Viemed Healthcare, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with, and is qualified entirely by, our condensed consolidated financial statements (including Notes to the Condensed Consolidated Financial Statements) and the other consolidated financial information under Item 1 of this Quarterly Report on Form 10-Q. Some of the information in this discussion and analysis includes forward-looking statements that involve risk and uncertainties. Actual results and timing of events could differ from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Forward-Looking Statements

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 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. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by applicable law.

Forward-looking statements relate to future events or future performance and reflect the expectations or beliefs of management regarding future events, and include, but are not limited to, statements with respect to: operating results; profitability; financial condition and resources; anticipated needs for working capital; liquidity; capital resources; capital expenditures; milestones; licensing milestones; information with respect to future growth and growth strategies; anticipated trends in our industry; our future financing plans; timelines; currency fluctuations; government regulation; unanticipated expenses; commercial disputes or claims; limitations on insurance coverage or other reimbursement; and availability of cash flow to fund capital requirements. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “potential”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, “projects”, or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results “will”, “should”, “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative of these terms or comparable terminology.

Forward-looking statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable. We cannot assure you, however, that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, including those identified under “Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and the other documents we file with the SEC, including under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, and with the securities regulatory authorities in certain provinces of Canada, which contribute to the possibility that the predicted outcomes may not occur or may be delayed. 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 we operate; significant capital requirements and operating risks that we may be subject to; our ability to implement business strategies and pursue business opportunities; volatility in the market price of our common shares; the state of the capital markets; the availability of funds and resources to pursue operations; inflation; reductions in reimbursement rates and audits of reimbursement claims by various governmental and private payor entities; dependence on few payors; possible new drug discoveries; dependence on key suppliers; granting of permits and licenses in a highly regulated business; competition; disruptions in or attacks (including cyber-attacks) on our information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud or other criminal behavior to which we are exposed; difficulty integrating newly acquired businesses; the impact of new and changes to, or application of, current laws and regulations; the overall difficult litigation and regulatory environment; increased competition; increased funding costs and market volatility due to market illiquidity and competition for funding; critical accounting estimates and changes to accounting standards, policies, and methods used by us; and the occurrence of natural and unnatural catastrophic events or health epidemics or concerns, and claims resulting from such events or concerns, as well as other general economic, market and business conditions; and other factors beyond our control.

General Matters

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms the "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. Our primary objective is to focus on the organic growth of the business and thereby solidify our position as one of the United States’ largest providers of in-home therapy for patients suffering from respiratory diseases. 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, 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.

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. We anticipate expanding our workforce of RTs to support our growth and ensure our high service model is maintained in the home. 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.

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 costs in the United States by offering more cost effective, home based solutions while increasing the quality of life for patients fighting serious respiratory diseases.

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 durable medical equipment (“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 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. government announced new tariffs on a broad range of imported goods from multiple countries, prompting reciprocal tariffs from affected trade partners. While medical equipment has traditionally been excluded from such tariffs, the expanded scope of recent trade measures and the possibility of further escalation create significant uncertainty around equipment pricing and supply availability. 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 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.

(Tabular amounts expressed in thousands of U.S. Dollars, except vent patients)

(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.

Results of Operations

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:

Revenue

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

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

Cost of revenue and gross profit

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 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 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 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

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 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

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 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%.

Net income

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:

Revenue

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

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.

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

Cost of revenue and gross profit

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 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 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 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 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.

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 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. 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

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 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%.

Net income

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

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:

(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 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. In addition to our collection of patient accounts receivable, from time to time, we can and do obtain additional sources of liquidity by the incurrence of additional 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.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

Net Cash Provided by Operating Activities

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

Net Cash Provided by (Used in) Financing Activities

Net cash 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

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 (a) extended the delayed draw term loan commitment expiration date to November 29, 2025, from its initial expiration date of May 29, 2024, and (b) provided for other technical amendments. On June 6, 2025, the Company entered into a Second Amendment to the 2022 Senior Credit Facilities that (a) increased the permitted amount of restricted payments that may be made by the Company and its subsidiaries subject to specified conditions, and (b) made other conforming and administrative changes.

The proceeds of the 2022 Revolving Credit Facility may be used to refinance existing indebtedness, for working capital purposes, capital expenditures and other general corporate purposes (including permitted acquisitions), and to pay transaction fees, costs and expenses related to the 2022 Senior Credit Facilities. The proceeds of the 2022 Term Loan Facility and any additional term loans established in accordance with the 2022 Senior Credit Facilities may be used to finance permitted acquisitions and to pay transaction fees, costs and expenses related to such acquisitions. Outstanding borrowings under the 2022 Term Loan Facility 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%.

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.
• 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 September 30, 2025.

Use of Funds

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 September 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. 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 $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

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.

Accounting and Disclosure Matters

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 the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Not all significant accounting policies require management to make difficult, subjective or complex judgments. However, the policy 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.

Recently Issued Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies of our Condensed 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.

Our exposure to market risk primarily relates to fluctuations in interest rates from borrowings under the 2022 Senior Credit Facilities. 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%. Outstanding borrowings subject to interest rate fluctuations 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. Based on our outstanding borrowings, an immediate 100 basis point change in interest rates would not have a material effect on our net income.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company's management, including its Chief Executive Officer and Chief Financial Officer, completed an evaluation of the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded:

i. that the Company's disclosure controls and procedures are designed to ensure (a) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and (b) that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure; and

ii. that the Company's disclosure controls and procedures are effective.

Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to disclose material information otherwise required to be set forth in the Company's periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the three months ended September 30, 2025 that have materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial reporting.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 10, 2025, which could materially affect our business, financial condition or future results. Except as set forth below, there have been no material changes in our risk factors from those disclosed in that Annual Report.

A reduction or elimination of coverage or reimbursement of our products by third-party payors, including Medicare, in the future could adversely affect our business and results of operations.

A substantial portion of our revenues are derived from reimbursement by Medicare and other third-party payors for our ventilator products and services. Currently, ventilators are covered under the National Coverage Determination ("NCD") for the DME Reference List, effective since April 1, 2003, for the treatment of neuromuscular diseases, thoracic restrictive diseases, and chronic respiratory failure resulting from chronic obstructive pulmonary disease ("COPD"). While the DME Reference List has been updated, no standalone NCD has been issued for ventilators.

On June 9, 2025, CMS finalized a new NCD establishing clear medical necessity criteria for noninvasive positive pressure ventilation ("NIPPV") in the home for treatment of chronic respiratory failure related to COPD. We actively participated in the national coverage analysis process, including submission of formal comments and ongoing engagement with CMS, the Department of Health and Human Services, and members of Congress.

The final NCD may significantly affect patient access, reimbursement, and utilization of ventilator therapies. Because Medicare coverage policies often influence commercial payors, including Medicare Advantage plans, changes to Medicare policy may have broader implications across our payer base. Any reduction or elimination of coverage or reimbursement by Medicare or other third-party payors, or an inability to maintain or expand coverage with additional commercial payors, could materially and adversely impact our business, financial condition, and results of operations.

Adverse global macroeconomic conditions, including supply chain disruptions, tariffs, and fluctuations in foreign currency exchange rates, could negatively impact our operations, costs, and profitability.

Our business may be affected by a range of global macroeconomic conditions, including newly imposed tariffs, disruptions to the supply chain, and fluctuations in foreign currency exchange rates. While nearly all of our revenues are generated within the United States and denominated in U.S. dollars, we rely on both domestic and international suppliers for the medical equipment and supplies we rent and sell to patients. As a result, our cost structure and operational efficiency are subject to global market dynamics that may influence the availability and pricing of key products.

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. government announced new tariffs on a broad range of imported goods from multiple countries, prompting reciprocal tariffs from affected trade partners. While medical equipment has traditionally been excluded from such tariffs, the expanded scope of recent trade measures and the possibility of further escalation create significant uncertainty around equipment pricing and supply availability. 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.

Additionally, global supply chain constraints continue to pose risks to our ability to acquire essential equipment and components in a timely and efficient manner. Factors such as raw material shortages, longer lead times from suppliers, and increased transportation expenses may limit our responsiveness to patient needs and may affect our ability to scale the business effectively.

Although our operations are primarily domestic, we are indirectly exposed to foreign currency exchange rate fluctuations through our international sourcing activities. Changes in the value of the U.S. dollar relative to other currencies, including the Canadian dollar and Chinese yuan, may impact the prices we pay to suppliers, which could increase our cost of goods sold and reduce our gross margins.

If these macroeconomic pressures persist or worsen, our ability to manage supply continuity, control costs, and meet patient demand could be adversely affected. As a result, our financial condition, operating results, and long-term strategic objectives may be negatively impacted.