Greetings, and welcome to the Viemed Healthcare, Inc. Year End 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. Please note that this conference is being recorded. I will now turn the conference over to our host, Trey Fitzgerald, Chief Financial Officer. Thank you. You may begin.

Thank you, and good morning, everyone. We appreciate you joining us today. Please note before we begin that these remarks this conference call may include forward-looking statements under the U.S. Federal securities laws or forward-looking information under applicable Canadian securities legislation, which we collectively refer to as forward-looking statements. Such statements reflect the company's current views and intentions with respect to future results or events, that are subject to certain risks and uncertainties, which could cause actual results or events to vary from those indicated in forward-looking statements. Examples of such risks and uncertainties are disclosed in our disclosure documents filed with the SEC or the security regulatory authorities in certain provinces of Canada. Because of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. The forward-looking statements made in this conference call are made as of today and the company undertakes no obligations to update or revise any forward-looking statements except as required by law. Fourth quarter financial news release, including the related financial statements, are available on the SEC's website. I will now turn it over to our CEO, Casey Hoyt.

Okay. Thank you, Trey. And good morning, everyone. We appreciate you joining us today for sharing some terrific performance results. I want to recognize and thank our dedicated Viemed family for their relentless efforts as we finished strong in 2024 delivering another record quarter. Our nearly twelve hundred employees' focus and desire to do what's best for our patients, providers, and partners is what sets us apart as more individuals choose Viemed as their in-home clinical care provider of post-acute respiratory equipment services. Thank you, team, for all that you do. Based on the year we just completed and now another strong one we're outlining for you for 2025, I think it's worth spending a moment on the demand we're seeing within our business and why we're so confident in this outlook. Provide some context on what we often refer to as the blue ocean of opportunity for business growth. There's a massively underserved patient population that needs to be treated for complex respiratory care. COPD alone, there are an estimated twenty-five million patients struggling in the US with this disease. Nearly two point five million people are already at the last stage of the disease and one point two five million have already reached chronic respiratory failure requiring the life-changing ventilation therapy we provide. The industry's market penetration is only in the high single digits at this point, with only a handful of national players like us working hard to address these complex respiratory needs. In our sleep sector, an estimated eighty million individuals are suffering from sleep apnea and remain undiagnosed. With increased awareness and engagement happening due to the widening adoption of GLP-1 drugs, the industry is seeing a more positive correlation to patients beginning path therapy. Downstream, this, of course, leads to higher resupply rates and…

Alright. Thank you, Casey. Reviewing the financial results, all figures are in US dollars, and the full results have been made on the SEC website. We have continued to incrementally evolve our disclosures to the investment community and I'd like to point out the earnings supplemental deck we provided together with our earnings release. There are some new disclosures and schedules in this document. As well as others we've added from our filings that are now putting in one place for ease of use. You can find this report on our IR site, and we encourage any ongoing feedback that you might have. Let's talk about revenue first. We are recognized for the organic revenue engine that we've built at Viemed. And it led the way once again in Q4. We set a couple of records for revenue this quarter and full year 2024. With a twenty percent increase year over year for the quarter, and a twenty-three percent increase for the year. These results were at the high end of our expectations. During 2024, acquired revenue accounted for only one point one million in Q4 and three point two million for the year. On a sequential basis, our revenue grew four point six percent. As Casey just noted, we had a very strong year with our core event business. It accounted for fifty-five percent of revenue for this quarter and fifty-six percent for the year. The sleep business increased to seventeen percent of revenues for Q4 and sixteen percent for the year. It's worth noting here that sleep historically experiences a disproportionate amount of seasonality in Q4, which has an impact on revenues but also margin. Our oxygen and staffing businesses continue to grow as well each contributing roughly ten percent of both this quarter's revenue and for the…

Thank you. And at this time, we'll conduct our Q&A session. And our first question comes from Brooks O'Neil with Lake Street Capital Markets. Please state your question.

Thank you. Good morning, guys. Congratulations on the strong finish to the year. Thank you. I have a few questions, I guess. Casey mentioned that it was too early to speculate on what changes might be coming from the new Trump administration but I'm curious if you anticipate any impact at all on your business from the kind of tariffs that are being suggested. I know it's a bit of a moving target, but do you see any impact right now?

This is Todd. We haven't seen anything to date yet, Brooks. I mean, it's hard for us to say what parts of certain manufacturers could have some sort of tariff, Most of the products we have, I think, are coming, domestically. But if there are, you know, if there are parts that they get taxed on and if they want to try to pass on things that could come. But we have not heard anything from any of our major suppliers yet.

And I'll just add that anecdotally, you're seeing the or you're feeling the pressure at the hospital what what's gonna happen to some of these Medicaid programs and and the and and their payers of sorts. And so they're actively tightening screws down. That usually plays in our handbooks. I mean, they need to fix efficiently discharge these folks and and lean on us for all the help that they can possibly get. So so we're feeling that right now, and we're seeing them kinda reach out to us and our folks and having more thoughtful and collaborative conversations. Those have already begun as a result of what could happen even though they don't even know what the cuts are gonna be. If there are if there are any at all. Damn.

Yeah. An interesting environment. For sure. And I'm guessing you're not hearing any even Tom Toms about competitive bidding? Out there right now?

No. Haven't heard heard a whisper about competitive bidding at all. So we're still in the same status quo. It's hard to see that it's gonna be a a I guess, you know, it would be almost impossible for it to be a 2026 event at this point in time. So, you know, 2027 and beyond, the time that we hear the first whispers, I guess, is the ballpark range that I would you know, throw at you right now. And just as a reminder, you remember the last time that it went through Medicare pulled the program because there were no cost savings, and that was pre the inflationary period that we've been through the last, I guess, five years.

Mhmm. Oh, Let me ask one more, and then I'll turn it over. Obviously, there's some uncertainty of whether we're in a good M&A environment or a bad M&A environment. Nobody seems to know. I kinda thought it would get better as a result of the some some indications. You know, the the the curve people may think somewhat similar to the last people. So would you say when you look out there, no M&A's know, only a small component of your growth plans and organic growth have has been the driver. But would you say to you guys it looks like a target-rich environment, a fertile environment for potential M&A, or would you say you're feeling it remains somewhat constrained as it was during the Biden years.

I would say it's more target-rich infertile than definitely the Biden years. We're having a lot more interest activity. The pipeline is building. There's there's many more conversations we have many more options on the table for us to consider. You know, that's that's a positive thing for Viemed. You know you know how picky we are in in bringing folks into the fold of this culture and and our business. And we've we've got more interest from the right types of targets than we have in the past. And so I'm I'm I'm optimistic that that could possibly be of of the the change in the guard, but but, nevertheless, something's different than the how quiet it was for the past two years, if you will.

Yeah. Great. Let me just say quickly, we really appreciate the annual guidance. That's gonna help us a lot, and look forward to another great year.

Yeah. Thank you. Thank you, Brooks.

Thank you. And another reminder to the audience, ask a question now, press star one on your phone. And we have another question. We have coming from Andrew Rem with Oden Partners. Please state your question.

Hey, guys. I just had one question on you guys mentioned the JV. Can you just comment on that how it's gone over the past year and any updated thoughts?

The JV is going well. We've we've had a successful integration and great partnership with East Alabama Medical been taken here's the things that we're we're looking at to be perfectly candid. You know, it's taken a lot of time. For this type of integration. Such a small transaction. So that's led us down the path of if we're going to do this another one, it needs to be a a substantial size that kinda worth the the time and effort it takes. You know, we we're kinda weighing the the the way that we can get business from the complex respiratory you know, organic offering, if you will, of us just going out and building our relationship relationships on our own versus the opportunity that we create inside of being a part of their their their cost, you know. And so that's what's going down. There's when you get into looking at larger joint venture targets, the then East Alabama Medical Center, they're the inventory is not as vast, but there are a handful out there that we're having conversations with and and we'll just see what whether or not it comes to fruition or not.

Yeah. And I guess I would add, Andrew, that it is profitable. It's been profitable out of the gate. You can actually see that on our P&L. So it's been it's been a good accretive deal for us from a financial perspective. And it was a great one to have as our first one. And then I echo what Casey says, we're gonna do another one, we'd rather make, you know, the juice worth the squeeze.

Okay. And then your commentary relating to behavioral health, so it sounds like you're doing some staffing business, but were you also suggesting you're looking at doing behavioral health services through would it be the, like, the sleep business or the vent business or both?

Yeah. So let me back up. I'll start with our entry into behavioral health. You know, I guess it was around 2021. When we or maybe before that when we cranked up iMed Clinical Services. We we we were putting licensed clinical social workers on top of our respiratory therapist. And that was by design to handle things that went beyond respiratory. In late 2021, we started a staffing division. That staffing division was primarily providing clinical labor for the clinical, like, the nursing shortage around the country for our hospital partners. And so as we as you start starting to see some of those needs stabilize and normalize after post-COVID, our staffing divisions started getting a little bit more scrappy, if you will. And and they were, you know, surfing the needs of of all sorts of clinical labor throughout the country. And what they uncovered is that, you know, they're there were lots of needs and RFPs throughout the country with different states that are requesting behavioral health types of services. And so with our knowledge of VCS, our knowledge of of of staffing, and our ability to go out and and pursue those types of RFPs, we've gotten really good at it. And it's something worth acknowledging right now because that staffing becomes a more material part of our business, it's important for everyone to understand that, shoot, close to eighty percent of it is is being driven by behavioral health needs around the country. And so we'll be nimble in that space, and we'll look for many more opportunities. It's certainly a complement to our organic offering as well with from a behavioral health standpoint, but it's also some of somewhat of these one-off wins here and there throughout the country with through our staffing division.

Okay. And then if I can ask one more, just related to kind of cash flow. A year ago, you guys had talked about the opportunity to cash flow to kind of accelerate and then you're kinda hit by the the change health situation. I think that took maybe longer than expected to kinda work through that. And then I think it also seems like your CapEx got accelerated, but maybe just go back and revisit that comment. Are you still thinking that maybe the CapEx situation is fine but this the business is now to the point where you should experience cash flow acceleration.

Yeah. I'll take that one. The answer is yes. But I I caveat that in the case where we doubled our vent growth this year. So obviously, the faster we grow, the more we need CapEx. And we would always rather spend money on growing our organic patient base than anything. So in the event that growth stays somewhat similar year over year, the cash flow should expand. This year, while change maybe has a a minor impact on us, if you look at twenty-three versus twenty-four and twenty-four think we paid three or four million dollars more in cash taxes. And we had about three million dollars that was related to the, Phillips receivable that we got during 2025 that's gonna impact that number. So if you just kinda look at, apples to apples, we probably are hit by about a six million dollar change in true cash and the growth rate just expanded. So all things being equal, we continue to think that our free cash flow is gonna increase especially as staffing grows. Especially as the resupply business grows. While those, you know, we we kind of beat it up during our prepared remarks while those carry, a lower gross and EBITDA margin they drop cash to the bottom line. And so that is all things pointing to additional free cash flow for us in the future. We still stand behind that.

And then unlike the saying for the ventations, is that roughly eighteen? Is that where you guys are at? Eighteen months? It's still

Seventeen months is kinda where we've been hanging the last several years, and it's and it has not deviated much from that.

Have you guys talked about what it is in sleep?

We haven't necessarily, but the PAP generally caps out at a year. So our length of stay for an actual PAP patient is, call it a year, the resupply is it's a we haven't really talked about nor have we calculated that number as it continues to grow. We will probably provide some disclosure on that. But as a younger patient, so if they're staying compliant, there's no reason they shouldn't stay on for a number of years.

Yeah. And to add a little color on this is Trey Andrew. To add a little color on that, we're we're also in our infancy of the resupply program. So our length of stay right now, as it relates to how we calculate it every single year, is is probably trickling up.

Okay. And and on the path, the reason that's a year is is that just how the reimbursement works on a thirteen-month schedule. Is that right?

That's right. That's right. And so, like, if you think about our the Vint is an uncapped rental. It's a life-saving device. It's a bundled rate. It's It's very different than the rest of them. Oxygen typically has a thirty-six-month cap. Sleep generally has somewhere around a twelve, thirteen-month cap.

Yeah. Okay. Alright. Well, thanks a lot. You guys are doing awesome job. You. I can't quite figure out why you have this massive disparity in in valuation, but hopefully, the market will come around in time because you've done a fantastic job executing great twenty percent, I think, is the the revenue CAGR, and I think EBITDA is just slightly below that. So again, congrats on and and whole team for doing a great job executing over several years here. Thanks.

We we appreciate that, and stay tuned for our new investor deck. We're gonna try to start putting some valuation metrics in there to to show what we think as well. So we appreciate your your feedback.

Thank you. And there are no further questions at this time. I'll hand the floor back to Casey Hoyt for closing remarks. Thank you.

Okay. Thanks, everyone. That's going to conclude our conference call. Appreciate everyone joining us today. If you've got anything else, please feel free to reach out to us at any time. Have a good day. Have a good day. This concludes today's call. All parties may disconnect. Thank you.