VIEMED HEALTHCARE, INC. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Income and Comprehensive Income F-5 Consolidated Statements of Changes in Shareholders' Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to the Financial Statements F-8 Page F-1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Viemed Healthcare, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Viemed Healthcare, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 10, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Page F-2 Revenue and Accounts Receivable, net Description of the Matter As described in Note 2 to the consolidated financial statements, the Company records accounts receivable and revenues for rentals and sales based upon contractually agreed-upon rates, reduced by adjustments for estimated probable collectability losses related to rental revenues and variable consideration for implicit price concessions related to sales revenues. The adjustments to revenue and accounts receivables are estimated utilizing historical realization data under a portfolio approach, which is then assessed by management to evaluate whether adjustments should be made based on accounts receivable aging trends, other operating trends, and relevant business conditions such as governmental and managed care payor claims processing procedures. The Company recognized $204.1 million in rental and sales revenues for the year ended December 31, 2024 and recorded $24.9 million in accounts receivable, net at December 31, 2024. Auditing the Company's estimate of the adjustments to rental and sales revenues and net accounts receivable was judgmental due to the subjectivity in assessing the appropriateness of the assumptions made by management. Those assumptions include an expectation that the Company’s collection of accounts receivables will be consistent with historical collections experience adjusted for consideration of current or forecasted conditions that may affect the Company’s expected collectable amount. How We Addressed the Matter in Our Audit To test the adjustments to rental and sales revenues and net accounts receivable, we performed audit procedures that included, among others, testing management's process for developing the estimate of net accounts receivable, testing the completeness, accuracy, and relevance of the data used; and evaluating significant assumptions used by management, including assessing the Company’s expected collection rates based on historical experience, adjusted for consideration of current or forecasted conditions. For example, we compared management’s prior year estimated net accounts receivable to actual amounts collected during the current year, and reviewed trends in management’s estimate over time. We also performed a predictive analytical procedure by utilizing prior year hindsight results to develop an expectation of current year net accounts receivable. Additionally, we performed a sensitivity analysis to evaluate the changes in rental and sales revenue and net accounts receivable that would result from changes in assumptions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2019. New Orleans, Louisiana March 10, 2025 Page F-3 VIEMED HEALTHCARE, INC. CONSOLIDATED BALANCE SHEETS (Expressed in thousands of U.S. Dollars, except outstanding shares) Note At December 31, 2024 At December 31, 2023 ASSETS Current assets Cash and cash equivalents 2 $ 17,540 $ 12,839 Accounts receivable, net 2 24,911 18,451 Inventory 2 4,320 4,628 Prepaid expenses and other assets 6,109 2,449 Total current assets $ 52,880 $ 38,367 Long-term assets Property and equipment, net 4 76,279 73,579 Finance lease right-of-use assets 50 401 Operating lease right-of-use assets 2,831 2,872 Equity investments 2 2,794 1,680 Debt investment 2 — 2,219 Deferred tax asset 10 8,398 4,558 Identifiable intangibles, net 2 848 567 Goodwill 3 32,989 29,765 Other long-term assets 9 — 887 Total long-term assets $ 124,189 $ 116,528 TOTAL ASSETS $ 177,069 $ 154,895 LIABILITIES Current liabilities Trade payables $ 5,322 $ 4,180 Deferred revenue 6,694 6,207 Income taxes payable 3,883 2,153 Accrued liabilities 5 20,157 17,578 Finance lease liabilities, current portion 6 50 256 Operating lease liabilities, current portion 6 811 678 Current portion of long-term debt 6 409 1,072 Total current liabilities $ 37,326 $ 32,124 Long-term liabilities Accrued liabilities 8 846 558 Finance lease liabilities, less current portion 6 — 132 Operating lease liabilities, less current portion 6 2,007 2,184 Long-term debt 6 3,589 6,002 Total long-term liabilities $ 6,442 $ 8,876 TOTAL LIABILITIES $ 43,768 $ 41,000 Commitments and Contingencies — — SHAREHOLDERS' EQUITY Common stock - No par value: unlimited authorized; 39,132,897 and 38,506,161 issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 8 23,365 18,702 Additional paid-in capital 18,337 15,698 Retained earnings 89,691 79,495 TOTAL VIEMED HEALTHCARE, INC.'S SHAREHOLDERS' EQUITY $ 131,393 $ 113,895 Noncontrolling interest in subsidiary 1,908 — TOTAL SHAREHOLDERS' EQUITY 133,301 113,895 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 177,069 $ 154,895 See accompanying notes to the consolidated financial statements Page F-4 VIEMED HEALTHCARE, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Expressed in thousands of U.S. Dollars, except share and per share amounts) Year Ended December 31, Note 2024 2023 2022 Revenue 2 $ 224,257 $ 183,008 $ 138,832 Cost of revenue 91,054 70,225 54,152 Gross profit $ 133,203 $ 112,783 $ 84,680 Operating expenses Selling, general and administrative 106,199 87,884 68,161 Research and development 3,068 2,782 2,696 Stock-based compensation 8 6,285 5,849 5,202 Depreciation and amortization 1,483 1,391 1,012 Loss (gain) on disposal of property and equipment ( 1,905 ) 645 346 Other expense (income), net 173 ( 98 ) ( 989 ) Income from operations $ 17,900 $ 14,330 $ 8,252 Non-operating income and expenses Income (expense) from investments ( 954 ) 485 935 Interest expense, net 6 ( 776 ) ( 424 ) ( 197 ) Net income before taxes 16,170 14,391 8,990 Provision for income taxes 10 4,761 4,148 2,768 Net income $ 11,409 $ 10,243 $ 6,222 Net income attributable to noncontrolling interest 144 — — Net income attributable to Viemed Healthcare, Inc. $ 11,265 $ 10,243 $ 6,222 Other comprehensive income Change in unrealized gain on derivative instruments, net of tax — — 278 Other comprehensive income $ — $ — $ 278 Comprehensive income $ 11,265 $ 10,243 $ 6,500 Net income per share Basic 11 $ 0.29 $ 0.27 $ 0.16 Diluted 11 $ 0.28 $ 0.25 $ 0.16 Weighted average number of common shares outstanding: Basic 11 38,754,893 38,354,071 38,655,403 Diluted 11 40,805,085 40,378,922 39,807,434 See accompanying notes to the consolidated financial statements Page F-5 VIEMED HEALTHCARE, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Expressed in thousands of U.S. Dollars, except share and per share amounts) Common Stock Additional paid-in capital Accumulated other comprehensive loss Noncontrolling interest in subsidiary Total Shareholders' equity Shares Amount Retained earnings Shareholders' equity December 31, 2021 39,640,388 $ 14,014 $ 7,749 $ ( 278 ) $ 73,335 $ — $ 94,820 Stock-based compensation - options — — 3,094 — — — 3,094 Stock-based compensation - restricted stock — — 2,108 — — — 2,108 Exercise of options 82,822 283 — — — — 283 Shares issued for vesting of restricted stock units 148,404 826 ( 826 ) — — — — Shares redeemed to pay income tax ( 27,712 ) — — — ( 143 ) — ( 143 ) Shares repurchased under the share repurchase program ( 1,794,163 ) — — — ( 9,568 ) — ( 9,568 ) Change in accumulated other comprehensive loss, net of tax — — — 278 — — 278 Net income — — — — 6,222 — 6,222 Shareholders' equity, December 31, 2022 38,049,739 $ 15,123 $ 12,125 $ — $ 69,846 $ — $ 97,094 Stock-based compensation - options — — 1,165 — — — 1,165 Stock-based compensation - restricted stock — — 4,684 — — — 4,684 Exercise of options 246,022 1,303 — — — — 1,303 Shares issued for vesting of restricted stock units 285,635 2,276 ( 2,276 ) — — — — Shares redeemed to pay income tax ( 75,235 ) — — — ( 594 ) — ( 594 ) Net income — — — — 10,243 — 10,243 Shareholders' equity, December 31, 2023 38,506,161 $ 18,702 $ 15,698 $ — $ 79,495 $ — $ 113,895 Stock-based compensation - options — — 269 — — — 269 Stock-based compensation - restricted stock — — 6,016 — — — 6,016 Exercise of options 281,121 1,017 — — — — 1,017 Shares issued for vesting of restricted stock units 488,600 3,646 ( 3,646 ) — — — — Shares redeemed to pay income tax ( 142,985 ) — — — ( 1,069 ) — ( 1,069 ) Acquired non-controlling interest — — — — — 1,800 1,800 Distribution to non-controlling interest — — — — — ( 36 ) ( 36 ) Net income — — — — 11,265 144 11,409 Shareholders' equity, December 31, 2024 39,132,897 $ 23,365 $ 18,337 $ — $ 89,691 $ 1,908 $ 133,301 See accompanying notes to the consolidated financial statements Page F-6 VIEMED HEALTHCARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in thousands of U.S. Dollars) Year Ended December 31, Note 2024 2023 2022 Cash flows from operating activities Net income $ 11,409 $ 10,243 $ 6,222 Adjustments for: Depreciation and amortization 25,368 21,862 15,630 Change in inventory reserve — — ( 1,418 ) Stock-based compensation expense 8 6,285 5,849 5,202 Distributions of earnings received from equity method investments 147 980 1,079 Income from equity method investments ( 261 ) ( 485 ) ( 935 ) Loss (income) from debt investment 1,344 ( 219 ) — Loss (gain) on disposal of property and equipment ( 1,905 ) 645 346 Amortization of deferred financing costs 187 — — Deferred income tax expense (benefit) ( 3,840 ) ( 1,439 ) 1,746 Changes in working capital: Accounts receivable, net ( 6,073 ) ( 1,058 ) ( 2,556 ) Inventory 574 ( 472 ) 301 Prepaid expenses and other assets 544 2,176 ( 2,838 ) Trade payables 359 ( 859 ) ( 318 ) Deferred revenue 364 851 871 Accrued liabilities 2,857 4,959 2,549 Income tax payable/receivable 1,730 2,179 1,867 Net cash provided by operating activities $ 39,089 $ 45,212 $ 27,748 Cash flows from investing activities Purchase of property and equipment 4 ( 37,771 ) ( 26,093 ) ( 22,898 ) Investment in equity investments 2 ( 1,000 ) ( 20 ) ( 141 ) Cash paid for acquisitions, net of cash acquired 3 ( 2,999 ) ( 28,588 ) — Investment in debt security 2 — — ( 2,000 ) Proceeds from sale of debt security 2 750 — — Proceeds from sale of property and equipment 4 10,321 2,588 1,063 Net cash used in investing activities $ ( 30,699 ) $ ( 52,113 ) $ ( 23,976 ) Cash flows from financing activities Proceeds from exercise of options 8 1,017 1,303 283 Proceeds from term notes 6 — 5,000 — Principal payments on term notes 6 ( 1,071 ) ( 3,721 ) ( 5,796 ) Proceeds from revolving credit facilities 6 3,000 8,000 — Principal payments on revolving credit facilities ( 5,000 ) ( 7,005 ) — Payments for debt issuance costs ( 192 ) — — Shares redeemed to pay income tax 8 ( 1,069 ) ( 594 ) ( 143 ) Shares repurchased under the share repurchase program — — ( 9,568 ) Repayments of finance lease liabilities ( 338 ) ( 157 ) ( 42 ) Distributions to non-controlling interest ( 36 ) — — Net cash provided by (used in) financing activities $ ( 3,689 ) $ 2,826 $ ( 15,266 ) Net increase (decrease) in cash and cash equivalents 4,701 ( 4,075 ) ( 11,494 ) Cash and cash equivalents at beginning of year 12,839 16,914 28,408 Cash and cash equivalents at end of period $ 17,540 $ 12,839 $ 16,914 Supplemental disclosures of cash flow information Cash paid during the period for interest $ 950 $ 851 $ 231 Cash paid (received) during the period for income taxes, net of refunds $ 6,827 $ 3,566 $ ( 846 ) Supplemental disclosures of non-cash transactions Non-cash change in debt from the reclassification of debt issuance costs 6 $ — $ ( 594 ) $ — Net non-cash changes to operating lease $ — $ ( 41 ) $ 530 Equipment and other fixed asset purchases payable at end of period $ 2,179 $ 1,396 $ 739 Equipment sales receivable at end of period $ 2,844 $ — $ — Non-cash consideration received for sale of debt security $ 125 $ — $ — See accompanying notes to the consolidated financial statements Page F-7 VIEMED HEALTHCARE, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollar amounts expressed in thousands of U.S. Dollars, except per share amounts) Notes to Consolidated Financial Statements 1. Nature of Business and Operations Viemed Healthcare, Inc. (the "Company"), through its subsidiaries, is a provider of home medical equipment and post-acute respiratory healthcare services in the United States. The Company’s primary service offerings are focused on effective in-home treatment with clinical practitioners providing therapy and counseling to patients in their homes using cutting edge technology. The Company serves patients in all 50 states of the United States. The Company was incorporated under the Business Corporations Act (British Columbia) on December 14, 2016. The Company's registered and records office is located at Suite 2800, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2Z7 and its corporate office is located at 625 E. Kaliste Saloom Road, Lafayette, Louisiana 70508. The Company’s common shares are traded on the Nasdaq Capital Market under the symbol "VMD". 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows have been made. Prior to December 31, 2024, the Company qualified as an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the Securities Act), as modified by the Jumpstart our Business Startups Act of 2012 (the JOBS Act), and took advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and other exemptions. As of December 31, 2024, the Company no longer qualified as an emerging growth company, and as a result is no longer exempt from the reporting requirements discussed above. Reporting Currency All values are in U.S. dollars ($ or "USD"). Basis of Consolidation These consolidated financial statements include the accounts of the Company and its subsidiaries in which it has a controlling financial interest. All intercompany transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition, accounts receivable, income tax provisions, the fair value of financial instruments, and goodwill. Actual results could differ from these estimates. Segment Reporting The Company’s chief operating decision-makers ("CODMs") are its Chief Executive Officer and Chief Operating Officer, who make resource allocation decisions and assess performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the chief operating decision-makers, or anyone else, for any planning, strategy and key decision-making regarding operations. The corporate office is responsible for contract negotiation with vendors and payors, corporate compliance with healthcare laws and regulations, and revenue cycle management, among other corporate supporting functions. Accordingly, the Company has a single reportable segment and operating segment structure. All expense categories on the Consolidated Statements of Income and Comprehensive Income are significant and there are no other significant segment expenses that require disclosure. Page F-8 Cash and Cash Equivalents Cash and cash equivalents consist of cash and temporary investments with an original maturity of three months or less that are readily convertible to known amounts of cash that are subject to insignificant risk or change. At December 31, 2024 and 2023, the Company's cash was held primarily in checking and money market accounts. Cash and cash equivalents consist of the following at December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Cash $ 6,958 $ 7,182 Money market accounts 10,582 5,657 Total cash and cash equivalents $ 17,540 $ 12,839 Accounts Receivable Accounts receivable and revenues are based on contractually agreed-upon rates for services provided, reduced by estimated adjustments. The accounts receivable are presented on the Consolidated Balance Sheets net of adjustments, including variable consideration for implicit price concessions related to sales revenues and an estimate for probable losses related to net rental revenues. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. The complexity of third-party billing arrangements and laws and regulations governing Medicare and Medicaid may result in adjustments to amounts originally recorded. The Company performs a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. These estimates are determined utilizing historical realization data under a portfolio approach, which is then assessed by management to evaluate whether adjustments should be made based on accounts receivable aging trends, other operating trends, and relevant business conditions such as governmental and managed care payor claims processing procedures. The Company records a reserve for estimated probable losses as part of rental revenue adjustments in order to report rental revenue at an expected collectable amount based on the total portfolio of operating lease receivables for which collectability has been deemed probable. Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and the account has been determined to be uncollectible. Revisions in reserve estimates are recorded as an adjustment to revenue in the period of revision. Included in accounts receivable at December 31, 2024 are amounts due from Medicare representing 27 % of total outstanding net receivables. As of December 31, 2023, 28 % of total outstanding net receivables were amounts due from Medicare. Inventory Inventory represents non-serialized supplies that consist of equipment parts, consumables, and associated product supplies and is expensed at the time of sale or use. The Company values inventory at the lower of cost or net realizable value. Obsolete and unserviceable inventories are valued at estimated net realizable value. Property and Equipment Property and equipment is presented on the Consolidated Balance Sheets at historic cost less accumulated depreciation. Major renewals and improvements that extend the useful life of assets are capitalized to the respective property accounts, while maintenance and repairs, which do not extend the useful life of the respective assets, are expensed as incurred. Management has estimated the useful lives of equipment leased to customers. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Property and equipment are depreciated on a straight-line basis over their estimated useful lives. Page F-9 The estimated useful lives of the property and equipment are as follows: Description Estimated Useful Lives Medical Equipment 1 - 10 Years Computer Equipment 5 Years Office Furniture & Fixtures 5 - 10 Years Leasehold Improvements Shorter of Useful Life or Lease Vehicles 5 Years Buildings 15 - 39 Years Land Indefinite Life Depreciation of medical equipment commences at the date of service, which represents the date that the asset has been delivered to a patient and is put in use and continues through the useful life of the asset. Property and equipment with definite useful lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Equity Investments Equity investments on the Consolidated Balance Sheets are primarily comprised of equity investments without readily determinable fair values accounted for under the measurement alternative described in ASC 321-10-35-2. For these investments, the Company has elected the measurement alternative which measures the investment at cost, less any impairment. ASU 2019-04 clarifies that if an entity identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, it must measure its equity investment at fair value in accordance with ASC 820 as of the date that the observable transaction occurred. The balance of the Company’s equity investments was $ 2.8 million and $ 1.7 million as of December 31, 2024 and December 31, 2023, respectively. The Company was not aware of any impairment or observable price change adjustments that needed to be made as of December 31, 2024 on its investments in equity securities without a readily determinable fair value. Debt Investment The debt investment presented on the historical Consolidated Balance Sheets was a variable rate secured convertible note, classified as an available-for-sale debt instrument. Accrued interest was included in the amortized cost basis at each reporting period. At each financial statement date until a conversion event, the debt instrument was remeasured at fair value. Changes in unrealized gains and losses were recorded in accumulated other comprehensive income, net of tax effect, until realized. When changes were determined to be other than temporary, the Company recognized an other-than-temporary impairment expense in earnings, equal to the difference between the debt security’s amortized cost basis and its fair value at the balance sheet date. On October 4, 2024, the Company sold its available-for-sale debt investment. The sale resulted in proceeds of $ 0.9 million and a gross realized loss of $ 1.4 million, which was recognized in earnings for the year ended December 31, 2024. The debt instrument is no longer included in the Consolidated Balance Sheet as of December 31, 2024. Page F-10 Intangible Assets Intangible assets include trade names and other identifiable intangible assets. During the year ended December 31, 2024, the Company recorded $ 0.4 million for an indefinite-lived trade name related to the acquisition of HomeMed. During the year ended December 31, 2023, the Company recorded $ 0.5 million in trade names and $ 0.1 million of other intangibles related to the acquisition of HMP, which are amortized on a straight-line basis over a period of their expected useful lives of five years . Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization in the accompanying Consolidated Statements of Income and Comprehensive Income, was $ 0.1 million and $ 0.1 million for the years ended December 31, 2024 and December 31, 2023, respectively. The weighted average remaining useful life of definite-lived intangible assets was 3.4 years as of December 31, 2024. Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company's comprehensive income represents net income adjusted for unrealized gains and losses on derivative instruments, net of tax. Accumulated other comprehensive loss is presented on the accompanying Consolidated Balance Sheets as a component of shareholders' equity if applicable. Revenue Recognition Revenues are principally derived from the rental and sale of HME products and services to patients. Rental revenues Revenue generated from equipment that is rented to patients is recognized over the non-cancellable rental period (typically one month) and commences on delivery of the equipment to the patients. The agreements are evaluated at commencement and the start of each monthly renewal period to determine if it is reasonably certain that the monthly renewal or purchase options would be exercised. The exercise of monthly renewal or purchase options by a patient has historically not been reasonably certain to occur at lease commencement or subsequent monthly renewals. Revenues are recorded at amounts estimated to be received under reimbursement arrangements with payors, including private insurers, prepaid health plans, Medicare, Medicaid and patients. Rental revenue, less estimated adjustments, is recognized as earned on a straight-line basis over the non-cancellable lease term. Rental of patient equipment is billed on a monthly basis beginning on the date the equipment is delivered. Since deliveries can occur on any day during a month, the amount of billings that apply to the next month are deferred. The Company's lease agreements generally contain lease components and non-lease components, which primarily relate to supplies. The Company has made the accounting policy election to account for a lease component of an agreement and its associated non-lease components as a single lease component based on the Company's assessment of classification of the lease based on the consideration in the contract for the combined component. Sales and Services revenues Revenue related to sales of equipment and supplies is recognized on the date of delivery as this is when control of the promised goods is transferred to patients and is presented net of applicable sales taxes. Revenues are recorded only to the extent it is probable that a significant reversal will not occur in the future as amounts may include implicit price concessions under reimbursement arrangements with payors, including private insurers, prepaid health plans, Medicare, Medicaid and patients. The sales transaction price is determined based on contractually agreed-upon rates, adjusted for estimates of variable consideration. The expected value method is used in determining the variable consideration as part of determining the sales transaction price using historical reimbursement experience, historical sales returns, and other operating trends. Payment terms and conditions vary by contract. The timing of revenue recognition, billing, and cash collection generally results in billed and unbilled accounts receivable. Revenues associated with external staffing services are accrued on an hourly basis and are recorded based on the determination of whether the Company is acting as a principal or an agent. In arrangements in which the Company manages customers' supplemental workforce needs utilizing its own network of healthcare professionals, the Company is determined to be a principal and includes the contractual gross billings in revenues with a corresponding increase to cost of revenues for worksite employee payroll costs associated with these services. Alternatively, when the Company acts as agent in the performance of workforce management, revenue is recorded based on contractually agreed upon fees or commissions with no associated cost of revenues. Page F-11 The revenues from each major source are summarized in the following table: Year Ended December 31, 2024 2023 2022 Revenue from rentals Ventilator rentals, non-invasive and invasive $ 124,577 $ 108,258 $ 92,710 Other home medical equipment rentals 48,651 38,315 21,446 Revenue from sales and services Equipment and supply sales 30,896 25,770 13,927 COVID-19 response sales and services — — 2,278 Service revenues 20,133 10,665 8,471 Total revenues $ 224,257 $ 183,008 $ 138,832 Revenues from Medicare as a percentage of the Company's traditional revenue streams, excluding COVID-19 response sales and services, for the years ended December 31, 2024, 2023, and 2022 were 41 % , 44 % , and 47 %, respectively. Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with ASC 718 , "Compensation—Stock Compensation" , which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Stock–based compensation costs for stock options are determined at the grant date using the Black-Scholes option pricing model. Stock-based compensation costs for RSUs are determined at the grant date based on the closing stock price. The expense of such stock-based compensation awards is recognized using the graded vesting attribution method over the vesting period and the offsetting credit is recorded as an increase in additional paid-in capital. Forfeitures are recorded as incurred. Any excess tax benefit or deficiency is recognized as a component of income taxes and within operating cash flows upon vesting of the share-based award. For the Company’s phantom share units ("PSUs") settled in cash, the Company computes the fair value of the PSUs using the closing price of the Company's stock at the end of each period and records a liability based on the percentage of requisite service. Interest Rate Swaps The Company utilized an interest rate swap contract to reduce exposure to fluctuations in variable interest rates for future interest payments on the 2019 Term Note (as defined below). For determining the fair value of the interest rate swap contract, the Company uses significant other observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. These fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves. The Company presents a positive ending period fair value of the interest rate swap contract in other long-term assets, as a component of long-term assets, and a negative ending period fair value of the interest rate swap contract in accrued liabilities, as a component of long-term liabilities on the Consolidated Balance Sheets. The Company recognized any differences between the variable interest rate payments and the fixed interest rate settlements from its swap counterparty as an adjustment to interest expense over the life of the swap. If determined to be an effective cash flow hedge, the Company will record the changes in the estimated fair value of the swaps to accumulated other comprehensive income or loss on the Consolidated Balance Sheets. To the extent that interest rate swaps are determined to be ineffective, the Company would recognize the changes in the estimated fair value of swaps in interest and other non-operating expenses, net in its Consolidated Statements of Income and Comprehensive Income. During the year ended December 31, 2022, the Company settled its interest rate swap in connection with the refinancing of its credit facilities and recognized the realized gain of $ 0.2 million in Other Income. Page F-12 Income Taxes The Company is subject to income taxes in numerous U.S. jurisdictions. The Company’s income tax provisions reflect management’s interpretation of country and state tax laws. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business and may remain uncertain for several years after their occurrence. The Company recognizes assets and liabilities for taxation when it is probable that the Company will receive refunds from or pay taxes to the relevant tax authority. Where the final determination of tax assets and liabilities is different from the amounts that were initially recorded, such differences will impact the current and deferred income taxes provision in the period in which such a determination is made. Changes in tax law or changes in the way tax law is interpreted may also impact the Company’s effective tax rate as well as the Company's business and operations. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to temporary differences between the financial statement carrying value of assets and liabilities and their respective income tax bases. Deferred income tax assets or liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled. The calculation of current and deferred income taxes requires management to make estimates and assumptions and to exercise a certain amount of judgment concerning the carrying value of assets and liabilities. The current and deferred income tax assets and liabilities are also impacted by expectations about future operating results and the timing of reversal of temporary differences as well as possible audits of tax filings by regulatory agencies. Changes or differences in these estimates or assumptions may result in changes to the current and deferred tax assets and liabilities on the Consolidated Balance Sheets and a charge to or recovery of income tax expense. Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable earnings. The effect of a change in the enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to which the adjustment relates. At each reporting period end, deferred tax assets are evaluated for recoverability based on whether it is more likely than not that sufficient taxable earnings will be available to allow all or part of the asset to be recovered. Business Combinations The Company applies the acquisition method of accounting for business acquisitions. The results of operations of the business 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, liabilities assumed, and noncontrolling interest in the acquiree 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, liabilities assumed, and any noncontrolling interests, 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 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. Impairment of Goodwill and Long-Lived Assets Goodwill resulting from business combinations is not amortized, rather, it is assessed for impairment annually and upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a quantitative or qualitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value and judgment about impairment triggering events. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future. For the year ended December 31, 2024, the Company performed an assessment of qualitative factors and determined that no events or circumstances existed that would lead to a determination that it is more likely than not that the fair value of indefinite-lived Page F-13 assets were less than the carrying amount. As such, a quantitative analysis was not required to be performed and the Company did not record any goodwill impairment charges. The Company follows ASC Topic 360, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the asset group’s carrying amounts may not be recoverable. In performing the review for recoverability, if future undiscounted cash flows (excluding interest charges) from the use and ultimate disposition of the assets are less than their carrying values, an impairment loss represented by the difference between its fair value and carrying value, is recognized. When properties are classified as held for sale they are recorded at the lower of the carrying amount or the expected sales price less costs to sell. There were no impairment charges recognized during the years ended December 31, 2024, 2023, and 2022. Net Income per Share Attributable to Viemed Healthcare, Inc.'s Common Stockholders Basic net income per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive stock-based awards outstanding during the period using the treasury stock method. Dilutive stock-based awards include outstanding common stock options and time-based RSUs. See Note 11 for earnings per share computations. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The Company adopted this standard during the year ended December 31, 2024, which did not have a material impact on its consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid by jurisdiction. The ASU is effective for public business entities' annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which specifies additional disclosure requirements. The new guidance requires additional disclosures, including the composition of certain income expense line items (such as purchases of inventory, employee compensation, and 'other expenses') and a separate disclosure for selling expenses. This change is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, however, early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements. Page F-14 3. Business Combinations East Alabama HomeMed, LLC On April 1, 2024, the Company acquired a controlling 60 % equity interest in East Alabama HomeMed, LLC ("HomeMed"). The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805. As a result of the acquisition, goodwill of $ 3.2 million and a trade name of $ 0.4 million were recognized. The Company expects its portion of the goodwill to be fully tax-deductible. Additionally, a noncontrolling interest of $ 1.8 million was recorded at the acquisition date. The accompanying financial statements include the results of HomeMed's operations from the acquisition date. Changes in the noncontrolling interests after the acquisition date are accounted for pursuant to ASC 810, Consolidation . Home Medical Products, Inc. On June 1, 2023, the Company completed the acquisition of HMP, which operates in Tennessee, Alabama, and Mississippi. The Company acquired 100 % of the equity ownership of HMP in exchange for approximately $ 29 million in cash. The following table summarizes the consideration paid and estimated fair values of the assets acquired and liabilities assumed at the acquisition date. Purchase Price Cash paid $ 29,417 Identifiable Assets Cash and cash equivalents 829 Accounts receivable 2,014 Inventory 582 Prepaid expenses and other assets 498 Property and equipment 4,358 Lease assets 743 Identifiable intangibles 641 Other long-term assets 25 TOTAL ASSETS 9,690 Identifiable Liabilities Trade payables 1,985 Deferred revenue 732 Accrued liabilities 1,195 Current portion of lease liabilities 536 Current debt 4,558 Long-term lease liabilities 196 Long-term debt 836 TOTAL LIABILITIES 10,038 Net assets (liabilities) acquired ( 348 ) Resulting goodwill $ 29,765 Goodwill resulted from a combination of synergies and cost savings, and further expansion into Tennessee, Alabama, and Mississippi. All of the goodwill is deductible for income tax purposes. There are no contingent consideration arrangements included in the transaction. The results of HMP’s operations have been included in the consolidated financial statements since the date of acquisition. There were no acquisitions during the year ended December 31, 2022. Page F-15 4. Property and Equipment The Company’s fixed assets consist of its medical equipment held for rental, furniture and equipment, real property and related improvements, and vehicles and other various small equipment. The following table details the Company’s fixed assets: December 31, 2024 December 31, 2023 Medical equipment $ 116,938 $ 110,920 Furniture and equipment 4,523 3,540 Land 2,566 2,566 Buildings 8,307 7,953 Leasehold improvements 660 345 Vehicles 1,288 1,192 Less: Accumulated depreciation ( 58,003 ) ( 52,937 ) Property and equipment, net of accumulated depreciation $ 76,279 $ 73,579 Depreciation in the amount of $ 23.9 million, $ 20.5 million, and $ 14.6 million is included in cost of revenue for the years ended December 31, 2024, 2023, and 2022, respectively. Medical equipment purchases with a cost of $ 2.2 million and $ 1.4 million were included in accounts payable at December 31, 2024 and 2023, respectively. 5. Current Liabilities The Company’s short-term accrued liabilities are included within current liabilities and consist of the following: December 31, 2024 December 31, 2023 Accrued trade payables $ 4,016 $ 3,230 Accrued commissions payable 1,027 794 Accrued bonuses payable 6,589 7,131 Accrued vacation and payroll 3,402 2,058 Current portion of phantom share liability 1,701 1,867 Accrued other liabilities 3,422 2,498 Total accrued liabilities $ 20,157 $ 17,578 6. Debt and Lease Liabilities Debt The following table summarizes the Company’s debt as of December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 2022 Senior Credit Facilities $ 4,563 $ 6,875 Medical equipment financing 34 793 Financing costs and commitment fees ( 599 ) ( 594 ) Current portion ( 409 ) ( 1,072 ) Long-term portion $ 3,589 $ 6,002 Page F-16 2018 Senior Credit Facility On February 20, 2018, the Company entered a Commercial Business Loan Agreement (the "2018 Senior Credit Facility") that provided for Term Loans and Lines of Credit with Hancock Whitney Bank. Until November 29, 2022, the Company maintained a line of credit in the amount of $ 30.0 million under the 2018 Senior Credit Facility. On May 30, 2019, the Company entered into a term note (“Building Term Note”) under the 2018 Senior Credit Facility in the principal amount of $ 4.8 million. The proceeds of the Building Term Note were used to purchase the Company's corporate headquarters. In connection with the Building Term Note, the Company entered into an interest rate swap transaction ("Interest Rate Swap Transaction") with Hancock Whitney Bank effectively fixing the interest rate for the Building Term Note at 4.68 %. On September 19, 2019, the Company entered into an additional loan agreement providing for a term note (the “2019 Term Note") under the 2018 Senior Credit Facility in the principal amount of $ 5.0 million and bearing an annual interest rate of 4.60 %. The proceeds of the 2019 Term Note were utilized for general corporate purposes. The 2019 Term Note matured on September 19, 2022 at which time the entire unpaid balance of principal and interest was repaid in full. In connection with the entry in to the 2022 Senior Credit Facilities on November 29, 2022, the Company retired the 2018 Senior Credit Facility, and repaid all outstanding interest and principal in full. 2022 Senior Credit Facilities On November 29, 2022, the Company refinanced its existing borrowings under the 2018 Senior Credit Facility 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 (the "Administrative Agent") and collateral agent, that provides for an up to $ 30.0 million revolving credit facility (the "2022 Revolving Credit Facility") and an up to $ 30.0 million delayed draw term loan facility (the "2022 Term Loan Facility"), both maturing in November 2027. The proceeds of the 2022 Revolving Credit Facility may be used to refinance existing indebtedness, for working capital purposes, capital expenditures and other general corporate purposes (including permitted acquisitions), and to pay transaction fees, costs and expenses related to the 2022 Senior Credit Facilities. The proceeds of the 2022 Term Loan Facility and any additional term loans established in accordance with the 2022 Senior Credit Facilities may be used to finance permitted acquisitions and to pay transaction fees, costs and expenses related to such acquisitions. The interest rates per annum applicable to the 2022 Senior Credit Facilities are a forward looking term rate based on a secured overnight financing rate ("Term SOFR") plus an applicable margin ranging from 2.625 % to 3.375 %, or, at the option of the Company, a Base Rate (as defined in the 2022 Senior Credit Facilities) plus an applicable margin, which ranges from 1.625 % to 2.375 %. The 2022 Senior Credit Facilities require the Company to comply with certain affirmative, as well as certain negative covenants that, among other things, will restrict, subject to certain exceptions, the ability of the Company to incur indebtedness, grant liens, make investments, engage in acquisitions, mergers or consolidations and pay dividends and other restricted payments. The 2022 Senior Credit Facilities also include certain financial covenants, which generally include, but are not limited to the following : • Consolidated Total Leverage Ratio ( defined generally as total indebtedness to adjusted EBITDA) of not greater than (i) for any fiscal quarter ending during the period from the closing date to and including December 31, 2024, 2.75 to 1.0 and (ii) for any fiscal quarter ending on and after March 31, 2025, 2.50 to 1.0, subject to certain adjustments following a material acquisition. • Consolidated Fixed Charge Coverage Ratio ( defined generally as (a) adjusted EBITDA minus capital expenditures minus cash taxes to (b) the sum of scheduled principal payments plus cash interest expense plus restricted payments) of not less than 1.25 :1.0. The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at December 31, 2024. The 2022 Senior Credit Facilities include provisions permitting the Company from time to time to, subject to certain terms and conditions, increase the aggregate amount of commitments under the 2022 Revolving Credit Facility and/or establish one or more additional term loans under the 2022 Term Loan Facility, in each case, with additional commitments from existing lenders or new commitments from financial institutions acceptable to the Administrative Agent in its reasonable discretion; provided, that, (a) the aggregate principal amount of any increases in the 2022 Revolving Credit Facility, and (b) the aggregate principal amount of all additional term loans under the 2022 Term Loan Facility established after the closing date will not exceed $ 30.0 million. Page F-17 Financing costs related to the issuance and amendments of 2022 Senior Credit Facilities are capitalized and amortized over the term of the loans using the effective interest method. Upon the initial draw of debt under the 2022 Senior Credit Facilities during the year ended December 31, 2023, the Company reclassified the deferred financing fees previously recorded in other long-term assets to long-term debt in the consolidated balance sheets. 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. Payment for debt issuance costs associated with the 2022 Senior Credit Facilities was $ 0.2 million during the year ended December 31, 2024 . Medical Equipment Financing The Company enters into medical equipment financing obligations through supplier finance programs. The financing obligations are primarily short term in nature and are payable in monthly installments. Leases The Company has recognized finance lease liabilities for vehicles and operating leases for land and buildings that have terms greater than twelve months, as follows: December 31, 2024 December 31, 2023 Lease liabilities $ 2,868 $ 3,250 Less: Current portion of lease liabilities ( 861 ) ( 934 ) Net long-term lease liabilities $ 2,007 $ 2,316 Operating Lease Liabilities The Company has recognized operating lease liabilities that relate primarily to the lease of land and buildings. The exercise of lease renewal options is at the Company's sole discretion and is included in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. These lease liabilities are recorded at their present value using a discount rate ranging from 5.50 % to 7.87 %, based on the Company's incremental borrowing rate at the time of assessment. At December 31, 2024, the weighted average lease term was approximately 3.52 years. Future maturities of the Company's operating lease liabilities as of December 31, 2024 are summarized as follows: Lease Liability 2025 $ 1,003 2026 906 2027 751 2028 573 2029 4 Thereafter 4 Total lease payments $ 3,241 Less: imputed interest $ 423 Present value of lease liabilities $ 2,818 Operating rental expenses for the years ended December 31, 2024, 2023, and 2022 amounted to $ 1,484,000 , $ 999,000 , and $ 539,000 , respectively. 7. Fair Value Measurement Under ASC Topic 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and Page F-18 minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. There are three levels to the hierarchy based on the reliability of inputs, as follows: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active. Level 3 - Unobservable inputs for the asset or liability. The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. Assets Measured at Fair Value on a Recurring Basis The Company measures certain assets at fair value on a recurring basis. There were no transfers between fair value measurement levels during any presented period. The following tables summarize the Company's assets measured at fair value on a recurring basis as of December 31, 2024 and December 31, 2023: At December 31, 2024 (In thousands) Level 1 Level 2 Level 3 Total Recurring Fair Value Measurements: Money market mutual funds $ 10,582 $ — $ — $ 10,582 Total $ 10,582 $ — $ — $ 10,582 At December 31, 2023 (In thousands) Level 1 Level 2 Level 3 Total Recurring Fair Value Measurements: Money market mutual funds $ 5,657 $ — $ — $ 5,657 Available for sale debt instrument — — 2,219 2,219 Total $ 5,657 $ — $ 2,219 $ 7,876 Available for Sale Debt Instrument The fair value of the Company’s available for sale debt instrument is classified within Level 3 in the fair value hierarchy as the Company evaluates adjustments using a combination of observable and unobservable inputs, such as operating results of the counterparty as well observable prices in transactions of debt and equity instruments of the issuing counterparty when available. On October 4, 2024, the Company sold its available-for-sale debt investment. The sale resulted in proceeds of $ 0.9 million and a gross realized loss of $ 1.4 million, which was recognized in earnings for the year ended December 31, 2024. The debt instrument is no longer included in the Consolidated Balance Sheet as of December 31, 2024. Page F-19 Assets Measured at Fair Value on a Nonrecurring Basis The Company measures certain assets at fair value on a nonrecurring basis. These assets include other equity investments and the fair value allocation related to the Company’s acquisitions. The Company's other equity investments are holdings in privately-held companies without a readily determinable market value. The Company remeasures equity securities without readily determinable fair value at fair value when an orderly transaction is identified for an identical or similar investment of the same issuer in accordance with the measurement alternative under Topic 820. ASU 2019-04 states that the measurement alternative is a nonrecurring fair value measurement. Accordingly, other equity investments without readily determinable fair value are classified within Level 3 in the fair value hierarchy because the Company estimates the value using a combination of observable and unobservable inputs, including valuation ascribed to the issuing company in subsequent financing rounds, volatility in the results of operations of the issuers and rights and obligations of the holdings the Company owns. The Company had no material adjustments of other equity investments measured at fair value on a nonrecurring basis during any of the periods presented. The fair value allocation related to the Company’s acquisitions are determined using a discounted cash flow approach, or a replacement cost approach, which are based on significant unobservable inputs (Level 3). These valuation methods required management to make various assumptions, including, but not limited to, future profitability, cash flows, replacement costs, and discount rates. The Company’s estimates are based upon historical trends, management’s knowledge and experience and overall economic factors, including projections of future earnings potential. Developing discounted future cash flows in applying the income approach requires the Company to evaluate its intermediate to longer-term strategies, including, but not limited to, estimates of revenue growth, operating margins, capital requirements, inflation and working capital management. The development of appropriate rates to discount the estimated future cash flows requires the selection of risk premiums, which can materially impact the present value of future cash flows. The Company estimated the fair value of acquired identifiable intangible assets using discounted cash flow techniques that included an estimate of future cash flows, consistent with overall cash flow projections used to determine the purchase price paid to acquire the business, discounted at a rate of return that reflects the relative risk of the cash flows. The Company estimated the fair value of certain acquired identifiable intangible assets based on the cost approach using estimated costs consistent with historical experience. The Company believes the estimates and assumptions used in the valuation methods are reasonable. There were no transfers between fair value measurement levels during any presented period. 8. Shareholders' Equity Authorized Share Capital The Company’s authorized share capital consists of an unlimited number of common shares, with no stated par value. Issued and Outstanding Share Capital The Company has only one class of stock outstanding, common shares. The authorized stock consists of an unlimited number of common shares with no stated par value, of which 39,132,897 and 38,506,161 shares were issued and outstanding as of December 31, 2024 and 2023, respectively. 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 vesting during the year ended December 31, 2024. The Company’s retained earnings were reduced by the amount paid for the shares repurchased and cancelled. Stock-Based Compensation On June 6, 2024 (the "Effective Date"), the Company’s shareholders approved the Company's 2024 Long Term Incentive Plan (the "2024 Omnibus Plan") to provide an incentive to attract, retain, and reward directors, officers, employees, and consultants who provide services to the Company or any of its subsidiaries. All directors, officers, employees, and consultants of the Company and/or its affiliates are eligible to receive awards under the 2024 Omnibus Plan, subject to its terms. Awards include common share purchase options, restricted stock, stock appreciation rights, performance awards, or other stock-based awards, including restricted stock units, deferred stock units, and dividends and dividend equivalents. The maximum number of common shares that will be available for awards and issuance under the 2024 Omnibus Plan and that may be reserved for issuance at any time, including under previous plans such as the 2020 Long Term Incentive Plan (effective June 11, 2020), the Amended and Restated Stock Option Plan (effective as of July 17, 2018), the Amended and Restated Restricted Share Unit Plan (effective as of July 17, 2018), Page F-20 and the Deferred Share Unit Plan (effective July 17, 2018), will be 7,800,000 shares. The maximum amount of common shares that may be awarded under the 2024 Omnibus Plan as “incentive stock options” is 1,000,000 common shares. As of December 31, 2024, the Company had outstanding options of 3,917,000 and restricted stock units ("RSUs") of 1,514,000 associated with common shares under the existing plans. The following table summarizes stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022 (in thousands): Year Ended December 31, 2024 2023 2022 Stock-based compensation - options $ 269 $ 1,165 $ 3,094 Stock-based compensation - restricted stock units 6,016 4,684 2,108 Total $ 6,285 $ 5,849 $ 5,202 At December 31, 2024, there was approximately $ 6,000 of total unrecognized pre-tax stock option expense under the Company's equity compensation plans, which is expected to be recognized over a weighted-average period of 0.39 years. As of December 31, 2024, there was approximately $ 4,015,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted average period of 1.38 years. Options The following table summarizes stock option activity for the years ended December 31, 2024, 2023 and 2022: Number of options (000's) Weighted average exercise price (1) Weighted average remaining contractual life Aggregate intrinsic value (2) Balance December 31, 2021 3,822 $ 5.22 7.4 years $ 3,722 Issued 764 5.29 Exercised ( 83 ) 3.55 Expired / Forfeited ( 6 ) 5.21 Balance December 31, 2022 4,497 $ 5.26 6.9 years $ 11,356 Issued — — Exercised ( 246 ) 5.42 Expired / Forfeited ( 37 ) 6.33 Balance December 31, 2023 4,214 $ 5.25 5.9 years $ 11,698 Issued — — Exercised ( 281 ) 3.62 Expired / Forfeited ( 16 ) 5.21 Balance December 31, 2024 3,917 $ 5.36 5.0 years $ 10,984 (1) For presentation purposes, stock options issued with a Canadian dollar exercise price have been translated to U.S. dollars based on the prevailing exchange rate on the date of grant. (2) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing price of the Company's common shares on the last trading day of the period ($ 8.02 , $ 7.85 and $ 7.56 on December 31, 2024, 2023 and 2022, respectively). The aggregate intrinsic value of options outstanding was $ 10,984,000 and options exercisable were $ 10,369,000 at December 31, 2024. During the fiscal years ended December 31, 2024, 2023 and 2022, 281,121 , 246,022 and 82,822 common shares were issued pursuant to the exercise of stock options, respectively. At December 31, 2024, the Company had 3,691,000 exercisable stock options outstanding with a weighted average exercise price of $ 5.37 and a weighted average remaining contractual life of 4.9 years. At December 31, 2023, the Company had 3,461,000 exercisable stock options outstanding with a weighted average exercise price of $ 4.99 and a weighted average remaining contractual life of 5.5 years. Page F-21 The fair value of the stock options has been charged to the Consolidated Statements of Income and Comprehensive Income and credited to additional paid-in capital over the vesting period, using the grant date fair value based on the Black-Scholes option pricing model. The assumptions used to determine the grant date fair value of stock options include exercise price, risk-free interest rates, expected volatility, and average life of an option. The risk-free interest rates are based on the rates available at the time of the grant for zero-coupon U.S. government issues with a remaining term equal to the option’s expected life. The average life of an option is based on both historical and projected exercise and lapsing data. Expected volatility is based on implied volatilities from traded options on the Company's common shares and historical volatility of the Company's common shares over the expected life of the option. There were no issuances of options during the year ended December 31, 2024. Restricted Stock Units The Company accounts for RSUs using fair value. The fair value of the RSUs has been charged to the Consolidated Statements of Income and Comprehensive Income and credited to additional paid-in capital over the vesting period, based on the stock price on the date of grant. RSUs vest generally over a one or three-year period. The Company accounts for forfeitures of RSUs under ASU 2016-09 and recognizes forfeitures in the period in which they occur. The following table summarizes RSU activity for the years ended December 31, 2024, 2023 and 2022: Number of RSUs (000's) Weighted average grant price Weighted average remaining contractual life Aggregate intrinsic value (1) Balance December 31, 2021 206 $ 6.61 0.68 years $ 1,074 Issued 581 5.44 Vested ( 149 ) 6.27 Forfeited ( 9 ) 6.45 Balance December 31, 2022 629 $ 5.62 0.88 years $ 4,755 Issued 921 7.88 Vested ( 286 ) 5.82 Forfeited ( 38 ) 6.98 Balance December 31, 2023 1,226 $ 7.23 0.86 years $ 9,624 Issued 915 8.18 Vested ( 489 ) 7.07 Forfeited ( 138 ) 7.84 Balance December 31, 2024 1,514 $ 7.80 1.38 years $ 12,141 (1) The aggregate intrinsic value of time-based RSUs outstanding was based on the closing price of the Company's common shares on the last trading day of the period ($ 8.02 , $ 7.85 and $ 7.56 on December 31, 2024, 2023 and 2022, respectively) . During the year ended December 31, 2024, the Company issued 915,043 RSUs, with a vesting term of one or three years and a fair value betwee n $ 7.05 and $ 8.39 per share. During the year ended December 31, 2023, the Company issued 920,588 RSUs, with a vesting term of one to three years and a fair value betwe en $ 7.10 and $ 7.93 per share. During the year ended December 31, 2022, the Company issued 580,962 RSUs, with a vesting term of one to three years and a fair value betwe en $ 5.21 and $ 6.34 per share. Page F-22 Phantom Share Units The Company has a phantom share unit plan, which it uses for grants to directors, officers, and employees. PSUs granted under the plan are non-assignable and are settled in cash at vesting based on the fair value of the Company's common stock on the vesting date. PSUs vest annually over a three-year period. The cash-settled PSUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with accrued liability and related expense being recognized over the requisite service period. The following table summarizes PSU activity for the years ended December 31, 2024, 2023 and 2022: Number of phantom share units (000's) Value of share equivalents (1) Balance December 31, 2021 573 $ 2,991 Issued 256 1,320 Vested ( 263 ) ( 1,383 ) Forfeited ( 53 ) ( 401 ) Balance December 31, 2022 513 $ 3,878 Issued 181 1,444 Vested ( 245 ) ( 2,354 ) Forfeited ( 31 ) ( 241 ) Balance December 31, 2023 418 $ 3,281 Issued 268 2,161 Vested ( 218 ) ( 1,607 ) Forfeited ( 27 ) ( 214 ) Balance December 31, 2024 441 $ 3,537 (1) The value of outstanding share equivalents at the beginning of the period is based on the market price of the Company’s common shares at that time; the value of issued share equivalents is based on the market price of the Company’s common shares at issuance; the value of vested share equivalents is based on the cash paid at the time of vesting; and the values of forfeited share equivalents and outstanding share equivalents at the end of the period are based on the market price of the Company's common shares at the end of the period. The market price of the Company's common shares was $ 8.02 , $ 7.85 and $ 7.56 on December 31, 2024, 2023 and 2022, respectively. The change in fair value of the PSUs has been charged to the Consolidated Statements of Income and Comprehensive Income and recorded as a liability included in accrued liabilities and long-term accrued liabilities. The total liability associated with PSUs at December 31, 2024 is $ 2,546,000 , with $ 1,700,000 of this amount included in current accrued liabilities and the remaining portion of $ 846,000 included in long-term accrued liabilities. At December 31, 2023, the total liability associated with PSUs was $ 2,425,000 , with $ 1,867,000 of this amount included in current accrued liabilities and the remaining portion of $ 558,000 included in long-term accrued liabilities. The impact associated with the fair value re-measurement of PSUs is recorded in selling, general and administrative expenses within the Consolidated Statements of Income and Comprehensive Income. The following table summarizes expense associated with the PSUs for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Selling, general and administrative $ 1,729 $ 2,189 $ 2,316 The Company paid cash settlements of $ 1.6 million, $ 2.4 million and $ 1.4 million during the years ended December 31, 2024, 2023 and 2022, respectively, pertaining to vestings of cash-settled PSUs. Page F-23 9. Commitments and Contingencies The Company accrues estimates for resolution of any legal and other contingencies when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies (“ASC 450”). No less than quarterly, the Company reviews the status of each significant matter underlying a legal proceeding or claim and assess our potential financial exposure. The Company accrues a liability for an estimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, and accruals are based only on the information available to the Company at the time the judgment is made, which may prove to be incomplete or inaccurate or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. Furthermore, the outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. Legal Proceedings As previously disclosed, on November 5, 2020, the Company (through its subsidiary Sleep Management LLC) filed a lawsuit against Vyaire Medical, Inc. d/b/a CareFusion Respiratory Technologies (“Vyaire”) in the 15th Judicial District Court for the Parish of Lafayette, Louisiana (the “State Court”) seeking damages for breach of contract and seeking declaratory judgment. The State Court issued an order on September 5, 2023 granting the Company Partial Summary Judgment finding that Vyaire breached the contract. On June 9, 2024, Vyaire and certain of its affiliates filed voluntary bankruptcy under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). A liquidation analysis subsequently submitted to the Bankruptcy Court disclosed that unsecured claims, including those subordinate to the super-priority claims of certain Vyaire creditors, would not receive any recovery under the proposed Chapter 11 reorganization plan or in the event of a Chapter 7 liquidation. Consequently, collection of the Company's unsecured claim against Vyaire was determined to be not probable. During the year ended December 31, 2024, outstanding funds receivable in the amount of $ 0.9 million related to undelivered respiratory equipment were impaired through Other expense (income). Governmental and Regulatory Matters From time to time the Company is involved in various external governmental investigations, audits and reviews. Reviews, audits and investigations of this sort can lead to government actions, which can result in the assessment of recoupment of reimbursement, civil or criminal fines or penalties, or other sanctions, including restrictions or changes in the way the Company conducts business, loss of licensure or exclusion from participation in government healthcare programs. 10. Income Taxes Income taxes are computed in accordance with the provisions of ASC Topic 740, which requires, among other things, a balance sheet approach to calculating deferred income taxes. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in its consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in the years in which the differences are expected to reverse. The Company is required to make certain estimates and judgments about the application of tax law, the expected resolution of uncertain tax positions and other matters. In the event that uncertain tax positions are resolved for amounts different than the Company’s estimates, or the related statutes of limitations expire without the assessment of additional income taxes, the Company will be required to adjust the amounts of related assets and liabilities in the period in which such events occur. Such adjustment may have a material impact on the Company’s income tax provision and results of operations. At December 31, 2024 and 2023, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months. The Company recognizes interest and penalties related to income tax matters in income tax expense. The Company is subject to U.S. federal income tax as well as income tax in various states. The Company is generally not subject to examination by taxing authorities for years prior to 2021. Page F-24 A reconciliation of the effective tax rate with the federal statutory tax rate for the years ended December 31, 2024, 2023, and 2022 are as follows: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Federal statutory tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 2.5 % 3.8 % 3.1 % Permanent differences 5.1 % 3.6 % 4.8 % Prior Year True Ups — % 0.4 % 1.7 % Tax rate changes 0.8 % — % — % Changes in valuation allowance for deferred tax assets — % — % 0.2 % Effective tax rate 29.4 % 28.8 % 30.8 % The significant components of the provision for income taxes for the years ended December 31, 2024, 2023, and 2022 are as follows: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Current taxes: Federal $ 7,310 $ 4,242 $ 614 State 1,291 1,345 408 Total current taxes 8,601 5,587 1,022 Deferred taxes: Federal $ ( 3,408 ) $ ( 991 ) $ 1,660 State ( 432 ) ( 448 ) 86 Total deferred taxes ( 3,840 ) ( 1,439 ) 1,746 Provision for income taxes $ 4,761 $ 4,148 $ 2,768 Deferred Income Taxes Deferred income taxes are determined based on the temporary differences between the financial statement basis and the tax basis of assets and liabilities using enacted tax rates in the years in which the differences are expected to reverse. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that all, or some portion, of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities and projected future taxable income in making this assessment. Management evaluates the need for valuation allowances on the deferred income tax assets according to the provisions of FASB ASC 740, Income Taxes. In making this determination, management assesses all available evidence, both positive and negative, available at the balance sheet date. This includes, but is not limited to, recent earnings, internally prepared income projections, and historical financial performance. Page F-25 The significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2024 December 31, 2023 Deferred tax assets: State fixed asset and net operating losses $ 824 $ 1,043 Goodwill 6,053 7,977 Allowance for doubtful accounts 5,107 2,874 Accrued compensation and other 1,394 1,782 Accrued phantom stock 637 628 Stock-based compensation 4,476 4,098 Capitalized costs 1,514 1,137 Lease liability 705 842 Capital loss carryover 328 — Investments 247 — Other 193 170 UNICAP 13 15 Total deferred tax assets $ 21,491 $ 20,566 Deferred tax liabilities: Right-of-use asset $ ( 709 ) $ ( 848 ) Property and equipment ( 12,368 ) ( 15,141 ) Total deferred liabilities $ ( 13,077 ) $ ( 15,989 ) Valuation allowance: Net deferred tax asset before valuation allowance $ 8,414 $ 4,577 Less: valuation allowance ( 16 ) ( 19 ) Net deferred tax asset $ 8,398 $ 4,558 Page F-26 11. Earnings Per Share Income per common share is calculated using earnings for the year divided by the weighted average number of shares outstanding during the year . Using the treasury stock method, diluted income per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares by assuming the proceeds received from the exercise of stock options and the vesting of RSUs are used to purchase common shares at the prevailing market rate. The following reflects the earnings and share data used in the basic and diluted earnings per share computations: Year Ended December 31, 2024 2023 2022 Numerator - basic and diluted: Net income attributable to Viemed Healthcare, Inc. $ 11,265 $ 10,243 $ 6,222 Denominator: Basic weighted average number of common shares 38,754,893 38,354,071 38,655,403 Diluted weighted average number of shares 40,805,085 40,378,922 39,807,434 Basic earnings per share $ 0.29 $ 0.27 $ 0.16 Diluted earnings per share $ 0.28 $ 0.25 $ 0.16 Denominator calculation from basic to diluted: Basic weighted average number of common shares 38,754,893 38,354,071 38,655,403 Stock options and other dilutive securities 2,050,192 2,024,851 1,152,031 Diluted weighted average number of shares 40,805,085 40,378,922 39,807,434 Anti-dilutive shares excluded from the calculation consisted of dilutive employee stock options and RSUs that were de minimis in all periods presented. Page F-27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.