What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 123 added, 252 removed, 240 unchanged (61% of the section changed)

5 unchanged sentences

Certain statements and information in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 or "forward-looking information" as such term is defined in applicable Canadian securities legislation (collectively, "forward-looking statements").

Any statements other than statements of historical information, including those that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

Any statements other than statements of historical information, including those that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance, including the Company’s expectations about its pending acquisition of Lehan, such as expected purchase price, contingent payments, closing date, funding sources, and other benefits, are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

These forward-looking statements are made as of the date hereof.

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Accordingly, readers should not place undue reliance on forward-looking statements.

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, including those identified under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and the other documents we file with the SEC, including under “Item 1A.

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, including those identified under “Item 1A.

Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and the other documents we file with the SEC, including under “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, and with the securities regulatory authorities in certain provinces of Canada, which contribute to the possibility that the predicted outcomes may not occur or may be delayed.

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critical accounting estimates and changes to accounting standards, policies, and methods used by us;

our status as an emerging growth company;

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

and other factors beyond our control.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

General Matters

In this Quarterly Report on Form 10-Q, 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).

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 54.8% and 57.3% of our revenue for the three months ended September 30, 2024 and 2023, respectively, and 55.9% and 59.9% for the nine months ended September 30, 2024 and 2023, respectively.

We derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 54.4% and 57.7% of our revenue for the three months ended March 31, 2025 and 2024, respectively.

We combine the benefits of home ventilation support with licensed Respiratory Therapists ("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.

As of September 30, 2024, we employed 398 licensed RTs, representing approximately 35% of our company-wide employee count.

By focusing overhead costs on personnel that service the patient rather than physical location costs, we anticipate that we will efficiently scale our business in regions that are currently not being effectively serviced.

We anticipate expanding our workforce of RTs to support our growth and ensure our high service model is maintained in the home.

As of March 31, 2025, we employed 418 licensed RTs, representing approximately 34% of our company-wide employee count.

Beyond fulfilling our internal staffing needs, we also provide 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.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

Trends Affecting our Business

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The decline in the number of smaller regional players is attributed to the capital investment and scale required to compete effectively.

This has led to a more consolidated and competitive landscape in the DME market.

This has led to a more consolidated and competitive landscape in the durable medical equipment (“DME”) market.

Despite these positive trends, the industry faces challenges such as cost containment efforts of payors.

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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.

There is also uncertainty surrounding the U.S.

healthcare regulatory environment.

Future changes in federal spending priorities, program eligibility, and administrative policy may materially affect the HME industry.

For example, on January 20, 2025, President Trump issued an executive order establishing the U.S.

Department of Government Efficiency Service Temporary Organization (“DOGE”) to reform federal processes and reduce expenditures.

Subsequently, on February 5, 2025, the Centers for Medicare & Medicaid Services (“CMS”) announced a partnership with DOGE to evaluate more efficient resource use within federal healthcare programs.

It remains unclear how these actions will evolve or what implications they may have for the broader healthcare ecosystem.

In addition, ventilator coverage remains a key area of regulatory focus.

Although ventilators have historically been included under the National Coverage Determination (“NCD”) for the Durable Medical Equipment Reference List, which has been in effect since April 1, 2003, there is currently no dedicated coverage policy that specifically addresses ventilator use.

On September 11, 2024, the CMS initiated a national coverage analysis (NCA) to evaluate the use of noninvasive positive pressure ventilation in the home for the treatment of chronic respiratory failure related to chronic obstructive pulmonary disease.

CMS released a proposed decision memo on March 11, 2025, and a final determination is scheduled for June 9, 2025, although the timing may be extended or delayed.

We have actively participated in the coverage analysis process, including the submission of formal comments, and we continue to engage with CMS, the Department of Health and Human Services, and members of Congress.

The issuance of a revised or new NCD that clearly defines medical necessity criteria for ventilator use could significantly affect patient access, reimbursement, and utilization of ventilator therapies, and may have a material impact on our business.

Impact of Inflation

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Items not subject to the competitive bidding program received a 2.4% reimbursement rate increase.

As discussed in Part II, Item 1A of this Quarterly Report on Form 10-Q, we are exposed to risks related to our reliance on third-party suppliers, including those associated with evolving trade policies and tariff regimes.

In the first quarter of 2025, the U.S.

government imposed new tariffs on a broad range of imported goods from several countries, prompting reciprocal measures from affected trade partners.

While medical equipment has historically been excluded from such tariffs, the scope of the latest measures and their potential future expansion create uncertainty around equipment pricing and availability.

We are closely monitoring these developments and assessing their potential operational and financial impact.

In response, we are actively pursuing mitigation strategies, including evaluating alternative sourcing arrangements, engaging with domestic manufacturers where feasible, and refining our inventory and supply chain planning to minimize disruption and preserve margin stability.

Future volatility in general price inflation and its impact on material availability, shipping, warehousing, and operational overhead could further impact financial results.

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.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

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.

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

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Dollars, except vent patients)

For the quarter ended September 30,

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

For the quarter ended March 31,

2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023

Financial Information:

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Gross Profit % 56 % 60 % 59 % 60 % 59 % 63 % 62 % 60 %

Net Income 3,905 1,477 1,603 3,477 2,919 2,330 1,517 2,438

Cash (As of) 11,347 8,807 7,309 12,839 10,078 10,224 23,544 16,914

Net Income attributable to Viemed Healthcare, Inc.

$ 2,625 $ 4,316 $ 3,878 $ 1,468 $ 1,603 $ 3,477 $ 2,919 $ 2,330

Cash and Cash Equivalents (As of)

$ 10,160 $ 17,540 $ 11,347 $ 8,807 $ 7,309 $ 12,839 $ 10,078 $ 10,224

Total Assets (As of) $ 178,079 $ 177,069 $ 169,526 $ 163,947 $ 154,875 $ 154,895 $ 149,400 $ 149,117

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11,809 11,795 11,374 10,905 10,450 10,327 10,244 10,005

PAP Therapy Patients (3)

22,899 21,338 19,478 17,349 15,726 14,900 14,788 13,313

Sleep Resupply Patients (4)

22,941 24,478 22,143 20,185 18,904 18,902 18,544 12,572

(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.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

(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.

Results of Operations

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

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

Three Months Ended September 30,

2024 % of Total Revenue 2023

% of Total Revenue $

Comparison of the Three Months Ended March 31, 2025 and 2024:

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

2025 % of Total Revenue 2024 % of Total Revenue $

Revenue $ 59,129 100.0 % $ 50,593 100.0 % $ 8,536 16.9 %

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Loss (gain) on disposal of property and equipment

Other expense (income), net

(2,368) (4.0) % 213 0.4 % (2,581) (1211.7) %

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

Non-operating income and expenses

Income (expense) from investments

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

Interest expense, net

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

Net income before taxes 5,499 9.5 % 4,239 8.6 % 1,260 29.7 %

Provision for income taxes

1,594 2.7 % 1,320 2.7 % 274 20.8 %

Net income 3,905 6.7 % 2,919 5.9 % 986 33.8 %

Net income attributable to noncontrolling interest 27 — % — — % 27 NM

Net income attributable to Viemed Healthcare, Inc.

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

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

Three Months Ended September 30,

2024 % of Total Revenue 2023

% of Total Revenue $

Revenue from rentals

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

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

Revenue from sales and services

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

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

Total revenue

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

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

The primary driver of this growth was our ventilator rental revenue, which increased by $3.5 million (or 12.2%) due to higher patient volumes associated with strong demand for ventilation services.

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

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

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

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

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

Cost of revenue and gross profit

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

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

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

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

Selling, general and administrative expense

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

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

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

The overall increase in selling, general and administrative expense as compared to the prior period is primarily attributable to additional employee related expenses to accommodate the overall growth of the Company.

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

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

Research and development

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

As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will remain consistent in 2024 relative to 2023 costs.

Stock-based compensation

For the three months ended September 30, 2024, stock-based compensation totaled $1.7 million, an increase of 17.8% from the comparable period in 2023.

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

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

Loss (gain) on disposal of property and equipment

For the three months ended September 30, 2024, gain on disposal of property and equipment totaled $0.5 million compared to loss on disposal of property and equipment of $0.3 million for the three months ended September 30, 2023.

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

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

Income (expense) from investments

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

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

Interest expense, net

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

As a result of continued repayments on debt, we expect a reduction in quarterly net interest expense for the remainder of 2024.

Provision for income taxes

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

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

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

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

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

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

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

Nine Months Ended September 30,

% of Total Revenue 2023

% of Total Revenue $

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

Cost of revenue 66,497 40.7 % 51,597 39.0 % 14,900 28.9 %

Gross profit 97,065 59.3 % 80,672 61.0 % 16,393 20.3 %

Selling, general and administrative 77,988 47.7 % 63,979 48.4 % 14,009 21.9 %

Research and development 2,265 1.4 % 2,131 1.6 % 134 6.3 %

Stock-based compensation 4,764 2.9 % 4,315 3.3 % 449 10.4 %

Depreciation and amortization

1,140 0.7 % 957 0.7 % 183 19.1 %

Loss (gain) on disposal of property and equipment (801) (0.5) % 373 0.3 % (1,174) (314.7) %

Other expense (income), net

Other income, net

(75) (0.1) % (26) (0.1) % (49) 188.5 %

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Non-operating income and expenses

Income (expense) from investments

Income from investments

— — % (67) (0.1) % 67 (100.0) %

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Net income $ 2,710 4.6 % 1,603 3.2 % $ 1,107 69.1 %

Net income attributable to noncontrolling interest 36 — % — — % 36 NM

Net income attributable to noncontrolling interest

85 0.1 % — — % 85 NM

Net income attributable to Viemed Healthcare, Inc.

$ 2,625 4.4 % $ 1,603 3.2 % $ 1,022 63.8 %

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

Nine Months Ended September 30,

% of Total Revenue 2023

% of Total Revenue $

The following table summarizes our revenue for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

2025 % of Total Revenue 2024 % of Total Revenue $

Revenue from rentals

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Other home medical equipment rentals 12,962 21.9 % 10,934 21.6 % 2,028 18.5 %

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

Revenue from sales and services

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Service revenues 6,489 11.0 % 4,334 8.6 % 2,155 49.7 %

Total revenue

Total revenues

$ 59,129 100.0 % $ 50,593 100.0 % $ 8,536 16.9 %

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

For the three months ended March 31, 2025, revenue totaled $59.1 million, an increase of $8.5 million (or 16.9%) from the comparable period in 2024.

The primary driver of this growth was our ventilator rental revenue, which increased by $3.0 million (or 10.2%) due to higher patient volumes associated with strong demand for ventilation services.

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

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

Furthermore, services revenue experienced an increase of $7.2 million (or 98.3%), primarily due to the growth of healthcare staffing offerings.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

Additionally, rental revenue from other home medical equipment increased by $2.0 million (or 18.5%) 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 $1.4 million (or 22.5%) largely attributable to the success of our sleep resupply program.

Furthermore, service revenue experienced an increase of $2.2 million (or 49.7%), primarily due to the growth of healthcare staffing offerings and a shift in service mix from workforce management arrangements to external staffing services.

Cost of revenue and gross profit

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

Gross profit percentage decreased from approximately 61.0% in the nine months ended September 30, 2023 to approximately 59.3% in the nine months ended September 30, 2024.

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

For the three months ended March 31, 2025, cost of revenue totaled $25.9 million, an increase of $5.1 million (or 24.3%) from the comparable period in 2024.

Gross profit percentage decreased from 58.9% in the three months ended March 31, 2024 to 56.3% in the three months ended March 31, 2025.

While the shift in revenue composition has temporarily impacted gross profit margins, we expect these margins to improve in future periods.

This improvement is anticipated to result from efficiencies associated with the scaling of our individual product and service lines.

However, the continued diversification of our offerings may partially offset these gains, moderating the expansion of gross profit margins.

Selling, general and administrative expense

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

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

Selling, general and administrative expenses as a percentage of revenue improved to 48.1% for the three months ended March 31, 2025 compared to 49.0% for the three months ended March 31, 2024.

Selling, general and administrative expenses totaled $28.4 million for the three months ended March 31, 2025, an increase of $3.6 million (or 14.6%) from the comparable period in 2024.

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

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

Employee compensation expenses increased $10.1 million (or 22%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation.

Our full-time employee count increased from 1,030 on March 31, 2024 to 1,222 on March 31, 2025, an increase of 19%.

Employee compensation expenses increased $2.2 million (or 12%) as a result of the increase in our employee headcount.

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

Research and development

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

As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will remain consistent in 2024 relative to 2023 costs, declining as a percentage of revenue.

For the three months ended March 31, 2024 and March 31, 2025, research and development expense totaled $0.8 million.

As we continue to invest in research and development related projects to support our technology initiatives, we expect that the associated costs will remain consistent in 2025 relative to 2024.

Stock-based compensation

For the nine months ended September 30, 2024, stock-based compensation totaled $4.8 million, an increase of 10.4% from the comparable period in 2023.

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

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.

For the three months ended March 31, 2025, stock-based compensation totaled $2.3 million, an increase of 61.4% from the comparable period in 2024, primarily driven by the transition from phantom stock liability awards to equity awards as a percentage of employee compensation.

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

We expect stock-based compensation expense to remain relatively consistent throughout the remainder of 2025.

Loss (gain) on disposal of property and equipment

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

For the three months ended March 31, 2025, gain on disposal of property and equipment totaled $2.4 million compared to loss on disposal of property and equipment of $0.2 million for the three months ended March 31, 2024.

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

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

Other expense (income), net

For the nine months ended September 30, 2024, other expense (income), net totaled $0.3 million, an increase of $0.4 million from the comparable period in 2023.

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

Income (expense) from investments

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

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

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

Interest expense, net

For the nine months ended September 30, 2024, net interest expense totaled $0.6 million compared to interest income of $0.2 million for the nine months ended September 30, 2023.

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

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

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.

Provision for income taxes

For the nine months ended September 30, 2024, the provision for income taxes was a $2.9 million expense, compared to $2.5 million during the comparable period in 2023.

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

For the three months ended March 31, 2025, the provision for income taxes was a $1.0 million expense, compared to a $0.5 million expense during the 2024 period.

Our annual estimated effective tax rate for 2025 is 29.7%.

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

Net income as a percentage of revenue decreased from 5.1% for the nine months ended September 30, 2023 to 4.3% for the nine months ended September 30, 2024, primarily due to non-operating fair value impairments of a debt investment and outstanding litigation funds receivable.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

For the three months ended March 31, 2025, net income was $2.7 million, an increase of $1.1 million (or 69.1%) from the comparable period in 2024.

Net income as a percentage of net revenue increased from 3.2% for the three months ended March 31, 2024 to 4.6% for the three months ended March 31, 2025.

Non-GAAP Financial Measures

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

In calculating Adjusted EBITDA, certain items (mostly non-cash) are excluded from net income attributable to Viemed Healthcare, Inc.

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 attributable to Viemed Healthcare, Inc., the most directly comparable GAAP measure, to Adjusted EBITDA, on a historical basis for the periods indicated:

For the quarter ended March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023

Net Income attributable to Viemed Healthcare, Inc.

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Interest expense (income)

179 147 225 254 150 256 237 (20)

Stock-based compensation (a)

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VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

Liquidity and Capital Resources

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

Cash and cash equivalents at March 31, 2025 was $10.2 million, compared to $17.5 million at December 31, 2024.

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

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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 nine months ended September 30, 2024.

Although claim submission activity has normalized, the prior delays temporarily reduced operating cash flow and, in some cases, continue to impact the timing of cash collections and resolution of affected claims.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net Cash provided by (used in):

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Net decrease in cash and cash equivalents

$ (7,380) $ (5,530)

Net Cash Provided by Operating Activities

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

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

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

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

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

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

Net cash provided by operating activities during the three months ended March 31, 2025 was $2.9 million, resulting from net income of $2.7 million, increased by net income adjustments of $6.6 million and offset by an increase in non-cash working capital of $6.4 million.

The net income adjustments primarily consisted of $6.6 million of depreciation and amortization and $2.3 million of stock-based compensation, partially offset by a $2.4 million gain on disposal of property and equipment.

The primary changes in non-cash working capital were an increase in net accounts receivable of $1.9 million, a decrease in accrued liabilities of $3.1 million, and a decrease in income tax payable of $2.0 million, partially offset by an increase in trade payables of $1.2 million.

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

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

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

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

Net Cash Used in Investing Activities

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

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

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

Net cash used in investing activities during the three months ended March 31, 2025 was $8.5 million, consisting of $15.5 million of purchases of property and equipment, partially offset by $7.0 million of sales proceeds from the disposal of property and equipment.

Net cash used for capital expenditures represents an increase of $3.2 million, or 59%, 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 HomeMed.

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

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

Net cash used for capital expenditures during the period was $16.0 million and consisted of $18.2 million of purchases of property and equipment, offset by $2.1 million of sales proceeds from the disposal of property and equipment.

Net cash used in investing activities during the three months ended March 31, 2024 was $5.4 million, consisting of $6.0 million of purchases of property and equipment, partially offset by $0.6 million of sales proceeds from the disposal of property and equipment.

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

Net Cash Provided by (used in) Financing Activities

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

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

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

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

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

The Company acquired and cancelled 142,489 common shares at a cost of $1.1 million to satisfy employee income tax withholding associated with RSUs vestings while proceeds from the exercise of options during the nine months ended September 30, 2024 were $0.4 million.

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

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

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

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

The Company acquired and cancelled 75,235 common shares at a cost of $0.6 million to satisfy employee income tax withholding associated with RSUs vestings while proceeds from the exercise of options during the nine months ended September 30, 2024 were $1.2 million.

Sources of Liquidity

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

Net Cash Used in Financing Activities

Net cash used in financing activities during the three months ended March 31, 2025 was $1.7 million.

During the three months ended March 31, 2025, principal payments on the 2022 Senior Credit Facilities (as defined below) were $0.1 million.

The Company acquired and cancelled 193,173 common shares at a cost of $1.6 million to satisfy employee income tax withholding associated with RSUs vesting during the three months ended March 31, 2025.

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

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

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

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

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

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.

On May 28, 2024, the Company entered into a First Amendment to the 2022 Senior Credit Facilities that (a) extended the delayed draw term loan commitment expiration date to November 29, 2025, from its initial expiration date of May 29, 2024, and (b) provided 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 were $4.7 million as of September 30, 2024.

There were no outstanding borrowings under the 2022 Revolving Credit Facility as of September 30, 2024.

Outstanding borrowings under the 2022 Term Loan Facility were $4.5 million as of March 31, 2025.

There were no outstanding borrowings under the 2022 Revolving Credit Facility as of March 31, 2025.

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%.

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The 2022 Senior Credit Facilities also include certain financial covenants, which generally include, but are not limited to the following:

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

for any fiscal quarter ending on and after March 31, 2025, 2.50 to 1.0, subject to certain adjustments following a material acquisition.

• Consolidated 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 September 30, 2024.

The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at March 31, 2025.

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

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

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

The following table presents our material contractual obligations and commitments to make future payments as of March 31, 2025:

Within 12 Months Beyond 12 Months

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Lease Obligations

Total $ 2,172 $ 7,132

Except for the funding of potential acquisitions and investments, we anticipate that our operating cash flows will satisfy our material cash requirements for the 12 months after September 30, 2024.

$ 1,856 $ 6,635

Except for the funding of potential acquisitions and investments, we anticipate that our operating cash flows will satisfy our material cash requirements for the 12 months after March 31, 2025.

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

10 unchanged sentences

The Company maintains a 401(k) retirement plan for employees to which eligible employees can contribute a percentage of their pre-tax compensation.

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

Matching employer contributions to the 401(k) plan totaled $566,000 and $535,000 for the three months ended March 31, 2025 and 2024, respectively.

Off Balance Sheet Arrangements

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

VIEMED HEALTHCARE, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

September 30, 2024 and 2023

Accounting and Disclosure Matters

6 unchanged sentences

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.

2 unchanged sentences

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.

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

Recently Issued Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies of our Condensed 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.

VIEMED HEALTHCARE, INC.

September 30, 2024 and 2023

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis