VIEMED HEALTHCARE INC
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
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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.
Sep 30, 2024 · Filed Nov 6, 2024
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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)
September 30, 2024 and 2023
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023:
The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Revenue | $58,004 | 100.0% | $49,402 | 100.0% | $8,602 | 17.4% |
| Cost of revenue | 23,633 | 40.7% | 18,840 | 38.1% | 4,793 | 25.4% |
| Gross profit | 34,371 | 59.3% | 30,562 | 61.9% | 3,809 | 12.5% |
| Selling, general and administrative | 26,671 | 46.0% | 23,654 | 47.9% | 3,017 | 12.8% |
| Research and development | 757 | 1.3% | 593 | 1.2% | 164 | 27.7% |
| Stock-based compensation | 1,712 | 3.0% | 1,453 | 2.9% | 259 | 17.8% |
| Depreciation and amortization | 348 | 0.6% | 419 | 0.8% | (71) | (16.9)% |
| Loss (gain) on disposal of property and equipment | (469) | (0.8)% | 278 | 0.6% | (747) | (268.7)% |
| Other expense (income), net | (276) | (0.5)% | (41) | (0.1)% | (235) | 573.2% |
| Income from operations | 5,628 | 9.7% | 4,206 | 8.5% | 1,422 | 33.8% |
| Non-operating income and expenses | ||||||
| Income (expense) from investments | 96 | 0.2% | 270 | 0.5% | (174) | (64.4)% |
| Interest expense, net | (225) | (0.4)% | (237) | (0.5)% | 12 | (5.1)% |
| Net income before taxes | 5,499 | 9.5% | 4,239 | 8.6% | 1,260 | 29.7% |
| Provision for income taxes | 1,594 | 2.7% | 1,320 | 2.7% | 274 | 20.8% |
| Net income | 3,905 | 6.7% | 2,919 | 5.9% | 986 | 33.8% |
| Net income attributable to noncontrolling interest | 27 | —% | — | —% | 27 | NM |
| Net income attributable to Viemed Healthcare, Inc. | $3,878 | 6.7% | $2,919 | 5.9% | $959 | 32.9% |
Revenue
The following table summarizes our revenue for the three months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Revenue from rentals | ||||||
| Ventilator rentals, non-invasive and invasive | $31,772 | 54.8% | $28,322 | 57.3% | $3,450 | 12.2% |
| Other home medical equipment rentals | 12,459 | 21.5% | 11,119 | 22.6% | 1,340 | 12.1% |
| Revenue from sales and services | ||||||
| Equipment and supply sales | 8,440 | 14.6% | 7,742 | 15.7% | 698 | 9.0% |
| Service revenues | 5,333 | 9.2% | 2,219 | 4.5% | 3,114 | 140.3% |
| Total revenue | $58,004 | 100.0% | $49,402 | 100.0% | $8,602 | 17.4% |
For the three months ended September 30, 2024, revenue totaled $58.0 million, an increase of $8.6 million (or 17.4%) from the comparable period in 2023. The primary driver of this growth was our ventilator rental revenue, which increased by $3.5 million (or 12.2%) due to higher patient volumes associated with strong demand for ventilation services. Additionally, services revenue saw a notable increase of $3.1 million (or 140.3%) primarily due to the expansion of our healthcare staffing services. Rental revenue from other Home Medical Equipment (HME) contributed an increase of $1.3 million (or 12.1%) driven by growing demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services. Equipment and supply sales increased by $0.7 million (or 9.0%) largely driven by the success of our sleep resupply program.
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VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
September 30, 2024 and 2023
While ventilator rentals continue to make up the majority of our revenue, the growth of PAP and oxygen related sales, as well as our healthcare staffing offerings, is contributing to the diversity of our overall revenue mix. As we continue to expand geographically into new territories and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and our other respiratory offerings.
Cost of revenue and gross profit
For the three months ended September 30, 2024, cost of revenue totaled $23.6 million, an increase of $4.8 million (or 25.4%) from the comparable period in 2023. Gross profit percentage decreased from approximately 61.9% in the three months ended September 30, 2023 to approximately 59.3% in the three months ended September 30, 2024. The change in gross profit percentage is primarily due to migration of the revenue mix associated with product and service diversification. Gross profit percentage is expected to remain relatively stable in upcoming periods due to subsiding inflationary cost pressures and the positive effects associated with reimbursement rates, offset by some decreases associated with product and service diversification.
Selling, general and administrative expense
Selling, general, and administrative expenses as a percentage of revenue improved to 46.0% for the three months ended September 30, 2024 compared to 47.9% for the three months ended September 30, 2023. Selling, general and administrative expenses totaled $26.7 million for the three months ended September 30, 2024, an increase of $3.0 million (or 12.8%) from the comparable prior period. The improvement in selling, general, and administrative expenses as a percentage of revenue is attributable to economies of scale and improvements in operational efficiencies. The overall increase in selling, general and administrative expense as compared to the prior period is primarily attributable to additional employee related expenses to accommodate the overall growth of the Company. Employee compensation expenses increased $3.0 million (or 18.6%) as a result of the increase in our employee headcount and increases in market-based compensation. We expect that current year selling, general and administrative expenses as a percentage of revenue will remain stable through the end of 2024 due to increased efficiencies and costs optimization efforts relative to revenue growth.
Research and development
For the three months ended September 30, 2024, research and development expense totaled $0.8 million, an increase of $0.2 million from the comparable period in 2023. As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will remain consistent in 2024 relative to 2023 costs.
Stock-based compensation
For the three months ended September 30, 2024, stock-based compensation totaled $1.7 million, an increase of 17.8% from the comparable period in 2023. We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will correspondingly rise. Historically, revenue growth has outpaced the growth in stock-based compensation, and as a result, the percentage of stock-based compensation relative to revenue is expected to decline.
Loss (gain) on disposal of property and equipment
For the three months ended September 30, 2024, gain on disposal of property and equipment totaled $0.5 million compared to loss on disposal of property and equipment of $0.3 million for the three months ended September 30, 2023. The gain primarily resulted from proceeds related to the sale of recalled ventilators back to the manufacturer. We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.
Income (expense) from investments
For the three months ended September 30, 2024, income from investments totaled $0.1 million compared to $0.3 million for the three months ended September 30, 2023. The change is primarily due to a $0.1 million impairment recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.
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VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
September 30, 2024 and 2023
Interest expense, net
For both the three months ended September 30, 2023 and September 30, 2024, net interest expense totaled $0.2 million. As a result of continued repayments on debt, we expect a reduction in quarterly net interest expense for the remainder of 2024.
Provision for income taxes
For the three months ended September 30, 2024, the provision for income taxes was a $1.6 million expense, compared to $1.3 million during the comparable period in 2023. The resulting decrease in the overall effective tax rate as a percentage of pre-tax income was due to the impact of discrete tax benefits associated with stock-based compensation between periods. Our annual estimated effective tax rate for 2024 is 30.3%.
Net income
For the three months ended September 30, 2024, net income was $3.9 million, an increase of $1.0 million (or 33.8%) from the comparable period in 2023. Net income as a percentage of revenue increased from 5.9% for the three months ended September 30, 2023 to 6.7% for the three months ended September 30, 2024.
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VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
September 30, 2024 and 2023
Comparison of the Nine Months Ended September 30, 2024 and 2023:
The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:
| Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Revenue | $163,562 | 100.0% | $132,269 | 100.0% | $31,293 | 23.7% |
| Cost of revenue | 66,497 | 40.7% | 51,597 | 39.0% | 14,900 | 28.9% |
| Gross profit | 97,065 | 59.3% | 80,672 | 61.0% | 16,393 | 20.3% |
| Selling, general and administrative | 77,988 | 47.7% | 63,979 | 48.4% | 14,009 | 21.9% |
| Research and development | 2,265 | 1.4% | 2,131 | 1.6% | 134 | 6.3% |
| Stock-based compensation | 4,764 | 2.9% | 4,315 | 3.3% | 449 | 10.4% |
| Depreciation and amortization | 1,140 | 0.7% | 957 | 0.7% | 183 | 19.1% |
| Loss (gain) on disposal of property and equipment | (801) | (0.5)% | 373 | 0.3% | (1,174) | (314.7)% |
| Other expense (income), net | 261 | 0.2% | (124) | (0.1)% | 385 | (310.5)% |
| Income from operations | 11,448 | 7.0% | 9,041 | 6.8% | 2,407 | 26.6% |
| Non-operating income and expenses | ||||||
| Income (expense) from investments | (954) | (0.6)% | 442 | 0.3% | (1,396) | (315.8)% |
| Interest expense, net | (629) | (0.4)% | (168) | (0.1)% | (461) | 274.4% |
| Net income before taxes | 9,865 | 6.0% | 9,315 | 7.0% | 550 | 5.9% |
| Provision for income taxes | 2,880 | 1.8% | 2,549 | 1.9% | 331 | 13.0% |
| Net income | 6,985 | 4.3% | 6,766 | 5.1% | 219 | 3.2% |
| Net income attributable to noncontrolling interest | 36 | —% | — | —% | 36 | NM |
| Net income attributable to Viemed Healthcare, Inc. | $6,949 | 4.2% | $6,766 | 5.1% | $183 | 2.7% |
Revenue
The following table summarizes our revenue for the nine months ended September 30, 2024 and 2023:
| Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | % of Total Revenue | 2023 | % of Total Revenue | $ Change | % Change | |
| Revenue from rentals | ||||||
| Ventilator rentals, non-invasive and invasive | $91,404 | 55.9% | $79,181 | 59.9% | $12,223 | 15.4% |
| Other home medical equipment rentals | 35,604 | 21.8% | 26,441 | 20.0% | 9,163 | 34.7% |
| Revenue from sales and services | ||||||
| Equipment and supply sales | 21,956 | 13.4% | 19,287 | 14.6% | 2,669 | 13.8% |
| Service revenues | 14,598 | 8.9% | 7,360 | 5.5% | 7,238 | 98.3% |
| Total revenue | $163,562 | 100.0% | $132,269 | 100.0% | $31,293 | 23.7% |
For the nine months ended September 30, 2024, revenue totaled $163.6 million, an increase of $31.3 million (or 23.7%) from the comparable period in 2023. The primary driver of this growth was our ventilator rental revenue, which increased by $12.2 million (or 15.4%) due to higher patient volumes associated with strong demand for ventilation services. Additionally, rental revenue from other Home Medical Equipment (HME) increased by $9.2 million (or 34.7%) due to an expanding patient base, robust demand for oxygen therapy, Positive Airway Pressure (PAP) therapy, and percussion vest services. Equipment and supply sales grew by $2.7 million (or 13.8%) largely attributable to the success of our sleep resupply program and the addition of HMP’s resupply program. Furthermore, services revenue experienced an increase of $7.2 million (or 98.3%), primarily due to the growth of healthcare staffing offerings.
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VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
September 30, 2024 and 2023
While ventilator rentals continue to make up the majority of our revenue, the growth of PAP and oxygen related sales, as well as our healthcare staffing offerings, is contributing to the diversity of our overall revenue mix. As we continue to expand geographically into new territories and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and our other respiratory offerings.
Cost of revenue and gross profit
For the nine months ended September 30, 2024, cost of revenue totaled $66.5 million, an increase of $14.9 million (or 28.9%) from the comparable period in 2023. Gross profit percentage decreased from approximately 61.0% in the nine months ended September 30, 2023 to approximately 59.3% in the nine months ended September 30, 2024. The decrease in gross profit percentage is primarily due to migration of the revenue mix associated with product and service diversification. Gross profit percentage is expected to remain relatively stable in upcoming periods due to subsiding inflationary cost pressures and the positive effects associated with reimbursement rates, offset by some decreases associated with product and service diversification.
Selling, general and administrative expense
Selling, general, and administrative expenses as a percentage of revenue improved to 47.7% for the nine months ended September 30, 2024 compared to 48.4% for the nine months ended September 30, 2023. Selling, general and administrative expenses totaled $78.0 million for the nine months ended September 30, 2024, an increase of $14.0 million (or 21.9%) from the comparable period in 2023. The improvement in selling, general, and administrative expenses as a percentage of revenue is attributable to economies of scale and improvements in operational efficiencies. The overall increase in selling, general and administrative expense as compared to the prior period is primarily attributable to additional employee related expenses to accommodate the overall growth of the Company. Our full time employee count increased from 988 on September 30, 2023 to 1,142 on September 30, 2024, an increase of 15.6%. Employee compensation expenses increased $10.1 million (or 22%) as a result of the increase in our employee headcount and increases in incentive and volume based compensation. We expect that current year selling, general and administrative expenses as a percentage of revenue will remain stable through the end of 2024 due to increased efficiencies and costs optimization efforts relative to revenue growth.
Research and development
For the nine months ended September 30, 2024, research and development expense totaled $2.3 million, an increase of $0.1 million from the comparable period in 2023. As we continue to invest in research and development related projects to support our technology initiatives, we expect that associated costs will remain consistent in 2024 relative to 2023 costs, declining as a percentage of revenue.
Stock-based compensation
For the nine months ended September 30, 2024, stock-based compensation totaled $4.8 million, an increase of 10.4% from the comparable period in 2023. We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will correspondingly rise. Historically, revenue growth has outpaced the growth in stock-based compensation, and as a result, the percentage of stock-based compensation relative to revenue is expected to continue declining.
Loss (gain) on disposal of property and equipment
For the nine months ended September 30, 2024, gain on disposal of property and equipment totaled $0.8 million compared to loss on disposal of property and equipment of $0.4 million for the nine months ended September 30, 2023. The gain primarily resulted from proceeds related to the sale of recalled ventilators back to the manufacturer. We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.
Other expense (income), net
For the nine months ended September 30, 2024, other expense (income), net totaled $0.3 million, an increase of $0.4 million from the comparable period in 2023. The increase in other expense (income), net is primarily due to an impairment of a litigation receivable of $0.9 million determined to be unrealizable as a result of the counterparty's bankruptcy proceedings.
Income (expense) from investments
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VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
September 30, 2024 and 2023
For the nine months ended September 30, 2024, expense from investments totaled $1.0 million compared to income from investments of $0.4 million for the nine months ended September 30, 2023. The change is primarily due to impairments of $1.4 million recognized on our debt investment, reflecting an other-than-temporary impairment in fair value during the period.
Interest expense, net
For the nine months ended September 30, 2024, net interest expense totaled $0.6 million compared to interest income of $0.2 million for the nine months ended September 30, 2023. The increase in net interest expense is primarily due to outstanding borrowings as a result of debt issued to fund acquisitions. However, with continued debt repayments, we expect a reduction in quarterly net interest expense for the remainder of 2024.
Provision for income taxes
For the nine months ended September 30, 2024, the provision for income taxes was a $2.9 million expense, compared to $2.5 million during the comparable period in 2023. The resulting increase in the overall effective tax rate as a percentage of pre-tax income was due to the impact of discrete tax benefits associated with stock-based compensation between periods. Our annual estimated effective tax rate for 2024 is 30.3%.
Net income
For the nine months ended September 30, 2024, net income was $7.0 million, an increase of $0.2 million (or 3.2%) from the comparable period in 2023. Net income as a percentage of revenue decreased from 5.1% for the nine months ended September 30, 2023 to 4.3% for the nine months ended September 30, 2024, primarily due to non-operating fair value impairments of a debt investment and outstanding litigation funds receivable.
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VIEMED HEALTHCARE, INC.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Tabular amounts expressed in thousands of US Dollars, except per share amounts)
September 30, 2024 and 2023
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.