increased from approximately 61.0% to approximately 61.6% from the year ended December 31, 2022 to year ended December 31, 2023, respectively.

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

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.

Gross profit percentage decreased from approximately 61.6% to approximately 59.4% from the year ended December 31, 2023 to the year ended December 31, 2024, respectively.

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

In 2025, gross profit in absolute dollars is expected to continue increasing, supported by overall revenue growth, subsiding inflationary cost pressures, and favorable reimbursement rate adjustments.

However, gross profit percentage is likely to be negatively impacted by the continued diversification of our product and service offerings.

Selling, General and Administrative Expense

Selling, general and administrative expenses as a percentage of revenue decreased to 48.0% for the year ended December 31, 2023 compared to 49.1% for the year ended December 31, 2022.

Selling, general and administrative expenses as a percentage of revenue improved to 47.4% for the year ended December 31, 2024 compared to 48.0% for the year ended December 31, 2023.

Selling, general and administrative expenses totaled $106.2 million for the year ended December 31, 2024, an increase of $18.3 million (or 20.8%) 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 and transaction costs related to the acquisition of HMP.

Our full time employee count increased from 743 on December 31, 2022 to 996 on December 31, 2023, an increase o f 34%, which was partially due to the acquisition of HMP on June 1, 2023.

Employee compensation expenses increase d $10.4 million (or 27%) a s a result of the increase in our employee headcount and increases in incentive and volume based compensation.

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

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, which was partially due to the acquisition of Home Medical Products, Inc.

(“HMP”) on June 1, 2023.

Our full-time employee count increased from 996 on December 31, 2023 to 1,179 on December 31, 2024, an increase o f 18% .

Employee compensation expenses increased $13.3 million (or 21% ) as a result of the increase in our employee headcount and increases in incentive and volume-based compensation.

We expect that selling, general and administrative expenses as a percentage of revenue will continue to improve in 2025 due to increased efficiencies and costs optimization efforts.

Research and Development Costs

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For the year ended December 31, 2024, stock-based compensation totaled $6.3 million, an increase of $0.4 million (or 7.5%) from the comparable period in 2023.

This increase is attributed to the expense of additional stock-based awards during 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.

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

Historically, revenue growth has outpaced the growth in stock-based compensation.

As we transition more of our stock-based compensation from phantom stock liability awards to equity awards, we expect stock-based compensation expense to increase in 2025.

Loss (gain) on disposal of property and equipment

For the year ended December 31, 2024, gain on disposal of property and equipment totaled $1.9 million compared to loss on disposal of property and equipment of $0.6 million for the year ended December 31, 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.

Income (expense) from investments

For the year ended December 31, 2024, expense from investments totaled $1.0 million compared to income from investments of $0.5 million from the comparable period in 2023.

The change is primarily driven by a loss recognized on a debt investment during the current year.

Interest Expense, Net

For the year ended December 31, 2024, net interest expense totaled $0.8 million, an increase of $0.4 million from the comparable period in 2023.

As a result of continued paydowns on debt issued to fund the acquisition of HMP, we expect net interest expense to decrease in 2024 relative to 2023.

Provision (Benefit) for Income Taxes

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

We expect to utilize positive cash flow to further reduce outstanding debt which would result in a reduction in net interest expense in 2025 relative to 2024.

Provision for Income Taxes

For the year ended December 31, 2024, the provision for income taxes was a $4.8 million expense, compared to a $4.1 million expense during the 2023 period.

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For the year ended December 31, 2024, net income was $11.4 million, an increase of $1.2 million (or 11.4%) from the comparable period in 2023.

Net income as a percentage of net revenue increased from 4.5% for the year ended December 31, 2022 to 5.6% for the year ended December 31, 2023, primarily due to improvements in selling, general, and administrative expenses associated with increased efficiencies and stabilizing costs.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

The increase in net income was primarily a result of the organic growth of the business and expansion of the patient base.

Net income as a percentage of net revenue decreased from 5.6% for the year ended December 31, 2023 to 5.1% for the year ended December 31, 2024, primarily due to non-operating investment losses and an impairment of outstanding litigation funds receivable.

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.

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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.

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.

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

Net Income $ 3,477 $ 2,919 $ 2,330 $ 1,517 $ 2,438 $ 1,055 $ 967 $ 1,762

Net Income attributable to Viemed Healthcare, Inc.

$ 4,316 $ 3,878 $ 1,468 $ 1,603 $ 3,477 $ 2,919 $ 2,330 $ 1,517

Depreciation & amortization

6 unchanged sentences

11 12 221 110 61 177 94 206

Impairment of assets (c)

— 125 2,173 — — — — —

Income tax expense

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

Use of Non-GAAP Financial Measures

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

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.

Liquidity and Capital Resources

Cash and cash equivalents at December 31, 2024 was $17.5 million, compared to $12.8 million at December 31, 2023.

The primary non-recurring use of excess cash during the 2023 period was to fund the acquisition of HMP.

Based on our current plan of operations, we believe this amount, when combined with expected cash flows from operations and amounts available under our 2022 Senior Credit Facilities will be sufficient to fund our growth strategy and to meet our anticipated operating expenses, capital expenditures, and debt service obligations for at least the next 12 months from the date of this filing.

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

In addition to our collection of patient accounts receivable, from time to time, we can and do obtain additional sources of liquidity through the incurrence of indebtedness.

Based on our current plan of operations, we believe cash and cash equivalents, when combined with expected cash flows from operations and amounts available under our 2022 Senior Credit Facilities will be sufficient to fund our growth strategy and to meet our anticipated operating expenses, capital expenditures, and debt service obligations for at least the next 12 months from the date of this filing.

The Company 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.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

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.

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 year ended December 31, 2024.

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

4 unchanged sentences

Financing activities (3,689) 2,826

Net decrease in cash and cash equivalents $ (4,075) $ (11,494)

Net increase (decrease) in cash and cash equivalents

$ 4,701 $ (4,075)

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the year ended December 31, 2023 was $45.2 million, resulting from net income of $10.2 million, increased by net income adjustments of $27.2 million and a change in net working capital of $7.8 million.

The net income adjustments primarily consisted of $21.9 million of depreciation and amortization, $5.8 million of stock-based compensation, and $1.0 million of distributions of earnings received from equity method investments, offset by a $1.4 million deferred income tax benefit.

The primary changes in working capital were an increase in accrued liabilities of $5.0 million, a decrease in prepaid expenses and other assets of $2.2 million, and a net increase in income taxes payable of $2.2 million, offset by an increase in net accounts receivable of $1.1 million.

Net cash provided by operating activities during the year ended December 31, 2022 was $27.7 million, resulting from net income of $6.2 million, increased by net income adjustments of $21.7 million and a change in net working capital of $0.1 million.

The net income adjustments primarily consisted of $15.6 million of depreciation and amortization, $5.2 million of stock-based compensation, $1.7 million of deferred income tax expense, and $1.1 million of distributions of earnings received from equity method investments, offset by a $1.4 million change in inventory reserve.

The primary changes in working capital were an increase in net accounts receivable of $2.6 million and an increase in prepaid expenses and other assets of $2.8 million, offset by an increase in accrued liabilities of $2.5 million and a net increase in income taxes payable of $1.9 million.

Net cash provided by operating activities during the year ended December 31, 2024 was $39.1 million, resulting from net income of $11.4 million, increased by net income adjustments of $27.3 million and offset by an increase in non-cash working capital of $0.4 million.

The net income adjustments primarily consisted of $25.4 million of depreciation and amortization, $6.3 million of stock-based compensation, and an impairment loss on debt investment of $1.3 million, partially offset by a $3.8 million change in deferred tax asset and a $1.9 million gain on disposal of property and equipment.

The primary change in non-cash working capital was an increase in net accounts receivable of $6.1 million, partially offset by an increase in accrued liabilities of $2.9 million.

The net income adjustments primarily consisted of $21.9 million of depreciation and amortization, $5.8 million of stock-based compensation, and $1.0 million of distributions of earnings received from equity method investments, partially offset by a $1.4 million deferred income tax benefit.

The primary changes in working capital were an increase in accrued liabilities of $5.0 million, a decrease in prepaid expenses and other assets of $2.2 million, and a net increase in income taxes payable of $2.2 million, partially offset by an increase in net accounts receivable of $1.1 million.

Net Cash Used in Investing Activities

Net cash used in investing activities during the year ended December 31, 2023 was $52.1 million, primarily due to the net cash paid for the acquisition of HMP of $28.6 million and $26.1 million of purchases of property and equipment, partially offset by $2.6 million of sales proceeds from the disposal of property and equipment.

Purchases of property and equipment during the year ended December 31, 2023 were primarily related to medical equipment rented to our patients.

Cash purchases of property and equipment represents a $3.2 million, or 14.0%, increase year over year.

Net cash used in investing activities during the year ended December 31, 2022 was $24.0 million, consisting of $22.9 million of purchases of property and equipment, $2.0 million in debt investments, and $0.1 million in equity investments, partially offset by $1.1 million of sales proceeds from the disposal of property and equipment.

Purchases of property and equipment during the year ended December 31, 2022 were primarily related to medical equipment rented to our patients.

Net cash used in investing activities during the year ended December 31, 2024 was $30.7 million.

Net cash used for capital expenditures during the period was $27.5 million and consisted of $37.8 million of purchases of property and equipment, partially offset by $10.3 million of sales proceeds from the disposal of property and equipment.

Net cash used for capital expenditures represents a $3.9 million, or 17%, increase year over year.

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

Net cash used in investing activities also included $3.0 million of net cash paid for the acquisition of East Alabama HomeMed, LLC ("HomeMed") and $1.0 million for an equity investment.

Net cash used in investing activities during the year ended December 31, 2023 was $52.1 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 $23.5 million and consisted of $26.1 million of purchases of property and equipment, partially offset by $2.6 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.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities during the year ended December 31, 2024 was $3.7 million.

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 $0.3 million.

Additionally, principal payments on acquired loans were $0.8 million during the year ended December 31, 2024.

The Company acquired and cancelled 142,985 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 year ended December 31, 2024 were $1.0 million.

Net cash provided by financing activities during the year ended December 31, 2023 was $2.8 million.

3 unchanged sentences

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 year ended December 31, 2023 were $1.3 million.

Net cash used in financing activities during the year ended December 31, 2022 was $15.3 million, consisting of 1,794,163 repurchased and canceled common shares at a cost of $9.6 million pursuant to the share repurchase program authorized by the Board on March 7, 2022 and terminated on September 30, 2023 (the "2022 Share Repurchase Program"), $1.3 million in principal payments on the term note under the prior Commercial Business Loan Agreement with Hancock Whitney Bank (the “Term Note”),$4.5 million in principal payments on the building term note under the prior Commercial Business Loan Agreement with Hancock Whitney Bank (the "Building Term Note"), and $0.1 million for shares repurchased and canceled for tax withholding in connection with RSUs vested in the period, partially offset by $0.3 million proceeds from the exercise of stock options.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

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 Senior 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 $4.9 million and $2.0 million, respectively, as of December 31, 2023.

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

Outstanding borrowings under the 2022 Term Loan Facility were $4.6 million as of December 31, 2024.

There were no outstanding borrowings under the 2022 Revolving Credit Facility as of December 31, 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, 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.

3 unchanged sentences

The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at December 31, 2024.

Sources of Funds

Cash provided by operating activities during the year ended December 31, 2023 was $45.2 million compared to $27.7 million during the year ended December 31, 2022.

As of December 31, 2023, the Company had cash and cash equivalents of $12.8 million.

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

9 unchanged sentences

If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected.

We may seek to raise additional funds through equity, equity-

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

linked or debt financings.

We may seek to raise additional funds through equity, equity-linked or debt financings.

If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.

12 unchanged sentences

See Note 2 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

VIEMED HEALTHCARE, INC.

(Tabular amounts expressed in thousands of U.S.

Dollars, except per share amounts)

December 31, 2023 and 2022

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

What changed 10-K

Item 7. Management’s Discussion and Analysis