VMD 10-K & 10-Q changes, risk factors and insider trading
Viemed Healthcare, Inc. · Nasdaq · Services-Misc Health & Allied Services, Nec · CIK 1729149 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “A reduction or elimination of coverage or reimbursement of our products by third-party payors, including Medicare, in the future could adversely affect our business and results of operations.”
New heading “Adverse global macroeconomic conditions, including supply chain disruptions, tariffs, and fluctuations in foreign currency exchange rates, could negatively impact our operations, costs, and profitability.”
New heading “CMS actions to impose temporary enrollment moratoria and heightened screening for certain DMEPOS supplier types could limit our ability to expand, pursue acquisitions, or maintain expected operational flexibility and could increase our compliance costs.”
New heading “We cannot guarantee that we will repurchase our common shares pursuant to our share repurchase program or that our share repurchase program will enhance long-term shareholder value. Share repurchases could also increase the volatility of the price of our common shares and could diminish our cash reserves.”
Removed heading “We may be negatively impacted by inflation.”
Removed heading “Delays in reimbursement due to state budget deficits may increase in the future, adversely affecting our liquidity.”
Removed heading “We no longer qualify as a “smaller reporting company” or an "emerging growth company" which may increase our costs and demands on management.”
Largest changes
“Adverse global macroeconomic conditions, including supply chain disruptions, tariffs, and fluctuations in foreign currency exchange rates, could negatively impact our operations, costs, and profitability.”see in full comparison
“We cannot predict the potential legal, regulatory, and financial risks that may arise out of the recall. For example, we may be asked to notify patients of the recall, retrieve recalled devices from patients, and/or provide replacement devices, resulting in additional unreimbursed costs. Some patients may discontinue use of their device, which could affect our ability to continue billing for service. …”see in full comparison
“Delays in reimbursement due to state budget deficits may increase in the future, adversely affecting our liquidity.”see in full comparison
“In February 2026, CMS announced the imposition of a 6-month nationwide temporary moratorium on the Medicare enrollment of certain DMEPOS “medical supply company” supplier types, with the stated objective of combating fraud, waste, and abuse. The moratorium generally applies to new enrollments and new practice locations for the specified supplier types, may be extended in additional 6-month increments, and CMS indicated it will closely scrutinize enrollment applications during the moratorium period, including through site visits and other verification activities. …”see in full comparison
“Current and anticipated inflationary effects may have an adverse effect on our business and be influenced by various factors, including general cost increases, disruptions in our supply chain, and governmental stimulus or fiscal policies. The services and products we provide to patients are subject to fluctuations based on the costs of materials, labor, and transportation, including fuel expenses. The rising costs of our services and products can be attributed, in part, to increased shipping expenses and general inflationary trends. …”see in full comparison
“The loss of smaller reporting company and emerging growth statuses and compliance with such larger company disclosure obligations may increase our legal and financial compliance costs and cause management and other personnel to divert attention from operational and other business matters to devote additional time to public company reporting requirements. …”see in full comparison
Full comparison: every changed paragraph (52)
Reimbursement for our services primarily comes from governmental healthcare programs, such as Medicare and Medicaid, and private health insurance companies, and our ability to sell our products and services depends in large part on the extent to which coverage and adequate reimbursement for our products and services are and will continue to be available. The reimbursement rates offered are outside of our control. The CARES Act previously introduced a blended rate for HME furnished in non-rural or contiguous non-competitive bidding areas that is based on 75% of the adjusted fee schedule amount and 25% of the unadjusted fee schedule amount. The 75/25 blended Medicare reimbursement rate expired on December 31, 2023. Efforts to extend the blended rate through H.R. 5555 and S. 1294 gained strong bipartisan support and advanced through key congressional committees. However, these provisions were ultimately excluded from the legislative package passed at the end of the 118th Congress. As a result, reimbursement rates for affected products have reverted to rates in place prior to the implementation of the 75/25 blend, adjusted for inflation, leading to lower reimbursement levels in certain markets where we operate. Industry stakeholders, including leading advocacy organizations, continue to push for legislative relief in the 119th Congress. Given that the most recent government funding package extends only through March 14, 2025, future opportunities may arise to reintroduce Medicare reimbursement relief as part of broader healthcare negotiations. However, there is no certainty that such efforts will succeed, or that reimbursement rates will be restored to previous levels.
Reimbursement for our services primarily comes from governmental healthcare programs, such as Medicare and Medicaid, and private health insurance companies, and our ability to sell our products and services depends in large part on the extent to which coverage and adequate reimbursement for our products and services are and will continue to be available. The reimbursement rates offered are outside of our control. Reimbursement rates for our services, like much of the United States healthcare market, are subject to reductions. We cannot predict the extent and timing of any reduction in reimbursement rates and we cannot assure you that coverage and reimbursement will be available for our products or services, that reimbursement amounts will be adequate, or that reimbursement amounts, even if initially adequate, will not be subsequently reduced.
A reduction or elimination of coverage or reimbursement of our products by third-party payors, including Medicare, in the future could adversely affect our business and results of operations.
A substantial portion of our revenues are derived from reimbursement by Medicare and other third-party payors for our ventilator products and services. Currently, ventilators are covered under the NCD for the DME Reference List, effective since April 1, 2003, for the treatment of neuromuscular diseases, thoracic restrictive diseases, and chronic respiratory failure resulting from COPD.
On June 9, 2025, CMS finalized a new NCD establishing clear medical necessity criteria for NIPPV in the home for treatment of chronic respiratory failure related to COPD. We actively participated in the national coverage analysis process, including submission of formal comments and ongoing engagement with CMS, the Department of Health and Human Services, and members of Congress.
The final NCD may significantly affect patient access, reimbursement, and utilization of ventilator therapies. Because Medicare coverage policies often influence commercial payors, including Medicare Advantage plans, changes to Medicare policy may have broader implications across our payer base. Any reduction or elimination of coverage or reimbursement by Medicare or other third-party payors, or an inability to maintain or expand coverage with additional commercial payors, could materially and adversely impact our business, financial condition, and results of operations.
We require the timely delivery of a sufficient supply of equipment we use to perform our home treatment of patients. Our dependence on third-party suppliers involves several additional risks, including limited control over pricing, availability, quality and delivery schedules. InWhile the coming months and/or years, limitations on control over pricing and limited availability of materials may create uncertainty if the new Presidential administration proceeds with implementing tariffs that apply to U.S. trading partners. Historicallycertain medical equipment hasand components have historically been exemptedexcluded from tariffs,tariff butregimes itor is unclear if that will continuesubject to exemptions, trade measures may be theexpanded, case.reclassified, or implemented with limited notice, and suppliers may increase prices to reflect higher input costs, compliance requirements, or logistics constraints. These developments could increase our equipment and supply costs and reduce product availability. To date, we have not experienced a material adverse impact on operating costs or supply availability attributable to tariffs. To the extent tariffs create challenges on sourcing medical equipment from foreign manufacturers, we can attempt to source equipment from domestic manufacturers when practicable. In addition, there are a limited number of manufacturers of the equipment used for home treatment of patients with ventilation respiratory therapy, which has been further exacerbated by Philips Respironics' January 2024 decision to discontinue of many of its respiratory products. Dependence on only a few manufacturers presents risks that suppliers may not be able to provide or adequately provide sufficient equipment to satisfy demand. Demand may also outstrip supply, leading to equipment shortages that could adversely affect our operations. Inadequate supply could also impair our ability to attract new business and could create upward pricing pressure on equipment and supplies, adversely affecting our margins. Conversely, incorrect demand forecasting could lead to excess inventory, which we may not be able to sell. If we fail to achieve certain volume of sales, prices of ventilatorsmedical equipment may increase, leading to reduced revenue and profitability. The industry is subject to a high level of regulatory scrutiny, and government or manufacturer recalls could adversely affect our ability to provide products and services and achieve revenue targets. Additionally, the market for financing ventilators and other supplies we need could be more difficult in the future.
On June 14, 2021, Royal Philips (“Philips”), one of our largest suppliers of BiPAP and CPAP and mechanical ventilator devices, initiated a voluntary recall notification with the U.S. Food and Drug Administration (“FDA”) for certain Philips BiPAP and CPAP and mechanical ventilator devices that we distribute and sell. Philips initiated this recall to address potential health risks related to the polyester-based polyurethane (“PE-PUR”) sound abatement foam component in these devices. The PE-PUR sound abatement foam, which is used to reduce sound and vibration in these affected devices, may break down and potentially enter the device’s air pathway and may off-gas certain chemicals. If this occurs, black debris from the foam or certain chemicals released into the device’s air pathway may be inhaled or swallowed by the person using the device. In July 2021, the FDA identified the Philips recall as a Class I recall, the most serious type of recall. Patients using these devices have been instructed to contact their health care provider and doctor about a suitable treatment for their condition. As of December 2023, Philips has announced remediation of 99% of actionable sleep therapy device registrations.
We cannot predict the potential legal, regulatory, and financial risks that may arise out of the recall. For example, we may be asked to notify patients of the recall, retrieve recalled devices from patients, and/or provide replacement devices, resulting in additional unreimbursed costs. Some patients may discontinue use of their device, which could affect our ability to continue billing for service. Viemed has been named in and may be subject to future litigation related to the recall, including individual and putative class action claims related to personal injury for devices affected by the recall as well as claims regarding repair and replacement of devices affected by the recall. Viemed cannot predict what additional actions will be required of the Company by the FDA or other state or federal agencies related to the recall.
Our strategic growth plan calls for significant growth in our business over the next several years through an increase in our density in select markets where we are established as well as the expansion of our geographic footprint into new markets. This growth would place (and has placed) significant demands on our management team, systems, internal controls and financial and professional resources. As a result, we could be required to incur (and have incurred) expenses for hiring additional qualified personnel, retaining professionals to assist in developing the appropriate control systems and expanding our information technology infrastructure. If we are unable to effectively manage growth, our financial results could be adversely impacted. Our strategic growth plan contemplates continued growth from future acquisitions of home medical equipment and service providers. We may face increased competition for attractive acquisition candidates, which may limit the number of acquisition opportunities available to us or lead to the payment of higher prices for acquisitions. Without successful acquisitions, our future growth rate could decline. In addition, we cannot guarantee that any future acquisitions, if consummated, will result in further growth.
We may face increased competition for attractive acquisition candidates, which may limit the number of acquisition opportunities available to us or lead to the payment of higher prices for acquisitions. Without successful acquisitions, our future growth rate could decline. In addition, we cannot guarantee that any future acquisitions, if consummated, will result in further growth.
The integration of acquisitions requires significant attention from management, may impose substantial demands on our operations or other projects and may impose challenges on us including, but not limited to, consistencies in business standards, procedures, policies and business cultures. We cannot assure you that any future acquisitions, if consummated, will result in further growth. Specific integration risks relating to our acquisition of other businesses may include: difficulties related to combining previously separate businesses into a single unit, including patient transitions, product and service offerings, distribution and operational capabilities and business cultures; availability of financing to the extent needed to fund acquisitions; customer loss and other general business disruption; managing the integration process while completing other independent acquisitions or dispositions; diversion of management’s attention from day-to-day operations; delaying post-closing operations due to being required to obtain a new Medicare enrollment and undergo a new accreditation process with respect to certain acquisition candidates that are Medicare-enrolled DMEPOS suppliers; assumption of liabilities of an acquired business, including unforeseen or contingent liabilities or liabilities in excess of the amounts estimated; failure to realize anticipated benefits and synergies, such as cost savings and revenue enhancements; potentially substantial costs and expenses associated with acquisitions and dispositions; and failure to retain and motivate key employees difficulties in establishing and applying our internal control over financial reporting and disclosure controls and procedures to an acquired business.
Adverse global macroeconomic conditions, including supply chain disruptions, tariffs, and fluctuations in foreign currency exchange rates, could negatively impact our operations, costs, and profitability.
Our business may be affected by a range of global macroeconomic conditions, including newly imposed tariffs, disruptions to the supply chain, and fluctuations in foreign currency exchange rates. While nearly all of our revenues are generated within the United States and denominated in U.S. dollars, we rely on both domestic and international suppliers for the medical equipment and supplies we rent and sell to patients. As a result, our cost structure and operational efficiency are subject to global market dynamics that may influence the availability and pricing of key products.
We are exposed to trade policy and tariff developments primarily through the pricing actions and sourcing decisions of our suppliers rather than through direct import activity. While certain medical equipment and components have historically been excluded from tariff regimes or subject to exemptions, trade measures may be expanded, reclassified, or implemented with limited notice, and suppliers may increase prices to reflect higher input costs, compliance requirements, or logistics constraints. These developments could increase our equipment and supply costs and reduce product availability. To date, we have not experienced a material adverse impact on operating costs or supply availability attributable to tariffs. However, the timing, scope, and duration of future actions remain uncertain, and we continue to monitor these developments and evaluate their potential operational and financial effects.
Additionally, global supply chain constraints continue to pose risks to our ability to acquire essential equipment and components in a timely and efficient manner. Factors such as raw material shortages, longer lead times from suppliers, and increased transportation expenses may limit our responsiveness to patient needs and may affect our ability to scale our business effectively.
Although our operations are primarily domestic, we are indirectly exposed to foreign currency exchange rate fluctuations through our international sourcing activities. Changes in the value of the U.S. dollar relative to other currencies, including the Canadian dollar and Chinese yuan, may impact the prices we pay to suppliers, which could increase our cost of goods sold and reduce our gross margins.
If these macroeconomic pressures persist or worsen, our ability to manage supply continuity, control costs, and meet patient demand could be adversely affected. As a result, our financial condition, operating results, and long-term strategic objectives may be negatively impacted.
We may be negatively impacted by inflation.
Current and anticipated inflationary effects may have an adverse effect on our business and be influenced by various factors, including general cost increases, disruptions in our supply chain, and governmental stimulus or fiscal policies. The services and products we provide to patients are subject to fluctuations based on the costs of materials, labor, and transportation, including fuel expenses. The rising costs of our services and products can be attributed, in part, to increased shipping expenses and general inflationary trends. Moreover, there is uncertainty regarding our ability to pass on these increased costs to customers to mitigate inflationary pressures. Sustained increases in inflation could impact the overall demand for our products and services, as well as our labor, equipment, and product costs, potentially affecting our profit margins. This, in turn, could have adverse consequences for our business, financial position, results of operations, and cash flows. Despite recent inflationary trends, we cannot accurately predict whether these patterns will persist. Future volatility in general price inflation and its impact on material availability, shipping, warehousing, and operational overhead could further impact financial results. We attempt to address these pressures through our inflation-linked reimbursement contracts, negotiation, leveraging our purchasing power and embracing technology, such as our proprietary clinical management platform.
Healthcare reform laws significantly affect the U.S. healthcare services industry. In recent years, many legislative proposals have been introduced or proposed in Congress and in some state legislatures that would affect major changes in the healthcare system, either nationally or at the state level. At the federal level, Congress has continued to propose or consider healthcare budgets that substantially reduce payments under the Medicare and Medicaid programs. See “Business–Government Regulation” in Item 1 for more information. The ultimate content, timing or effect of any healthcare reform legislation and the impact of potential legislation on us is uncertain and difficult, if not impossible, to predict. Additionally,In addition, the newcurrent Presidential administration hashas, begunsince itstaking termoffice, withpursued executive actions aimedand atpolicy reforminginitiatives government,intended includingto reductionschange inthe sizestructure, priorities, and funding forof manyvarious executivefederal agencies.agencies and programs. Changes in agency funding levels, staffing capacity, rulemaking priorities, enforcement practices, or administrative processes could influence reimbursement policy, audit activity, prior authorization requirements, claims adjudication timelines, and the interpretation or implementation of applicable laws and regulations. It is extremely difficult, if not impossible,difficult to predict whetherthe suchextent to which these actions will target HHS and/or CMS, how they may do so, whether they will be challenged in court, and what the consequences may be forimplemented, modified, or delayed, including as a result of litigation or changes in political priorities, or the agencies and for health care providers. Theultimate impact ofon legislativehealthcare reform and/or executive action may be material to our business, financial condition or results of operations.providers.
As a result of increased post-payment reviews of claims we submit to Medicare and Medicaid for our services, we may incur additional costs and may be required to repay amounts already paid to us.
We are subject to regular post-payment inquiries, investigations and audits of claims we submit to Medicare and Medicaid for payment for our services. These post-payment reviews havemay increasedincrease as a result of government cost-containment initiatives. These additional post-payment reviewsinitiatives, may require us to incur costs to respond to requests for records and to pursue the reversal of payment denials, and ultimately may require us to refund amounts paid to us by Medicare or Medicaid that are determined to have been overpaid.
Delays in reimbursement due to state budget deficits may increase in the future, adversely affecting our liquidity.
There is a delay between the time that we provide services and the time that we receive reimbursement or payment for these services. Many of the states in which we operate are operating with budget deficits for their current fiscal year. These and other states may in the future delay reimbursement, which would adversely affect our liquidity. In addition, from time to time, procedural issues require us to resubmit claims before payment is remitted, which contributes to our aged receivables. Additionally, unanticipated delays in receiving reimbursement from state programs due to changes in their policies or billing or audit procedures may adversely impact our liquidity and working capital. We fund operations primarily through the collection of accounts receivable.
There are delays in reimbursement from the time we provide services to the time we receive reimbursement or payment for these services. Delays may result from changes by third-party payors to data submission requirements or requests by fiscal intermediaries for additional data or documentation, among other issues. If we or other providers involved in claims submission reimbursement processes have information system problems or issues that arise with Medicare or Medicaid or private health insurers, we may encounter delays in our payment cycle. Such timing delays may cause working capital shortages. For example, the replacement in 2024 of our prior claims submissions clearinghouse due to a cybersecurity incident impacting the clearinghouse has resulted in delayed claims submissions and in a temporary reduction of our operating cash flow and an increase to our accounts receivable. Working capital management, including prompt and diligent billing and collection, is an important factor in our results of operations and liquidity. System problems, Medicare or Medicaid issues or industry trends may extend our collection period, adversely impact our working capital. Our working capital management procedures may not successfully negate this risk. There are often timing delays when attempting to collect funds from Medicaid programs. Delays in receiving reimbursement or payments from these programs may adversely impact our working capital.
A substantial portion of our revenues are derived from private and governmental third-party payors. In 2024,2025, approximately 57%50% of our revenuesrevenue werewas derivedassociated collectively fromwith managed care plans, commercial health insurers, workers’ compensation payors, and other privatethird-party paypayor revenue sourcesarrangements while approximately 43%40% of our revenues were derived from Medicare and Medicaid. The remaining portion of our patient revenue was generated from patient private pay and other sources. Initiatives undertaken by industry and government to contain healthcare costs affect our profitability. These payors attempt to control healthcare costs by contracting with healthcare providers to obtain services on a discounted basis. We believe that this trend will continue and may limit reimbursement for healthcare services. Additionally, from time to time our contracts with payors are terminated, amended or renegotiated, sometime unilaterally through policies. If insurers or managed care companies from whom we receive substantial payments were to terminate, amend or renegotiate contracts or reduce the amounts they pay for services, our profit margins may decline, or we may lose patients if we choose not to renew our contracts with these insurers at lower rates.
The HIPAA privacy and security regulations also require healthcare providers like us to notify affected individuals, the HHS Secretary, and in some cases, the media, when PHI has been “breachedbreached,”, as defined by HIPAA. Many states have similar breach notification laws. We have established policies and procedures in an effort to ensure compliance with the HIPAA privacy and security regulations and similar state laws. However, if there is a breach, we may be required to incur costs to mitigate and remediate the impact of the breach on affected individuals, and therefore could incur substantial operational and financial costs related to such mitigation and remediation. Additionally, HIPAA, and its implementing regulations provide for significant civil fines, criminal penalties, and other sanctions for failure to comply with the privacy, security, and breach notification rules, including for wrongful or impermissible use or disclosure of PHI. Although HIPAA regulations do not expressly provide for a private right of action for damages, we could incur damages under state laws to private parties for the wrongful or impermissible use or disclosure of confidential health information or other private personal information. Additionally, HIPAA allows state Attorneys General to bring an action against a covered entity, such as us, for a violation of HIPAA. We insure some of our risk with respect to HIPAA security breaches, but operational costs and penalties associated with HIPAA breaches easily could exceed our insured limits.
CMS has modified the scope and timing of the competitive bidding program over time. Non-invasive ventilators were previously included in Round 2021. However, prior to implementation, CMS removed that product category from the program. CMS subsequently removed a substantial number of additional product categories from Round 2021, including oxygen equipment and PAP devices, after determining that the program did not achieve expected savings. As a result, Viemed has continued to furnish non-invasive ventilators, oxygen equipment, and PAP devices in its Medicare-accredited service areas without being subject to competitive bidding contract limitations for those products.
The Round 2021 competitive bidding contracts expired on December 31, 2023. CMS has since issued updated guidance regarding the next round of the DMEPOS Competitive Bidding Program, indicating that the upcoming round will be limited to product categories within the Nationwide Remote Item Delivery (“RID”) program. CMS has identified the next round RID categories to include certain Class II continuous glucose monitors and insulin pumps, urological supplies, ostomy supplies, hydrophilic urinary catheters, and select off-the-shelf braces. Viemed does not furnish products within these categories and, based on currently available information, does not expect the next round of competitive bidding to apply to, or have a material impact on, its products or services.
However, the timing, scope, and structure of future competitive bidding rounds beyond the announced RID-focused program remain uncertain and subject to change. CMS retains authority to expand or modify the program, including by adding product categories, adjusting geographic coverage, or revising program requirements. We cannot predict whether respiratory-related products or other items that we furnish may be included in future competitive bidding programs or the potential impact of any such inclusion on reimbursement rates, supplier participation, market competition, or our results of operations. Any future expansion of the competitive bidding program to include our products could materially adversely affect our business, financial condition, and results of operations.
CMS actions to impose temporary enrollment moratoria and heightened screening for certain DMEPOS supplier types could limit our ability to expand, pursue acquisitions, or maintain expected operational flexibility and could increase our compliance costs.
In February 2026, CMS announced the imposition of a 6-month nationwide temporary moratorium on the Medicare enrollment of certain DMEPOS “medical supply company” supplier types, with the stated objective of combating fraud, waste, and abuse. The moratorium generally applies to new enrollments and new practice locations for the specified supplier types, may be extended in additional 6-month increments, and CMS indicated it will closely scrutinize enrollment applications during the moratorium period, including through site visits and other verification activities. Although the moratorium is generally directed at newly enrolling suppliers, it could adversely affect our business to the extent we seek to (i) open new locations or otherwise undertake expansion initiatives that require new supplier enrollments or specialty classifications, (ii) acquire, restructure, or integrate DME operations in a manner that triggers a new enrollment requirement, or (iii) consummate or finance transactions involving supplier entities that are required to re-enroll as a result of ownership changes. In particular, CMS highlighted that certain non-exempt changes in majority ownership within a defined period may require termination of existing billing privileges and re-enrollment as a new supplier, and CMS stated that the moratorium would prohibit re-enrollment in such circumstances for covered supplier types. More broadly, the announcement reflects an enhanced program integrity posture toward portions of the DMEPOS supplier sector, and similar CMS actions in the future, including extensions, expansions to additional supplier categories, or other enrollment and screening initiatives, could increase administrative burden, delay growth initiatives, heighten audit and investigation risk, and result in enrollment denials or other adverse actions. Any of these developments could materially and adversely affect our business, financial condition, results of operations, and cash flows.
In 2019, CMS announced the inclusion of non-invasive ventilator products on the list of products subject to the competitive bidding program in Round 2021 which covers the period of January 1, 2021 through December 31, 2023. Rental revenue from ventilator products represents a significant portion of our revenue (approximately 56% of total revenue in 2024). On March 9, 2020, CMS announced that due to the COVID-19 pandemic, the United States President’s exercise of the Defense Production Act, public concern regarding access to ventilators, and the non-invasive ventilators product category being new to the competitive bidding program, non-invasive ventilators were removed as a product category from Round 2021. On October 27, 2020, CMS announced that it had removed 13 of the 15 remaining product categories from Round 2021, including oxygen and PAP devices, because the payment amounts did not achieve expected savings. As a result of these announcements, we retain the ability to continue to furnish non-invasive ventilators and oxygen and PAP devices for all of our Medicare accredited areas. The current Round 2021 contracts expired on December 31, 2023 and CMS has not announced a new round of competitive bidding. Historically, CMS announces new rounds of competitive bidding and starts the process approximately 18 months prior to the contract start date. We cannot predict at this time the full impact the competitive bidding program and the developments in the competitive bidding program will have on our business and financial condition. In addition, we cannot assure you that non-invasive ventilators and oxygen and PAP devices will not be included on the list of products subject to the competitive bidding program in the future. If changes are made to the competitive program in the future, it could affect our reimbursement and revenue.
CMS maintains a Master List of Items Frequently Subject to Unnecessary Utilization (the “Master List”) that identifies certain DMEPOS items that CMS has determined may warrant additional utilization controls, including prior authorization, as a condition of Medicare payment. CMS also historically required face-to-face practitioner encounters and written orders for certain categories of DMEPOS items, and in 2019 combined and harmonized these requirements into the Master List framework. Inclusion of an item on the Master List does not, by itself, require prior authorization. However, CMS may select items from the Master List for inclusion on a Required Prior Authorization List or otherwise impose prior authorization or additional documentation requirements through rulemaking or sub-regulatory guidance.
Certain items within our product offerings are included in the Master List. If CMS were to implement prior authorization or additional documentation requirements applicable to products we furnish, including non-invasive home ventilation, we could experience delays in initiating therapy, increased administrative and compliance costs, higher claim denial or deferral rates, longer billing and collection cycles, and greater variability in reimbursement. Any of these outcomes could reduce revenue, adversely affect cash flows, and negatively impact our results of operations.
CMS maintains a Master List of Items Frequently Subject to Unnecessary Utilization. This list identifies items that could potentially be subject to prior authorization as a condition of Medicare Payment. On April 22, 2019, CMS added home ventilators used with a non-invasive interface to the Master List of Items Frequently Subject to Unnecessary Utilization. If CMS imposes prior authorization requirements for non-invasive home ventilation, it could materially impact our business, revenue and cash flow.
If we fail to establish and maintain proper disclosure controls and procedures or internal controls,control over financial reporting, our ability to produce accurate financial statements and supplemental information, or comply with applicable regulations could be impaired.
Our common shares are listed and posted for trading on the Nasdaq Capital Market.NASDAQ. Securities of small-cap and healthcare companies have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments in North America and globally, and market perceptions of the attractiveness of particular industries. The price of our common shares is also likely to be significantly affected by short-term changes in the cost of goods, or in financial condition or results of our operations. Other factors unrelated to our performance that may have an effect on the price of our common shares include the following: the extent of analytical coverage available to investors concerning our business may be limited if investment banks with research capabilities do not follow our securities; lessening in trading volume and general market interest in our securities may affect an investor’s ability to trade significant numbers of our common shares; the size of our public float may limit the ability of some institutions to invest in our securities; and a substantial decline in the price of our common shares that persists for a significant period of time could cause our securities, if listed on an exchange, to be delisted from such exchange, further reducing market liquidity.
Although our common shares are quoted on the Nasdaq Capital Market,NASDAQ, the volume of trades on any given day has historically been limited. As a result, shareholders might not have been able to sell or purchase our common shares at the volume, price or time desired. If our common shares are removed from various stock indices, the volume of trading in our shares may decrease materially as well as the prices at which our shares trade.
We no longer qualify as a “smaller reporting company” or an "emerging growth company" which may increase our costs and demands on management.
As of June 30, 2023, we determined that we no longer qualify as a “smaller reporting company”, and we became subject to expanded disclosure requirements, subject to certain exemptions and relief that was applicable to emerging growth companies, beginning with our Quarterly Report on Form 10-Q for the period ended March 31, 2024.
Additionally, we ceased to qualify as an “emerging growth company” on December 31, 2024. While we qualified as an emerging growth company, we elected to use the extended transition period under the Jumpstart Our Business Startups Act of 2012 to delay the adoption of new or revised accounting standards until those standards were applicable to private companies. As a result, our historical financial statements may not be comparable to those of companies that fully adopted public company accounting standards on the standard effective dates.
As a result of our ceasing to qualify as an emerging growth company, we are no longer able to take advantage of certain exemptions and relief from disclosure and other requirements that are otherwise applicable generally to SEC reporting companies. Specifically, we are now required to:
• Provide an auditor attestation of internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act;
• Provide audited financial statements for three fiscal years (rather than two);
• Comply with requirements that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
• Comply with increased executive compensation disclosure obligations; and
• Comply with the requirements on “say-on-pay” and “say-on-frequency” shareholder votes, shareholder approval of golden parachute compensation and pay ratio disclosure.
The loss of smaller reporting company and emerging growth statuses and compliance with such larger company disclosure obligations may increase our legal and financial compliance costs and cause management and other personnel to divert attention from operational and other business matters to devote additional time to public company reporting requirements. In addition, if we are not able to comply with changing requirements in a timely manner, the market price of our common shares could decline and we could be subject to sanctions or investigations by the stock exchanges on which our common shares are listed, the SEC or other regulatory authorities, which would require additional financial and management resources.
We cannot guarantee that we will repurchase our common shares pursuant to our share repurchase program or that our share repurchase program will enhance long-term shareholder value. Share repurchases could also increase the volatility of the price of our common shares and could diminish our cash reserves.
On March 4, 2026, the Company's Board of Directors authorized and approved a share repurchase program, effective through March 2027. Under the terms of the program, we may repurchase up to 1,930,131 of our common shares from time to time through open market purchases, block purchases or otherwise in accordance with applicable securities laws, including Rule 10b-18 of the Exchange Act. The timing and amount of repurchases of our common shares, if any, will depend upon several factors, such as the market price of the common shares, corporate requirements, general market economic conditions and applicable legal requirements. The Company is not obligated to repurchase any specific number or amount of common shares pursuant to the program, and it may modify, suspend or discontinue the program at any time. Repurchases of our common shares pursuant to the program could affect our share price and increase its volatility. The existence of the program could cause our share price to be higher than it would be in the absence of such a program and, if shares are repurchased in the program, it will reduce the market liquidity for our common shares. Additionally, the program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities. There can be no assurance that any share repurchases will enhance long-term shareholder value, and the market price of our common shares may decline below the levels at which we repurchased common shares.
Management's Discussion & Analysis (MD&A)
New heading “Demographic and Market Trends”
New heading “Regulatory and Policy Developments”
New heading “Gain on disposal of property and equipment”
Removed heading “Impact of Inflation”
Largest changes
For the year ended December 31,see in full comparison2024,2025, net income was$11.4$15.4 million, an increase of$1.2$4.0 million (or11.4%34.8%) from the comparable period in2023.2024. The increasein net incomewas primarily driven by higher operating income resulting from strong revenue growth across multiple product and service categories and improved operating leverage, partially offset by aresultlowerofgross margin driven by changes in revenue mix, higher selling, general and administrative expenses associated with headcount growth and theorganicLehangrowth of the businessacquisition, andexpansionincreasedofnettheinterestpatientexpensebase.related to acquisition financing. Net income as a percentage of net revenuedecreasedincreased from5.6% for the year ended December 31, 2023 to5.1% for the year ended December 31,2024, primarily due2024 tonon-operating5.7%investmentforlossestheandyearanendedimpairmentDecemberof31,outstanding litigation funds receivable.2025.
“As discussed in Part I, Item 1A of this Annual Report on Form 10-K, we are primarily exposed to trade policy and tariff developments indirectly, through supplier pricing and component sourcing rather than direct import activity. While certain medical equipment and components have historically been excluded from tariff regimes or subject to exemptions, trade measures may be expanded, reclassified, or implemented with limited notice, and suppliers may increase prices to reflect higher input costs, compliance requirements, or logistics constraints. …”see in full comparison
“The Company had historically utilized Change Healthcare, a subsidiary of UnitedHealth Group, to submit patient claims to certain non-Medicare payors for reimbursement. UnitedHealth Group announced that on February 21, 2024, Change Healthcare’s information technology systems were impacted by a cybersecurity incident. Although this incident did not impact our day-to-day operations or patient care delivery, it did cause delays in submitting patient claims to certain payors. …”see in full comparison
“Net cash used in financing activities during the year ended December 31, 2024 was $3.7 million. During the period, proceeds from the 2022 Revolving Credit Facility (as defined below) were $3.0 million, which were used to fund the HomeMed acquisition. Subsequent to the HomeMed acquisition, principal payments on the 2022 Revolving Credit Facility were $5.0 million. Principal payments on the 2022 Term Loan Facility (as defined below) were $0.3 million. Additionally, principal payments on acquired loans were $0.8 million during the year ended December 31, 2024. …”see in full comparison
Full comparison: every changed paragraph (56)
In this Annual Report on Form 10-K, unless the context otherwise requires, the terms the "Company," "we," "us" and "our" refer to Viemed Healthcare, Inc. and subsidiaries in which it has a controlling financial interest.
We were incorporated on December 14, 2016 pursuant to the Business Corporations Act (British Columbia). As of June 30, 2020, we determined that we no longer qualify as a "foreign private issuer," as defined in Rule 3b-4 of the Exchange Act, for the purposes of the informational requirements of the Exchange Act. As a result, effective January 1, 2021, we became subject to the proxy solicitation rules under Section 14 of the Exchange Act and Regulation FD, and our officers, directors, and principal shareholders became subject to the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. We will continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC and with the relevant Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval (SEDAR+).
We provide an array of home medical equipment, services and supplies, specializing in post-acute respiratory care services in the United States. OurViemed’s primary objective is to focusdrive ongrowth by increasing the organic growthnumber of thepatients businessserved and therebythe solidify our position as onelevel of thecare Unitedprovided States’through largestits providerstechnology-enabled, ofhome-based in-homeclinical therapycare forand patientschronic sufferingdisease frommanagement respiratorymodel. diseases. Our respiratoryViemed's care programs are designed specifically for payors to have the ability to treat patients in the home for less total cost and with a superior quality of care. OurViemed's services include respiratory disease management (through the rental of various HME devices), neuromuscular care, in-home sleep testing and sleep apnea treatment, oxygen therapy, the sale of associated supplies, women’s health products and services, and healthcare staffing services.
We derive thea majoritysignificant portion of our revenue through the rental of non-invasive and invasive ventilators which represented 55.6%50.6% and 59.2%55.6% of our revenue for the years ended December 31, 20242025 and 2023,2024, respectively. We combine the benefits of home ventilation support with licensed RTs to drive improved patient outcomes and reduce costly hospital readmissions.
We expect to grow through expansion of existing service areas as well as in new territories through a cost-efficientcost efficient launch that reduces location expenses. We currently serve patients in all 50 states. Viemed anticipatesexpects expandingto expand its workforce of RTslicensed clinical practitioners, including RTs, to support the Company's growth and ensure the high service model is maintained in the home. As of December 31, 2024,2025, we employed 404401 licensed RTs, representing approximately 34%29% of our company-wide employee count. Beyond fulfilling its internal staffing needs, Viemed also provides healthcare staffing and recruitment services, offering tailored workforce solutions to external healthcare institutions and partners seeking qualified clinical professionals.
By focusing overhead costs on personnel that service the patient rather than physical location costs, we anticipate that we will efficiently scale our business in territories that are currently not being effectively serviced. The continued trend of servicing patients in the home rather than in hospitals is aligned with our business objective and we anticipate that this trend will continue to offer growth opportunities for us. We expect to continue to be a solution to the rising health care costs in the United States by offering more cost-effective, home-based solutions while increasing the quality of life for patients fighting serious respiratory diseases.
The continued trend of servicing patients in the home rather than in hospitals is aligned with our business objective and we anticipate that this trend will continue to offer growth opportunities for us. We expect to continue to be a solution to the rising health care costs in the United States by offering more cost-effective, home-based solutions while increasing the quality of life for patients fighting serious chronic diseases.
Demographic and Market Trends
Regulatory and Policy Developments
Regulatory and policy developments remain a key area of focus. In particular, ventilator coverage has received renewed attention from the Centers for Medicare & Medicaid Services (“CMS”). Although ventilators have historically been included under the NCD for the Durable Medical Equipment Reference List, there was previously no dedicated policy specifically addressing ventilator use. On September 11, 2024, CMS initiated a national coverage analysis to evaluate noninvasive positive pressure ventilation in the home for the treatment of chronic respiratory failure associated with chronic obstructive pulmonary disease. CMS issued a proposed decision memorandum on March 11, 2025, followed by a final NCD on June 9, 2025. We actively participated in this process through formal comments and engagement with CMS, the U.S. Department of Health and Human Services (“HHS”), and members of Congress. The final NCD establishes specific medical necessity criteria for ventilator use that are expected to influence patient access, reimbursement, and utilization patterns. In addition to affecting traditional Medicare, the NCD may also influence coverage determinations and reimbursement policies under commercial insurance and Medicare Advantage plans that reference or align with CMS coverage criteria. These changes may have a material impact on our business.
In addition, CMS has proposed comprehensive reforms to the Medicare Competitive Bidding Program for DMEPOS, along with related updates to supplier accreditation standards and Medicare provider enrollment requirements. The proposals are intended to modernize the program by refining payment methodologies, contract award processes, and supplier oversight. Although the final scope and timing of these reforms remain subject to CMS rulemaking, providers with greater scale, infrastructure, and compliance capabilities are generally positioned to compete more effectively under a restructured Competitive Bidding Program. Larger operators may benefit from economies of scale that support service obligations, enable pricing flexibility, and enhance administrative efficiency relative to smaller suppliers.
The federal budget reconciliation legislation, known as the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces a broad set of statutory and policy changes that may affect the healthcare industry and our operations. Key provisions include revisions to Medicaid renewal and eligibility rules, adjustments to Medicaid state-directed payments and provider tax frameworks, new cost-sharing requirements, reduced home equity thresholds for long-term care eligibility, expanded telehealth coverage, and state waivers to support home and community-based services. The OBBBA also establishes a Rural Health Transformation program aimed at improving access and care coordination in underserved communities. Implementation of Pay-As-You-Go (“PAYGO”) rules could result in future adjustments to Medicare and Medicaid spending, including cost containment measures or payment reductions that may impact providers. Most provisions are scheduled to take effect in 2027 and 2028, although some states may elect to implement certain measures as early as 2026. We continue to monitor these regulatory developments closely.
Cost Pressures
Impact of Inflation
TheViemed Companyoperates facesin currentan andenvironment potentialof futureongoing inflationarycost pressures driven by factors such asfrom general cost increases, supply chain disruptions,dynamics, and governmentalgovernment policies.policy. The manufacturingManufacturing and distribution costs of Viemed's patient equipmentexpenses are affectedinfluenced by factors such as rising material, labor, and transportation expenses,costs, including fuel costs. Persistent inflation may impact overall demand, increase operating costs, and affect profit margins, potentially adversely affecting Viemed's business and financial performance.fuel.
As discussed in Part I, Item 1A of this Annual Report on Form 10-K, we are primarily exposed to trade policy and tariff developments indirectly, through supplier pricing and component sourcing rather than direct import activity. While certain medical equipment and components have historically been excluded from tariff regimes or subject to exemptions, trade measures may be expanded, reclassified, or implemented with limited notice, and suppliers may increase prices to reflect higher input costs, compliance requirements, or logistics constraints. These developments could increase our equipment and supply costs and reduce product availability. To date, we have not experienced a material adverse impact on operating costs or supply availability attributable to tariffs. However, the timing, scope, and duration of future actions remain uncertain, and we continue to monitor these developments and evaluate their potential operational and financial effects.
In its 2025 DMEPOS Fee Schedule, CMS announced the fee schedule adjustment based on the annual change to the Consumer Pricing Index for all urban areas. Items that were subject to the competitive bidding program in former competitive bidding areas will receive a 2.9% reimbursement rate increase. Items that were subject to the competitive bidding program in non-competitive bidding areas received a 3.0% reimbursement rate increase. Items not subject to the competitive bidding program received a 2.4% reimbursement rate increase.
Future volatility in general price inflation and its impact on material availability, shipping, warehousing, and operational overhead could further impact financial results. Viemed attempts to addressmanage these pressures through its inflation-linked reimbursement contracts, negotiation, leveraging its purchasing powerpower, and embracing technology, such as its proprietary clinical management platform.
For the year ended December 31, 2025, revenue totaled $270.3 million, an increase of $46.0 million (or 20.5%) from the comparable period in 2024. The primary driver of this growth was our equipment and supply sales revenue, which increased by $19.4 million (or 62.7%), largely due to the success of our sleep resupply program and the addition of maternal health offerings in connection with the Lehan Drugs, Inc ("Lehan") acquisition (as discussed in Note 3 – Business Combinations of the Notes to Consolidated Financial Statements). Ventilator rental revenue increased by $12.2 million (or 9.8%), primarily as a result of higher patient volumes and sustained demand for ventilation services. Rental revenue from other HME increased by $9.7 million (or 20.0%), reflecting an expanding patient base and strong demand for PAP, oxygen, and airway clearance therapies. Services revenue increased by $4.8 million (or 23.6%) primarily due to the growth of healthcare staffing offerings.
For the year ended December 31, 2024, revenue totaled $224.3 million, an increase of $41.2 million (or 22.5%) from the comparable period in 2023. The primary driver of this growth was our ventilator rental revenue, which increased by $16.3 million (or 15.1%) due to higher patient volumes associated with strong demand for ventilation services. Additionally, rental revenue from other Home Medical Equipment (HME) increased by $10.3 million (or 27.0%) due to an expanding patient base, robust demand for Positive Airway Pressure (PAP) therapy, oxygen therapy, and percussion vest services. Equipment and supply sales grew by $5.1 million (or 19.9%) largely attributable to the success of our sleep resupply program, which was further enhanced by the integration of resupply programs from acquisitions. Furthermore, services revenue experienced an increase of $9.5 million (or 88.8%), primarily due to the growth of healthcare staffing offerings.
While ventilator rentals continue to make up the majority of our revenue, the growth of PAP and oxygen related sales, as well as our healthcare staffing offerings, is contributing to the diversity of our overall revenue mix. As we continue to expand geographically into new territories and further expand our presence in our existing territories, we expect continued growth in our active ventilator patient base and other home medical offerings.
Cost of revenue for the year ended December 31, 2025 was $114.8 million, an increase of $23.8 million (or 26.1%) compared to the same period in 2024. This increase was primarily driven by higher patient volumes and the expansion of our service offerings, including higher personnel and product costs associated with servicing a larger patient base and supporting increased sales activity.
Gross profit margin decreased to approximately 57.5% for the year ended December 31, 2025, compared to 59.4% for the same period in 2024. The change in gross profit margin was primarily attributable to changes in revenue mix, including a higher proportion of revenue from categories that carry higher direct costs relative to ventilator rentals.
We expect continued growth and scale to support improved operating efficiencies over time, including increased fixed cost leverage. However, as revenue continues to shift toward a broader mix of products and services, including categories with different cost profiles, these efficiency gains may be partially offset. Accordingly, gross margin may fluctuate in future periods based on changes in revenue mix and the extent to which additional volume translates into economies of scale.
For the year ended December 31, 2024, cost of revenue totaled $91.1 million, an increase of $20.8 million (or 29.7%) from the comparable period in 2023. Gross profit percentage decreased from approximately 61.6% to approximately 59.4% from the year ended December 31, 2023 to the year ended December 31, 2024, respectively. The decrease in gross profit percentage is primarily due to migration of the revenue mix associated with product and service diversification. In 2025, gross profit in absolute dollars is expected to continue increasing, supported by overall revenue growth, subsiding inflationary cost pressures, and favorable reimbursement rate adjustments. However, gross profit percentage is likely to be negatively impacted by the continued diversification of our product and service offerings.
Selling, general and administrative expenses as a percentage of revenue improved to 44.9% for the year ended December 31, 2025 compared to 47.4% for the year ended December 31, 2024. Selling, general and administrative expenses totaled $121.4 million for the year ended December 31, 2025, an increase of $15.2 million (or 14.3%) from the comparable period in 2024.
The decrease in selling, general, and administrative expenses as a percentage of revenue reflects continued operating leverage and efficiency gains. The overall increase in selling, general and administrative expense as compared to the prior period is primarily attributable to additional employee-related expenses to support the Company's overall growth and the inclusion of operating expenses from the Lehan acquisition completed on July 1, 2025. Our full-time employee count increased from 1,179 as of December 31, 2024 to 1,382 as of December 31, 2025, an increase of 17%, reflecting both organic expansion and acquired operations. As a result, employee compensation expense increased by $9.7 million, or 13%, during the year.
Based on our current cost structure and expected revenue growth, we believe selling, general and administrative expenses as a percentage of revenue may continue to trend downward over time as the business scales, although period-to-period results may vary depending on the timing of hiring, the extent of integration activities, and other growth initiatives.
Selling, general and administrative expenses as a percentage of revenue improved to 47.4% for the year ended December 31, 2024 compared to 48.0% for the year ended December 31, 2023. Selling, general and administrative expenses totaled $106.2 million for the year ended December 31, 2024, an increase of $18.3 million (or 20.8%) from the comparable period in 2023. The improvement in selling, general, and administrative expenses as a percentage of revenue is attributable to economies of scale and improvements in operational efficiencies. The overall increase in selling, general and administrative expense as compared to the prior period is primarily attributable to additional employee related expenses to accommodate the overall growth of the Company, which was partially due to the acquisition of Home Medical Products, Inc. (“HMP”) on June 1, 2023. Our full-time employee count increased from 996 on December 31, 2023 to 1,179 on December 31, 2024, an increase of 18%. Employee compensation expenses increased $13.3 million (or 21%) as a result of the increase in our employee headcount and increases in incentive and volume-based compensation. We expect that selling, general and administrative expenses as a percentage of revenue will continue to improve in 2025 due to increased efficiencies and costs optimization efforts.
For the year ended December 31, 2024,2025, research and development costs totaled $3.1$3.0 million, ana increasedecrease of $0.3$0.1 million (or 10.3%1.7%) from the comparable period in 2023.2024. AsBased weon continueour tocurrent investproject in researchpipeline and developmentplanned relatedinvestment projects to support our technology initiatives,levels, we expect that the associated costs will remain relatively consistent in 2025 relative to 2024 costs.2026.
For the year ended December 31, 2025, stock-based compensation totaled $9.1 million, an increase of $2.8 million (or 45.3%) from the comparable period in 2024. The increase reflects our continued investment in employee retention and long-term incentive programs, including the broader integration of equity-based awards into our compensation structure. In recent years, we have increased the use of equity-based awards as part of our overall compensation programs, and the higher expense recognized during the year ended December 31, 2025 reflects the cumulative impact of awards granted in both the current and prior years, as those awards continue to vest over their respective service periods.
Gain on disposal of property and equipment
For the year ended December 31, 2024, stock-based compensation totaled $6.3 million, an increase of $0.4 million (or 7.5%) from the comparable period in 2023. We anticipate that as we expand our workforce, incorporating stock-based awards as a component of employee compensation, stock-based compensation expenses will rise correspondingly. Historically, revenue growth has outpaced the growth in stock-based compensation. As we transition more of our stock-based compensation from phantom stock liability awards to equity awards, we expect stock-based compensation expense to increase in 2025.
For the year ended December 31, 2024,2025, gain on disposal of property and equipment totaled $1.9$2.2 million compared to loss on disposal of property and equipment of $0.6$1.9 million for the year ended December 31, 2023.2024. TheIn gainboth periods, the gains were primarily resultedattributable fromto proceeds related tofrom the sale of recalled ventilators back to the manufacturer. We anticipate additional future gains from the disposal of eligible devices, as the proceeds from these disposals are expected to exceed their net book value.
The ventilator buyback program was substantially completed as of December 31, 2025, and accordingly we do not expect additional material gains from these transactions in future periods. We may, however, continue to recognize gains or losses from the disposal of equipment in the ordinary course of business, including losses related to damaged or destroyed equipment.
Income (expenseloss) from investments
The $1.0 million loss from investments in the prior year ended December 31, 2024 primarily reflects a loss recognized on a debt investment. No investment-related loss was recorded for the year ended December 31, 2025.
For the year ended December 31, 2024, expense from investments totaled $1.0 million compared to income from investments of $0.5 million from the comparable period in 2023. The change is primarily driven by a loss recognized on a debt investment during the current year.
For the year ended December 31, 2024,2025, net interest expense totaledwas $0.8$1.2 million, an increase of $0.4 million from the comparable period in 2023.2024. The increase in net interest expense is primarily due to outstanding borrowings as a result of debt issued to fund acquisitions.the WeLehan expect to utilize positive cash flow to further reduce outstanding debt which would result in a reduction in net interest expense in 2025 relative to 2024.acquisition.
For the year ended December 31, 2024,2025, the provision for income taxes was a $4.8$6.4 million expense, compared to a $4.1$4.8 million expense during the 20232024 period. The increase in income tax expense was primarily attributable to higher pre-tax income. Our annual estimated effective tax rate was 29.4% for 2024both is2025 29.4%.and 2024.
For the year ended December 31, 2024,2025, net income was $11.4$15.4 million, an increase of $1.2$4.0 million (or 11.4%34.8%) from the comparable period in 2023.2024. The increase in net income was primarily driven by higher operating income resulting from strong revenue growth across multiple product and service categories and improved operating leverage, partially offset by a resultlower ofgross margin driven by changes in revenue mix, higher selling, general and administrative expenses associated with headcount growth and the organicLehan growth of the businessacquisition, and expansionincreased ofnet theinterest patientexpense base.related to acquisition financing. Net income as a percentage of net revenue decreasedincreased from 5.6% for the year ended December 31, 2023 to 5.1% for the year ended December 31, 2024, primarily due2024 to non-operating5.7% investmentfor lossesthe andyear anended impairmentDecember of31, outstanding litigation funds receivable.2025.
The Company uses Adjusted EBITDA, which is a financial measure that is not prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management believes Adjusted EBITDA provides helpful information with respect to the Company’s operating performance as viewed by management, including a view of the Company’s business that is not dependent on the impact of the Company’s capitalization structure and items that are not part of the Company’s day-to-day operations. Management uses Adjusted EBITDA (i) to compare the Company’s operating performance on a consistent basis, (ii) to calculate incentive compensation for the Company’s employees, (iii) for planning purposes, including the preparation of the Company’s internal annual operating budget, and (iv) to evaluate the performance and effectiveness of the Company’s operational strategies. Accordingly, management believes that Adjusted EBITDA provides useful information in understanding and evaluating the Company’s operating performance in the same manner as management. It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of the Company's liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations; and other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. In calculating Adjusted EBITDA, certain items (mostly non-cash) are excluded from net income attributable to Viemed Healthcare, Inc. including depreciation and amortization of capitalized assets, net interest expense (income),expense, stock based compensation, transaction costs, impairment of assets, and taxes.
The following table is a reconciliation of Netnet income,income attributable to Viemed Healthcare, Inc., the most directly comparable GAAP measure, to Adjusted EBITDA, on a historical basis for the periods indicated:
On June 6, 2025, the Company's Board of Directors authorized and approved a share repurchase program. Under the terms of the 2025 Share Repurchase Program, the Company repurchased 1,976,441 of its common shares and the program was completed and terminated during the three months ended September 30, 2025. On March 4, 2026, the Company's Board of Directors authorized and approved a share repurchase program. Under the terms of the 2026 Share Repurchase Program, the Company may repurchase up to 1,930,131 of its common shares from time to time through open market purchases, block purchases or otherwise in accordance with applicable securities laws, including Rule 10b-18 of the Exchange Act.
The Company had historically utilized Change Healthcare, a subsidiary of UnitedHealth Group, to submit patient claims to certain non-Medicare payors for reimbursement. UnitedHealth Group announced that on February 21, 2024, Change Healthcare’s information technology systems were impacted by a cybersecurity incident. Although this incident did not impact our day-to-day operations or patient care delivery, it did cause delays in submitting patient claims to certain payors. By the end of the second quarter of 2024, the Company had replaced Change Healthcare as its clearinghouse and resumed claims submissions using alternative platforms for all claims. However, the delayed claims submissions resulted in a temporary reduction of our operating cash flow and an increase to our accounts receivable during the year ended December 31, 2024.
Net cash provided by operating activities during the year ended December 31, 20242025 was $39.1$51.9 million, resulting from net income of $11.4$15.4 million, increased by net income adjustments of $27.3$38.8 million and offset by an increase in non-cash working capital of $0.4$2.3 million. The net income adjustments primarily consisted of $25.4$28.6 million of depreciation and amortization, $6.3$9.1 million of stock-based compensation, and ana impairment$3.1 lossmillion ondeferred debtincome investmenttax of $1.3 million,expense, partially offset by a $3.8 million change in deferred tax asset and a $1.9$2.2 million gain on disposal of property and equipment. The primary change in non-cash working capital was ana increasedecrease in net accountsincome receivabletax payable of $6.1$4.1 million, partially offset by an increase in accruednet liabilitiesaccounts receivable of $2.9$1.2 million.
Net cash provided by operating activities during the year ended December 31, 20232024 was $45.2$39.1 million, resulting from net income of $10.2$11.4 million, increased by net income adjustments of $27.2$27.3 million and aoffset changeby an increase in non-cash working capital of $7.8$0.4 million. The net income adjustments primarily consisted of $21.9$25.4 million of depreciation and amortization, $5.8$6.3 million of stock-based compensation, and $1.0an millionimpairment loss on debt investment of distributions$1.3 of earnings received from equity method investments,million, partially offset by a $1.4$3.8 million deferred income tax benefit.benefit, and a $1.9 million gain on disposal of property and equipment. The primary changeschange in non-cash working capital werewas an increase in accruednet liabilitiesaccounts receivable of $5.0 million, a decrease in prepaid expenses and other assets of $2.2 million, and a net increase in income taxes payable of $2.2$6.1 million, partially offset by an increase in netaccrued accounts receivableliabilities of $1.1$2.9 million.
Net cash used in investing activities during the year ended December 31, 2024 was $30.7 million. Net cash used for capital expenditures during the period was $27.5 million and consisted of $37.8 million of purchases of property and equipment, partially offset by $10.3 million of sales proceeds from the disposal of property and equipment. Net cash used for capital expenditures represents a $3.9 million, or 17%, increase year over year. Purchases of property and equipment were primarily related to medical equipment rented to our patients. Net cash used in investing activities also included $3.0 million of net cash paid for the acquisition of East Alabama HomeMed, LLC ("HomeMed") and $1.0 million for an equity investment.
Net cash used in investing activities during the year ended December 31, 20232025 was $52.1$50.2 million, primarily due to the net cash paid for the acquisition of HMPLehan of $28.6$26.3 million. Net cash used for capital expenditures during the period was $23.5$23.8 million and consisted of $26.1$40.0 million of purchases of property and equipment, partially offset by $2.6$16.2 million of sales proceeds from the disposal of property and equipment. Net cash used for capital expenditures represents a decrease of $3.6 million, or 13%, compared to 2024. Purchases of property and equipment were primarily related to medical equipment rentedplaced towith patients under our patients.rental arrangements.
Net cash used in investing activities during the year ended December 31, 2024 was $30.7 million. Net cash used for capital expenditures during the period was $27.5 million and consisted of $37.8 million of purchases of property and equipment, partially offset by $10.3 million of sales proceeds from the disposal of property and equipment. Purchases of property and equipment were primarily related to medical equipment placed with patients under our rental arrangements. Net cash used in investing activities also included $3.0 million of net cash paid for the acquisition of East Alabama HomeMed, LLC ("HomeMed") and $1.0 million related to an equity investment.
Net Cash Provided by (Used in) Financing Activities
Net cash used in financing activities during the year ended December 31, 2024 was $3.7 million. Proceeds from the 2022 Revolving Credit Facility (as defined below) were $3.0 million, which was used to fund the HomeMed acquisition. Subsequent to the HomeMed acquisition, principal payments on the 2022 Revolving Credit Facility were $5.0 million. Principal payments on the 2022 Term Loan Facility (as defined below) were $0.3 million. Additionally, principal payments on acquired loans were $0.8 million during the year ended December 31, 2024. The Company acquired and cancelled 142,985 common shares at a cost of $1.1 million to satisfy employee income tax withholding associated with RSUs vestings while proceeds from the exercise of options during the year ended December 31, 2024 were $1.0 million.
Net cash providedused byin financing activities during the year ended December 31, 20232025 was $2.8$5.8 million. ProceedsDuring the period, proceeds from the 2022 Term Loan Facility (as defined below) were $5.0$9.0 million and proceeds from the 2022 Revolving Credit Facility (as defined below) were $8.0$13.0 million, which were used to partially fund the cash acquisition of HMP.Lehan. DuringSubsequent to the yearLehan endedacquisition, Decemberthe 31,Company 2023,made principal payments totaling $13.0 million on the 2022 SeniorRevolving Credit FacilitiesFacility, (asresulting definedin below)no wereoutstanding $6.1borrowings million. Additionally, principal payments on acquired loans were $4.6 million duringunder the year2022 endedRevolving Credit Facility as of December 31, 2023.2025. TheIn addition, the Company acquiredrepurchased and cancelled 75,235 common shares attotaling a$13.2 costmillion ofpursuant $0.6to the Share Repurchase Program authorized by the Board on June 6, 2025 (the "2025 Share Repurchase Program") and paid $1.7 million to satisfy employee income tax withholding obligations associated with the vesting of restricted stock units ("RSUs vestings"), while proceeds from the exercise of options during the year ended December 31, 20232025 were $1.3$1.4 million.
Net cash used in financing activities during the year ended December 31, 2024 was $3.7 million. During the period, proceeds from the 2022 Revolving Credit Facility (as defined below) were $3.0 million, which were used to fund the HomeMed acquisition. Subsequent to the HomeMed acquisition, principal payments on the 2022 Revolving Credit Facility were $5.0 million. Principal payments on the 2022 Term Loan Facility (as defined below) were $0.3 million. Additionally, principal payments on acquired loans were $0.8 million during the year ended December 31, 2024. The Company acquired and cancelled 142,985 common shares at a cost of $1.1 million to satisfy employee income tax withholding obligations associated with the vesting of RSUs, while proceeds from the exercise of options during the year ended December 31, 2024 were $1.0 million.
On November 29, 2022, the Company refinanced its existing borrowings under the prior Commercial Business Loan Agreement with Hancock Whitney Bank and entered into a new credit agreement (the "2022 Senior Credit Facilities") with the lenders from time to time party thereto, and Regions Bank, as administrative agent and collateral agent, that provides for an up to $30.0 million revolving credit facility (the "2022 Revolving Credit Facility") and an up to $30.0 million delayed draw term loan facility (the "2022 Term Loan Facility"), both maturing in November 2027. On May 28, 2024, the Company entered into a First Amendment to the 2022 Senior Credit Facilities that (a) extends the delayed draw term loan commitment expiration date to November 29, 2025, from its initial expiration date of May 29, 2024, and (b) provides for other technical amendments. On June 6, 2025, the Company entered into a Second Amendment to the 2022 Senior Credit Facilities that, among other things, increased the permitted amount of restricted payments that may be made by the Company and its subsidiaries, subject to specified conditions, and made other conforming and administrative changes. On November 7, 2025, the Company entered into a Third Amendment to the 2022 Senior Credit Facilities that, among other things, further extended the delayed draw term loan commitment expiration date from November 29, 2025 to November 29, 2026 and included other technical amendments.
Our principal uses of cash are funding the purchase of rental assets and other capital purchases, the repayment of debt, the repurchase of shares of our common stock, the funding of acquisitions, operations, and other working capital requirements. Our contractual obligations primarily relate to the repayment of existing debt and contractual obligations for operating and finance leases. The following table presents our material contractual obligations and commitments to make future payments as of December 31, 20242025:
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 4, 2026, which could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed in that Annual Report.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Loss (gain) on disposal of property and equipment”
New heading “Comparison of the Six Months Ended June 30, 2026 and 2025:”
New heading “Cost of revenue and gross profit”
New heading “Selling, general and administrative expense”
New heading “Research and development”
New heading “Stock-based compensation”
New heading “Loss (gain) on disposal of property and equipment”
New heading “Provision for income taxes”
Largest changes
Full comparison: every changed paragraph (68)
We derive a significant portion of our revenue through the rental of non-invasive and invasive ventilators which represented 46.9%46.6% and 54.4%53.6% of our revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 46.8% and 54.0% for the six months ended June 30, 2026 and 2025, respectively. We combine the benefits of home ventilation support with licensed Respiratory Therapists ("RTs") to drive improved patient outcomes and reduce costly hospital readmissions.
We expect to grow through expansion of existing service areas as well as in new territories through a cost efficient launch that reduces location expenses. We currently serve patients in all 50 states. We expect to expand our workforce of licensed clinical practitioners, including RTs, to support our growth and ensure the high service model is maintained in the home. As of MarchJune 31,30, 2026, we employed 403417 licensed RTs, representing approximately 29% of our company-wide employee count. Beyond fulfilling our internal staffing needs, we also provide healthcare staffing and recruitment services, offering tailored workforce solutions to external healthcare institutions and partners seeking qualified clinical professionals.
In addition, CMS has proposed comprehensive reforms to the Medicare Competitive Bidding Program for Durable,Durable Medical Equipment, Prosthetics, Orthotics, and Supplies ("DMEPOS"), along with related updates to supplier accreditation standards and Medicare provider enrollment requirements. The proposals are intended to modernize the program by refining payment methodologies, contract award processes, and supplier oversight. Although the final scope and timing of these reforms remain subject to CMS rulemaking, providers with greater scale, infrastructure, and compliance capabilities are generally positioned to compete more effectively under a restructured Competitive Bidding Program. Larger operators may benefit from economies of scale that support service obligations, enable pricing flexibility, and enhance administrative efficiency relative to smaller suppliers.
Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025:
The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025:
The following table summarizes our revenue for the three months ended MarchJune 31,30, 2026 and 2025:
For the three months ended MarchJune 31,30, 2026, total revenue was $75.4$78.1 million, an increase of $16.3$15.0 million, or 27.5%,23.9%, compared to the three months ended MarchJune 31,30, 2025. The increase reflectswas broad-baseddriven by growth across both our rentalrental, equipment and salessupply sales, and servicesservice revenue streams,categories, driven byincluding continued executionexpansion of our geographicventilator, expansionsleep, strategyresupply, and women’s health offerings and the ongoing diversified growthinclusion of ourrevenue productfrom andthe serviceLehan offerings.operations acquired on July 1, 2025.
VentilatorRevenue rentals,from non-invasive and invasive,invasive revenuesventilator rentals increased by $3.2$2.6 million, or 10.0%,7.7%, to $35.4$36.4 million for the three months ended MarchJune 31,30, 2026,2026. reflectingThe higherincrease period-over-periodwas patient volumesprimarily attributable to sustainedhigher average patient volumes, reflecting continued demand for ourhome non-invasive ventilation services.services and growth in our ventilator patient census. Rental revenue from other home medical equipment increased by $3.2$2.6 million, or 25.0%,18.7%, to $16.2$16.4 million.million Thisfor the three months ended June 30, 2026. The increase was driven primarily by broad-based growth across ourin PAP therapy, oxygen therapy,therapy and percussionairway-clearance vest service lines, each benefiting from an expanding patient base and the continued development of our sleep and respiratory programs,services, as well as therental inclusionrevenue ofassociated maternalwith women’s health equipmentproducts rentals from theand Lehan acquisition completed on July 1, 2025.operations.
Equipment and supply sales increased by $10.0$9.5 million, or 132.6%,99.4%, to $17.5$19.0 million, for the three months ended MarchJune 31,30, 2026. The increase was primarily attributable to growththe ininclusion ourand women'scontinued expansion of women’s health product offerings,sales, including breast pumps and related accessories,supplies, drivenand largelyhigher byPAP theresupply inclusionvolumes of revenuesresulting from thegrowth Lehan acquisition, as well as the continued scaling ofin our sleep resupplytherapy program,patient which drove higher volumes of PAP-related supplies and equipment.base. Service revenues, which consist primarily reflectof revenue from our healthcare staffing operations,operations decreasedand in-home sleep testing services, increased by $0.1$0.4 million, or 1.9%,6.9%, to $6.4$6.3 million for the three months ended MarchJune 31,30, 2026.
Ventilator rentals remained our largest individual source of revenue. However, the continued growth of PAP therapy and resupply, women’s health, oxygen therapy, and other home medical equipment offerings resulted in a more diversified revenue mix during the 2026 period.
The composition of our revenue continues to evolve in a manner consistent with our long-term strategic objectives. Ventilator rentals remain the largest contributor to total revenue; however, PAP-related rental and resupply revenue, oxygen therapy, and maternal health offerings each represented a growing proportion of our overall revenue mix.
For the three months ended MarchJune 31,30, 2026, cost of revenue totaled $32.6$33.0 million, an increase of $6.7 million, or 26.1%,25.5%, from the comparable period in 2025. GrossThe profitincrease marginwas improvedprimarily attributable to 56.8%the forcosts associated with higher patient and sales volumes and the threeinclusion months ended March 31, 2026 from 56.3% forof the threeLehan months ended March 31, 2025.operations.
Gross profit margin decreased to 57.7% for the three months ended June 30, 2026, compared to 58.3% for the three months ended June 30, 2025. The decrease in gross profit margin primarily reflected a shift in revenue mix, as revenue from sales and services typically generates lower gross margins but carries lower capital expenditure requirements than revenue from rentals. For the three months ended June 30, 2026, revenue from sales and services represented 32.4% of total revenue, compared to 24.4% in the comparable period in 2025.
The margin improvement reflects disciplined cost management and the favorable operating leverage in our rental revenue base. While the significant growth in equipment and supply sales introduced a higher proportion of direct product costs relative to rental revenue, these were more than offset by the efficiency and scale benefits realized across our broader operations. As our sleep resupply program and other sales-oriented service lines continue to scale, we expect gross margins to gradually improve as fulfillment efficiencies are realized and the cost structure of these programs matures, though the continued diversification of our revenue mix may partially moderate the pace of that expansion.
Selling, generalgeneral, and administrative expenses as a percentage of revenue improvedwas to 46.1%47.5% for the three months ended MarchJune 31,30, 2026 compared to 48.1%45.7% for the three months ended MarchJune 31,30, 2025. Selling, general and administrative expenses totaled $34.8$37.1 million for the three months ended MarchJune 31,30, 2026, an increase of $6.4$8.3 million (or 22.4%28.9%) from the comparable period in 2025.
The increase in selling, general and administrative expense was primarily attributable to expenses incurred to support the continued growth of the business, including the addition of the Lehan operations, which were acquired on July 1, 2025 and therefore not included in the prior-year quarter. Employee compensation expense increased $4.0 million, or 22.8%, primarily due to higher headcount. Other factors contributing to the increase included approximately $0.9 million of higher phantom stock compensation primarily driven by the increase in our share price, approximately $0.6 million of higher sales compensation associated with record patient setup activity, as well as incremental technology and implementation spending and higher legal and professional costs.
The increase as a percentage of revenue reflected continued investments in technology, talent, and operating capacity, and the development of the Company’s sales organization in advance of anticipated growth. The Company expects these investments to support future revenue growth and productivity improvements. However, the timing and extent of any resulting improvement in selling, general and administrative expenses as a percentage of revenue will depend on the pace at which these benefits are realized.
The improvement in selling, general and administrative expenses as a percentage of revenue reflects continued operating leverage and efficiency gains as our revenue base has grown. The overall increase in selling, general and administrative expenses as compared to the prior period is primarily attributable to additional employee-related expenses to support the Company's overall growth and the inclusion of operating expenses from the Lehan acquisition completed on July 1, 2025. Our full-time employee count increased from 1,222 as of March 31, 2025 to 1,387 as of March 31, 2026, an increase of 14%, reflecting both organic expansion and acquired operations. As a result, employee related costs increased by $4.5 million, or 22%, compared to the prior year period.
We expect selling, general and administrative expenses to continue to increase in absolute dollars as we invest in personnel, infrastructure, and integration activities to support our growth initiatives. However, over time we expect these expenses to decline as a percentage of revenue as we continue to realize operating leverage from the scaling of our platform, although period-to-period fluctuations may occur based on the timing of hiring, integration efforts, and other strategic investments.
For the three months ended MarchJune 31,30, 2026, research and development expense totaled $0.6$0.5 million, a decrease of $0.2$0.3 million, or 27.4%,40.5%, from $0.8 million in the comparable period in 2025. We expect research and development costs to remain consistent throughout the remainder of 2026 as we continue to invest in technology initiatives to support our clinical operations and service delivery capabilities.
For the three months ended MarchJune 31,30, 2026, stock-based compensation totaled $2.5$2.0 million, ana increasedecrease of 6.1%13.2% from the comparable period in 2025. The increasedecrease reflectsin stock-based compensation was primarily attributable to forfeitures recognized during the period. Stock-based compensation continues to reflect our continuedongoing investment in employee retention and long-term incentive programs,programs including the broader integration of equity-based awards into our compensation structure. In recent years, we have increasedthrough the use of equity-based awardsawards, as part of our overall compensation programs, and the higherwith expense recognized duringover the threerespective monthsvesting ended March 31, 2026 reflects the cumulative impactperiods of awards granted in both the current and prior years, as those awards continue to vest over their respective service periods.years.
Loss (gain) on disposal of property and equipment
For the three months ended MarchJune 31,30, 2026, loss on disposal of property and equipment totaled $0.4$0.6 million compared to a gain on disposal of property and equipment of $2.4$0.6 million for the three months ended MarchJune 31,30, 2025. The gain recognized in the prior year period was primarily attributable to proceeds received from the sale of recalled ventilators back to the manufacturer in excess of their net book value.
For the three months ended MarchJune 31,30, 2026, the provision for income taxes was a $1.3$1.2 million expense, compared to a $1.0$1.7 million expense during the 2025 period. Our annual estimated effective tax rate for 2026 is 29.7%.30.2%.
For the three months ended June 30, 2026, net income was $2.9 million, a decrease of $0.4 million (or 10.8%) from the comparable period in 2025. Net income represented 3.7% of revenue for the 2026 period, compared to 5.2% for the 2025 period. The decrease was primarily attributable to the operating-expense and equipment-disposal factors described above, partially offset by increased gross profit and a lower provision for income taxes.
Comparison of the Six Months Ended June 30, 2026 and 2025:
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
Revenue
The following table summarizes our revenue for the six months ended June 30, 2026 and 2025:
For the six months ended June 30, 2026, total revenue was $153.5 million, an increase of $31.3 million, or 25.6%, compared to the six months ended June 30, 2025. The increase was driven by growth across our rental, equipment and supply sales, and service revenue categories, including continued expansion of our ventilator, sleep, resupply, and women’s health offerings and the inclusion of revenue from the Lehan operations acquired on July 1, 2025.
Revenue from non-invasive and invasive ventilator rentals increased by $5.8 million, or 8.8%, to $71.8 million for the six months ended June 30, 2026. The increase was primarily attributable to higher average patient volumes and continued demand for home non-invasive ventilation services. Rental revenue from other home medical equipment increased by $5.8 million, or 21.7%, to $32.6 million for the six months ended June 30, 2026. The increase was primarily driven by growth in PAP therapy and airway-clearance services, as well as rental revenue associated with women’s health products and Lehan operations.
Equipment and supply sales increased by $19.4 million, or 114.2%, to $36.5 million, for the six months ended June 30, 2026. The increase was primarily attributable to the inclusion and continued expansion of women’s health product sales and higher PAP resupply volumes resulting from growth in our sleep therapy patient base. Service revenues, which consist primarily of our healthcare staffing operations and in-home sleep testing services, increased by $0.3 million, or 2.3%, to $12.7 million for the six months ended June 30, 2026.
Ventilator rentals remained our largest individual source of revenue. However, the growth of PAP therapy and resupply, women’s health, oxygen therapy, and other home medical equipment offerings continued to increase the diversification of our revenue mix.
Cost of revenue and gross profit
For the six months ended June 30, 2026, cost of revenue totaled $65.6 million, an increase of $13.5 million, or 25.8%, from the comparable period in 2025. The increase was primarily attributable to costs associated with higher patient and sales volumes and the inclusion of the Lehan operations.
Gross profit margin decreased slightly to 57.2% for the six months ended June 30, 2026, compared to 57.3% for the six months ended June 30, 2025. The modest decrease in gross profit margin primarily reflected a shift in revenue mix, as revenue from sales and services typically generates lower gross margins but carries lower capital expenditure requirements than revenue from rentals. For the six months ended June 30, 2026, revenue from sales and services represented 31.9% of total revenue, compared to 24.2% in the comparable period in 2025.
Selling, general and administrative expense
Selling, general, and administrative expenses as a percentage of revenue was 46.9% for the six months ended June 30, 2026, essentially unchanged compared to 46.8% for the six months ended June 30, 2025. Selling, general and administrative expenses totaled $71.9 million for the six months ended June 30, 2026, an increase of $14.7 million (or 25.7%) from the comparable period in 2025.
The increase in the dollar amount of selling, general and administrative expense was primarily attributable to expenses incurred to support the continued growth of the business, including the addition of the Lehan operations, which were acquired on July 1, 2025 and therefore not included in the comparable period in 2025. The increase also reflected higher phantom stock compensation primarily driven by the increase in our share price and incremental technology and implementation costs, partially offset by continued operating leverage as we scaled our platform.
We expect to manage selling, general and administrative expense as a percentage of revenue as our recent investments begin to contribute to revenue and productivity, although the timing and extent of any improvement will depend on the pace of that contribution.
Research and development
For the six months ended June 30, 2026, research and development expense totaled $1.1 million, a decrease of $0.6 million, or 34.1%, from $1.6 million in the comparable period in 2025. We expect research and development costs to remain consistent throughout the remainder of 2026 as we continue to invest in technology initiatives to support our clinical operations and service delivery capabilities.
Stock-based compensation
For the six months ended June 30, 2026, stock-based compensation totaled $4.5 million, a decrease of 3.6% from the comparable period in 2025. The decrease in stock-based compensation was primarily attributable to forfeitures recognized during the period. Stock-based compensation continues to reflect our ongoing investment in employee retention and long-term incentive programs through the use of equity-based awards, with expense recognized over the respective vesting periods of awards granted in both the current and prior years.
Loss (gain) on disposal of property and equipment
For the six months ended June 30, 2026, loss on disposal of property and equipment totaled $1.0 million compared to a gain on disposal of property and equipment of $3.0 million for the six months ended June 30, 2025. The gain recognized in the prior year period was primarily attributable to proceeds received from the sale of recalled ventilators back to the manufacturer in excess of their net book value.
The ventilator buyback program was substantially completed in 2025, and accordingly we do not expect additional material gains from these transactions in future periods. We may, however, continue to recognize gains or losses from the disposal of equipment in the ordinary course of business, including losses related to damaged or destroyed equipment.
Provision for income taxes
For the six months ended June 30, 2026, the provision for income taxes was a $2.4 million expense, compared to a $2.7 million expense during the 2025 period. Our annual estimated effective tax rate for 2026 is 30.2%.
Net income
Net income was $5.6 million for the six months ended June 30, 2026, a decrease of $0.3 million, or (5.8)%, compared to $6.0 million for the six months ended June 30, 2025. Net income represented 3.7% of revenue for the 2026 period, compared to 4.9% for the 2025 period. The decrease was primarily attributable to higher selling, general and administrative expense, the unfavorable change in equipment-disposal activity, partially offset by increased gross profit.
For the three months ended March 31, 2026, net income was $2.7 million, consistent with the comparable period in 2025. Net income as a percentage of net revenue decreased from 4.6% for the three months ended March 31, 2025 to 3.6% for the three months ended March 31, 2026. The prior year period benefited from gains recognized from the ventilator buyback program, which did not recur in the current period, resulting in a lower net income margin despite growth in underlying operating performance.
Cash and cash equivalents at MarchJune 31,30, 2026 was $9.8$10.7 million, compared to $13.5 million at December 31, 2025. Typically, our principal source of liquidity is the collection of our patient accounts receivable. In addition to our collection of patient accounts receivable, from time to time, we can and do obtain additional sources of liquidity through the incurrence of indebtedness. Based on our current plan of operations, we believe cash and cash equivalents, when combined with expected cash flows from operations and amounts available under our 2022 Senior Credit Facilities will be sufficient to fund our growth strategy and to meet our anticipated operating expenses, capital expenditures, and debt service obligations for at least the next 12 months from the date of this filing. The Company has also historically utilized short term financing arrangements with suppliers that could be extended over a longer term if there was a need for additional liquidity.
On June 6, 2025, the Company's Board of Directors authorized and approved a share repurchase program. Under the terms of this program, the Company repurchased 1,976,441 of its common shares and the program was completed and terminated during 2025. On March 4, 2026, the Company's Board of Directors authorized and approved a new share repurchase program (the “2026 Share Repurchase Program”). Under the terms of the 2026 Share Repurchase Program, the Company may repurchase up to 1,930,131 of its common shares from time to time through open market purchases, block purchases or otherwise in accordance with applicable securities laws, including Rule 10b-18 of the Exchange Act. During the threesix months ended MarchJune 31,30, 2026, the Company repurchased and canceled 150,000680,802 common shares pursuant to the 2026 Share Repurchase Program.
Net cash provided by operating activities during the threesix months ended MarchJune 31,30, 2026 was $8.1$24.0 million, resulting from net income of $2.7$5.6 million, increased by net income adjustments of $10.5$20.9 million and partially offset by an increase in non-cash working capital of $5.1$2.5 million. The net income adjustments primarily consisted of $7.6$15.1 million of depreciation and amortization and $2.5$4.5 million of stock-based compensation. The primary changes in non-cash working capital were an increase in net accounts receivable of $5.6$6.6 million and aan decreaseincrease in accruedprepaid liabilitiesexpenses and other assets of $2.6$1.7 million, partially offset by an increase in trade payables of $1.6$2.1 million andmillion, an increase in net income tax payable of $1.3$2.1 million, and an increase in accrued liabilities of $1.4 million.
Net cash provided by operating activities during the threesix months ended MarchJune 31,30, 2025 was $2.9$15.1 million, resulting from net income of $2.7$6.0 million, increased by net income adjustments of $6.6$13.3 million and partially offset by an increase in non-cash working capital of $6.4$4.1 million. The net income adjustments primarily consisted of $6.6$13.5 million of depreciation and amortization and $2.3$4.7 million of stock-based compensation, partially offset by a $2.4$3.0 million gain on disposal of property and equipment. The primary changes in non-cash working capital were an increase in net accounts receivable of $1.9$1.6 million, a decrease in accrued liabilities of $3.1$2.0 million, and a decrease in income tax payable of $2.0$2.4 million, partially offset by an increase in trade payables of $1.2$1.6 million.
Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 was $5.5$13.3 million. Net cash used for capital expenditures during the period consisted of $6.7$15.2 million of purchases of property and equipment, partially offset by $1.2$2.4 million of sales proceeds from the disposal of property and equipment. Net cash used for capital expenditures represents a decrease of $3.0 million, or 36%, year over year. Purchases of property and equipment were primarily related to medical equipment rented to our patients. Net cash used in investing activities also included a $0.6 million equity investment.
Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2025 was $8.5$10.3 million, consisting of $15.5$23.6 million of purchases of property and equipment, partially offset by $7.0$13.4 million of sales proceeds from the disposal of property and equipment. Purchases of property and equipment were primarily related to medical equipment placedrented with patients underto our rental agreements.patients.
Net cash used for capital expenditures represents an increase of $2.5 million, or 24.5%, compared to the prior-year period. Although purchases of property and equipment decreased, the reduction was more than offset by lower proceeds from sales of property and equipment, as the prior-year period benefited from proceeds associated with the ventilator return program.
Net cash used in financing activities during the threesix months ended MarchJune 31,30, 2026 was $6.3$13.5 million. During the threesix months ended MarchJune 31,30, 2026, principal payments on the 2022 Term Loan Facility (as defined below) were $3.2$5.4 million. In addition, the Company paid $1.4$6.8 million pursuant to share repurchase programs and canceled 268,002272,460 common shares at a cost of $2.0 million to satisfy employee income tax withholding obligations associated with the vesting of RSUs,RSUs. whileThese uses of cash were partially offset by $1.1 million of proceeds from the exercise of optionsstock during the three months ended March 31, 2026 were $0.5 million.options.
VMD insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 30,000 shares, about $347.2K). Net open-market shares: -30,000 (purchases minus sales); net value about -$347.2K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-19 | Kaushal Nitin |
Option exercise | 18,786 | — | — |
| 2026-08-19 | Heltz Sabrina |
Option exercise | 15,029 | — | — |
| 2026-08-19 | Heltz Sabrina |
Option exercise | 3,757 | — | — |
| 2026-08-19 | Heltz Sabrina |
Disposition to issuer | 3,757 | $8.94 | $33.6K |
| 2026-08-19 | Dobbs Randy E. |
Option exercise | 16,763 | — | — |
| 2026-08-19 | Dobbs Randy E. |
Option exercise | 4,191 | — | — |
| 2026-08-19 | Dobbs Randy E. |
Disposition to issuer | 4,191 | $8.94 | $37.5K |
| 2026-08-19 | Smokoff Timothy |
Option exercise | 15,029 | — | — |
| 2026-08-19 | Smokoff Timothy |
Disposition to issuer | 3,757 | $8.94 | $33.6K |
| 2026-08-19 | Smokoff Timothy |
Option exercise | 3,757 | — | — |
| 2026-06-25 | Frazier William |
Open-market sale | 10,000 | $11.72 | $117.2K |
| 2026-06-25 | Frazier William |
Option exercise | 10,000 | $1.81 | $18.1K |
| 2026-06-24 | Smokoff Timothy |
Open-market sale | 3,364 | $11.50 | $38.7K |
| 2026-06-24 | Smokoff Timothy |
Open-market sale | 5,000 | $11.56 | $57.8K |
| 2026-06-24 | Smokoff Timothy |
Open-market sale | 5,000 | $11.41 | $57.0K |
| 2026-06-24 | Smokoff Timothy |
Open-market sale | 1,636 | $11.48 | $18.8K |
| 2026-06-24 | Smokoff Timothy |
Open-market sale | 5,000 | $11.53 | $57.6K |
Well-known investors holding VMD (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| First Eagle Investment Management | 2026-06-30 | 535,157 | $6.1M | 0.01% | Added 1% |
| Two Sigma Investments | 2026-06-30 | 438,851 | $5.0M | 0.0% | Added 6% |
| Renaissance Technologies | 2026-06-30 | 425,900 | $4.9M | 0.01% | Reduced 4% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 234,315 | $2.7M | 0.0% | Added 1898% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 205,480 | $2.3M | 0.0% | Added 81% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 155,842 | $1.8M | 0.0% | Added 20% |
| Millennium Management (Israel Englander) | 2026-06-30 | 51,949 | $592.2K | 0.0% | Added 47% |