What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 139 added, 134 removed, 324 unchanged (46% 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 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.

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 the anticipated synergies and other benefits related thereto, 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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The risks, uncertainties and other factors, many of which are beyond our control, that could influence actual results include, but are not limited to:

the general business, market and economic conditions in the regions in which the we operate;

the general business, market and economic conditions in the regions in which we operate;

significant capital requirements and operating risks that we may be subject to;

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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, 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 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.

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

We derive a significant portion of our revenue through the rental of non-invasive and invasive ventilators which represented 48.5% and 54.8% of our revenue for the three months ended September 30, 2025 and 2024, respectively, and 52.0% and 55.9% for the nine months ended September 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 June 30, 2025, we employed 414 licensed RTs, representing approximately 33% of our company-wide employee count.

As of September 30, 2025, we employed 414 licensed RTs, representing approximately 30% 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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Trends Affecting our Business

Demographic and Market Trends

Home medical equipment markets are witnessing sustained expansion, with a notable focus on the complex respiratory and Obstructive Sleep Apnea ("OSA") device segments.

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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.

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.

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 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

The Company faces current and potential future inflationary pressures driven by factors such as general cost increases, supply chain disruptions, and governmental policies.

The manufacturing and distribution costs of Viemed's patient equipment are affected by rising material, labor, and transportation expenses, including fuel costs.

Persistent inflation may impact overall demand, increase operating costs, and affect profit margins, potentially adversely affecting Viemed's business and financial performance.

In its 2025 DMEPOS Fee Schedule, CMS announced the fee schedule adjustment based on the annual change to the Consumer Pricing Index for all urban areas.

Items that were subject to the competitive bidding program in former competitive bidding areas will receive a 2.9% reimbursement rate increase.

Items that were subject to the competitive bidding program in non-competitive bidding areas received a 3.0% reimbursement rate increase.

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.

Regulatory and Policy Developments

Regulatory and policy developments remain a key area of focus.

In particular, ventilator coverage has received renewed attention from the Centers for Medicare & Medicaid Services (“CMS”).

Although ventilators have historically been included under the National Coverage Determination (“NCD”) for the Durable Medical Equipment Reference List, there was previously no dedicated policy specifically addressing ventilator use.

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

CMS issued a proposed decision memorandum on March 11, 2025, followed by a final NCD on June 9, 2025.

We actively participated in this process through formal comments and engagement with CMS, the U.S.

Department of Health and Human Services (“HHS”), and members of Congress.

The final NCD establishes specific medical necessity criteria for ventilator use that are expected to influence patient access, reimbursement, and utilization patterns.

In addition to affecting traditional Medicare, the NCD may also influence coverage determinations and reimbursement policies under commercial insurance and Medicare Advantage plans that reference or align with CMS coverage criteria.

These changes may have a material impact on our business.

In addition, CMS has proposed comprehensive reforms to the Medicare Competitive Bidding Program (“CBP”) for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”), along with related updates to supplier accreditation standards and Medicare provider enrollment requirements.

The proposals are intended to modernize the program by refining payment methodologies, contract award processes, and supplier oversight.

Although the final scope and timing of these reforms remain subject to CMS rulemaking, providers with greater scale, infrastructure, and compliance capabilities are generally positioned to compete more effectively under a restructured CBP.

Larger operators may benefit from economies of scale that support service obligations, enable pricing flexibility, and enhance administrative efficiency relative to smaller suppliers.

The federal budget reconciliation legislation, known as the One Big Beautiful Bill Act (“OBBBA”), signed into law on July 4, 2025, introduces a broad set of statutory and policy changes that may affect the healthcare industry and our operations.

Key provisions include revisions to Medicaid renewal and eligibility rules, adjustments to Medicaid state-directed payments and provider tax frameworks, new cost-sharing requirements, reduced home equity thresholds for long-term care eligibility, expanded telehealth coverage, and state waivers to support home and community-based services.

The OBBBA also establishes a Rural Health Transformation program aimed at improving access and care coordination in underserved communities.

Implementation of Pay-As-You-Go (“PAYGO”) rules could result in future adjustments to Medicare and Medicaid spending, including cost containment measures or payment reductions that may impact providers.

Most provisions are scheduled to take effect in 2027 and 2028, although some states may elect to implement certain measures as early as 2026.

We continue to monitor these regulatory developments closely.

Cost Pressures

Viemed operates in an environment of ongoing cost pressures from general cost increases, supply chain dynamics, and government policy.

Manufacturing and distribution expenses are influenced by factors such as rising material, labor, and transportation costs, including fuel.

As discussed in Part II, Item 1A of this Quarterly Report on Form 10-Q, we are primarily exposed to trade policy and tariff developments indirectly, through supplier pricing and component sourcing rather than direct import activity.

In early 2025, the U.S.

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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.

To date, we have not experienced a significant impact on our operating costs or supply availability as a result of these tariff actions, but the timing, scope, and duration of future measures 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 manage 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 June 30,

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

For the quarter ended September 30,

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

Financial Information:

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Results of Operations

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,

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

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

Three Months Ended September 30,

2025 % of Total Revenue 2024

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397 0.6 % 348 0.6 % 49 14.1 %

Gain on disposal of property and equipment

Loss (gain) on disposal of property and equipment

476 0.7 % (469) (0.8) % 945 (201.5) %

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Non-operating income and expenses

Loss on investments

Income (loss) from investments

— — % 96 0.2 % (96) (100.0) %

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$ 3,513 4.9 % $ 3,878 6.7 % $ (365) (9.4) %

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

Three Months Ended June 30,

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

Three Months Ended September 30,

2025 % of Total Revenue 2024

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$ 71,914 100.0 % $ 58,004 100.0 % $ 13,910 24.0 %

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.

Additionally, rental revenue from other home medical equipment increased by $1.6 million (or 13.2%) 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 $2.1 million (or 29.0%) largely attributable to the success of our sleep resupply program.

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.

For the three months ended September 30, 2025, revenue totaled $71.9 million, an increase of $13.9 million (or 24.0%) from the comparable period in 2024.

The primary driver of this growth was equipment and supply sales revenue, which increased by $7.3 million (or 86.0%) largely due to the success of our sleep resupply program and the addition of maternal health offerings in connection with the Lehan acquisition.

Ventilator rental revenue increased by $3.1 million (or 9.8%) primarily as a result of higher patient volumes and sustained demand for ventilation services.

Rental revenue from other home medical equipment increased by $2.9 million (or 23.6%) reflecting an expanding patient base and continued demand for Positive Airway Pressure (PAP) therapy, oxygen therapy, and percussion vest services.

Services revenue increased by $0.6 million (or 11.2%) due to the growth of healthcare staffing offerings.

While ventilator rentals continue to represent a significant portion of our total revenue, the growth in equipment and supply sales, as well as our healthcare staffing offerings, is contributing to the diversity of our overall revenue mix.

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

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Cost of revenue and gross profit

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.

Cost of revenue for the three months ended September 30, 2025 was $30.6 million, an increase of $6.9 million (or 29.3%) 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.

Gross profit margin decreased modestly to 57.5% in the three months ended September 30, 2025, compared to 59.3% for the same period in 2024.

The decline in gross margin was primarily attributable to changes in the revenue mix associated with the diversification of our products and services.

We expect continued growth and scale to support improved cost efficiencies over time.

However, the evolving revenue mix may 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 economies of scale are realized.

Selling, general and administrative expense

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.

Selling, general and administrative expenses as a percentage of revenue improved to 44.4% for the three months ended September 30, 2025 compared to 46.0% for the three months ended September 30, 2024.

Selling, general and administrative expenses totaled $31.9 million for the three months ended September 30, 2025, an increase of $5.2 million (or 19.7%) from the comparable period in 2024.

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

The overall increase in selling, general and administrative expense compared to the prior period is primarily attributable to additional employee-related expenses to accommodate the overall growth of the Company and the impact of the Lehan acquisition completed on July 1, 2025.

Employee compensation expenses increased $2.7 million (or 13.8%) as a result of the increase in our employee headcount from both organic expansion and the acquired operations.

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.

For both the three months ended September 30, 2025 and September 30, 2024, research and development expense totaled $0.8 million.

As we continue to invest in research and development related projects to support our technology initiatives, we expect that 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.

Stock-based compensation totaled $2.2 million for the three months ended September 30, 2025, an increase of 27.3% compared to the same 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.

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

Loss (gain) on disposal of property and equipment

For the three months ended September 30, 2025, the Company recognized a $0.5 million loss on the disposal of property and equipment, compared to a $0.5 million gain in the same period of 2024.

The current period loss was primarily related to patient equipment that was damaged or destroyed and subsequently written off.

The prior-year gain was 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, no material gains from these transactions are expected in future periods.

However, the Company expects that certain losses associated with the disposal of damaged or destroyed equipment may continue to occur in future periods.

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.

For the three months ended September 30, 2025, net interest expense totaled $0.5 million, an increase of $0.3 million from the comparable period in 2024.

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

However, with anticipated debt repayments, we expect a reduction in quarterly net interest expense for the remainder of 2025.

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.

For the three months ended September 30, 2025, the provision for income taxes was a $1.5 million expense, compared to a $1.6 million expense during the 2024 period.

Our annual estimated effective tax rate for 2025 is 31.6%.

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,

For the three months ended September 30, 2025, net income was $3.6 million, a decrease of $0.3 million (or 7.8%) from the comparable period in 2024.

Net income as a percentage of revenue decreased from 6.7% for the three months ended September 30, 2024 to 5.0% for the three months ended September 30, 2025, primarily due to the gains recognized in 2024 from our participation in the ventilator buyback program.

Comparison of the Nine Months Ended September 30, 2025 and 2024:

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

Nine Months Ended September 30,

% of Total Revenue 2024

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1,098 0.7 % 1,140 0.7 % (42) (3.7) %

Gain on disposal of property and equipment

Loss (gain) on disposal of property and equipment

(2,528) (1.3) % (801) (0.5) % (1,727) 215.6 %

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Non-operating income and expenses

Loss on investments

Income (loss) from investments

— — % (954) (0.6) % 954 (100.0) %

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$ 9,295 4.8 % $ 6,949 4.2 % $ 2,346 33.8 %

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

Six Months Ended June 30,

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

Nine Months Ended September 30,

% of Total Revenue 2024

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$ 194,099 100.0 % $ 163,562 100.0 % $ 30,537 18.7 %

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.

For the nine months ended September 30, 2025, revenue totaled $194.1 million, an increase of $30.5 million (or 18.7%) from the comparable period in 2024.

The primary driver of this growth was our equipment and supply sales revenue, which increased by $10.8 million (or 49.0%), largely due to the success of our sleep resupply program and the addition of maternal health offerings in connection with the Lehan acquisition.

Ventilator rental revenue increased by $9.5 million (or 10.3%), primarily as a result of higher patient volumes and sustained demand for ventilation services.

Rental revenue from other home medical equipment increased by $6.6 million (or 18.5%), reflecting an expanding patient base and strong demand for Positive Airway Pressure (PAP) therapy, oxygen therapy, and percussion vest services.

Services revenue increased by $3.7 million (or 25.5%) 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.

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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.

Cost of revenue for the nine months ended September 30, 2025 was $82.7 million, an increase of $16.2 million (or 24.4%) 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.

Gross profit margin decreased to 57.4% for the nine months ended September 30, 2025, compared to 59.3% for the same period in 2024.

The decline in gross margin was primarily attributable to changes in the revenue mix associated with the diversification of our products and services.

We expect continued growth and scale to support improved cost efficiencies over time.

However, the evolving revenue mix may 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 economies of scale are realized.

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 1,121 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.

Selling, general and administrative expenses as a percentage of revenue improved to 45.9% for the nine months ended September 30, 2025, compared to 47.7% for the same period in 2024.

Selling, general and administrative expenses totaled $89.1 million for the nine months ended September 30, 2025, an increase of $11.2 million (or 14.3%) from the comparable period in 2024.

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

The overall increase in selling, general and administrative expenses compared to the prior period is primarily attributable to additional employee-related expenses to support the Company’s overall growth and the impact of the Lehan acquisition completed on July 1, 2025.

Employee compensation expenses increased $6.7 million (or 12.0%) as a result of the increase in our employee headcount from both organic expansion and the acquired operations.

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 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.

For the nine months ended September 30, 2025, research and development expense totaled $2.4 million, an increase of $0.2 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 six months ended June 30, 2025, stock-based compensation totaled $4.7 million, an increase of 52.4% from the comparable period in 2024.

For the nine months ended September 30, 2025, stock-based compensation totaled $6.8 million, an increase of 43.4% 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.

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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.

For the nine months ended September 30, 2025, gain on disposal of property and equipment totaled $2.5 million compared to gain on disposal of property and equipment of $0.8 million for the nine months ended September 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.

However, the Company expects that certain losses associated with the disposal of damaged or destroyed equipment may continue to occur in future periods.

Income (loss) from investments

The $1.0 million loss from investments in the prior year period ended September 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.

For the nine months ended September 30, 2025, net interest expense totaled $0.8 million, an increase of $0.2 million from the comparable period in 2024.

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

However, with anticipated debt repayments, we expect a reduction in quarterly net interest expense for the remainder of 2025.

Provision for income taxes

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.

For the nine months ended September 30, 2025, the provision for income taxes was a $4.2 million expense, compared to a $2.9 million expense during the 2024 period.

Our annual estimated effective tax rate for 2025 is 31.6%.

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.

For the nine months ended September 30, 2025, net income was $9.6 million, an increase of $2.6 million (or 36.9%) from the comparable period in 2024.

Net income as a percentage of revenue increased from 4.3% for the nine months ended September 30, 2024 to 4.9% for the nine months ended September 30, 2025.

Non-GAAP Financial Measures

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

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

Net income attributable to Viemed Healthcare, Inc.

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Liquidity and Capital Resources

Cash and cash equivalents at June 30, 2025 was $20.0 million, compared to $17.5 million at December 31, 2024.

Cash and cash equivalents at September 30, 2025 was $11.1 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 following table summarizes our cash flows for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

Net Cash provided by (used in):

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Financing activities 2,662 (4,093)

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

$ (6,417) $ (1,492)

Net Cash Provided by Operating Activities

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 six months ended June 30, 2024 was $11.4 million, resulting from net income of $3.1 million, increased by net income adjustments of $16.5 million and offset by an increase in non-cash working capital of $8.2 million.

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

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

Net cash provided by operating activities during the nine months ended September 30, 2025 was $33.5 million, resulting from net income of $9.6 million, increased by net income adjustments of $28.2 million and offset by an increase in non-cash working capital of $4.3 million.

The net income adjustments primarily consisted of $21.0 million of depreciation and amortization, $6.8 million of stock-based compensation, and a $2.7 million deferred income tax expense, partially offset by a $2.5 million gain on disposal of property and equipment.

The primary changes in non-cash working capital were an increase in accrued liabilities of $1.6 million and trade payables of $0.8 million, partially offset by a change in income tax payable/receivable of $5.8 million and an increase in net accounts receivable of $0.7 million.

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

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

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

Net Cash Used in Investing Activities

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 in investing activities during the nine months ended September 30, 2025 was $42.6 million, primarily due to the net cash paid for the acquisition of Lehan of $26.3 million.

Net cash used for capital expenditures during the period was $16.2 million, consisting of $31.2 million of purchases of property and equipment, partially offset by $15.0 million of sales proceeds from the disposal of property and equipment.

Net cash used for capital expenditures represents a decrease of $2.3 million, or 12.3%, 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 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.

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, partially offset by $7.4 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.

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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.

Net cash provided by financing activities during the nine months ended September 30, 2025 was $2.7 million.

During the period, proceeds from the 2022 Term Loan Facility (as defined below) were $9.0 million and proceeds from the 2022 Revolving Credit Facility (as defined below) were $13.0 million, which were used to partially fund the cash acquisition of Lehan.

Subsequent to the Lehan acquisition, the Company made $5.0 million of principal payments on the 2022 Revolving Credit Facility.

In addition, the Company repurchased and cancelled common shares totaling $13.2 million under the 2025 Share Repurchase Program and $1.7 million to satisfy employee income tax withholding obligations associated with the vesting of RSUs, while proceeds from the exercise of stock options were $1.4 million during the period.

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

During the period, proceeds from the 2022 Revolving Credit Facility were $3.0 million, which were 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 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 obligations associated with the vesting of RSUs during the period while proceeds from the exercise of stock options during the nine months ended September 30, 2024 were $0.4 million.

Senior Credit Facilities

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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 $4.4 million as of June 30, 2025.

There were no outstanding borrowings under the 2022 Revolving Credit Facility as of June 30, 2025.

Outstanding borrowings under the 2022 Term Loan Facility and 2022 Revolving Credit Facility were $13.1 million and $8.0 million, respectively, as of September 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%.

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

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

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

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

Within 12 Months Beyond 12 Months

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Total $ 4,575 $ 24,279

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.

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, 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 $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.

Matching employer contributions to the 401(k) plan totaled $455,000 and $358,000 for the three months ended September 30, 2025 and 2024, respectively, and $1,400,000 and $1,230,000 for the nine months ended September 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