Q1 2025 Viemed Healthcare Inc Earnings Call

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Operator: Good day, ladies and gentlemen, and welcome to the Viemed Healthcare First Quarter 2025 Earnings Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator.

Good day, ladies and gentlemen, and welcome to the VI Mad Health care first quarter 2025 earnings call. All lines have been placed on a listen only mode and the floor will be opened for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero to reach a live operator.

Trae Fitzgerald: At this time, it is my pleasure to turn the floor over to your host, Trae Fitzgerald, CFO. Welcome, Trae. The floor is yours.

Trey Fitzgerald: At this time it is my pleasure to turn the floor over to your host Trey Fitzgerald CFO welcome track the floor is yours.

Trae Fitzgerald: Thank you and good morning, everyone. We appreciate you joining us today.

Trey Fitzgerald: Thank you and good morning, everyone. We appreciate you joining us today. 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 stay.

Trae Fitzgerald: 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 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 to vary from those indicated in forward-looking statements. Examples of such risk 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 risk and uncertainties, investors should not produce undue reliance on forward-looking statements.

Trey Fitzgerald: This reflects the courage of 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.

Trey Fitzgerald: Examples of such risks and uncertainties are disclosed in our disclosure documents filed with the FCC or the security regulatory authorities in certain provinces of Canada because of these risks and uncertainties investors should not produce undue reliance on forward looking statements. The forward looking statements made in this conference call are made as of today in the car.

Trae Fitzgerald: 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.

Trey Fitzgerald: Undertakes no obligations to update or revise any forward looking statements, except as required by law.

Trae Fitzgerald: The first quarter financial supplement and financial news release, as well as the related financial statements, are available on the SEC's website.

Speaker Change: First quarter financial supplement and financial news release as well as it related financial statements are available on the Sec's website I'll now turn it over to <unk> CEO Casey Hogan you get things started.

Casey Hoyt: I'll now turn it over to Viemed CEO, Casey Hoyt, to get things started. Okay, thank you, Trae. And good morning, everyone. We appreciate you joining us today. I want to first give a huge thanks to our over 1200 employees in the Biomed family and acknowledge how well they take care of our patients, providers and partners. We overcame the cyclical challenges the first quarter presents and continue to grow Biomed's place in the home with every single interaction. It does not go unnoticed. Thank you team for all that you do.

Casey Hogan: Okay. Thank you Trey and good morning, everyone. We appreciate you joining us today.

Speaker Change: I want to give me a huge thanks to our over 100.

Casey Hogan: Employees and by mid families and acknowledged well they take care of our patients providers and partners.

Casey Hogan: We overcame the cyclical challenges in the first quarter for debt and continue to grow by niche players in the home with every single interaction. It does not go unnoticed. Thank you team for all that you do.

Casey Hoyt: The typical goal of any first-quarter earnings call is to declare that you had a solid start to the year and business objectives are on track relative to the overall business plan. This morning, I had the distinct pleasure of saying that we're ahead of where we anticipated in Q1 and have tightened our outlook upward for the year. The confidence in this outlook is based on the across-the-board strength and operations across our businesses that we expect to translate into even better financial results over the balance of the year.

Casey Hogan: It's typical of any first quarter earnings calls.

Casey Hogan: Yeah, I had a solid start to the year and business objectives are on track relative to the overall business plan. This morning, the distinct pleasure of saying that weird.

Casey Hogan: Where we anticipated Q1.

Casey Hogan: [noise] tightened our outlet upwards for the year.

Casey Hogan: The confidence in this outlook is based on the across the board strength and operations across our businesses and we expect to translate into even better financial results over the balance of the year.

Casey Hoyt: I want to spend a few moments on the details of our strong business performance, and then I'll turn to the opportunities we're seeing and our views of the regulatory environment. Our business accounts for 54% of our revenues and was a strong performer once again this quarter. As expected, vent revenue was only down 3% sequentially and up 10% year-over-year. More telling is the fact that our total vent patients were up for the 16th straight quarter and our new patient starts were up an impressive 9% sequentially. That's a direct result of the sales restructuring we implemented last year and bodes well for our future results in this business.

Casey Hogan: I want to spend a few moments on the details by strong business performance and then I'll turn to the opportunities, we're seeing and our views of the regulatory environment.

Casey Hogan: I forget business accounts for 54% of our revenues and was strong a strong performer once again this quarter.

Casey Hogan: As expected.

Casey Hogan: It was only down 3% sequentially and up 10% year over year.

Casey Hogan: More generally.

Casey Hogan: Total debt patients were up for the 16th straight quarter and our new patient starts were up an impressive 9% sequentially as a direct result of the sales restructuring, we implemented last year and bodes well for our future results in this business.

Casey Hoyt: This is quite an achievement in light of how this product has shifted from 90% to 54% of our revenue over time. These vent patients represent a massively underserved population and one of the populations I refer to as a blue ocean of opportunity. We like to think that we're really good at sales, and we are, but the truth is that we're benefiting from our sales restructuring, recruiting, and sales process that we launched in 2024. We're ahead of schedule on the hiring, and that we planned for 2025, and we're finding people in new territories we have targeted.

Casey Hogan: This is quite an achievement.

Casey Hogan: This product has shifted from 90% to 54% of our revenue over time.

Speaker Change: These patients represent a massively underserved population and one of the populations I referred to as a blue Ocean opportunity.

Speaker Change: We like to think that we're really good at sales and we are but the truth is that benefiting from our sales restructuring recruiting and sales processes. We lost in 2024, we're ahead of schedule and the hiring and we plan for 2020 that we plan for 2025, and we're finding people in new territories, we had targeted.

Casey Hoyt: In our sleep business, we saw a 7% sequential increase in sleep therapy patients and a 46% increase year-over-year. We're excited about this continued trend going forward, as we also saw a 40% increase year-over-year in new patient set-ups. While resupply patients were down sequentially due to the first quarter seasonality, they're up 21% year-over-year, and the new patient starts are an indicator for strong resupply growth later this year. The staffing business continued to grow both sequentially and year-over-year, reaching 10% of our net revenues for the quarter, reflecting strong demand in behavioral health and social service specialists.

Speaker Change: And our sleep business, we saw 7% sequential increase and sleep therapy patients and a 46% increase year over year.

Speaker Change: We're excited about this continued trend going forward as we also saw a 40% increase year over year, new patient setups.

Speaker Change: We supply base were down sequentially due to the first quarter seasonality, there up 21% year over year and the new patient starts are an indicator for stronger supply growth later this year.

Speaker Change: The staffing business continued to grow both sequentially and year over year, reaching 10% of our net revenues for the quarter, reflecting strong demand in behavioral health and social service specialists.

Casey Hoyt: As strong as our combined businesses have been, it's worth addressing some of the recent regulatory announcements. While most of the healthcare industry is still trying to assess potential cuts to Medicaid and Medicare, we continue to believe that these pressures play to our strengths and drive demand for the unique services our respiratory therapists can provide in the home. Unlike most HME providers who are selling virtually cataloged medical equipment, our salespeople in Ortiz are in the halls of the hospitals helping manage length of stay for these systems through helping them create efficiencies, improve outcomes, and increase patient satisfaction.

Speaker Change: As strong as our combined businesses are bad it's worth addressing some of the recent regulatory announcements.

Speaker Change: While most of the health care industry is still trying to assess potential cuts to Medicaid Medicare. We continue to believe that these pressures play to our strengths and drive demand for the unique service with a respiratory therapist can provide in the home.

Speaker Change: Unlike most HMA providers, who are selling virtually catalog medical equipment, our salespeople and our teams in the hall at the hospitals, helping manage length of stay HD systems, and helping them create efficiencies improve outcomes and increase patient satisfaction.

Casey Hoyt: We have become a vital link between patients, providers, and payers in this setting because we are working directly with them to deliver comprehensive patient-centered care. Business models only built on dropping off equipment don't address the real needs of the patients and providers. Our model addresses their pain points, and in the evolving regulatory environment, we are better positioned to flirt.

Speaker Change: We have become a vital link between patients providers and payers in that setting.

Speaker Change: Because we are working directly with them to deliver comprehensive patient centered care.

Speaker Change: Business models, only built one dropping off equipment don't address the real needs of the patients and providers our model addresses their pain points and then the evolving regulatory environment, we are better positioned to flourish.

Casey Hoyt: As we all saw in mid-March, CMS proposed their National Policy Coverage Determination, or NCD, on non-invasive positive pressure ventilation. The industry had asked for this NCB to clarify the rules. There are some things that we like in the NCD, some we don't, and some that definitely need further clarification. Public comments were due by April 10th, and our Chief Medical Officer, Dr. Frazier, submitted on behalf of Ivan. In our opinion, overall, this is going in the right direction. Also, this is a great time for CMS to look at the actual data, see the savings, and write a more fulsome reconsideration in the near future.

Speaker Change: As we all saw mid March CMS proposed their national policy coverage determination or NCD noninvasive positive pressure ventilation.

Speaker Change: The industry had asked me this MTB to clarify the rules.

Speaker Change: There is something that we like and NCD, some we don't and some of that definitely need further clarification.

Speaker Change: Comments were due by April test and our Chief Medical Officer, Dr. Frazier submitted on behalf of buyback.

Speaker Change: In our opinion overall this is going in the right direction.

Speaker Change: Also this is a great time for CMS to look at the actual data see the savings and right of where it falls on reconsideration in the near future.

Casey Hoyt: We are hopeful that the end result is a set of formulary rules that gives the right patients access to NIV and ultimately saves the system money. We are actively monitoring the process and what we can say is that this process has finally alerted CMS to the data and published research we built up. CMS is connecting with it for the first time and demonstrating a willingness to consider the evidence. We've already seen this data influence outcomes at the state level.

Speaker Change: We are hopeful that the end result is a set of formulary roles and get the right patients access tier IV and ultimately save the system money.

Speaker Change: We are actively monitoring the process and what we can say is that this process has finally at large and CMS to their data and published research we built a CMS.

Speaker Change: CMS connecting with it for the first time and demonstrating a willingness to consider the habits.

Speaker Change: We've already seen this data influence outcomes at the state level for example in mid April Arkansas Governor standards signed a bill prohibiting step therapy, a practice that requires patients to fail on a less effective device before accessing ventilation for both Medicaid and commercial plans.

Casey Hoyt: For example, in mid-April, Arkansas Governor Sanders signed a bill prohibiting step therapy, a practice that requires patients to fail on a less effective device before accessing ventilation for both Medicaid and commercial plans. The bill mandates that all MCOs reimburse NIV at 100% of the state Medicaid rate. Arkansas now joins Louisiana and Oklahoma in enacting similar legislation, and other states are actively considering the comparable measure. I've said this before and am barely repeating today, when there's pressure to create efficiencies in healthcare, that plays into Viemed's capabilities. When there's transparency, overhauls, and more rules to reduce waste, that is also very good for us.

Speaker Change: The bill mandates that all Mcs reimbursed at 100% by the state Medicaid rate.

Speaker Change: Arkansas, Louisiana, and Oklahoma, and asking similar legislation and other states are actively considering the comparable metrics.

Speaker Change: I've said this before and it bears repeating today when there is pressure to create efficiencies in health care that plays into biomed capabilities, when there's transparency overhauls and more rules to reduce waste that is also very good for us.

Casey Hoyt: And when more care is being delivered in the home, that continues to position us for success.

Speaker Change: And when more care is being delivered in the home that continues to position us for success.

Casey Hoyt: I noted last quarter that we were looking for additional opportunities that will expand our products, services, and our reach to diversify patient types, as well as leverage a number of contracts we've built up over the years with our payer infrastructure and some diversification. also noted that we thought we could leverage the trust we learned in the home throughout the country.

Speaker Change: I noted last quarter that we were looking for additional opportunities that will expand our products services and our reach the diversified patient types as well as the number of contracts, we've built up over the years with our payer infrastructure and some of that diversification.

Speaker Change: Also noted that we thought we could leverage the trust we've earned at home.

Speaker Change: Sorry.

Casey Hoyt: The agreement we signed earlier this week to acquire Leigh Ann's medical equipment for a base purchase price of $26 million checks all of these boxes and then some.

Speaker Change: The agreement we signed earlier this week to acquire Lee Hanse medical equipment for a base purchase price of $26 million checks all of these boxes and then some.

Casey Hoyt: We put a separate release out on this acquisition, so I won't tread too much of that ground again this morning, but I do want to highlight the strategic nature of this transaction. Leigh Ann has a nearly 80-year-old family-owned business, which has built up a tremendous reputation in the community of Northern Illinois and the West Chicagoland area with significant grant equity. They have specialties in respiratory care and women's health and so other equipment that aligns nicely with us. They also have great relationships and contracts with payers in Illinois. The opportunity, as we see it, is to extend their business and women's health across our payer relationships and markets across the country.

Speaker Change: We put in a separate release out on this acquisition, so I won't try it too much on the ground that ground again this morning, but I do want to highlight the strategic nature of this transaction.

Speaker Change: We added nearly 80 year old family owned business, which has built up a tremendous reputation in the community in northern Illinois, and the West Chicago land area with significant brand equity.

Speaker Change: They have special needs in respiratory care and women's health and some other equipment that aligns nicely with us.

Speaker Change: They also have great relationships and contracts with payers in Illinois.

Speaker Change: The opportunity as we see it to extend their business in women's health across our payer relationships and markets across the country.

Casey Hoyt: We also have the opportunity to grow their sleep and resupply business, as well as introduce our complex respiratory care into their market.

Speaker Change: We also have the opportunity to grow their sleep and resupply business as well as introduced our complex respiratory care into that market. Historically, we've had some time breaking into the Chicago market. We believe this strong pizza and that's exceptional platform opens up a key market with significant embedded growth.

Casey Hoyt: Historically, we've had some time breaking into the Chicago market. We believe this strong beach lab and this exceptional platform opens up a key market with significant embedded growth.

Casey Hoyt: who visited Leigh Ann's offices earlier this week to welcome the more than 90 employees to the BiMed family, and we're excited to see the response and eagerness to grow together. We look forward to sharing more of our plans for this acquisition after it closes, which we anticipate in Q3 of this year. We're ahead of pace on 2025 so far, but we have more we want to accomplish. There are more patients we can serve and more hospitals and health systems that need it.

Speaker Change: We visited <unk> offices earlier this week to welcome more than 90 employees to the Biomed family and we're excited to see the response and eagerness to grow together.

Speaker Change: We look forward to sharing more of our plans for this acquisition after it closes which we anticipate in Q3 of this year.

Speaker Change: We're ahead of pace on 2025, so far but we have more want to accomplish there are more patients we can serve more hospitals and health systems that needs.

Todd Zehnder: For more on our operational and financial results for the quarter, I'll now turn it over to Todd Zehnder, our Chief Operating Officer. Todd. All right. Thank you, Casey. In reviewing the financial results, all figures are in U.S. dollars and the full results have been made available on the SEC's website. In my comments today, I'll reference disclosures that we have made available in our quarterly financial supplement. This supplement can be found on our IR website. Let's talk about revenue first, our organic growth engine led the way in Q1 with organic revenue increasing 14.5% and total revenue increasing 16.9%.

Scott Alright: Our operational and financial results for the quarter I'll now turn it over to Todd Zehnder, Chief Operating Officer, Scott Alright. Thank you Casey and reviewing the financial results. All figures are in U S dollars and the full results have been made available on the Sec's website and my comments today I'll reference disclosures that we've made available in our quarterly financial supplement.

Speaker Change: The supplement can be found on our IR website.

Speaker Change: Let's talk about revenue first our organic growth engine led the way in Q1 with organic revenue, increasing 14, 5% and total revenue increasing 16, 9%.

Todd Zehnder: This was a strong performance for Q1, which is always our toughest due to lower utilization as we get patients off of hold and through open enrollment season. We also see a sequential impact from patients not hitting their deductibles early in the year. All that said, we were right in line with our expectations. Our core vent business accounted for 54% of the revenue this quarter, the sleep business increased to 16% of revenues, the staffing business increased to 10% of revenues, and our oxygen business accounted for 10%. Gross margin was 56.3% for the quarter, compared with 58.9% for the first quarter of 2024, and 59.5% in the fourth quarter of 2024.

Speaker Change: This was a strong performance for Q1, which is always our toughest due to lower utilization as we get patients off of hold and through open enrollment season.

Speaker Change: We also see a sequential impact from patients not hitting their deductibles early in the year.

Speaker Change: All of that said, we were right in line with our expectations are.

Speaker Change: Our core business accounted for 54% of the revenue this quarter.

Speaker Change: <unk> business increased to 16% of revenues.

Speaker Change: Staffing business increased to 10% of revenues and our oxygen business accounted for 10%.

Speaker Change: Gross margin was 56, 3% for the quarter compared with 58, 9% for the first quarter of 2024 and 59, 5% in the fourth quarter of 2024.

Todd Zehnder: While our margins remain quite strong and steady in our core vent business, its percentage of overall revenues has declined year over year by 330 basis points on a much larger base. The rapid growth of our sleep and staffing businesses, both of which are either CapEx Lite or non-CapEx, is the primary factor in the gross margin evolution of the company. The service and revenue mix slide we provided in the supplemental for Q125 and Q124 highlights how our businesses have grown and evolved. The year-over-year comparisons for us on the gross margin line are becoming less relevant as we focus more on these CapEx-like businesses that allow us to leverage SG&A and drive net income, adjusted EBITDA, and cash flow growth.

Speaker Change: While our margins remain quite strong and steady in our core event business. Its percentage of overall revenues has declined year over year by 330 basis points on a much larger base.

Speaker Change: The rapid growth of our sleep and staffing businesses, both of which are either capex light or non capex is the primary factor in the gross margin evolution of the company.

Speaker Change: The service and revenue mix slide we provided in the supplemental for Q1 25 in Q1 'twenty four highlights how our businesses have grown and evolved.

The year over year comparisons for us on the gross margin line are becoming less relevant as we focus more on these capex light businesses that allow us to leverage SG&A and drive net income adjusted EBITDA and cash flow growth.

Todd Zehnder: To that end, Adjusted EBITDA grew 26% for the quarter to $12.8 million driven by strong organic growth and contributions from each of our businesses. Adjusted EBITDA margin for the quarter was 21.6% up 160 basis points compared with a year ago. This margin is in line with four-year projections and with the evolving composition of our product and service mix. We continue to leverage our investments in new sales talent and technology with SG&A at 48% of revenue in a quarter, a 90 basis point improvement year over year. We are projecting a similar improvement for the full year, plus or minus a few basis points.

Speaker Change: To that end adjusted EBITDA grew 26% for the quarter to $12 8 million driven by strong organic growth and contributions from each of our businesses.

Speaker Change: Adjusted EBITDA margin for the quarter was 21, 6% up 160 basis points compared with a year ago.

Speaker Change: This margin is in line with full year projections and with the evolving composition of our product and service mix.

Speaker Change: We continue to leverage our investments in new sales talent and technology with SG&A at 48% of revenue in the quarter, a 90 basis point improvement year over year.

Speaker Change: We are projecting a similar improvement for the full year, plus or minus a few basis points.

Todd Zehnder: Turn to CapEx. I want to reinforce what's going on with our gross CapEx. We've provided some incremental disclosure in our supplemental for Net Cap Ex over the past eight quarters. As we've talked about for some time, we accelerated our Bin Exchange program with the Philips program. We saw this as a once-in-a-lifetime opportunity to upgrade our vent fleet and significantly extend the life of the fleet as well. That is why we believe not only is our net capex number the right one to focus on until we complete these buybacks, but we should also take into account the 1500 net vent patient ads we experienced during 2024 and the projected growth we're expecting in 2025.

Speaker Change: Turning to Capex I want to reinforce was going on with our gross Capex, we provided some incremental disclosure in our supplemental for net capex over the past eight quarters.

Speaker Change: As we've talked about for some time, we accelerated our bent exchange program with the Philips program.

Speaker Change: We saw this as a once in a lifetime opportunity to upgrade our event fleet and significantly extend the life of the fleet as well.

Speaker Change: That is why we believe not only is our net capex number the right one to focus on until we complete these buybacks, but we should also take into account. The 1500 net patient adds we experienced during 2024 and the projected growth we're expecting in 2025.

Todd Zehnder: By taking advantage of this program, we are preparing for both near and long-term growth. This program has been wildly successful for us. From inception of the program in the second quarter of 2024, through the end of the current quarter, we've refreshed the life on close to half of our fleet at a net cost of approximately $1 million. Our net capex in the quarter was $8.5 million, or 14.4% of net revenue, compared with $8.9 million, or 14.7% of net revenue in Q4. This compares with $5.4 million, or 10.6% of net revenue in Q1 of 2024. The trade-in program will likely end during the second quarter.

Speaker Change: By taking advantage of this program, we are preparing for both near and long term growth.

Speaker Change: This program has been wildly successful for us from inception of the program in the second quarter of 2024 through the end of the current quarter. We've refreshed the life on close to half of our fleet at a net cost of approximately $1 million.

Speaker Change: Our net capex in the quarter was $8 5 million or 14, 4% of net revenue compared with $8 9 million or $14 414, 7% of net revenue in Q4.

Speaker Change: This compares with $5 4 million or 10, 6% of net revenue in Q1 of 2024.

Speaker Change: The trade in program will likely in during the second quarter. Therefore, we expect our capex will normalize at that point.

Todd Zehnder: Therefore, we expect our capex will normalize at that point. In Q1, we recorded a gain of $2.4 million that was primarily driven by the Trilogy of Return program. Recall that these gains are expected to continue until the project is completed by the end of Q2. We've once again funded our CapEx out of discretionary cash flow and continue to manage the business in order to drop free cash flow onto the balance sheet. Recall for 2023, our percentage of net capex adjusted EBITDA was 54.6%. that dropped its 53.7% in 2024. We're expecting a similar decline for full year 2025.

Speaker Change: In Q1, we recorded a gain of $2 4 million that was primarily driven by the trilogy return program.

Speaker Change: Recall that these gains are expected to continue until the project is completed by the end of Q2.

Speaker Change: Okay.

Once again funded our capex out of discretionary cash flow and continue to manage the business in order to drop free cash flow onto the balance sheet.

Speaker Change: Recall for 2023, our percentage of net Capex to adjusted EBITDA was 54, 6%.

Speaker Change: That dropped its 53, 7% in 2024.

Speaker Change: We're expecting a similar decline for full year 2025.

Todd Zehnder: The first two quarters of this year are expected to be higher than that percentage due to the Trilogy Return Program and seasonality.

Speaker Change: The first two quarters of this year are expected to be higher than that percentage due to this really do you return program and seasonality.

Todd Zehnder: While we're on this topic, I should address the potential impact of terror. For 2025, our supplier contracts are already largely locked in. We're in constant contact with our suppliers should the tariff environment change. But for now, we're not expecting a material impact from the announced tariffs in the current year. Our balance sheet remains a real asset for us and has created the optionality for us to continue to organically grow, to pursue the VIN exchange program, as well as announce the Leigh Ann acquisition that Casey mentioned earlier. We have $55 million available on our credit facilities, a $30 million accordion if needed, $10.2 million of cash on hand at quarter end, and a working capital balance of $13.6 million.

Speaker Change: While we're on this topic I should address the potential impact of tariffs.

Speaker Change: For 2025, our supplier contracts are already largely locked in.

Speaker Change: We're in constant contact with our suppliers should the tariff environment change, but for now we're not expecting a material impact from the announced tariffs in the current year.

Casey Hogan: Our balance sheet remains a real asset for us. It has created the optionality for us to continue to organically grow to pursue the Venn exchange program as well as announced the <unk> acquisition that Casey mentioned earlier.

Casey Hogan: We have $55 million available on our credit facilities, a 30 million dollar accordion, if needed $10 2 million of cash on hand at quarter end and our working capital balance of $13 6 million.

Todd Zehnder: We take great pride in the fact that we are one of the few companies in healthcare services that has no net debt. With the continued growth of our CapEx-like businesses and the VIN exchange program drawing to a close by the end of Q2, the resulting free cash flow from these two factors gives us the confidence that we can not only partially fund the Leigh Ann acquisition with cash on hand, but that we should be able to quickly pay down any borrowings associated with that anticipated acquisition as well.

Casey Hogan: We take great pride in the fact that we are one of the few companies in health care services that has no net debt.

With the continued growth of our Capex light businesses, and then exchange program drawing to a close by the end of Q2.

Casey Hogan: The resulting free cash flow from these two factors gives us the confidence that we can not only partially fund the <unk> acquisition with cash on hand, but we should be able to quickly pay down any borrowings associated with that anticipated acquisition as well.

Todd Zehnder: Based on our results from the first quarter, we've tightened our outlook for the full year 2025. We've raised the bottom end of net revenue from the range of $254 million to $256 million and kept the top end of the range at $265 million, implying 16% growth over 2024 at the midpoint. We also raised the bottom end of the adjusted EBITDA range from $54 million to $55 million, with the top end at $58 million. This new range would imply 11% growth over 2024 at the midpoint. In our quarterly supplemental, we provided some additional commentary and assumptions on our guidance.

Casey Hogan: Based on our results from the first quarter, we've tightened our outlook for the full year 2025.

Casey Hogan: We've raised the bottom end of net revenue.

Casey Hogan: From the range of $254 million to $256 million and kept the top end of the range at 265 million, implying 16% growth over 2024 at the midpoint.

Casey Hogan: We also raised the bottom end of the adjusted EBITDA range from $54 million to $55 million with the top end at $58 million.

Casey Hogan: This new range would imply a 11% growth over 2024 at the midpoint.

Casey Hogan: In our quarterly supplemental we provided some additional commentary and assumptions on our guidance I'll cover these briefly.

Todd Zehnder: I'll cover these briefly. First, we still expect year-over-year growth in each quarter to be roughly consistent with the increases we experienced in 2024. We expect sequential revenue growth in Q2 through Q4 to be in a range of 5% to 9%. The adjusted EBITDA ranges for the year assume an adjusted EBITDA margin in the range of 21 to 23%, which remains unchanged from our expectations from last quarter. CapEx in the first half of 2025 is expected to be similar to what we experienced in the second half of 2024 while we continue to exchange out our ventilator fleet.

Casey Hogan: We still expect year over year growth in each quarter to be roughly consistent with the increases we experienced in 2024.

Casey Hogan: We expect sequential revenue growth in Q2 through Q4 to be in a range of 5% to 9%.

Casey Hogan: The adjusted EBITDA ranges for the year assume an adjusted EBITDA margin in the range of 21% to 23%, which remains unchanged from our expectations from last quarter.

Casey Hogan: Capex in the first half of 2025 is expected to be similar to what we experienced in the second half of 2024, while we continue to exchange out or been a later fleet.

Todd Zehnder: We expect to complete these ventilator buybacks in June, which would mean that we should be receiving our final payments in early third quarter. All of these assumptions are based on status quo of the business. They do not include expected contribution from $26 million in revenue or the $7.4 million in annual EBITDA that Lehan's Medical Equipment generated during 2024. Once that acquisition closes, likely in the third quarter, we intend to update our forecast to include that expected contribution. As we look ahead to the balance of the year, we are well positioned to continue the growth in each of our businesses.

Casey Hogan: We expect to complete these ventilator buybacks in June which would mean that we should be receiving our final payments in early third quarter.

Casey Hogan: All of these assumptions are based on status quo of the business.

Casey Hogan: They do not include expected contribution from $26 million in revenue or the $7 4 million in annual EBITDA that Lee has medical equipment generated during 2024.

Casey Hogan: Once that acquisition closes likely in the third quarter, we intend to update our forecast to include that expected contribution.

Casey Hogan: As we look ahead to the balance of the year, we are well positioned to continue the growth in each of our businesses are.

Todd Zehnder: Our balance sheet has proven to be a strategic asset in preparing us for both near-term and long-term growth. And the combination of organic growth and an expected layer of inorganic growth coming position us for another successful year.

Our balance sheet has proven to be a strategic asset and preparing us for both near term and long term growth.

Casey Hogan: And the combination of organic growth and then expected layer up in Oregon, and the organic growth coming position us for another successful year.

Operator: Thank you for joining us today. This concludes our prepared remarks.

Casey Hogan: Thank you for joining US today. This concludes our prepared remarks, we will now open up the floor for questions.

Operator: We will now open up the floor for questions. Thank you. Ladies and gentlemen, the floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time. Again, that's star 1 if you do have a question or comment.

Casey Hogan: Thank you ladies and gentlemen, the floor is now open for questions.

Speaker Change: I have a question. Please press star one on your telephone keypad at this time again that star one if you do have a question or comment.

Brooks O'Neill: And we'll take our first question from Brooks O'Neill from Lake Street Capital.

Speaker Change: And we will take our first question from Brooks O'neil from Lake Street Capital. Please go ahead Brooks.

Casey Hoyt: Please go ahead, Brooks. Thank you very much. Good morning, guys. Congratulations on this strong start to the year. I guess I'd like to start asking a bit about the strong hiring and the sales reorganization. It sounds like that's going really well. And I had some recollection that there were some staffing challenges. in the past, but it sounds like maybe the environment's more conducive to your ability to grow the business and grow the company by internal hiring. Can you just comment on that a little bit? Yeah, I mean, the staffing challenges we experienced in the past were intentional last year, Brooks.

Brooks O'neil: So very much good morning, guys. Congratulations on the strong start to the year.

Speaker Change: Thank you.

Brooks O'neil: Asking.

Brooks O'neil: But about the strong hiring in the sales.

Brooks O'neil: That sounds like that's going really well and I had some recollection that there were some staffing challenges.

Brooks O'neil: In the past, but it sounds like maybe the environment more conducive to your ability to grow the business and grow the company by internal hiring can you just comment on that a little bit.

Brooks O'neil: Yes.

Brooks O'neil: Staffing challenges we experienced in the past were intentional last year brought slowing on through the restructuring we kind of play a part.

Casey Hoyt: While we're going through the restructuring, we kind of put a pause on aggressive recruiting while we dialed in all of our new sales managers that were in place, got them trained and out in the field, up and running in their new territories, got all the territories restructured. That's all past us now, so we're back to aggressively hiring and recruiting and finding sales reps. And so I wouldn't call it a challenge. We always had the ability to find these people. It's just making sure that once we got them, they were properly prepared to enter the field and set up for success.

Speaker Change: Paul on aggressive recruiting while we dialed in all of our new sales managers that were in place got them trained and out in the field up and run it in their new territories territories restructured that's all past US now so we're back to you.

Speaker Change: Aggressively hiring and recruiting and finding sales reps and so I.

Speaker Change: I wouldn't call it a challenge.

Speaker Change: We we always have the ability to find these people its just making sure that once we got them. They were properly prepared to hit in the field and set up for success.

Casey Hoyt: That's happening. Lots of positive trends organically around the country with those new folks getting up to speed at faster rates. Our managers are developing as good leaders and mentors, and we couldn't be more pleased with what we accomplished last year. And we're going to reap the benefits here in 2025 of really doubling down on that growth.

Speaker Change: Happenings lots of positive trends organically around the country with those new folks getting up to speed at faster rates, our managers are developing as as good leaders and mentors.

Speaker Change: We couldnt be more pleased with what we accomplished last year and we're going to reap the benefits here in 2025.

Speaker Change: Really doubling down on that growth.

Brooks O'Neill: Great, that's fantastic.

Gary: Gary that's fantastic.

Casey Hoyt: Are you seeing anything different from a competitive perspective in the marketplace right now? No, not necessarily. We, you know, it's not like we wake up every day trying to go beat out our competitors. I mean, sometimes that naturally happens whenever we enter into new markets, just because our complex respiratory offering is so unique compared to the field. But, you know, what we're competing against or what we're losing sleep over is just the underserved population. It continues to grow and it continues to swell despite us having all this research and growth and so on and so forth.

Gary: <unk> seen anything different from a competitive perspective in the marketplace right now.

Gary: No not necessarily.

Gary: It's not like we wake up every day trying to go beat out our competitors, sometimes that naturally happens whenever we enter into new markets, just because our complex respiratory offering is so unique compared to the to the field.

Gary: But.

Gary: Well, we are competing against or what were losing sleep over just the underserved population. It continues to grow and it continues to swell.

Gary: Despite us having all this research and growth and so on and so forth. So.

Brooks O'Neill: So it's good problems from that perspective, but it's less about beating out the competitors. It's just more about getting to the people who need us right now. And that's us and all of our competitors combined with that challenge right now. Great. That sounds good.

Gary: It's good problems from that perspective, but it's less about being other competitors just more about getting to the people who need us right now and that's us.

And all of our competitors combined with that challenge right now.

Speaker Change: Great that sounds good so, let's just talk a little bit I know the acquisition is still pending but.

Brooks O'Neill: So let's just talk a little bit.

Casey Hoyt: I know the acquisition is still pending, but When you mentioned the huge opportunity you have in the core respiratory business, Talk a little bit about expanding into women's health in particular and how that business You know, dovetails with your current business or not, how you're thinking about that in terms of you know, realistically a different patient population, or at least a somewhat different patient population, perhaps different payer group, different doctor referral sources. How are you thinking about that, and how do you see it fitting in with your existing operation? Yeah, it's a pretty simple business, Brooks, it's similar to, you can compare it to the resupply business, I mean, you're talking about a maternal breast pump that is accompanied with a resupply segment of products of its own, and so it becomes more about, and it's a private insurance game versus a Medicare game, so you have a little bit of a diversification by payer, even though Medicare is a great payer for us, you're leveraging, we are going to leverage all of our contracts, private contracts around the country that Leigh Ann can expand to, and that was the genesis of why they were so excited about the transaction on the maternal side, and then 40% of their business is respiratory, and so we were really excited about teaching them how to do complex respiratory in a unique manner, helping them grow their sleep business in a different way, moving from the more traditional sleep lab referral source business to a home sleep referral model, that's something that we teach very well, we were able to do that with H&P, our previous transaction, and have been reaping some benefits from that, so it's a similar business in terms of size to H&P, you know, with 90 employees, $26 million transaction, I believe H&P was about $31 million, they had roughly about 140 employees, but we see the same playbook that with their respiratory business that we did and have been accomplishing with H&P, and then the maternal seems to be a really simple, not complicated, easy-to-double-down-through-our-contract type of business line, so we're very excited about the expansion opportunity there.

When you mentioned the huge opportunity you have there.

Speaker Change: In the core respiratory business.

Speaker Change: It's a little bit about expanding into women's health in particular and how that business.

Speaker Change: Dovetails with your core business or not how you're thinking about that in terms of.

Speaker Change: You know realistically a different patient population or at least somewhat different patient population.

Speaker Change: Perhaps different payer group.

Speaker Change: A different doctor referral sources, how are you thinking about that and how do you see it fitting in with your existing operations.

Speaker Change: Yes, it's a pretty simple business broke.

Speaker Change: And similar to you could compare it to the resupply business, maybe you're talking about a maternal breast PA, where that is accompanied with a resupply segment on products of its own and so it becomes more about and it's a private insurance gain versus a Medicare game. So you have a little bit of a diverse.

Speaker Change: Occasion by payer, even though Medicare is a great payer far as you're you're leveraging.

Speaker Change: We're going to leverage all of our contracts tied to contracts around the country that leann can expand now step.

Speaker Change: The Genesis of why they were so excited about the transaction on the maternal side and then 40% of their business is respiratory and so we were really excited about teaching them how to do complex respiratory in a unique manner.

Speaker Change: <unk> death row, there their sleep business in a different way the moving from the more traditional sleep.

Speaker Change: Referral source business to a home sleep referral model, that's something that we teach very well we were able to do that with <unk> T. Our previous transaction and then reaping some benefits from that so it's a.

Speaker Change: A similar business in terms of size to H M. P. With 90 employees $26 million transaction I believe ACP was about $31 million add roughly about 140 employees, but we see the same playbook that with our respiratory business that we did and it had been in power.

Speaker Change: With HMT and then the maternal seems to be a really simple not complicated easy to double down through our contract types of business lines. So we're very excited about the expansion opportunity there.

Brooks O'Neill: Great. Let me just ask one one last one.

Speaker Change: Great. Let me just ask one last one so with the <unk>.

Casey Hoyt: So with the potential wind down of the refurbishment of your equipment portfolio and the strong cash flows that are going to come, do you anticipate ramping up the pace of acquisitions or are you going to continue to take that on a measured basis? I would say that we're always looking to ramp that up, but we are also very patient, Brooks. It's not like capital has slowed us down. We have a pristine balance sheet, as I said in my prepared remarks. We've got plenty of capabilities. We're net debt zero and generating upwards of high 50s and EBITDA this year.

Speaker Change: Tend to wind down of the refurbishment of your equipment portfolio and the strong cash flows that are going to come do you anticipate ramping up the pace of acquisitions are you going to continue to take that on a measured basis.

Speaker Change: I would say that we're always looking to ramp that up but we are also very patient Brooks, it's not like capital has slowed us down, but we have a pristine balance sheet as I said in my prepared remarks, we've got plenty of capabilities were net debt zero and generating upwards of high.

Speaker Change: <unk> and EBITDA. This year, so we're not really capital constrained from the acquisition standpoint, but we're also very diligent and that's why we're very excited about the Lee Hanse deal.

Casey Hoyt: So we're not really capital constrained from the acquisition standpoint, but we're also very diligent, and that's why we're very excited about the Lehands deal.

Brooks O'Neill: Great. Congratulations. I'm excited for the future. Thanks, Brooks. Thank you.

Brooks O'neil: Alright, congratulations I'm excited for the future.

Speaker Change: Thanks Brooks.

Operator: Thank you once again, Star One, if you do have a question or comment.

Speaker Change: Thank you once again star one if you do have a question or comment.

Ryan Langston: And we'll take our next question from Ryan Langston from Cowan. Please go ahead, Ryan. Hey guys, thanks. Good morning. On Leehands, I know it's a mix of respiratory and women's health. I think you said that the majority is breast pumps. Is there any other equipment or product types we should be thinking about there? And it sounds like this is sort of a longer term family owned business. I guess.

Speaker Change: And we will take our next question from Ryan Langston from Cowen. Please go ahead Ryan.

Ryan Langston: Hey, guys. Thanks, good morning.

Speaker Change: <unk> I know, it's a mix of respiratory in women's health I think you said that you know the majority is breast pumps is there any other equipment or product types, we should be thinking about there and it sounds like this is sort of a longer term family owned business. I guess was there anything else in particular that drew you to this particular asset.

Casey Hoyt: Was there anything else in particular that drew you to this particular asset? Yeah, I'll take it. Yes, they have six locations, full-line DME, similar to HMP. If you recall, we were able to leverage the full-line DME to help us get in with the East Alabama Joint Venture opportunity. That also expands our outreach for different payer contracts as well. So we're not turning our nose up to full-line DME. But yeah, I would say that they've got the rehab, they have the back braces, and the wound care, and so on and so forth that any other DME around the country will have.

Ryan Langston: Yeah I'll.

Ryan Langston: I'll take it.

Ryan Langston: They have six locations for me.

Ryan Langston: Similar to <unk>. If you recall, we were able to leverage the full on DNA to help us get in with the East, Alabama joint venture opportunity that also expands our outreach far different payer contracts as well so we're not turning our nose up to full <unk>.

Ryan Langston: But.

Ryan Langston: But yes, I would say that they've got that.

Yeah, they have the bat races.

Ryan Langston: <unk> care and so on and so forth that any other DMA around the Concho has a wells, we'll leverage that along the way as well.

Casey Hoyt: So we'll leverage that along the way as well. Got it.

Casey Hoyt: And then just last one, I know, you know, in the last call, you said it was a little too early to kind of pontificate on the new administration. I know you gave some comments on tariffs, but just for sort of your business and maybe DME in general, is there anything else you've gleaned over the last few months here in terms of visibility? Or is it just still a little bit too early to know what this administration is doing? It's kind of early, but I mean, we're in the process that we comment on the NCD. I'm not entirely sure if this administration launched that or not, but they've been positive from the standpoint of being receptive to hearing our position along with the rest of the industry and others on the pros, the cons, and so forth of the NCD.

Speaker Change: Got it and then just last one I know you know on the last call. You said it was a little too early to kind of pontificate on the New administration. I know you gave some comments on tariffs, but just for sort of your business and maybe <unk> in general is there anything else you've gleaned over the last few months here in terms of visibility or is it just.

Speaker Change: Still a little bit too early to know what this administration means.

Speaker Change: It's kind of early but I mean, we're in the process that we commented on the NCD I'm not entirely sure. If this administration launch that or not but they have been positive from the standpoint of being receptive to hearing our position along with the rest of the industry and others on the pros the cons and so forth of the M C.

Speaker Change: D.

Casey Hoyt: Look, we're all for the changes that are being made to run, make processes more efficient, make departments more efficient. There's been a lot of speculation about Medicaid and so forth. We haven't heard anything, although, you know, we're always paying attention to that and there could be changes. And outside of that, it's just really status quo.

Speaker Change: Look we're all for the changes that are being made to run make.

Processes more efficient and make departments more efficient.

Speaker Change: There's been a lot of speculation about Medicaid and so forth, we haven't heard anything although were always.

Speaker Change: We're always paying attention to that and there could be changes and outside of that it's just really status quo. So I wouldn't say anything large that is impacting 2025, but some things that could be positive for our for our business going forward.

Ryan Langston: So, I wouldn't say anything large that is impacting 2025, but some things that could be positive for our business going forward. Got it. Thank you very much. Thank you.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you. Thank you.

Andrew Rem: Once again, star one, if you do have a question or comment, and we'll take our next question from Andrew Rem from Odinson Partners. Please go ahead, Andrew. Hey, gentlemen. Can you share like what the growth profile or the historical profile has been for Lehigh? It's been double digits, and we are expecting that to continue anywhere in the teens. They're coming off a smaller base, so there's been years where it's higher than that. I think last year was mid-double digits.

Speaker Change: Once again star one if you do have a question or comment.

Take our next question from Andrew <unk> from <unk> Partners. Please go ahead Andrew.

Andrew: Hey, gentlemen.

Andrew: Can you share what the growth profile or the historical profile, it's been for Lee here.

Speaker Change: It's been double digits and we.

Speaker Change: We're expecting that to continue anywhere in the teens suddenly they're coming off a smaller base. So theres been years, where it's higher than that I think last year was mid double digits.

Casey Hoyt: We are hopeful that that continues in that local area, but what we're real excited about is what Casey said, can we go and push that growth rate higher around the country and some Viemed strong areas to increase that. And then can you also comment, you said a reference kind of a Chicago beachhead. Can you talk about what the potential is to grow? I guess if they're primarily servicing Chicago, is there more to go in the Chicago area, more in the Midwest? Yeah, I mean, like, I'll give you an example. I mean, they have six locations they have four sales reps, you know, in a coverage area that Leigh Ann is responsible for, we would probably have, I mean, I don't know, maybe 10 to 12.

Speaker Change: We are hopeful that that continues in that local area, but what we're really excited about is we're Casey said can we go and push that growth rate higher around the country and some VI mad strong areas.

Speaker Change: To increase that.

Speaker Change: And then can you also comment you said referenced kind of a Chicago beachhead can you talk about what the potential is two to.

Speaker Change: To grow.

Speaker Change: I guess, if they are primarily servicing Chicago.

Speaker Change: Is there more to go in the Chicago area.

Speaker Change: More in the Midwest.

Speaker Change: Yes.

Speaker Change: Give you an example, I mean, they have six locations they have.

Speaker Change: Third for sales reps.

Speaker Change: And in our coverage area that we had is responsible for we would probably have I'm Ed I don't know maybe 10 to 12. So there is a lot of room for growth two to improve sales will leverage some of their their referral sources their channel positions in.

Casey Hoyt: So there's a lot of room for growth to improve sales, we'll leverage some of their referral sources, their champion positions, and get some better education into their hands and teach their folks how we walk and talk.

Speaker Change: Some better education into their hands and teach their folks how we walk and talk and so yeah I think.

Casey Hoyt: And so, yeah, I think it's a big opportunity to just kind of double down on their local market around them from a respiratory standpoint, and it's even probably a greater opportunity for us to leverage the maternal on our network throughout the country. And then it looks like it has a margin, the EBITDA margin profile that's higher than Viemed. Can you just comment on what it is about that business that allows the higher margins? Yeah, I'll take that, Andrew. Yeah, Lehans, 70% of their total business, when we think about their, not just their product mix, but sort of the revenue streams between rental and sale, they are much more transactional.

Speaker Change: It's a big opportunity to just kind of double down on their local market around them from a respiratory standpoint, and it hasn't even probably a greater opportunity.

Speaker Change: To elaborate the maternal on our network throughout the country.

Speaker Change: And then it looks like it has a margin EBITDA margin profile.

Speaker Change: Higher than.

Speaker Change: Biomed.

Speaker Change: Can you just comment on what it is about that business that then allows us to higher margins.

Speaker Change: Yeah.

Andrew: I'll take that Andrew.

Speaker Change: Yes, Lee Hanse seven.

Speaker Change: 70% of their total business when we think about their not just their product mix, but sort of the revenue streams between rental and sale. They are much more transactional 70% of their business is via sales whether it be resupply from return or on the sleep side and so really their EBITDA margins reflect.

Casey Hoyt: 70% of their business is via sales, whether it be resupply from returnal or on the sleep side. And so really, their EBITDA margins reflect more of that, you know, less back office, you know, using more technology on this transactional side that doesn't come with a higher margin of SG&A. And so you are correct in seeing that they have pretty good operational leverage in that business and carry, you know, a little bit higher EBITDA margins than we carry here at Consolidated.

Speaker Change: More of that.

Speaker Change: Less less back office.

Speaker Change: Using more technology on this transactional side that doesn't come with a higher margin of SG&A and so you are correct in and seeing that.

Speaker Change: They have pretty good operational leverage in that business and carry.

Speaker Change: You know a little bit higher EBITDA margins than me carry here consolidated.

Andrew Rem: And maybe the last one, you guys haven't talked for a while about the VA opportunity. Can you just give an update on? Where that is at, how things are going there.

Speaker Change: Maybe last one you gave them attack.

Speaker Change: While about the VA opportunity can you just give an update on.

Speaker Change: Where that is that how things are going there.

Casey Hoyt: The VA opportunity, I'm just going to go ahead and say it, is dead. We've had so many different folks coming and going through different administrations. It's been a broken system, it's a cry in shame. At some point, they're going to have to come around back to us because we've had this thing at the one yard line for multiple years and it just hasn't come to We've moved on from that and if they circle back with us looking to take care of their veterans the right way, we'll be ready to do so. But at this point in time, we don't have a pursuit inside of the VA.

Speaker Change: D var community I'm, just going to go ahead and say it is dead.

Speaker Change: We've had to we've had so many different folks commenting galante different administrations, it's been a broken system Brian shame.

Speaker Change: Some point.

Speaker Change: Theyre going to have to come around back to us because we've had this thing at the one yard line floor.

Speaker Change: Multiple.

Speaker Change: Years, and it just hasnt come to fruition so.

Speaker Change: Yes.

Speaker Change: And we've moved on from that and.

Speaker Change: If they circle back with us looking to take care of their veterans the right way, we will be ready to do so but at this point in time, we don't have a pursuit inside of the VA.

Andrew Rem: All right.

Speaker Change: Alright, well thanks, a lot you guys another great quarter I appreciate it.

Andrew Rem: Well, thanks a lot, you guys. Another great, boring quarter. Appreciate it. Thanks, Andrew.

Speaker Change: Thanks, Andrew.

Operator: Once again, star 1 if you do have a question or comment. And there appear to be no further questions at this time.

Speaker Change: Once again star one if you do have a question or comment.

Speaker Change: And there appear to be no further questions at this time I'd like to turn the floor back to management for closing remarks.

Operator: I'd like to turn the floor back to management for closing remarks.

Operator: All right, we want to thank everybody for joining us today. We're always available for follow-up calls. We hope everybody has a great day. Thank you.

Speaker Change: Alright, we want to thank everybody for joining us today, we're always available for follow up calls we hope everybody has a great day.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.

Operator: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].