Viemed Healthcare, Inc.

Greetings and welcome to Vymed's third quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, you can press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Todd Zender, COO. Thank you. You may begin.

All right, thank you, Rob. 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 refer to as forward-looking statements. Such statements reflect the company's current views and intentions with respect to future results or events and are subject to certain risks and uncertainties. which could cause the actual results or events to vary from those indicated in forward-looking statements. Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the security regulatory authorities in certain provinces of Canada. Because of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. The forward-looking statements made in this conference call are made as of today, and the company undertakes no obligations to update or revise any forward-looking statements, except as required by law. The third quarter financial news release, including the related financial statements, are available on the SEC's website. I'll now turn it over to Vymed's CEO, Casey Hoyt, to get things started.

Okay. Thank you, Todd, and good morning, everyone. We appreciate you joining us today. The third quarter results exceeded both our projections and expectations, driven by continued organic growth in our core businesses, as well as continued growth from recent M&A activity, leading to strong year-over-year and sequential growth in net revenue. Our third quarter net revenue established yet another company record of $58 million, exceeding the top end of our guidance and establishing a pathway to a strong finish in 2024. I want to acknowledge and thank our incredible ViMed family, which now numbers more than 1,150 employees. Their dedication to our Live Your Life mission and their relentless focus on patient satisfaction and operational performance will enable a strong finish to 2024. You've heard us talk about earning a trusted place in the home for some time. I want to drill down on that a bit more this morning and why it matters. ViMed is substantially differentiated from HME providers to the point that we believe that even the description, home medical equipment, doesn't fully capture exactly what we're doing in the home and the value we're proving out every day to patients, providers, and payers. It's clear that there is a trend of providing clinical care in the home. Patients want to be treated in the comfort and safety of their home. Hospitals and health systems want to avoid readmissions, and payers know that costs are are lower in the home versus an institutional setting. Improving outcomes, patient satisfaction, and operational efficiency are the pillars for delivering care in the home. ViMed has been a leader since day one with our high touch, high technology care model. What's become clear to us is that in today's environment, patient satisfaction is more critical than ever. A focus on patient outcomes and personalized care, not to mention offering support to address patient concerns, becomes increasingly important, particularly when it comes to patient compliance. Utilizing advanced tools such as our proprietary engaged platform can boost provider communication and care coordination. These solutions need to be scalable to streamline operations and provide the accurate data ultimately needed for value-based care. This isn't a future state we're talking about at ViMed. This is the model that we have been deploying with our RTs at the center of everything we do in the home. It's the reason why we've allocated capital investments in technology, recruiting, training, and the provision of social services we offer to our patients. We're ready for where the industry should be going, and we expect to continue to lead it. On the regulatory front, we're seeing some positive signs of support for the industry. BiMed has been a leading advocate for the reconsideration of NCD 280.1, emphasizing objective and comprehensive coverage policies for NIV therapy. We believe that the request for the NCD is another signal we've seen from CMS that they are serious about holding MA plans accountable for appropriate guidelines to deliver clinical care. The majority of comments submitted on the NCD have been positive, and we think this is a real opportunity for the industry to serve those in need and facilitate continued expansions. The reason we've been proactive on the NCD is that establishing clear and consistent guidelines will create a stable business environment for providers and reduce uncertainty for patients. The research supports the efficacy of the NIV, resulting in significant reductions in costs, hospitalizations, and improved patient outcomes. And the data exhibits there is medical necessity for putting patients on the device immediately and improving their quality of life. We've submitted our comments on the NCD and have sponsored or supported much of the research cited in other comments. We'll continue to provide a leadership role through ViMed and through the industry trade associations. I'd also like to highlight that there has been some recent movement on the 75-25 reimbursement relief. Recall that this rate adjustment for certain products in certain areas would increase Medicare reimbursements for providers serving those areas. This isn't dead by any means. It adds positive momentum with some recent legislative support, and it should be backed up for consideration at the end of the year. As we've noted before, restoration of this relief would be positive for the financial performance in 2025. Let me now turn to some brief updates on the business. The continued strength of our vent business was on display again this quarter with a 4.3% sequential increase in active vent patients. That sequential growth is usually a leading indicator for future quarters and reinforces the positive outlook we have on the business. The 400-plus increase in vent patients we've experienced in both Q2 and Q3 is as good as we've produced in a number of years. One of the reasons our vent growth has been so strong is the operational overhaul we completed earlier in the year. Those efforts resulted in internal processes driving higher vent utilization and vent patient billings The new sales structure we put in place and discussed last quarter is having an impact as well. With an 18% increase in average monthly setups per sales rep compared with what they were producing prior to the implementation, we've been accelerating the recruitment of sales reps to maintain our industry-leading organic growth. We expect to have more to report on this effort in Q4. In our sleep business, All I can say is what a difference a quarter makes in terms of the overall narrative around GLP-1 drugs. Based on what we've seen from ResMed and others so far, we believe it's pretty conclusive that GLP-1s are not impeding the growth of the sleep business. As we noted before, in fact, it appears to be bringing more patients into treatment for sleep apnea and other disorders as they lose weight. Despite the increasing use of GLP-1 therapies for weight loss, both obesity and sleep apnea rates continue to climb. For patients with moderate to severe obesity-related sleep apnea, research consistently shows that combining PAP therapy with weight loss provides greater benefits than either treatment alone. Real-world data reveals that OSA patients prescribed GLP-1 medications are 10.8% more likely to start PAP therapy with significantly higher adherence rates, evidenced by increased PAP resupply orders, at one and two years post-setup. The improvement in sentiment and the increasing amount of published research lines up with what we're seeing in our business. We're seeing sequential growth in CPAP units, patients, resupply orders, and home sleep tests. Even though sleep is currently contributing 17% of our total revenue as of Q3, we believe we've only scratched the surface of what this business can contribute to our overall growth. We're still on track with our East Alabama joint venture integration. We made incremental progress each of the last two quarters, and as this is our test case for future JVs like this, we are easing our way into our growth plans. We outlined a plan for annualized revenue of approximately $4 million when we made this acquisition, and that's the path we're on. We expect to have more to report out on the JV at the year end. Our M&A pipeline remains robust with a focus on adding complementary services that could expand our core businesses. These new opportunities could also build on the strong relationships we've already earned with patients and could enhance our value to providers and payers through greater scale and efficiencies. Overall, I'm pleased with how we've executed throughout this quarter. We've regularly challenged our team to hit our strategic goals, and they've delivered. With record-breaking quarters in 2024 on top of our highest EBITDA quarter ever in Q3, we have built up a lot of positive momentum for the fourth quarter that will feed into 2025. The increasing patient and sleep patient growth together with our sleep resupply business provide a strong base of organic growth. We have no intention of letting up. We are laser-focused internally on finishing on a strong note which will provide the exit velocity for a stronger year in 2025. For more on our operational and financial results for the quarter, I'll turn the call back over to Todd.