What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-07 · 189 added, 94 removed, 269 unchanged (51% of the section changed)

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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, 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.

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 acquisition of Lehan’s Medical Equipment, such as contingent payments and anticipated 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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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, the sale of associated supplies, and healthcare staffing services.

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 derive the majority of our revenue through the rental of non-invasive and invasive ventilators which represented 53.6% and 55.4% of our revenue for the three months ended June 30, 2025 and 2024, respectively, and 54.0% and 56.5% for the six months ended June 30, 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 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.

As of June 30, 2025, we employed 414 licensed RTs, representing approximately 33% 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.

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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.

Regulatory uncertainty remains a key risk.

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

Notably, the recent finalization of the “One Big Beautiful Bill Act” (OBBBA) has introduced significant healthcare reforms that could impact reimbursement structures, coverage policies, and provider obligations.

Additionally, the implementation of Pay-As-You-Go (PAYGO) budgeting rules may result in further adjustments to Medicare and Medicaid spending, potentially leading to additional cost containment measures or payment reductions that could affect HME providers.

As the industry adjusts to these developments, providers must continue to monitor and adapt to the evolving regulatory environment.

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

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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.

CMS released a proposed decision memo on March 11, 2025, and issued the final NCD on June 9, 2025.

We have actively participated in the NCD process through formal comments and ongoing engagement with CMS, the Department of Health and Human Services, and members of Congress.

The final NCD establishes clear medical necessity criteria for ventilator use that are expected to impact patient access, reimbursement, and utilization of ventilator therapies.

This development may have a material effect on our business.

Impact of Inflation

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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.

In early 2025, the U.S.

government announced new tariffs on a broad range of imported goods from multiple countries, prompting reciprocal tariffs from affected trade partners.

While medical equipment has traditionally been excluded from such tariffs, the expanded scope of recent trade measures and the possibility of further escalation create significant uncertainty around equipment pricing and supply availability.

The timing, scope, and final implementation of these tariffs remain unpredictable.

The Company is actively monitoring these developments and continuously assessing their potential operational and financial impacts.

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 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 March 31,

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

For the quarter ended June 30,

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

Financial Information:

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Results of Operations

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 $

Comparison of the Three Months Ended June 30, 2025 and 2024:

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

2025 % of Total Revenue 2024

% of Total Revenue $

Revenue $ 63,056 100.0 % $ 54,965 100.0 % $ 8,091 14.7 %

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353 0.6 % 377 0.7 % (24) (6.4) %

Loss (gain) on disposal of property and equipment

Gain on disposal of property and equipment

(636) (1.0) % (545) (1.0) % (91) 16.7 %

Other income, net

Other expense (income), net

(72) (0.1) % 563 1.0 % (635) (112.8) %

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Non-operating income and expenses

Income from investments

Loss on investments

— — % (1,117) (2.0) % 1,117 (100.0) %

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Provision for income taxes

1,713 2.7 % 768 1.4 % 945 123.0 %

Net income 3,250 5.2 % 1,477 2.7 % 1,773 120.0 %

Net income attributable to noncontrolling interest 93 0.2 % 9 — % 84 933.3 %

85 0.1 % — — % 85 NM

Net income attributable to Viemed Healthcare, Inc.

$ 3,157 5.0 % $ 1,468 2.7 % $ 1,689 115.1 %

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 $

The following table summarizes our revenue for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

2025 % of Total Revenue 2024

% of Total Revenue $

Revenue from rentals

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Service revenues 5,900 9.4 % 4,931 9.0 % 969 19.7 %

Total revenues

Total revenue

$ 63,056 100.0 % $ 54,965 100.0 % $ 8,091 14.7 %

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.

For the three months ended June 30, 2025, revenue totaled $63.1 million, an increase of $8.1 million (or 14.7%) from the comparable period in 2024.

The primary driver of this growth was our ventilator rental revenue, which increased by $3.4 million (or 11.1%) due to higher patient volumes associated with strong demand for ventilation services.

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Equipment and supply sales grew by $2.1 million (or 29.0%) 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.

Furthermore, services revenue experienced an increase of $1.0 million (or 19.7%) primarily due to the growth of healthcare staffing offerings.

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

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 other home medical offerings.

As we broaden our geographic footprint and deepen our presence in existing markets, we expect further growth in our ventilator patient base.

Additionally, the continued expansion of existing home medical equipment offerings, together with the introduction of new and complementary products, is expected to serve as an additional driver of revenue growth in future periods.

Cost of revenue and gross profit

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.

Cost of revenue for the three months ended June 30, 2025 was $26.3 million, an increase of $4.3 million (or 19.3%) compared to the same period in 2024.

This increase was primarily driven by higher patient volumes and the expansion of our service offerings, which contributed to overall revenue growth.

Gross profit margin declined modestly to 58.3% in the three months ended June 30, 2025, down from 59.8% in the prior-year comparable period.

The decrease in gross margin was largely driven by changes in our revenue mix associated with the diversification of our products and services.

We expect that continued growth and scaling of our operations may lead to improved cost efficiency over time.

However, the margin impact of an evolving revenue mix could partially offset these benefits.

As a result, gross margins may fluctuate in future periods depending on the composition of revenue sources and the degree to which we are able to capture economies of scale.

Selling, general and administrative expense

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.

Selling, general, and administrative expenses as a percentage of revenue improved to 45.7% for the three months ended June 30, 2025 compared to 48.2% for the three months ended June 30, 2024.

Selling, general and administrative expenses totaled $28.8 million for the three months ended June 30, 2025, an increase of $2.3 million (or 8.7%) from the comparable period in 2024.

The improvement in selling, general, and administrative expenses as a percentage of revenue reflects the benefits of operating leverage and continued gains in operational efficiency.

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 $1.8 million (or 9.9%) 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 supported by ongoing efficiency initiatives and disciplined cost management.

Research and development

For the three months ended June 30, 2025, research and development expense totaled $0.8 million, an increase of $0.1 million from the comparable period in 2024.

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 three months ended June 30, 2025, stock-based compensation totaled $2.3 million, an increase of 44.5% from the comparable period in 2024.

The increase reflects our continued investment in employee retention and long-term incentive programs, including the broader integration of equity-based awards into our compensation structure.

As we expand our workforce and align employee incentives with long-term shareholder value, we expect stock-based compensation to remain a consistent component of our cost structure throughout the remainder of 2025.

Gain on disposal of property and equipment

For the three months ended June 30, 2025, gain on disposal of property and equipment totaled $0.6 million compared to gain on disposal of property and equipment of $0.5 million for the three months ended June 30, 2024.

In both periods, the gains were primarily attributable to proceeds from the sale of recalled ventilators back to the manufacturer.

As our participation in the ventilator buyback program has substantially concluded, we do not expect further material gains from these transactions in future periods.

Other expense (income), net

For the three months ended June 30, 2025, other income totaled $0.1 million, compared to other expense of $0.6 million for the three months ended June 30, 2024.

Other expense during the prior period 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.

Loss on investments

The $1.1 million loss on investments in the prior year period ended June 30, 2024 primarily reflects a loss recognized on a debt investment during the period.

No investment related loss was recorded in the current period.

Interest expense, net

Net interest expense was not significant for the three months ended June 30, 2025 or the comparable period in 2024.

However, we expect net interest expense to increase over the remainder of 2025 following the issuance of debt to finance the acquisition of Lehan’s Medical Equipment.

Provision for income taxes

For the three months ended June 30, 2025, the provision for income taxes was a $1.7 million expense, compared to a $0.8 million expense during the 2024 period.

Our annual estimated effective tax rate for 2025 is 31.7%.

For the three months ended June 30, 2025, net income was $3.3 million, an increase of $1.8 million (or 120.0%) from the comparable period in 2024.

Net income as a percentage of revenue increased from 2.7% for the three months ended June 30, 2024 to 5.2% for the three months ended June 30, 2025.

Comparison of the Six Months Ended June 30, 2025 and 2024:

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

% of Total Revenue 2024

% of Total Revenue $

Revenue $ 122,185 100.0 % $ 105,558 100.0 % $ 16,627 15.8 %

Cost of revenue 52,175 42.7 % 42,864 40.6 % 9,311 21.7 %

Gross profit 70,010 57.3 % 62,694 59.4 % 7,316 11.7 %

Selling, general and administrative 57,228 46.8 % 51,317 48.6 % 5,911 11.5 %

Research and development 1,644 1.3 % 1,508 1.4 % 136 9.0 %

Stock-based compensation 4,652 3.8 % 3,052 2.9 % 1,600 52.4 %

Depreciation and amortization

701 0.7 % 792 0.8 % (91) (11.5) %

Gain on disposal of property and equipment

(3,004) (2.5) % (332) (0.3) % (2,672) 804.8 %

Other expense (income), net

(147) (0.1) % 537 0.5 % (684) (127.4) %

Income from operations 8,936 7.3 % 5,820 5.5 % 3,116 53.5 %

Non-operating income and expenses

Loss on investments

— — % (1,050) (1.0) % 1,050 (100.0) %

Interest expense, net

(311) (0.2) % (404) (0.4) % 93 (23.0) %

Net income before taxes 8,625 7.1 % 4,366 4.1 % 4,259 97.5 %

Provision for income taxes 2,665 2.2 % 1,286 1.2 % 1,379 107.2 %

Net income 5,960 4.9 % 3,080 2.9 % 2,880 93.5 %

Net income attributable to noncontrolling interest 178 0.2 % 9 — % 169 1877.8 %

Net income attributable to Viemed Healthcare, Inc.

$ 5,782 4.7 % $ 3,071 2.9 % $ 2,711 88.3 %

The following table summarizes our revenue for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

% of Total Revenue 2024

% of Total Revenue $

Revenue from rentals

Ventilator rentals, non-invasive and invasive $ 65,979 54.0 % $ 59,632 56.5 % $ 6,347 10.6 %

Other home medical equipment rentals

26,798 21.9 % 23,145 21.9 % 3,653 15.8 %

Revenue from sales and services

Equipment and supply sales 17,020 13.9 % 13,516 12.8 % 3,504 25.9 %

Service revenues 12,388 10.2 % 9,265 8.8 % 3,123 33.7 %

Total revenue

$ 122,185 100.0 % $ 105,558 100.0 % $ 16,627 15.8 %

For the six months ended June 30, 2025, revenue totaled $122.2 million, an increase of $16.6 million (or 15.8%) from the comparable period in 2024.

The primary driver of this growth was our ventilator rental revenue, which increased by $6.3 million (or 10.6%) due to higher patient volumes associated with strong demand for ventilation services.

Additionally, rental revenue from other home medical equipment increased by $3.7 million (or 15.8%) 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 $3.5 million (or 25.9%) largely attributable to the success of our sleep resupply program.

Furthermore, services revenue experienced an increase of $3.1 million (or 33.7%), primarily due to the growth of healthcare staffing offerings.

As we broaden our geographic footprint and deepen our presence in existing markets, we expect further growth in our ventilator patient base.

Cost of revenue and gross profit

Cost of revenue for the six months ended June 30, 2025 was $52.2 million, an increase of $9.3 million (or 21.7%) compared to the same period in 2024.

This increase was primarily driven by higher patient volumes and the expansion of our service offerings, which contributed to overall revenue growth.

Gross profit margin declined to 57.3% in the six months ended June 30, 2025, down from 59.4% in the prior-year comparable period.

The decrease in gross margin was largely driven by changes in our revenue mix associated with the diversification of our products and services.

We expect that continued growth and scaling of our operations may lead to improved cost efficiency over time.

However, the margin impact of an evolving revenue mix could partially offset these benefits.

As a result, gross margins may fluctuate in future periods depending on the composition of revenue sources and the degree to which we are able to capture economies of scale.

Selling, general and administrative expense

Selling, general, and administrative expenses as a percentage of revenue improved to 46.8% for the six months ended June 30, 2025 compared to 48.6% for the six months ended June 30, 2024.

Selling, general and administrative expenses totaled $57.2 million for the six months ended June 30, 2025, an increase of $5.9 million (or 11.5%) from the comparable period in 2024.

The improvement in selling, general, and administrative expenses as a percentage of revenue reflects the benefits of operating leverage and continued gains in operational efficiency.

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

Our full time employee count increased from 1,121 on June 30, 2024 to 1,258 on June 30, 2025, an increase of 12.2%.

Employee compensation expenses increased $4.1 million (or 11%) 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 three months ended March 31, 2024 and March 31, 2025, research and development expense totaled $0.8 million.

For the six months ended June 30, 2025, research and development expense totaled $1.6 million, an increase of $0.1 million from the comparable period in 2024.

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 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 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.

For the six months ended June 30, 2025, stock-based compensation totaled $4.7 million, an increase of 52.4% from the comparable period in 2024.

The increase reflects our continued investment in employee retention and long-term incentive programs, including the broader integration of equity-based awards into our compensation structure.

Gain on disposal of property and equipment

For the six months ended June 30, 2025, gain on disposal of property and equipment totaled $3.0 million compared to gain on disposal of property and equipment of $0.3 million for the six months ended June 30, 2024.

In both periods, the gains were primarily attributable to proceeds from the sale of recalled ventilators back to the manufacturer.

As our participation in the ventilator buyback program has substantially concluded, we do not expect further material gains from these transactions in future periods.

Other expense (income), net

For the six months ended June 30, 2025, other income totaled $0.1 million, compared to other expense of $0.5 million for the six months ended June 30, 2024.

Loss on investments

The $1.1 million loss on investments in the prior year period ended June 30, 2024 primarily reflects a loss recognized on a debt investment during the period.

No investment related loss was recorded in the current period.

Interest expense, net

Net interest expense was not significant for the six months ended June 30, 2025 or the comparable period in 2024.

However, we expect net interest expense to increase over the remainder of 2025 following the issuance of debt to finance the acquisition of Lehan’s Medical Equipment.

Provision for income taxes

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.

For the six months ended June 30, 2025, the provision for income taxes was a $2.7 million expense, compared to a $1.3 million expense during the 2024 period.

Our annual estimated effective tax rate for 2025 is 31.7%.

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.

For the six months ended June 30, 2025, net income was $6.0 million, an increase of $2.9 million (or 93.5%) from the comparable period in 2024.

Net income as a percentage of revenue increased from 2.9% for the six months ended June 30, 2024 to 4.9% for the six months ended June 30, 2025.

Non-GAAP Financial Measures

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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.

including depreciation and amortization of capitalized assets, net interest expense, 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

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

Net income attributable to Viemed Healthcare, Inc.

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6,891 6,613 6,366 6,408 6,309 6,285 5,918 5,975

Interest expense (income)

Interest expense, net

132 179 147 225 254 150 256 237

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Liquidity and Capital Resources

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

Cash and cash equivalents at June 30, 2025 was $20.0 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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The Company has also historically utilized short term financing arrangements with suppliers that could be extended over a longer term if there was a need for additional liquidity.

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

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

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

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

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:

Three Months Ended March 31,

Six Months Ended June 30,

Net Cash provided by (used in):

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Financing activities (2,375) 1,143

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

$ 2,476 $ (4,032)

Net Cash Provided by Operating Activities

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.

Net cash provided by operating activities during the six months ended June 30, 2025 was $15.1 million, resulting from net income of $6.0 million, increased by net income adjustments of $13.3 million and offset by an increase in non-cash working capital of $4.1 million.

The net income adjustments primarily consisted of $13.5 million of depreciation and amortization and $4.7 million of stock-based compensation, partially offset by a $3.0 million gain on disposal of property and equipment.

The primary changes in non-cash working capital were an increase in net accounts receivable of $1.6 million, a decrease in accrued liabilities of $2.0 million, and a decrease in income tax payable of $2.4 million, partially offset by an increase in trade payables of $1.6 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 provided by operating activities during the six months ended June 30, 2024 was $11.4 million, resulting from net income of $3.1 million, increased by net income adjustments of $16.5 million and offset by an increase in non-cash working capital of $8.2 million.

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

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

Net Cash Used in Investing Activities

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.

Net cash used in investing activities during the six months ended June 30, 2025 was $10.3 million, consisting of $23.6 million of purchases of property and equipment, partially offset by $13.4 million of sales proceeds from the disposal of property and equipment.

Net cash used for capital expenditures represents a decrease of $3.3 million, or 24.2%, year over year.

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

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.

Net cash used in investing activities during the six months ended June 30, 2024 was $16.5 million, consisting of $14.9 million of purchases of property and equipment, partially offset by $1.4 million of sales proceeds from the disposal of property and equipment.

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

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.

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

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities during the six months ended June 30, 2025 was $2.4 million, consisting of $1.7 million of cash paid for common shares repurchased and cancelled pursuant to the 2025 Share Repurchase Program, $0.2 million in principal payments under the 2022 Senior Credit Facilities (as defined below), and $1.6 million for common shares repurchased and cancelled to satisfy employee income tax withholding associated with RSUs vested during the period, partially offset by $1.4 million of proceeds from the exercise of stock options.

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

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

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

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

The Company acquired and cancelled 129,983 common shares at a cost of $1.0 million to satisfy employee income tax withholding associated with RSUs vested during the period while proceeds from the exercise of options during the six months ended June 30, 2024 were $0.3 million.

Senior Credit Facilities

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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.

On June 6, 2025, the Company entered into a Second Amendment to the 2022 Senior Credit Facilities that (a) increased the permitted amount of restricted payments that may be made by the Company and its subsidiaries subject to specified conditions, and (b) made other conforming and administrative changes.

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 $4.5 million as of March 31, 2025.

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

Outstanding borrowings under the 2022 Term Loan Facility were $4.4 million as of June 30, 2025.

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

3 unchanged sentences

• Consolidated Fixed Charge Coverage Ratio ( defined generally as (a) adjusted EBITDA minus capital expenditures minus cash taxes to (b) the sum of scheduled principal payments plus cash interest expense plus restricted payments) of not less than 1.25:1.0.

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

The Company was in compliance with all covenants under the 2022 Senior Credit Facilities in effect at June 30, 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 March 31, 2025:

The following table presents our material contractual obligations and commitments to make future payments as of June 30, 2025:

Within 12 Months Beyond 12 Months

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Lease Obligations

$ 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.

Total $ 2,234 $ 6,218

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

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

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

Matching employer contributions to the 401(k) plan totaled $379,000 and $338,000 for the three months ended June 30, 2025 and 2024, respectively, and $945,000 and $873,000 for the six months ended June 30, 2025 and 2024, respectively.

Off Balance Sheet Arrangements

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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