Viemed Healthcare (NASDAQ:VMD) reported record second-quarter revenue as growth in its ventilator business resumed under the updated Medicare coverage framework and newer service lines expanded.
Revenue for the quarter reached $78.1 million, up approximately 24% from a year earlier and 4% sequentially. Net income attributable to Viemed was $2.8 million, or $0.07 per diluted share, while adjusted EBITDA was $13.7 million, representing a 17.6% margin.
Ventilator Growth Returns Under New Coverage Rules
Viemed’s ventilation operations remain the company’s clinical and economic foundation, according to Hoyt. The company provides in-home respiratory therapy, clinical support and connected technology to patients with chronic respiratory conditions.
Hoyt said the results demonstrate that Viemed can grow under the new Centers for Medicare & Medicaid Services National Coverage Determination for home mechanical ventilation. The company has worked to adapt its qualification, documentation, patient education and compliance processes to the revised standards.
During the question-and-answer session, Chief Operating Officer Todd Zehnder said the improvement in ventilator patient growth reflected several factors, including new orders, clearer formulary rules for Medicare Advantage and private insurance plans, sales-force effectiveness, patient compliance efforts and fewer patient billing holds following the insurance-change season.
Management said it continues to monitor respiratory therapist staffing and patient capacity as the patient base grows. Zehnder said the company is prioritizing patient education and therapy compliance, adding that it is too early to determine whether the revised coverage requirements will produce a lasting change in the number of patients supported per respiratory therapist.
Sleep, Resupply and Maternal Health Expand
Growth extended beyond the ventilation segment. Viemed reported a record quarter for positive airway pressure, or PAP, setups. Sleep therapy patients increased approximately 5% sequentially and 44% year over year. The number of resupply patients served increased about 10% from the first quarter and 47% from the prior-year period.
Maternal health also reached a quarterly high for breast-pump deliveries. Activity in legacy Viemed markets increased approximately 9% sequentially, which management said reflects the strategy behind its Lehan acquisition: using Viemed’s payer relationships, referral channels and operating infrastructure to broaden maternal health services.
Equipment sales nearly doubled year over year to $19 million, driven by growth across sleep, resupply and maternal health. Other rental revenue rose approximately 19% to $16.4 million, while service revenue increased approximately 7% to $6.3 million. Ventilator rental revenue increased approximately 8% to $36.4 million.
Ventilator rental revenue accounted for approximately 47% of total revenue, down from about 54% a year earlier. Total rental revenue represented 68% of revenue, compared with 76% in the prior-year quarter. Zehnder said the mix change reflected faster expansion in resupply and maternal health rather than a shrinking rental base, which grew approximately 11% year over year.
Margins Reflect Mix Shift and Operating Investments
Gross profit was $45 million, or 57.7% of revenue, compared with 58.3% in the prior-year quarter. The company said the year-over-year margin change reflected its revenue mix as well as temporary maternal-health distribution and inventory costs during a transition in supply arrangements.
Adjusted EBITDA margin declined from 22.7% a year earlier. Zehnder said the comparison included an approximately $1.2 million swing in equipment disposal activity, primarily because the prior-year period included nonrecurring gains from a ventilator return program. Excluding that prior-year gain, adjusted EBITDA increased year over year, he said.
Selling, general and administrative expenses increased as Viemed added sales, technology, operating and fulfillment capacity. The company also cited higher setup-related compensation, phantom stock revaluations tied to its share-price appreciation, implementation work and temporary cost duplication while portions of sleep and resupply operations are moved in-house.
Viemed said its new intake workflow partner, Tennr, reduced the time from receipt of a PAP order to qualification review from days to less than an hour. PAP setups increased approximately 16% sequentially without a corresponding increase in fulfillment infrastructure, according to management.
Guidance Updated as Cash Flow Improves
For the full year, Viemed raised the low end of its revenue outlook and now expects net revenue of $314 million to $320 million, compared with prior guidance of $312 million to $320 million. The company expects continued sequential growth in the second half.
It revised adjusted EBITDA guidance to $64 million to $68 million, from a prior range of $65 million to $69 million, while lowering its projected net capital expenditures to 8.5% to 10% of revenue from 9% to 10.5%. Management said the change reflects the larger contribution from less capital-intensive product and service revenue.
Operating cash flow was $15.9 million in the second quarter, free cash flow was $8.6 million and net capital expenditures were $7.3 million. For the first half, operating cash flow rose to $24 million from $15.1 million a year earlier, while free cash flow increased to $11.2 million from $4.9 million.
During the quarter, Viemed repaid approximately $2.2 million of debt and repurchased and canceled about 531,000 shares for $5.1 million. It ended June with $10.7 million in cash, exceeding total debt, along with unused borrowing capacity under its credit facilities.
About Viemed Healthcare (NASDAQ:VMD)
Viemed Healthcare, Inc (NASDAQ: VMD) is a provider of home-based respiratory therapy services, specializing in the management of patients requiring long-term mechanical ventilation and pulmonary support. The company’s offerings encompass invasive and noninvasive ventilation, airway clearance therapies, cough assist devices, and supplemental oxygen. Viemed combines durable medical equipment with clinical care, delivering tailored respiratory treatment plans that are overseen by licensed respiratory therapists and registered nurses.
Founded in the early 2010s and headquartered in Birmingham, Alabama, Viemed has grown its footprint to serve patients across multiple states in the United States.
