VIEMED HEALTHCARE INC
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 2. Results of Operations
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
Results of Operations
Comparison of the Three Months Ended June 30, 2024 and 2023:
The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:
| Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Revenue | $54,965 | 100.0% | $43,311 | 100.0% | $11,654 | 26.9% |
| Cost of revenue | 22,073 | 40.2% | 17,205 | 39.7% | 4,868 | 28.3% |
| Gross profit | 32,892 | 59.8% | 26,106 | 60.3% | 6,786 | 26.0% |
| Selling, general and administrative | 26,503 | 48.2% | 20,563 | 47.5% | 5,940 | 28.9% |
| Research and development | 758 | 1.4% | 758 | 1.8% | — | —% |
| Stock-based compensation | 1,620 | 2.9% | 1,471 | 3.4% | 149 | 10.1% |
| Depreciation and amortization | 377 | 0.7% | 298 | 0.7% | 79 | 26.5% |
| Loss (gain) on disposal of property and equipment | (545) | (1.0)% | 117 | 0.3% | (662) | (565.8)% |
| Other expense (income), net | 563 | 1.0% | (2) | —% | 565 | NM |
| Income from operations | 3,616 | 6.6% | 2,901 | 6.7% | 715 | 24.6% |
| Non-operating income and expenses | ||||||
| Income (expense) from investments | (1,117) | (2.0)% | 137 | 0.3% | (1,254) | (915.3)% |
| Interest income (expense), net | (254) | (0.5)% | 20 | —% | (274) | (1370.0)% |
| Net income before taxes | 2,245 | 4.1% | 3,058 | 7.1% | (813) | (26.6)% |
| Provision for income taxes | 768 | 1.4% | 728 | 1.7% | 40 | 5.5% |
| Net income | 1,477 | 2.7% | 2,330 | 5.4% | (853) | (36.6)% |
| Net income attributable to noncontrolling interest | 9 | —% | — | —% | 9 | NM |
| Net income attributable to Viemed Healthcare, Inc. | $1,468 | 2.7% | $2,330 | 5.4% | $(862) | (37.0)% |
Revenue
The following table summarizes our revenue for the three months ended June 30, 2024 and 2023:
| Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Net revenue from rentals | ||||||
| Ventilator rentals, non-invasive and invasive | $30,445 | 55.4% | $25,712 | 59.4% | $4,733 | 18.4% |
| Other home medical equipment rentals | 12,211 | 22.2% | 8,419 | 19.5% | 3,792 | 45.0% |
| Net revenue from sales and services | ||||||
| Equipment and supply sales | 7,378 | 13.4% | 6,778 | 15.6% | 600 | 8.9% |
| Service revenues | 4,931 | 9.0% | 2,402 | 5.5% | 2,529 | 105.3% |
| Total net revenue | $54,965 | 100.0% | $43,311 | 100.0% | $11,654 | 26.9% |
For the three months ended June 30, 2024, net revenue totaled $55.0 million, an increase of $11.7 million (or 26.9%) from the comparable period in 2023. The primary driver of this growth was our ventilator rental revenue, which increased by $4.7 million (or 18.4%) due to higher patient volumes associated with strong demand for ventilation services. Additionally, rental revenue from other Home Medical Equipment (HME) increased by $3.8 million (or 45.0%) attributable to an expanding patient census and robust demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services. Equipment and supply sales grew by $0.6 million (or 8.9%) largely driven by the success of our sleep resupply program. Furthermore, services revenue experienced an increase of $2.5 million (or 105.3%), primarily due to the growth of healthcare staffing offerings.
Page 29
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
While ventilator rentals continue to make up the majority of our revenue, the organic and acquired growth of PAP and oxygen related sales, as well as our healthcare staffing offerings, is contributing to the diversity of our overall revenue mix. As we continue to expand geographically into new territories and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and our other respiratory offerings.
Cost of revenue and gross profit
For the three months ended June 30, 2024, cost of revenue totaled $22.1 million, an increase of $4.9 million (or 28.3%) from the comparable period in 2023. Gross profit percentage decreased from approximately 60.3% in the three months ended June 30, 2023 to approximately 59.8% in the three months ended June 30, 2024. The change in gross profit percentage is primarily due to migration of the revenue mix associated with product and service diversification. Gross profit percentage is expected to remain relatively stable in upcoming periods due to subsiding inflationary cost pressures and the positive effects associated with reimbursement rates, offset by some decreases associated with product and service diversification.
Selling, general and administrative expense
Selling, general, and administrative expenses as a percentage of revenue increased to 48.2% for the three months ended June 30, 2024 compared to 47.5% for the three months ended June 30, 2023. Selling, general and administrative expenses totaled $26.5 million for the three months ended June 30, 2024, an increase of $5.9 million (or 28.9%) from the comparable prior period. The overall increase in selling, general and administrative expense as compared to the prior period is primarily attributable to additional employee related expenses to accommodate the overall growth of the Company. Employee compensation expenses increased $3.6 million (or 23.8%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation. Legal and professional fees also increased by $0.7 million (or 99.4%) as a result of integrated audit fees and legal services. We expect that current year selling, general and administrative expenses as a percentage of revenue will remain stable through the end of 2024 due to increased efficiencies and costs optimization efforts relative to revenue growth.
Research and development
For both the three months ended June 30, 2023 and June 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 associated costs will remain consistent in 2024 relative to 2023 costs, declining as a percentage of revenue.
Stock-based compensation
For the three months ended June 30, 2024, stock-based compensation totaled $1.6 million, an increase of 10.1% from the comparable period in 2023. We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will correspondingly rise. Historically, revenue growth has outpaced the growth in stock-based compensation, and as a result, the percentage of stock-based compensation relative to revenue is expected to continue declining.
Loss (gain) on disposal of property and equipment
For the three months ended June 30, 2024, gain on disposal of property and equipment totaled $0.5 million compared to loss on disposal of property and equipment of $0.1 million for the three months ended June 30, 2023. The gain primarily resulted from proceeds related to the sale of recalled ventilators back to the manufacturer. We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.
Other expense (income), net
For the three months ended June 30, 2024, other expense (income), net totaled $0.6 million, an increase of $0.6 million from the comparable period in 2023. The increase in other expense (income), net is primarily due to an impairment of a litigation receivable of $0.9 million determined to be unrealizable as a result of the counterparty's bankruptcy proceedings.
Income (expense) from investments
For the three months ended June 30, 2024, expense from investments totaled $1.1 million compared to income from investments of $0.1 million for the three months ended June 30, 2023. The change is primarily due to a $1.3 million impairment recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.
Page 30
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
Interest income (expense), net
For the three months ended June 30, 2024, net interest expense totaled $0.3 million, an increase of $0.3 million from the comparable period in 2023. The increase in net interest expense is primarily due to outstanding borrowings as a result of debt issued to fund acquisitions. However, with anticipated debt repayments, we expect a reduction in quarterly net interest expense for the remainder of 2024.
Provision for income taxes
For the three months ended June 30, 2024, the provision for income taxes was a $0.8 million expense, compared to $0.7 million during the comparable period in 2023. The resulting increase in the overall effective tax rate as a percentage of pre-tax income was due to the impact of discrete tax benefits associated with stock-based compensation between periods. Our annual estimated effective tax rate for 2024 is 30.9%.
Net income
For the three months ended June 30, 2024, net income was $1.5 million, a decrease of $0.9 million (or 36.6%) from the comparable period in 2023. Net income as a percentage of net revenue decreased from 5.4% for the three months ended June 30, 2023 to 2.7% for the three months ended June 30, 2024, primarily due to fair value impairments of a debt investment and outstanding litigation funds receivable.
Page 31
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
Comparison of the Six Months Ended June 30, 2024 and 2023:
The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Revenue | $105,558 | 100.0% | $82,867 | 100.0% | $22,691 | 27.4% |
| Cost of revenue | 42,864 | 40.6% | 32,757 | 39.5% | 10,107 | 30.9% |
| Gross profit | 62,694 | 59.4% | 50,110 | 60.5% | 12,584 | 25.1% |
| Selling, general and administrative | 51,317 | 48.6% | 40,325 | 48.7% | 10,992 | 27.3% |
| Research and development | 1,508 | 1.4% | 1,538 | 1.9% | (30) | (2.0)% |
| Stock-based compensation | 3,052 | 2.9% | 2,862 | 3.5% | 190 | 6.6% |
| Depreciation and amortization | 792 | 0.8% | 538 | 0.6% | 254 | 47.2% |
| Loss (gain) on disposal of property and equipment | (332) | (0.3)% | 95 | 0.1% | (427) | (449.5)% |
| Other expense (income), net | 537 | 0.5% | (83) | (0.1)% | 620 | (747.0)% |
| Income from operations | 5,820 | 5.5% | 4,835 | 5.8% | 985 | 20.4% |
| Non-operating income and expenses | ||||||
| Income (expense) from investments | (1,050) | (1.0)% | 172 | 0.2% | (1,222) | (710.5)% |
| Interest income (expense), net | (404) | (0.4)% | 69 | 0.1% | (473) | (685.5)% |
| Net income before taxes | 4,366 | 4.1% | 5,076 | 6.1% | (710) | (14.0)% |
| Provision for income taxes | 1,286 | 1.2% | 1,229 | 1.5% | 57 | 4.6% |
| Net income | 3,080 | 2.9% | 3,847 | 4.6% | (767) | (19.9)% |
| Net income attributable to noncontrolling interest | 9 | —% | — | —% | 9 | NM |
| Net income attributable to Viemed Healthcare, Inc. | $3,071 | 2.9% | $3,847 | 4.6% | $(776) | (20.2)% |
Revenue
The following table summarizes our revenue for the six months ended June 30, 2024 and 2023:
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Net revenue from rentals | ||||||
| Ventilator rentals, non-invasive and invasive | $59,632 | 56.5% | $50,859 | 61.4% | $8,773 | 17.2% |
| Other home medical equipment rentals | 23,145 | 21.9% | 15,325 | 18.5% | 7,820 | 51.0% |
| Net revenue from sales and services | ||||||
| Equipment and supply sales | 13,516 | 12.8% | 11,542 | 13.9% | 1,974 | 17.1% |
| Service revenues | 9,265 | 8.7% | 5,141 | 6.2% | 4,124 | 80.2% |
| Total net revenue | $105,558 | 100.0% | $82,867 | 100.0% | $22,691 | 27.4% |
For the six months ended June 30, 2024, revenue totaled $105.6 million, an increase of $22.7 million (or 27.4%) from the comparable period in 2023. The primary driver of this growth was our ventilator rental revenue, which increased by $8.8 million (or 17.2%) due to higher patient volumes associated with strong demand for ventilation services. Additionally, rental revenue from other Home Medical Equipment (HME) increased by $7.8 million (or 51.0%) due to an expanding patient base, robust demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services, and the acquisition of HMP on June 1, 2023. Equipment and supply sales grew by $2.0 million (or 17.1%) largely attributable to the success of our sleep resupply program and the addition of HMP’s resupply program. Furthermore, services revenue experienced an increase of $4.1 million (or 80.2%), primarily due to the growth of healthcare staffing offerings.
Page 32
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
While ventilator rentals continue to make up the majority of our revenue, the organic and acquired growth of PAP and oxygen related sales, as well as our healthcare staffing offerings, is contributing to the diversity of our overall revenue mix. As we continue to expand geographically into new territories and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and our other respiratory offerings.
Cost of revenue and gross profit
For the six months ended June 30, 2024, cost of revenue totaled $42.9 million, an increase of $10.1 million (or 30.9%) from the comparable period in 2023. Gross profit percentage decreased from approximately 60.5% in the six months ended June 30, 2023 to approximately 59.4% in the six months ended June 30, 2024. The decrease in gross profit percentage is primarily due to migration of the revenue mix associated with product and service diversification. Gross profit percentage is expected to remain relatively stable in upcoming periods due to subsiding inflationary cost pressures and the positive effects associated with reimbursement rates, offset by some decreases associated with product and service diversification.
Selling, general and administrative expense
Selling, general, and administrative expenses as a percentage of revenue was 48.6% for the six months ended June 30, 2024 compared to 48.7% for the six months ended June 30, 2023. Selling, general and administrative expenses totaled $51.3 million for the six months ended June 30, 2024, an increase of $11.0 million (or 27.3%) from the comparable period in 2023. The overall increase in selling, general and administrative expense as compared to the prior period is primarily due to additional employee related expenses to accommodate the overall growth of the Company. Our full time employee count increased from 974 on June 30, 2023 to 1,121 on June 30, 2024, an increase of 15.1%. Employee compensation expenses increased $7.0 million (or 24%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation. We expect that current year selling, general and administrative expenses as a percentage of revenue will remain stable through the end of 2024 due to increased efficiencies and costs optimization efforts relative to revenue growth.
Research and development
For both the six months ended June 30, 2023 and June 30, 2024, research and development expense totaled $1.5 million. As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will remain consistent in 2024 relative to 2023 costs, declining as a percentage of revenue.
Stock-based compensation
For the six months ended June 30, 2024, stock-based compensation totaled $3.1 million, an increase of 6.6% from the comparable period in 2023. We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will correspondingly rise. Historically, revenue growth has outpaced the growth in stock-based compensation, and as a result, the percentage of stock-based compensation relative to revenue is expected to continue declining.
Loss (gain) on disposal of property and equipment
For the six months ended June 30, 2024, gain on disposal of property and equipment totaled $0.3 million compared to loss on disposal of property and equipment of $0.1 million for the six months ended June 30, 2023. The gain primarily resulted from proceeds related to the sale of recalled ventilators back to the manufacturer. We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.
Other expense (income), net
For the six months ended June 30, 2024, other expense (income), net totaled $0.5 million, an increase of $0.6 million from the comparable period in 2023. The increase in other expense (income), net is primarily due to an impairment of a litigation receivable of $0.9 million determined to be unrealizable as a result of the counterparty's bankruptcy proceedings.
Income (expense) from investments
For the six months ended June 30, 2024, expense from investments totaled $1.1 million compared to income from investments of $0.2 million for the six months ended June 30, 2023. The change is primarily due to a $1.3 million impairment recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.
Page 33
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
Interest income (expense), net
For the six months ended June 30, 2024, net interest expense totaled $0.4 million compared to interest income of $0.1 million for the six months ended June 30, 2023. The increase in net interest expense is primarily due to outstanding borrowings as a result of debt issued to fund acquisitions. However, with anticipated debt repayments, we expect a reduction in net interest expense for the remainder of 2024.
Provision for income taxes
For the six months ended June 30, 2024, the provision for income taxes was a $1.3 million expense, compared to $1.2 million during the comparable period in 2023. The resulting increase in the overall effective tax rate as a percentage of pre-tax income was due to the impact of discrete tax benefits associated with stock-based compensation between periods. Our annual estimated effective tax rate for 2024 is 30.9%.
Net income
For the six months ended June 30, 2024, net income was $3.1 million, a decrease of $0.8 million (or 19.9%) from the comparable period in 2023. Net income as a percentage of net revenue decreased from 4.6% for the six months ended June 30, 2023 to 2.9% for the six months ended June 30, 2024, primarily due to fair value impairments of a debt investment and outstanding litigation funds receivable.
Page 34
VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
June 30, 2024 and 2023
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.