Item 7. Management’s Discussion and Analysis
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the accompanying notes included elsewhere in this report. The forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to our future development plans, capital resources and requirements, results of operations, and future business performance. Our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors, including, but not limited to, those discussed in the section entitled “Special Note Regarding Forward-Looking Statements” immediately preceding Part I of this report.
Discussion in this Form 10-K includes results of operations and financial condition for 2025 and 2024 and year-over-year comparisons between 2025 and 2024. For discussion on results of operations and financial condition pertaining to 2023 and year-over-year comparisons between 2024 and 2023, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
General Matters
In this Annual Report on Form 10-K, unless the context otherwise requires, the terms "Company," "we," "us" and "our" refer to Viemed Healthcare, Inc. and subsidiaries in which it has a controlling financial interest.
We were incorporated on December 14, 2016 pursuant to the Business Corporations Act (British Columbia). As of June 30, 2020, we determined that we no longer qualify as a "foreign private issuer," as defined in Rule 3b-4 of the Exchange Act, for the purposes of the informational requirements of the Exchange Act. As a result, effective January 1, 2021, we became subject to the proxy solicitation rules under Section 14 of the Exchange Act and Regulation FD, and our officers, directors, and principal shareholders became subject to the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. We will continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC and with the relevant Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval (SEDAR+).
Overview
We provide an array of home medical equipment, services and supplies, specializing in post-acute respiratory care services in the United States. Viemed’s primary objective is to drive growth by increasing the number of patients served and the level of care provided through its technology-enabled, home-based clinical care and chronic disease management model. Viemed's care programs are designed specifically to treat patients in the home for less total cost and with a superior quality of care. Viemed's 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, women’s health products and services, and healthcare staffing services.
We derive a significant portion of our revenue through the rental of non-invasive and invasive ventilators which represented 50.6% and 55.6% of our revenue for the years ended December 31, 2025 and 2024, respectively. We combine the benefits of home ventilation support with licensed RTs to drive improved patient outcomes and reduce costly hospital readmissions.
We expect to grow through expansion of existing service areas as well as in new territories through a cost efficient launch that reduces location expenses. We currently serve patients in all 50 states. Viemed expects to expand its workforce of licensed clinical practitioners, including RTs, to support the Company's growth and ensure the high service model is maintained in the home. As of December 31, 2025, we employed 401 licensed RTs, representing approximately 29% of our company-wide employee count. Beyond fulfilling its internal staffing needs, Viemed also provides healthcare staffing and recruitment services, offering tailored workforce solutions to external healthcare institutions and partners seeking qualified clinical professionals.
By focusing overhead costs on personnel that service the patient rather than physical location costs, we anticipate that we will efficiently scale our business in territories that are currently not being effectively serviced.
The continued trend of servicing patients in the home rather than in hospitals is aligned with our business objective and we anticipate that this trend will continue to offer growth opportunities for us. We expect to continue to be a solution to the rising health care costs in the United States by offering more cost-effective, home-based solutions while increasing the quality of life for patients fighting serious chronic diseases.
For the year ended December 31, 2025, we generated revenues of $270.3 million and had net income of $15.4 million, compared to revenues of $224.3 million and net income of $11.4 million for the year ended December 31, 2024. Net revenue increased $46.0 million (or 20.5% ) from the comparable period in 2024. Revenue derived from the rental and sale of home medical equipment represented a combined 90.8% and 91.0%, respectively, of Viemed’s 2025 and 2024 revenue.
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Our primary sources of capital to date have been from operating cash flows. Our existing commercial credit facilities provide access to additional liquidity through a revolving credit facility of up to $30.0 million and a delayed draw term loan facility of up to $30.0 million. An accordion feature allows the Company to increase the size of such facilities by up to an additional $30.0 million, subject to certain conditions, for a total borrowing capacity of up to $90.0 million.
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. Analysts in the industry anticipate a consistent and robust growth trajectory, projecting Compound Annual Growth Rates ("CAGR") of approximately 6% for respiratory devices and 8% for OSA devices. This upward trend underscores the increasing demand for innovative solutions in respiratory care and sleep apnea management, highlighting the industry's responsiveness to evolving healthcare needs. As technological advancements and awareness drive the adoption of these specialized devices, we believe the HME markets, particularly in respiratory and OSA, are positioned for continuous expansion, offering promising opportunities for both providers and consumers alike.
The aging population remains a pivotal driver for the industry, as the elderly, constituting a substantial portion of HME patients, are expected to represent a higher percentage of the overall population. Projections from industry analysts indicate a consistent annual growth in the number of Medicare beneficiaries, contributing to ongoing patient volume growth. A significant contributing factor to the industry's growth is the rising incidence of chronic diseases. Factors such as increasing obesity rates, consequences of past smoking prevalence, under-diagnosis of certain health conditions, and higher diagnosis rates for chronic diseases collectively shape the industry. There is a notable shift towards home-based treatment for these conditions.
The industry is undergoing a transition to value-based healthcare, with both government and commercial payors increasingly adopting models that emphasize the transition of patients from acute care settings to home care. We believe HME providers are well-positioned to benefit from this industry shift. Advancements in technology and medical equipment have led to an increased prevalence of in-home treatments. The broader range of treatments administered in patient homes is expected to continue growing. Projections from industry analysts indicate that U.S. home healthcare spending will increase, reaching $250 billion by 2031, with a CAGR of approximately 7%.
Market consolidation is a notable trend favoring larger, financially stable players. The decline in the number of smaller regional players is attributed to the capital investment and scale required to compete effectively. This has led to a more consolidated and competitive landscape in the DME market.
Despite these positive trends, the industry faces challenges such as cost containment efforts of payors. The consolidation of managed care payors into larger purchasing groups has increased negotiating power, resulting in pricing pressure on HME providers. In addition to ongoing negotiations relating to contract management with third party payors to secure fair reimbursement, HME providers are engaging in value-based contracting, focusing on outcomes and patient satisfaction. These value-based contracts leverage data analytics to demonstrate the cost-effectiveness and quality of durable medical goods and provide evidence-based data to payors demonstrating the long-term benefits and cost savings associated with the use of certain medical goods.
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 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.
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In addition, CMS has proposed comprehensive reforms to the Medicare Competitive Bidding Program for 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 Competitive Bidding Program. 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 I, Item 1A of this Annual Report on Form 10-K, we are primarily exposed to trade policy and tariff developments indirectly, through supplier pricing and component sourcing rather than direct import activity. While certain medical equipment and components have historically been excluded from tariff regimes or subject to exemptions, trade measures may be expanded, reclassified, or implemented with limited notice, and suppliers may increase prices to reflect higher input costs, compliance requirements, or logistics constraints. These developments could increase our equipment and supply costs and reduce product availability. To date, we have not experienced a material adverse impact on operating costs or supply availability attributable to tariffs. However, the timing, scope, and duration of future actions remain uncertain, and we continue to monitor these developments and evaluate their potential operational and financial effects.
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 manage these pressures through its inflation-linked reimbursement contracts, negotiation, leveraging its purchasing power, and embracing technology, such as its proprietary clinical management platform.
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The below table highlights summary financial and operational metrics for the last eight quarters (expressed in thousands of U.S. Dollars, except operational information).
For the quarter ended December 31,
2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024
Financial Information:
Revenue $ 76,181 $ 71,914 $ 63,056 $ 59,129 $ 60,695 $ 58,004 $ 54,965 $ 50,593
Gross Profit $ 44,103 $ 41,345 $ 36,731 $ 33,279 $ 36,138 $ 34,371 $ 32,892 $ 29,802
Gross Profit % 58 % 57 % 58 % 56 % 60 % 59 % 60 % 59 %
Net Income attributable to Viemed Healthcare, Inc.
$ 5,639 $ 3,513 $ 3,157 $ 2,625 $ 4,316 $ 3,878 $ 1,468 $ 1,603
Cash and Cash Equivalents (As of) $ 13,501 $ 11,123 $ 20,016 $ 10,160 $ 17,540 $ 11,347 $ 8,807 $ 7,309
Total Assets (As of) $ 199,154 $ 202,360 $ 184,603 $ 178,079 $ 177,069 $ 169,526 $ 163,947 $ 154,875
Adjusted EBITDA (1)
$ 18,203 $ 16,121 $ 14,287 $ 12,765 $ 14,242 $ 13,954 $ 12,813 $ 10,098
Operational Information:
Vent Patients (2)
12,259 12,372 12,152 11,809 11,795 11,374 10,905 10,450
PAP Therapy Patients (3)
34,528 31,891 26,260 22,899 21,338 19,478 17,349 15,726
Sleep Resupply Patients (4)
36,561 33,518 25,246 22,941 24,478 22,143 20,185 18,904
(1) Refer to "Non-GAAP Financial Measures" section below for definition of Adjusted EBITDA.
(2) Vent Patients represents the number of active ventilator patients on recurring billing service at the end of each calendar quarter.
(3) PAP Therapy Patients represents the number of distinct patients billed for PAP therapy services during each calendar quarter.
(4) Sleep Resupply Patients represents the number of distinct patients who received supplies through our sleep resupply program during each calendar quarter.
Critical Accounting Estimates
We are required to disclose “critical accounting estimates” which are estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and that have had or are reasonably likely to have a material impact on our financial condition or results of operations.
We follow financial accounting and reporting policies that are in accordance with accounting principles generally accepted in the United States. The more significant of these policies are summarized in Note 2 to our consolidated financial statements included in Part II, Item 8 of this report. Not all significant accounting policies require management to make difficult, subjective or complex judgments. However, the policies noted below could be deemed to meet the SEC’s definition of a critical accounting estimate.
Accounts Receivable
Accounts receivable are recorded based upon contractually agreed-upon rates, reduced by estimated adjustments for variable consideration for implicit price concessions related to sales revenues and estimated probable losses related to rental revenues. Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required in order to record revenues and accounts receivable net of these adjustments. Management’s evaluation takes into consideration such factors as historical realization data, including current and historical cash collections, accounts receivable aging trends, other operating trends and relevant business conditions.
Inherent in these estimates is the risk that they may have to be revised or updated as additional information becomes available. It is possible that management’s estimates could change, which could have an impact on operations and cash flows. Specifically, the complexity of many third-party billing arrangements, patient qualification for medical necessity of equipment and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. If the payment amount received differs from the estimated amount, an adjustment is made in the period that these payment differences are determined.
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Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024:
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024:
Year Ended December 31,
2025 % of Total Revenue 2024 % of Total Revenue $
Change %
Change
Revenue $ 270,280 100.0 % $ 224,257 100.0 % $ 46,023 20.5 %
Cost of revenue 114,822 42.5 % 91,054 40.6 % 23,768 26.1 %
Gross profit 155,458 57.5 % 133,203 59.4 % 22,255 16.7 %
Selling, general and administrative 121,366 44.9 % 106,199 47.4 % 15,167 14.3 %
Research and development 3,017 1.1 % 3,068 1.3 % (51) (1.7) %
Stock-based compensation 9,132 3.4 % 6,285 2.8 % 2,847 45.3 %
Depreciation and amortization
1,485 0.5 % 1,483 0.6 % 2 0.1 %
Gain on disposal of property and equipment
(2,239) (0.8) % (1,905) (0.8) % (334) 17.5 %
Other expense (income), net
(252) (0.1) % 173 0.1 % (425) (245.7) %
Income from operations 22,949 8.5 % 17,900 8.0 % 5,049 28.2 %
Non-operating income and expenses
Income (loss) from investments
— — % (954) (0.4) % 954 (100.0) %
Interest expense, net (1,182) (0.4) % (776) (0.4) % (406) 52.3 %
Net income before taxes 21,767 8.1 % 16,170 7.2 % 5,597 34.6 %
Provision for income taxes 6,391 2.4 % 4,761 2.1 % 1,630 34.2 %
Net income $ 15,376 5.7 % $ 11,409 5.1 % $ 3,967 34.8 %
Net income attributable to noncontrolling interest 442 0.2 % 144 0.1 % 298 206.9 %
Net income attributable to Viemed Healthcare, Inc. $ 14,934 5.5 % $ 11,265 5.0 % $ 3,669 32.6 %
Revenue
The following table summarizes our revenue for the years ended December 31, 2025 and 2024:
Year Ended December 31,
2025 % of Total Revenue 2024 % of Total Revenue $
Change %
Change
Net revenue from rentals
Ventilator rentals, non-invasive and invasive $ 136,749 50.6 % $ 124,577 55.6 % $ 12,172 9.8 %
Other home medical equipment rentals 58,386 21.6 % 48,651 21.7 % 9,735 20.0 %
Net revenue from sales and services
Equipment and supply sales 50,254 18.6 % 30,896 13.7 % 19,358 62.7 %
Service revenues 24,891 9.2 % 20,133 9.0 % 4,758 23.6 %
Total net revenue $ 270,280 100.0 % $ 224,257 100.0 % $ 46,023 20.5 %
For the year ended December 31, 2025, revenue totaled $270.3 million, an increase of $46.0 million (or 20.5%) from the comparable period in 2024. The primary driver of this growth was our equipment and supply sales revenue, which increased by $19.4 million (or 62.7%), largely due to the success of our sleep resupply program and the addition of maternal health offerings in connection with the Lehan Drugs, Inc ("Lehan") acquisition (as discussed in Note 3 – Business Combinations of the Notes to Consolidated Financial Statements). Ventilator rental revenue increased by $12.2 million (or 9.8%), primarily as a result of higher patient volumes and sustained demand for ventilation services. Rental revenue from other HME increased by $9.7 million (or 20.0%), reflecting an expanding patient base and strong demand for PAP, oxygen, and airway clearance therapies. Services revenue increased by $4.8 million (or 23.6%) primarily due to the growth of healthcare staffing offerings.
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Cost of Revenue and Gross Profit
Cost of revenue for the year ended December 31, 2025 was $114.8 million, an increase of $23.8 million (or 26.1%) compared to the same period in 2024. This increase was primarily driven by higher patient volumes and the expansion of our service offerings, including higher personnel and product costs associated with servicing a larger patient base and supporting increased sales activity.
Gross profit margin decreased to approximately 57.5% for the year ended December 31, 2025, compared to 59.4% for the same period in 2024. The change in gross profit margin was primarily attributable to changes in revenue mix, including a higher proportion of revenue from categories that carry higher direct costs relative to ventilator rentals.
We expect continued growth and scale to support improved operating efficiencies over time, including increased fixed cost leverage. However, as revenue continues to shift toward a broader mix of products and services, including categories with different cost profiles, these efficiency gains may be partially offset. Accordingly, gross margin may fluctuate in future periods based on changes in revenue mix and the extent to which additional volume translates into economies of scale.
Selling, General and Administrative Expense
Selling, general and administrative expenses as a percentage of revenue improved to 44.9% for the year ended December 31, 2025 compared to 47.4% for the year ended December 31, 2024. Selling, general and administrative expenses totaled $121.4 million for the year ended December 31, 2025, an increase of $15.2 million (or 14.3%) from the comparable period in 2024.
The decrease 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 as compared to the prior period is primarily attributable to additional employee-related expenses to support the Company's overall growth and the inclusion of operating expenses from the Lehan acquisition completed on July 1, 2025. Our full-time employee count increased from 1,179 as of December 31, 2024 to 1,382 as of December 31, 2025, an increase of 17%, reflecting both organic expansion and acquired operations. As a result, employee compensation expense increased by $9.7 million, or 13%, during the year.
Based on our current cost structure and expected revenue growth, we believe selling, general and administrative expenses as a percentage of revenue may continue to trend downward over time as the business scales, although period-to-period results may vary depending on the timing of hiring, the extent of integration activities, and other growth initiatives.
Research and Development Costs
For the year ended December 31, 2025, research and development costs totaled $3.0 million, a decrease of $0.1 million (or 1.7%) from the comparable period in 2024. Based on our current project pipeline and planned investment levels, we expect that the associated costs will remain relatively consistent in 2026.
Stock-Based Compensation
For the year ended December 31, 2025, stock-based compensation totaled $9.1 million, an increase of $2.8 million (or 45.3%) 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. In recent years, we have increased the use of equity-based awards as part of our overall compensation programs, and the higher expense recognized during the year ended December 31, 2025 reflects the cumulative impact of awards granted in both the current and prior years, as those awards continue to vest over their respective service periods.
Gain on disposal of property and equipment
For the year ended December 31, 2025, gain on disposal of property and equipment totaled $2.2 million compared to $1.9 million for the year ended December 31, 2024. In both periods, the gains were primarily attributable to proceeds from the sale of recalled ventilators back to the manufacturer.
The ventilator buyback program was substantially completed as of December 31, 2025, and accordingly we do not expect additional material gains from these transactions in future periods. We may, however, continue to recognize gains or losses from the disposal of equipment in the ordinary course of business, including losses related to damaged or destroyed equipment.
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Income (loss) from investments
The $1.0 million loss from investments in the prior year ended December 31, 2024 primarily reflects a loss recognized on a debt investment. No investment-related loss was recorded for the year ended December 31, 2025.
Interest Expense, Net
For the year ended December 31, 2025, net interest expense was $1.2 million, an increase of $0.4 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.
Provision for Income Taxes
For the year ended December 31, 2025, the provision for income taxes was a $6.4 million expense, compared to a $4.8 million expense during the 2024 period. The increase in income tax expense was primarily attributable to higher pre-tax income. Our annual effective tax rate was 29.4% for both 2025 and 2024.
Net Income
For the year ended December 31, 2025, net income was $15.4 million, an increase of $4.0 million (or 34.8%) from the comparable period in 2024. The increase was primarily driven by higher operating income resulting from strong revenue growth across multiple product and service categories and improved operating leverage, partially offset by a lower gross margin driven by changes in revenue mix, higher selling, general and administrative expenses associated with headcount growth and the Lehan acquisition, and increased net interest expense related to acquisition financing. Net income as a percentage of net revenue increased from 5.1% for the year ended December 31, 2024 to 5.7% for the year ended December 31, 2025.
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Non-GAAP Financial Measures
The Company uses Adjusted EBITDA, which is a financial measure that is not prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management believes Adjusted EBITDA provides helpful information with respect to the Company’s operating performance as viewed by management, including a view of the Company’s business that is not dependent on the impact of the Company’s capitalization structure and items that are not part of the Company’s day-to-day operations. Management uses Adjusted EBITDA (i) to compare the Company’s operating performance on a consistent basis, (ii) to calculate incentive compensation for the Company’s employees, (iii) for planning purposes, including the preparation of the Company’s internal annual operating budget, and (iv) to evaluate the performance and effectiveness of the Company’s operational strategies. Accordingly, management believes that Adjusted EBITDA provides useful information in understanding and evaluating the Company’s operating performance in the same manner as management. It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of the Company's liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations; and other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. In calculating Adjusted EBITDA, certain items (mostly non-cash) are excluded from net income attributable to Viemed Healthcare, Inc. 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 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024
Net Income attributable to Viemed Healthcare, Inc.
$ 5,639 $ 3,513 $ 3,157 $ 2,625 $ 4,316 $ 3,878 $ 1,468 $ 1,603
Add back:
Depreciation & amortization
7,570 7,539 6,891 6,613 6,366 6,408 6,309 6,285
Interest expense, net
364 507 132 179 147 225 254 150
Stock-based compensation (a)
2,300 2,180 2,341 2,311 1,521 1,712 1,620 1,432
Transaction costs (b)
139 847 53 85 11 12 221 110
Impairment of assets (c)
— — — — — 125 2,173 —
Income tax expense
2,191 1,535 1,713 952 1,881 1,594 768 518
Adjusted EBITDA $ 18,203 $ 16,121 $ 14,287 $ 12,765 $ 14,242 $ 13,954 $ 12,813 $ 10,098
(a) Represents non-cash, equity-based compensation expense associated with option and RSU awards.
(b) Represents transaction costs and expenses related to acquisition and integration efforts associated with recently announced or completed acquisitions.
(c) Represents impairments of the fair value of investment and litigation-related assets.
Liquidity and Capital Resources
Cash and cash equivalents at December 31, 2025 was $13.5 million, compared to $17.5 million at December 31, 2024. Typically, our principal source of liquidity is the collection of our patient accounts receivable. In addition to our collection of patient accounts receivable, from time to time, we can and do obtain additional sources of liquidity through the incurrence of indebtedness. Based on our current plan of operations, we believe cash and cash equivalents, when combined with expected cash flows from operations and amounts available under our 2022 Senior Credit Facilities will be sufficient to fund our growth strategy and to meet our anticipated operating expenses, capital expenditures, and debt service obligations for at least the next 12 months from the date of this filing. The Company has also historically utilized short term financing arrangements with suppliers that could be extended over a longer term if there was a need for additional liquidity.
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On June 6, 2025, the Company's Board of Directors authorized and approved a share repurchase program. Under the terms of the 2025 Share Repurchase Program, the Company repurchased 1,976,441 of its common shares and the program was completed and terminated during the three months ended September 30, 2025. On March 4, 2026, the Company's Board of Directors authorized and approved a share repurchase program. Under the terms of the 2026 Share Repurchase Program, the Company may repurchase up to 1,930,131 of its common shares from time to time through open market purchases, block purchases or otherwise in accordance with applicable securities laws, including Rule 10b-18 of the Exchange Act.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Year Ended December 31,
2025 2024
Net Cash provided by (used in):
Operating activities $ 51,916 $ 39,089
Investing activities (50,166) (30,699)
Financing activities (5,789) (3,689)
Net increase (decrease) in cash and cash equivalents
$ (4,039) $ 4,701
Net Cash Provided by Operating Activities
Net cash provided by operating activities during the year ended December 31, 2025 was $51.9 million, resulting from net income of $15.4 million, increased by net income adjustments of $38.8 million and offset by an increase in non-cash working capital of $2.3 million. The net income adjustments primarily consisted of $28.6 million of depreciation and amortization, $9.1 million of stock-based compensation, and a $3.1 million deferred income tax expense, partially offset by a $2.2 million gain on disposal of property and equipment. The primary change in non-cash working capital was a decrease in net income tax payable of $4.1 million, partially offset by an increase in net accounts receivable of $1.2 million.
Net cash provided by operating activities during the year ended December 31, 2024 was $39.1 million, resulting from net income of $11.4 million, increased by net income adjustments of $27.3 million and offset by an increase in non-cash working capital of $0.4 million. The net income adjustments primarily consisted of $25.4 million of depreciation and amortization, $6.3 million of stock-based compensation, and an impairment loss on debt investment of $1.3 million, partially offset by a $3.8 million deferred income tax benefit, and a $1.9 million gain on disposal of property and equipment. The primary change in non-cash working capital was an increase in net accounts receivable of $6.1 million, partially offset by an increase in accrued liabilities of $2.9 million.
Net Cash Used in Investing Activities
Net cash used in investing activities during the year ended December 31, 2025 was $50.2 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 $23.8 million and consisted of $40.0 million of purchases of property and equipment, partially offset by $16.2 million of sales proceeds from the disposal of property and equipment. Net cash used for capital expenditures represents a decrease of $3.6 million, or 13%, compared to 2024. Purchases of property and equipment were primarily related to medical equipment placed with patients under our rental arrangements.
Net cash used in investing activities during the year ended December 31, 2024 was $30.7 million. Net cash used for capital expenditures during the period was $27.5 million and consisted of $37.8 million of purchases of property and equipment, partially offset by $10.3 million of sales proceeds from the disposal of property and equipment. Purchases of property and equipment were primarily related to medical equipment placed with patients under our rental arrangements. Net cash used in investing activities also included $3.0 million of net cash paid for the acquisition of East Alabama HomeMed, LLC ("HomeMed") and $1.0 million related to an equity investment.
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Net Cash Used in Financing Activities
Net cash used in financing activities during the year ended December 31, 2025 was $5.8 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 principal payments totaling $13.0 million on the 2022 Revolving Credit Facility, resulting in no outstanding borrowings under the 2022 Revolving Credit Facility as of December 31, 2025. In addition, the Company repurchased and cancelled common shares totaling $13.2 million pursuant to the Share Repurchase Program authorized by the Board on June 6, 2025 (the "2025 Share Repurchase Program") and paid $1.7 million to satisfy employee income tax withholding obligations associated with the vesting of restricted stock units ("RSUs"), while proceeds from the exercise of options during the year ended December 31, 2025 were $1.4 million.
Net cash used in financing activities during the year ended December 31, 2024 was $3.7 million. During the period, proceeds from the 2022 Revolving Credit Facility (as defined below) 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 (as defined below) were $0.3 million. Additionally, principal payments on acquired loans were $0.8 million during the year ended December 31, 2024. The Company acquired and cancelled 142,985 common shares at a cost of $1.1 million to satisfy employee income tax withholding obligations associated with the vesting of RSUs, while proceeds from the exercise of options during the year ended December 31, 2024 were $1.0 million.
Sources of Liquidity
Our principal source of liquidity is our operating cash flow, which is supplemented by extended payment terms from our suppliers and amounts available under the 2022 Senior Credit Facilities.
Senior Credit Facilities
On November 29, 2022, the Company refinanced its existing borrowings under the prior Commercial Business Loan Agreement with Hancock Whitney Bank and entered into a new credit agreement (the "2022 Senior Credit Facilities") with the lenders from time to time party thereto, and Regions Bank, as administrative agent and collateral agent, that provides for an up to $30.0 million revolving credit facility (the "2022 Revolving Credit Facility") and an up to $30.0 million delayed draw term loan facility (the "2022 Term Loan Facility"), both maturing in November 2027. On May 28, 2024, the Company entered into a First Amendment to the 2022 Senior Credit Facilities that extends the delayed draw term loan commitment expiration date to November 29, 2025, from its initial expiration date of May 29, 2024, and provides for other technical amendments. On June 6, 2025, the Company entered into a Second Amendment to the 2022 Senior Credit Facilities that, among other things, increased the permitted amount of restricted payments that may be made by the Company and its subsidiaries, subject to specified conditions, and made other conforming and administrative changes. On November 7, 2025, the Company entered into a Third Amendment to the 2022 Senior Credit Facilities that, among other things, further extended the delayed draw term loan commitment expiration date from November 29, 2025 to November 29, 2026 and included other technical amendments.
The proceeds of the 2022 Revolving Credit Facility may be used to refinance existing indebtedness, for working capital purposes, capital expenditures and other general corporate purposes (including permitted acquisitions), and to pay transaction fees, costs and expenses related to the 2022 Senior Credit Facilities. The proceeds of the 2022 Term Loan Facility and any additional term loans established in accordance with the 2022 Senior Credit Facilities may be used to finance permitted acquisitions and to pay transaction fees, costs and expenses related to such acquisitions. Outstanding borrowings under the 2022 Term Loan Facility were $12.9 million as of December 31, 2025. There were no outstanding borrowings under the 2022 Revolving Credit Facility as of December 31, 2025.
The interest rates per annum applicable to the 2022 Senior Credit Facilities are Term SOFR plus an applicable margin, which ranges from 2.625% to 3.375%, or, at the option of the Company, a Base Rate (as defined in the 2022 Senior Credit Facilities) plus an applicable margin, which ranges from 1.625% to 2.375%.
The 2022 Senior Credit Facilities require the Company to comply with certain affirmative, as well as certain negative covenants that, among other things, will restrict, subject to certain exceptions, the ability of the Company to incur indebtedness, grant liens, make investments, engage in acquisitions, mergers or consolidations and pay dividends and other restricted payments. The 2022 Senior Credit Facilities also include certain financial covenants, which generally include, but are not limited to the following:
• Consolidated Total Leverage Ratio ( defined generally as total indebtedness to adjusted EBITDA) of not greater than (i) for any fiscal quarter ending during the period from the closing date to and including December 31, 2024, 2.75 to 1.0 and (ii) for any fiscal quarter ending on and after March 31, 2025, 2.50 to 1.0, subject to certain adjustments following a material acquisition.
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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 December 31, 2025.
Use of Funds
Our principal uses of cash are funding the purchase of rental assets and other capital purchases, the repayment of debt, the repurchase of shares of our common stock, the 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 leases. The following table presents our material contractual obligations and commitments to make future payments as of December 31, 2025:
Within 12 Months Beyond 12 Months
Debt Obligations, including interest $ 2,578 $ 12,456
Lease Obligations 1,442 2,615
Total $ 4,020 $ 15,071
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 December 31, 2025. In addition to our operating cash flows, we may need to raise additional funds to support our contractual obligations and investing activities beyond such 12 month period, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing may be dilutive to our stockholders.
Leases
Leases under which we assume substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lesser of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset. The associated lease liability is drawn down over the life of the lease by allocating a portion of each lease payment to the liability with the remainder being recognized as finance charges. Leases that do not transfer the risks and rewards of ownership to the Company are treated as operating leases and are expensed as incurred.
Retirement Plan
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 $1.9 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively.
Off Balance Sheet Arrangements
The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its results of operations or financial condition.
Recently Issued Accounting Pronouncements
See Note 2 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.
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