Q1 2021 Viemed Healthcare Inc Earnings Call
Greetings and welcome to the vie net first quarter 2021 earnings call.
The time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
Now my pleasure to introduce Chief operating Officer, Todd Zehnder. Thank you you may begin.
Alright, Thank you Daryl and good morning, everyone. Please note that our remarks in 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 referred to as forward looking statements such statements reflect the company's current views and intentions with respect to <unk>.
The results or events and are subject to certain risks and uncertainties, which could cause actual results or events to vary from those indicated in our forward looking statements.
Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or 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 the conference call are made as of today and the company undertakes no.
Obligation to update or revise any forward looking statements, except as required by law. The first quarter financial news results and related financial statements are available on the SEC's website now I will turn it over to Casey to get things started.
Thank you Todd.
Morning, everyone and thank you for joining our call today.
As customary I'd like to leave my comments for the acknowledgement of our biomass family and express my deepest gratitude for their passion of our mission.
Our people are the foundation of every successful metric within our business and I remain humbled and blessed to be at the helm of this organization.
The focus on safety persistent messaging type of referral sources and commitment to superior patient care has not wavered once with our team despite working through many challenges posed by this pandemic.
This morning, I'll focus my comments on how we've experienced an abrupt trend to new patient growth of the last multiple quarters and we believe it's signaling we are nearing an end of the pandemic access challenges.
We'll also talk about the various investments in product line sectors that are contributing the growth of our core business.
Lastly, I'll refresh and update everyone on the current stability of the regulatory landscape and will offer a perspective on how it will contribute to our growth strategy.
First let me provide an update on the core business.
January and February of 2021, where some of the toughest months, we've experiencing by Madden and many years for our core business. We saw the pandemic, peaking in January February of similar to the peak in April and May of 2020, the impact of this kept patients in their homes reticent to leave the house to address their health care needs.
Physicians, we're spending the majority of their practice time treating COVID-19 patients in the hospital and most facilities continue the severely limit access to the outside companies.
Furthermore, we also literally had the weather the storm that being the ice storms in the southern region of the country that left many of our patients without power, forcing them back into the hospital to receive care. Despite.
Despite these major challenges, we still achieved growth in the quarter of 19% over last year's pre pandemic and pre ice storm first quarter.
We've expanded our coverage area to 45 states and started up 15, new territories by hiring 50, new reps through April.
Execution is on pace, the higher 60, new reps during the during 2021, which is the goal of the base a lot which is the goal of that this is the baseline of driving our organic growth.
We also expanded our home sleep delivered sleep apnea business into six new areas, which is another new growth initiatives from 2021 day.
The H S day reps are the separate team of reps that specifically focus on home sleep testing Pap therapy oxygen and remote patient monitoring.
The call points are typically cardiologist and fairness and family practice physicians most of the early success with the view a remote patient monitoring platform has come by way of the HFC reps. We now have approximately 400 patients in the view platform utilizing scales blood pressure cuffs with commoners and pulse.
Great devices to monitor these general physiological indicators within these patients.
Physicians are actively receiving billable codes from our care team and their offices are billing for the monitoring of these patients as.
As a result of the RPM offering our physician referral sources of naturally sent more sleep apnea patients our way.
We are optimistic about this new trend and will continue to place more HFC reps around the country to expand both RPM and our home suite delivered model.
We are equally pleased with the other arm of our technology platform engage which is currently being deployed nationally. It's the all new patients being placed on ventilation.
Our metrics of showing an improvement in our T workflows and efficiencies as well as improve compliance with these patients we serve.
As we mentioned in the past the engage tablet acts as a hub in the home to connect our Rps to the ventilator.
We can now see alarms leaks and indicators that allow our teams to intervene with care sooner rather than later.
Engage also has the telehealth feature, allowing the patient and our T out of face to face interaction and a safe and efficient manner.
We also added a new feature to engage in the first quarter called clinician, which allows the physician to have a portal where they can remotely tap in and of a real time look at the care delivered to their patients.
The sales force is currently being trained on the features of engage we expect this to be another strong sales feature that will substantially differentiate us from the competition in 2021.
Our other new conversation with physicians has been about our behavioral health offering called Biomed clinical services.
The BCS team has hired and trained licensed clinical social workers and six new areas. Many hospital systems have a strategic focus on helping prepare patients from the end of life.
But these conversations being really tough with the physicians to have our vcs team has proven that we serve as a nice complement for them to carry this conversation forward and give the patient and their family of next level of care. The since it's going to it's going to uniquely differentiate us from the competition.
Behavioral health workers have proven that they can help us retain more patients on Vince contribute to new core business and help drive more hospital partnerships.
We are actively recruiting to hire the social workers throughout our 45 state coverage area and feel it as of yet another new offering that will help grow and differentiate our core business for years to come.
Perhaps the best news of the quarter is that the most of the growth was captured in the month of March our busiest months since COVID-19 for new patients the spread of the vaccine throughout the country has driven patient security and confidence to see their physicians again.
There's pent up demand from the patients needing to address their health care of concerns as led the facilities opening up their doors. The homecare clinicians with solutions that help free up hospital beds for the first time in the year. Our core business is showing signs that we will soon be growing at our normal pre pandemic growth rates. We are encouraged by this new trend, especially.
Since we have so many new offerings to the review with physicians and patients in the years ahead.
On the acquisition front, we have been exploring multiple data rooms, and learning a lot about several companies that could help springboard our patient growth.
Where I'm covering many synergies as it relates to product mix payer contracts and further day patient diversification.
Our strategy is to look for accretive companies that come with strong human resources to help us carry our <unk> initiative forward at a faster rate.
The companies, we are evaluating or a medium to large sizes and are in the areas that we have the geographic coverage GAAP.
Acquisitions have not been part of our strategy in the past, but with the new regulatory stability and our M&A team in place, we will make acquisitions the meaningful part of it of our expansion in 2021 and beyond.
The regulatory landscape has never been more stable since Mike and I founded the business back of 2006.
As we have commented on in the past noninvasive ventilation was eliminated from CMS 2021 to 2020 for competitive bidding round in may of last year.
Furthermore, CMS presented data that showed many products, including oxygen and CPAP. We're also not going to realize savings and therefore moved to remove all of our products from the competitive bidding round.
Recognizing the advantages of needing more home care suppliers CMS also created innovative waiver waivers supporting access to more home care, while offering legislative relief from the 2% sequestration.
These moves by CMS gives us confidence and reimbursement stability of the 'twenty 'twenty four and possibly beyond.
Todd and I have been highly active in creating awareness about the regulatory landscape for our investors to help better explain why we think the stage of set for exponential growth.
So I'll provide further detail on our capital market strategy operational initiatives and a further review of the financials I'll turn the call over to the Chief operating Officer Todd Zehnder.
Alright, thank the casing and reviewing the financial results all figures are in U S dollars and the full results have been made available on the SEC website as well as SEDAR.
Our core business generated revenue of $25 5 million during the first quarter of 2021 as compared to net revenues of $22 8 million in the first quarter of 2020, which equates to a 12% increase.
As previously discussed this is the slower growth rate than our normal quarter, primarily due to the latest COVID-19 Spike in January and February in addition to the weather issues that impacted us during the quarter.
During the first quarter, we generated approximately $2 9 million of equipment and service revenue from the ongoing COVID-19 pandemic.
The COVID-19 related revenue has once again come primarily from contact tracing services and sales of PPE.
When comparing total revenue, including COVID-19 sales, our first quarter 2021 revenue was up 19% over last year's comparable quarter.
Our margin percentages, both gross and EBITDA continue to fluctuate as COVID-19 related product sales during the current year skew comparability.
However, we once again posted very strong margins during the quarter, our first quarter gross and EBITDA amounts came in at $17 7 million and $5 5 million respectively.
Our diversification efforts have continued to pay off as our first quarter revenue from Vince was approximately 81% of our core revenue as compared to 84% in the first quarter of 2020.
Our SG&A for the quarter total of approximately $14 5 million as compared to $10 6 million in the first quarter of 2020.
Our stock price increase of approximately 30% had an impact on our first quarter G&A due to the mark to market of our Phantom stock and we expect that our G&A will remain relatively flat this year.
We had another successful year of hiring and are continuing to invest in new ways to achieve world class growth.
We've previously proven that of historical investments, such as technology marketing and payer relations pay off when needed most and our current investments and by unmet clinical services and the M&A team will have a positive impact in our coming years of growth.
We will continue to support these world class investments to stay ahead of waste the outperformed the market from a gross standpoint.
We recorded an income tax benefit during the quarter as a result of the timing of recording some permanent differences, we expect to record income taxes in the future as more of it more fully described in our financial statements.
Our balance sheet with strength in organically during the quarter with approximately $31 1 million in cash at quarter end of $13 $3 million of accounts receivable and an overall working capital balance of roughly $26 4 million.
We have once again grown our liquidity during the current quarter and continue to position ourselves to grow both organically and inorganically.
Our long term debt is approximately $6 $1 million of being serviced with operating cash flow.
By focusing our company on returns we are growing strategically and maintain a low leverage profile to remain opportunistic in the ever changing business climate.
We remain perfectly positions for rapid growth as we expect to come out of the COVID-19 pandemic over the next few months in existing and new regions.
We have developed a pipeline of opportunities when it comes to inorganic growth and have begun to build out of teams to help evaluate and ultimately integrate down the road or.
Our mission of aligns us with many other respected health care companies and remain confident that we'll find something to augment our historically high organic growth rates.
Moving on to the second quarter, we have provided net revenue guidance of the $26 2 million to $27 $2 million range related to our core business.
And of also guided approximately half of millions of $1 billion of revenue related to COVID-19.
Our organic revenue is projected to grow 3% to 7% sequentially and is up 13% to 18% over the second quarter of 2020.
Our new patient setups are gaining momentum and we are confident that they will only get better with each passing month.
The COVID-19 of revenue is primarily related to the contact tracing work that we have continued through April but as the pandemic has moved into another phase those services of winding down we're looking for ways to assist various states and health care systems, such as vaccines racing, but remain excited that as this pandemic revenue is slowing our COO.
Our business is getting back to our expectations.
On the Investor Relations front, we are once again presented at more online sell side conferences during the last quarter, along with many non deal roadshows.
Our institutional Investor interest continues to grow as the sector remains exciting with new public peers as well as an environment that is ripe for treating patients effectively in the home.
We once again are bullish on the growth opportunities for our company and our shareholders.
I'm going to turn the call back over to Casey to wrap things up.
Thanks Todd.
In summary, the trends of 2021 are already exhibiting this to be a year, where we see patients referral sources hospital systems payer sources and lawmakers valuing more home care.
All parties of connecting with the mortality benefit cost effectiveness and readmission efficiencies realized in the home care setting.
The recently published study in the respiratory Medicine Journal, which can be found on our web site supports this statement.
Surrogates for health care costs of always been EUR visits from hospital admissions are data exhibits that for every five and a half patients we put on therapy, we save a life for every five we saved EUR visit for every eight eight we save the hospital admission.
The fact can no longer be debated and finally offer us published proof about the good that we've been doing in the home.
The pandemic helped our management team realized many financial opportunities, which contributed to our current healthy cash position.
All of it also allowed us the time to really focus on finalizing our technology investments further develop our training and recruiting protocols deliver our behavioral health offering amongst other initiatives.
All of these components, we are creating are essential as payers and hospital systems look for partners, who can provide awareness into actionable data insights I feel strongly that the time is now to capitalize aggressively on both inorganic and organic growth opportunities for this business and we would hope the investment community feels the same.
Our patient centric mission has always been the reason, we uncover new opportunities and we will continue to let the patient first focus be at the forefront.
Personally I want to thank my team once more for their continued commitment to biomed I'd also like to thank our fellow shareholders for their trust. The maths as we worked hard to be good stewards of their investments. This concludes our prepared remarks, we'll now open up for Q&A.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
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Our first question is coming from the line of Brooks O'neil with Lake Street Capital markets. Please proceed with your questions.
Good morning, guys. Thanks for the comprehensive overview of a couple of questions I guess I'd like to start with.
If you could provide any.
I guess more specific.
Or numerical kind of color on the progression through Q1 and into the beginning of Q2 in terms of.
Whats your growth rates were that would help us get a better feel for kind of what you're seeing in the marketplace.
Yes, I think the best way to think about it Brooks is the number of new patients, we're bringing on a monthly basis and I guess to categorize. It we would say that the months of January and February whereas low as anything we had seen since really I guess April may of last year, where we were probably admitting maybe call. It <unk>.
60%, 65% of our pre COVID-19 new patients on a monthly basis in the month of current we're right we're right around 90% of <unk>.
Pre COVID-19 numbers, so a pretty dramatic comeback.
And it looks like those trends are staying pretty consistent in April. So that's just a it's a good sign that things are opening up around the country.
Yep, that's great. That's very helpful. I appreciate that the color secondly, I think Casey.
Use the words medium to large in regard to potential <unk>.
Acquisitions, and I am hoping you guys might kind of frame that up for us.
In terms that we can get our arms around in terms of are you thinking about.
$2 million acquisition, 10, 5500, AOI, even thinking about it.
Well I'll say that we're not interested in doing about 10 acquisitions that are worth $2 million Brooks.
Okay, Okay, and exact number to throw on medium to large I mean, we are really focused on finding quality companies less of your fixer Upper if you will more quality management teams that are in place that can kind of carry our biomed mission forward, we can introduce them to our technology.
That forms we can leverage some of their payer contracts that are in place in areas that were not.
So.
I'd, rather not just talk about what that number is because we're looking at so many different shapes, but I'd rather be a larger acquisition than a smaller one that's our preference.
Yes, I get that that's very helpful. And then I mean, just a little color, obviously youre not announcing any transactions today, but from your perspective are you.
Pleased with what Youre seeing in the marketplace in terms of pricing for these acquisitions are.
Are you shocked but willing to go to where the market is what are you seeing out there.
I mean, we're not seeing enough to be like I guess, giving a ton of color, but I think that the.
The environment is one in which.
This is at a low.
Low single digit multiple type world and we're going to be looking at things that are important to us. We're not just like Casey said, we're not going to go do a bunch of little things that we can buy at four five times, that's not what we're focused on so I don't think we're surprised because we've watched some of our peers be very acquisitive and we're watching what it takes to be.
In the game I guess.
So nothing has necessarily surprises yet, but we're also not at the point, where we have one teed up either yes.
Yep Yep, Okay. That's very helpful. And then I'll just ask one more.
Obviously, you didn't say anything about VA, but it's still an area of.
In my opinion immense opportunity is there any progress you can comment on with the VA and maybe do you have any line of sight to when you might see some decent revenue from that source.
Yes. The V. Eight pilot study is still ongoing broke so where where there's no real major update from the last quarter. That's why I didn't put it in my prepared remarks, but it.
It's moving forward, it's probably going to take of six to 12 months to really generate some real data that they can prove out and then from there you have to.
Think about the national rollout. So it's hard to think about when we're going to realize that the a revenue and thats why im just talking a little bit less about it I really want to get through this pilot program and then kind of reset with these guys on what the strategy will be for incremental revenue I agree with you, 100% and we're not.
Giving up by any means this is a huge opportunity with the VA being the second largest payer in the country and then not servicing COPD years on Niv major major opportunities as the slow moving and it's.
It's bloody in your notes out there for our company, but but we are taking the necessary steps of moving forward. The SBA pilot study.
That's perfect that's great. Thanks very much.
Alright, thank you.
Thank you our next questions come from the line of Anton Hie with RBC capital markets. Please proceed with your question.
Hey, guys. Good morning. Thanks.
Thanks for taking the questions.
Glad to see some improvement in the trends from month to month and that's continuing on into.
April.
Can you.
Is there any any kind of one factor that you can address that debt that may be driving those new patient starts two to improve so wells or one way to kind of characterize that.
It's access access our positions in the access to the hospitals thats been the biggest driver of new patient growth. So much of what we do and ties is related to.
Preventative getting of proactive maintenance with the with the patient if you will so its educating the physician on the front end to look for these patients sooner rather than later don't give them to us when they're on their debt bad, let's really drive quality of life by.
The diagnosing immediately our data shows that there are three times more likely the die in the first 90 days after diagnosis. So that's another driver of why we got to get out there and be progressive.
But it's simply access now we can we can have the conversation that we can start to make at the top of mind for the physicians to get in there and then the second piece of that is really the patient and consumer confidence to get back in and take care of their of health. They are now willing to go into the clinic into the hospital to address there.
The concerns because theyre vaccinated and so as we see the vaccine spread throughout the country, that's really driving the patient confidence for for them to get back in there and help themselves.
Okay, that's great thanks for that.
The I was glad to hear you well okay. So the margins came in quite a bit lower than we were expecting is there any reason.
You know obviously you had some some top line headwinds is there any reason that margins can't get back well above 20% pretty quickly as youre seeing.
The new patient accounts come in and then and then together with that you mentioned the G&A.
It should be flat kind of rest of the year at least I understood. It that way is is there can you help kind of rectify against I would imagine your TNT and more of some of the discretionary spending may of ramp back up as things things kind of normalize.
Can you help kind of rectify those two items.
Yeah, I think that your EBITDA margins will be back to normal for the rest of the year really and that's going to that'll immediately come back to US I think G&A, we said, it's going to be flat for the rest of the year for Q2, it very well could be down. Some just like we've had last year I think it was <unk> was underneath what <unk>.
You came in.
We are going to have less Phantom expense in the third of them in the second quarter than we did the first but youre right were going to have some other initiatives that things are ramping back up and we've hired some people in BCS and we've built out this M&A team. So I do think debt.
I guess in long of short expect margins to go back up we're going to keep driving those up.
Both top line and the middle part.
Okay, Great and then one more real quickly I E.
Seem like last call, we were talking to some more about oxygen rollout of kind of nationally.
Where is where are you seeing those and I believe that's mostly just POC the kind of <unk>.
Whereas the the demand headed in that are you seeing any.
Slowdown as COVID-19 winds down or opposite of fact are you seeing kind of more of those patients move over to more of kind of chronic stasis, where they stay on your patient census longer and then I'll hop off thanks.
Yes, so <unk> is still on the national rollout and it will be our fastest growing product of the year.
As it relates to COVID-19, we have gotten some COVID-19 business that is more short term because your COVID-19 patients arent your lifers and Thats volume, where there is of resource to serve for our physicians and patients, but the national rollout since the POC was pushed around and it also comes with the station area as well so it's both products.
It's going very well, we're investing more resources in our back office into our sales infrastructure.
There is no reason that oxygen won't be a huge growth driver for the company for years to come.
Alright, thanks, guys.
Alright.
Thank you our next questions come from the line of Antonio Bar of Vienna with Bloom Burton. Please proceed with your question.
Hi, there.
My first question is related to some of the questions that were already asked but can you give us a sense of some of the gross.
Can you give us of Samsung.
What proportion of the gross and Vantiv patient that Youre seeing in March is related to pent up demand because you said some of the the patients were apprehensive about going into the clinics.
First the new contact with physicians and referrals coming out of that.
I would say that.
The heavy portion of it is coming from pent up demand just meaning that folks have been cooped up in their home waiting for the the time to get back in as well as waiting for their position to get back to work as well because of lot of those pulmonologists were pulled into the hospital systems to work with COVID-19 patients and now they are finally being.
And able to get back in to their normal routines. So.
I don't have a number for you Antonio but it's it's got a lot to do with pent up demand and we're seeing more and more of that as we.
As we go through April as well.
So yes, I don't know if that answered your question, but I feel like that is driven by the patients.
Okay. No. That's helpful. And then the average revenue per patient was down in first quarter sequentially. So can you maybe just provide some commentary on that.
I don't know of anything dramatic.
The especially with other ancillary products coming in at a we're down to 81% of our revenue coming from Vince.
I'll have to look into it.
<unk> seen a massive decline.
There's really nothing I guess, there's really nothing out there on Vince specifically that would drive that number down, but we can look into it and get back to you Antonio.
Okay.
And then just finally.
About the behavioral therapists day, you talked about I'm, just wondering if you can give us.
I think what the reimbursement landscape for the.
What kind of therapy.
The reimbursement for the actual assessment as it can range, depending on what type of visit it is but it is something like non between 70 and 80 bucks each visit and so but it's less about the the incremental revenue that the behavioral health screening itself will generate.
It's more about how it will really help drive our core business in terms of Vince pick up prevention whenever someone appears to be done with the ventilation for the wrong reason.
Can kind of come in as of the RT of struggling as by Med Special forces of if you will sort of have that tough conversation about the end of life of what's next on the reasons to keep the vet.
And then the the other piece I'll say, that's really hot right. Now is the fact that these hospitals are really training physicians to be less of fixtures of more of coaches.
They are really good at fixing things, but there they struggle whenever it's time to have that tough conversation about the end of life and so when you are offering them a solution that they that you can help them with that and it is easiest checking the box on your order form the.
Yeah, they're very inclined to take advantage of those services and so it just it's another value add that ultimately will help drive more business for us. So that's the reason that we're so excited about it.
Okay, great. Thank you.
Thank you our next questions come from the line of net corporate with acumen capital. Please proceed with your questions.
Good morning, and thanks for taking my questions the.
First question, just sort of stay with the primary or the couple of primary care ACO.
Can you give an update on that and whether there's any other acos in the pipeline.
Okay. What was the first part of your question, maybe I missed it I'm sorry Commonwealth Commonwealth Yeah. So Commonwealth is ongoing in Phoenix, we are taking care of patients and it's it's one of those things we're learning more and more as we work with their care teams that the.
The ACO has the care team that that is really offers a lot of insight into which patients are candidates for our therapy. So our folks are becoming more internal if you will within the ACO to find these lists of of patients that qualify for our care, it's almost like having a warm lead we go out there with <unk>.
The patient has the diagnosis, we know the patient has the need we visit with the.
The physician and then we're able to get the patient on therapy. So it's really really nice to have your access to that data to where you can walk around with these warm leads but it's no different than working a co lead if you will so our process is pretty darn similar we're just we just have a big.
Patient pool to work with that.
And then.
The second part yes. The answer is we are taking those learnings and having discussions with other acos around the country of as probably the most important thing about having Commonwealth is that we're learning ways to work together and we are having those discussions both locally and around the country as well.
Good day and a housekeeping question from me how many salespeople did you add the 2020 with and where do you expect to end 2000 Twenty's line.
We ended 2020 with around 60% and we're trying we're trying to double that for 2021.
Great. Thanks for taking my questions.
You got a net.
Okay.
Thank you there are no further questions at this time I would like to turn the call back over to management for any closing remarks.
Yes, we'd like to thank everybody for their attention today and follow up with any follow up questions that you might have.
And we look forward to talking to you in the future.
Okay.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time have a great day.
Yeah.