Viemed Healthcare, Inc. Q2 FY2023 Earnings Call

Greetings, and welcome to the Viemed Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Todd Zehnder, Chief Operating Officer. Thank you, Todd. You may begin.

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

All right. Thank you, Todd, and good morning, everyone. Welcome to our second quarter 2023 earnings call. Today, we are excited to share a comprehensive overview of our robust business performance along with a positive forward-looking outlook for the industry. Our organization is positioned exceptionally well to expand our reach and strategically capitalize on prevailing tailwinds in our operating environment. During this period, we've achieved significant organic growth, a testament to our management team and their commitment to continuing our proven growth model, and we simultaneously initiated our long-awaited M&A strategy. We are pleased to announce the successful completion of the HMP acquisition on June 1, which further accelerates our growth engine and broadens our capabilities geographically. This acquisition reinforces our dedicated care while building a larger Viemed team with expanded resources. Before we delve further, I want to take a moment to acknowledge and express our gratitude to our dedicated team of respiratory therapists, behavioral health specialists, staffing professionals, and administrative support staff. Their continuous commitment to delivering best-in-class care to the patients we serve is the driving force behind our outstanding quarter and continued growth for Viemed. As of the end of the second quarter, our Viemed family grew to 974 employees, including 172 new onboarded employees from the HMP team. We are fortunate and excited to welcome the HMP team into our family. The second quarter of 2023 exhibited the strength of our business model. Our revenue results again landed at the top end of our guided range, confirming that even as a larger company, we continue to experience strong growth. Our success is built on a robust and resilient strategy, which has consistently demonstrated its ability to overcome challenges and drive sustainable growth. We are pushing our growth strategy to new heights by executing on strategic and accretive acquisitions that build upon our existing capabilities. These acquisitions serve as powerful catalysts, accelerating the expansion of our comprehensive respiratory offerings and geographic coverage gaps throughout the country. Our back-office team is continuously refining our processes for training and culture, which helps drive both organic and synergized inorganic growth. Through the acquisition and integration of HMP, we are demonstrating the value of our well-developed and mature base organization and training programs. We are already seeing tremendous success by sharing our mature complex respiratory model with a strong team at HMP. In the first month of post-close operations, the non-invasive ventilation setups from HMP have experienced significant growth over historic levels. Additionally, we will be training HMP clinicians on the use of our proprietary care delivery technologies such as Engage. Due to this high-tech, high-touch delivery model, we will continue to improve patient outcomes while driving efficiencies for all stakeholders. Our commitment to data-driven decision-making allows us to continuously measure and improve our business performance and patient satisfaction. Our equipment supply chain remains stronger than ever, with many new manufacturers competing for our business. We have diversified our sources and forged partnerships with multiple reputable manufacturers, safeguarding us against potential disruptions. This enhanced stability in the supply chain allows us to meet the ever-increasing demands of our patients, regardless of fluctuations in the market. This increased competition is stabilizing equipment costs and ensuring that we have adequate supply to meet the needs of our patients. Moreover, the recent HMP acquisition has delivered significant volume pricing favorability, amplifying the advantages we gain due to our scale and the competitive equipment landscape. Our commitment to diversification has yielded substantial success, and the integration of HMP has played a pivotal role in contributing to these efforts. We are now reaching patients earlier in their disease state, expanding our patient base like never before. As of June 30, we are treating over 96,000 unique patients, a significant increase from the same time last year. Our growing portfolio provides a robust continuum of care solution for patients and pulmonologists, and our early intervention capabilities allow us to treat underlying conditions at the right time. As coordinated care efforts gained prominence, our adoption of sophisticated care services such as behavioral health addressing social determinants of care goes beyond respiratory. This positions us as a leader in patient-centric care in the industry. The adoption of innovative technologies, such as portable oxygen concentrators and remote setups of path devices, has enabled us to expand our portfolios rapidly and in a cost-effective manner. These ventilator-adjacent offerings not only increase the length of our patient relationships but also allow us to provide timely care for patients as their disease state progresses. Integral to our strategy is our focus on people. Viemed Healthcare staffing is playing a pivotal role in our organization, acting as a driving force behind the identification and recruitment of top-tier talent across all economic cycles. Our commitment to finding the best professionals continues to drive remarkable results, as evidenced by the significant improvements in both the quality and volume of internal hires. This success not only enhances our workforce but also reflects our dedication to always developing a thriving and talented team. As our staffing division continues to mature, it has earned the trust and respect of our valued partners and customers. Organizations such as the VA and large regional hospital networks have come to rely on our staffing solutions, recognizing the value we bring in meeting their workforce needs. Our reputation as a dependable and valuable staffing partner has continued to grow, further strengthening our position in the healthcare industry. By continuously refining our recruitment strategies and investing in advanced data and analytical tools, we are better equipped to identify and engage with top candidates in the market, and we are consistently prepared to make informed decisions that keep us ahead of the competition. This data-driven approach empowers us to match the right professionals with the right positions, ultimately leading to improved patient care and organizational performance. We continue to see encouraging progress in ongoing collaboration between regulators, legislators, and the home medical equipment industry. Together, we are working to find practical solutions that ensure providers can deliver care to patients effectively. Regarding competitive bidding, although CMS has not announced plans related to future rounds, we have observed that the timeline for a potential round in 2024 for competitive bidding has effectively lapsed. The prevailing signals also strongly suggest that the prospect of the 2025 round is winding down. We remain confident in the current indicators of a strong reimbursement environment for the coming years, and our business is well-positioned in the face of potential macroeconomic challenges such as a recession and long-term inflation pressures. Additionally, the issuance of the final rule by CMS on April 5, 2023, marks a significant milestone in the healthcare landscape, particularly in the realms of the Medicare Advantage and Medicare Part D prescription drug benefits. This rule ushers in a host of changes, impacting several key aspects of the programs and signaling a positive direction for the industry as a whole. Included in the provisions are improvements impacting prior authorization, marketing and communications, health equity, provider directories, coverage criteria, network adequacy, and other areas. Importantly, the final rule emphasizes the need to ensure that individuals with Medicare Advantage receive access to the same medically necessary care available in traditional Medicare. This parity in care is a crucial step towards achieving healthcare equity and ensuring that beneficiaries have equitable access to essential medical services, irrespective of their chosen Medicare program. As the healthcare reimbursement environment evolves, driven by Medicare Advantage trends and value-based arrangements, we maintain an optimistic outlook for the demand of our high-quality and cost-effective service offerings. Our unwavering commitment to investing in advanced technology and robust protocols allows us to streamline administrative processes, capture essential data, and demonstrate tangible benefits to patients, physicians, and payers alike. At this juncture, I'll now hand the call over to Chief Operating Officer Todd Zehnder to provide additional insights regarding our financial results and capital activities. Todd, the floor is yours.

All right. Thanks, Casey. In reviewing the financial results, all figures are in US dollars, and the full results have been made available on the SEC website as well as SEDAR. Our core business generated net revenue of $43.3 million during the second quarter of 2023, as compared to net revenues of $33.1 million during the second quarter of 2022, which equates to a 31% increase. This revenue amount includes approximately $2.5 million of revenue related to our acquisition of HMP during June. Excluding that impact, our organic growth over the second quarter of 2022 was an impressive 23%. Our sequential growth for the core business was 9%, and we see that continuing to increase as we will have HMP for the entire third quarter, and our organic growth remains very strong. We continue to stay optimistic that we will be able to continue our high organic growth rates as well as continue our evaluation of inorganic opportunities. Our gross and EBITDA margin percentages are once again strong as we are focused on both margin and diversification. We remain committed to our dual-pronged strategy of continuing to diversify our revenue stream, all while looking to expand our bottom-line margins. We continue to see our margin percentages be influenced by our product mix and continue to be pleased by the notional growth. Our gross and EBITDA margins during the quarter came in at 60.3% and 22.6%, respectively. Our second quarter gross and EBITDA amounts came in at $26.1 million and $9.8 million, respectively. Our second quarter 2023 EBITDA is approximately 52% higher than second quarter 2022 EBITDA, which is a testament to our overall focus for the last 12 months. Our second quarter revenue from vents was approximately 60% of our core revenue as compared to 69% in the second quarter of 2022. Our SG&A for the quarter totaled approximately $20.5 million as compared to $17.5 million in the second quarter of 2022. We are continuing the efforts of managing costs across the board and are pleased in a quarter that had revenues grow 31%, G&A grew 17%. We will continue to invest in our patient and employee experiences. We continue to expect to grow revenues at a faster rate than expenses, even in light of the ongoing inflationary environment. For the quarter, we invested approximately $6 million on capital expenditures. The CapEx has been spent through a diversified supplier network, which has given us an ability to leverage relationships, whereby we have minimized inflationary impacts as much as possible. As was the case over the recent periods, our vent and oxygen products had the most CapEx spent during the period. We have once again funded all of our CapEx with discretionary cash flow during a quarter of extreme growth, and we were able to use our balance sheet to fund the HMP acquisition. We are very proud of the pristine balance sheet where we ended the quarter with a cash balance of $10 million. Additionally, we ended the quarter with an overall working capital balance of $4.4 million. We drew on our credit facility in order to close the acquisition and had $12.1 million of long-term debt at June 30. We will opportunistically pay down or use the revolver portion depending on the needs of cash resulting from additional organic growth or future inorganic opportunities. We are extremely excited about the integration efforts related to our acquisition of HMP. As previously stated, we are being extremely diligent in ensuring the company has folded into Viemed to assure efficiencies are attained. The HMP culture is one that is being easily integrated, and we are seeing revenue synergies come through early, which was always the number one reason for us to acquire this great company. We are diligently working with retained management to make sure this is the proverbial win-win. We have now begun executing on our capital allocation strategy that we defined at the end of 2022. Our first priority remains on CapEx to service new patients. Our organic growth through new patient service has and will likely always be our first priority. We continue to see major organic growth opportunities for both legacy Viemed as well as HMP. Now that we have completed our first deal, it is evident that M&A has moved into the number two priority on the capital allocation. We continue to patiently evaluate other deals as we are optimizing our first one. As we previously mentioned, we might consider paying down on the revolver until another deal comes up that needs capital. But the flexibility of our credit facility allows for those decisions to be made routinely and quickly. We also expect to renew our existing shelf registration statement, which is scheduled to expire next month. This renewal will maintain our ongoing capacity to rapidly fund an acquisition or seize opportunistic transactions. Moving on to the third quarter, we have provided net revenue guidance in the $49 million to $50.2 million range related to our core business. The midpoint of our net revenue guidance is up 39% over the core revenue in the third quarter of 2022. We remain active in our discussions with existing and potentially new investors. We are planning to attend a couple of institutional conferences during the third quarter, whereby we will hopefully expand our investor base. We are excited to tell our story, but we are even more excited to continue to build out our footprint to new patients through our organic and now inorganic growth strategies.

At this time, I'll turn it back over to Casey to wrap things up. All right. Thanks, Todd. In the midst of these exciting developments in the quarter, we are most pleased with the fact that our commitment to organic growth remains unwavering. Our team has done some incredible orchestration for this next chapter of our growth story, and their careful work on the integration of the HMP acquisition has not slowed us down in any way. On the contrary, we're firing on all cylinders, continuously improving, growing, and expanding our operations. We remain focused on maintaining our position as the leader in the industry, never taking our eye off the ball. As we move forward, with the help of the stable regulatory environment, we remain aggressive on creating more preferred partnerships with our hospital partners. Driving innovation and ongoing improvements to our clinical model will continue to be a major part of our strategy. We are confident in our ability to navigate the evolving healthcare landscape and deliver sustainable value to our stakeholders. Once again, thank you all for joining us today, and we look forward to sharing the exciting developments ahead for Viemed Healthcare. This concludes our prepared remarks. We'll now open up the floor for further questions. Thank you.

Our first question is from Brooks O'Neil with Lake Street Capital Markets. Please proceed with your question.

Thank you, and good morning, guys. Congratulations on the terrific results.

Good morning, Brooks. Thank you.

I have a couple of questions. First, if I remember correctly, the business mix from HMP was somewhat aligned with yours but leaned more towards the sleep side. Can you discuss how initial efforts to cross-sell in their regions are going and how you might leverage some of your strengths in the ventilator side of the business?

Yes. That's a great observation. The HMP mix was heavily focused on sleep, around 50%, while about 10% was related to ventilation. This is one of the factors that excited us about the acquisition during our initial analysis. On June 1, when we finalized the deal, our bid team visited their offices the following week to train their team on the Viemed approach to selling our complex respiratory model, which includes ventilation. They achieved record numbers for vents in their first month, which was very encouraging. We were thrilled to see them embrace the training and adopt our methods. Additionally, we were impressed with the potential for incremental growth in their markets. They plan to continue expanding their sleep services, which are strong in Tennessee, Mississippi, and Alabama. They currently service labs and see opportunities to enhance their sleep business by launching home sleep programs in rural areas beyond their current service regions. We are eager to assist them since we have expertise in developing home sleep programs. Therefore, we are concentrating on revenue synergy opportunities right from the start. We are also identifying ways to reduce costs, but our primary focus now is on increasing sales, which presents a significant opportunity.

Great. Appreciate all that color. So I'm curious, you and Todd both talked about continuing to mine the pipeline of acquisition opportunities. Would you say this first acquisition has been a slam dunk template for what you're going to do going forward? Or have you learned some things from this one that might make you even better at making acquisitions down the road?

I think the answer is yes to both questions. This was an ideal transaction for many reasons, particularly because we understand all the business units involved, and it allows for diversification of our revenue streams in an area where we weren't very strong. Most importantly, culturally, it was a very good fit. However, it would be disappointing if we didn't learn anything from our first significant acquisition, and we are indeed learning. Fortunately, as Casey mentioned, we haven't encountered anything concerning; it's all been positive. This represents a new avenue for growth for our company, but our priority is to execute properly, ensure integration, harvest revenue synergies, and maintain our organic growth. That has been our focus, and we're looking forward to the next acquisition. We aren't in a rush to make another one immediately, but if the right opportunity arises soon, we will be prepared. Overall, things are going well with this first acquisition.

Great. Let me just ask one last one, and it's sort of revisiting an old friend, if you will. Any progress with the VA in terms of opening the doors for the oxygen programs broadly across that opportunity set?

The pilot program is still active and progressing. We are managing some turnover among employees involved in developing the program, which has caused some delays. However, our main achievement within the VA has been through staffing, where we now have substantial experience and a proven track record as a quality provider. This has led to successful staffing contracts, which have been significant wins for us. Nonetheless, our efforts in the complex respiratory initiative are not over; we are still awaiting updates from the VA, and the situation remains consistent from one quarter to the next.

Okay, cool. Thanks for the color. I’m excited for the future.

All right. Thanks, Brooks.

Thank you. Our next question is from Doug Cooper with Beacon Securities. Please proceed with your question.

Hey, good morning, guys. And terrific work on the quarter. Just a couple of quick ones for me. I just want to confirm pro forma because you only had the acquisition in for one month. Would pro forma would have been if you had it for the full quarter, roughly $48 million, $48.5 million of revenue and $11 million of EBITDA. Is that sort of in the ballpark?

The $48 million is a good approximate. We don't have an estimate of EBITDA, but I don't think it's going to change the composition very much, Doug.

Okay. I saw the vent, your over 10,000 vent patients now, a nice milestone. That looked like it had the strongest growth, certainly sequentially, it's up 7% sequentially for some time. How much of that was due to HMP? Casey, you mentioned they were out of the gate selling, and how much of it is just, I don't know, maybe the physicians finally realizing that this is a good therapy?

I think HMP contributed about 340 to 350 basis points to the growth. The remaining portion was from our traditional sequential growth, which I estimate was around 300 basis points for the quarter. This aligns with our overall growth of about 700 basis points. Our own initiatives contributed roughly half of that. The organic aspect is definitely performing well, and incorporating their group has significantly boosted our results.

Another important point, Doug, is that we set an internal target to finish the year with 115 quality sales representatives. Currently, we have 112. Our recruiting efforts are proving effective, and we have successfully brought in many strong candidates. Now, we just need to focus on their training and ensure they have the necessary support and infrastructure in place, not only for the new hires we've recruited but also for the new HMP team. A significant portion of our attention right now is on enhancing sales training and building up our sales management team.

Okay. So just to be clear, you added 300 bps over three months, and they added 340 bps in a month?

Well, no, I mean that gets all added at once. That's part of the acquisition. So that was their active…

Got it. Okay. And regarding the non-vent business, including the sleep and oxygen segments, even without counting the contribution from HMP, it seems like it grew 50%. Did I interpret that correctly?

Yes. That's going to be encompassed by a lot of growth in oxygen, a lot of growth in sleep. And then, you've got staffing up and running, just our sales revenues are higher at this point. So that's probably about right. I don't see the number exactly that you're talking about. I want to make sure that HMP is not included in that, but…

HMP, I guess if I added $2.5 million of that non-vent revenue, obviously, your non-vent revenue up, I think it was over 100%. So if I…

Yeah, that’s right.

It would be incredible growth. You're making great progress in the sleep and oxygen market. Can you maintain that growth rate?

Well, that brings us back to the ongoing question of how long we can maintain our growth. Our goal is to consistently grow our business organically at the high rates we've been achieving, around 25% to 30%. It becomes more challenging as our figures increase. However, as our sleep business expands, the resupply aspect will also grow, which acts like an annuity. With more sales representatives nationwide promoting our various products, including vents, vests, and oxygen, our intention is to significantly increase those numbers. Smaller segments may have an edge over vents in sustaining high percentage growth rates. Ultimately, we want to see overall growth across the board.

Yeah. It was interesting for me with, I guess, Owens & Minor with Apria, they had an organic growth rate year-over-year of 10.5%, I think, and AdaptHealth was 9% or 10%. So, I mean the sleep side of the business continues to have pretty strong fundamentals, I would suspect?

Yes, it does. Sleep apnea is certainly a growing issue. We're capitalizing on our national rollout during the COVID period. As new sales representatives become more effective in offering our products alongside everything else, we are seeing the benefits. Additionally, as we incorporate HMP moving forward, we expect to further enhance our revenue growth outside of ventilation.

Right. And I'm assuming the supply chain issues, ResMed has really picked up the pace, and there's no issue about getting equipment?

We have no issue on any product at this point. Yeah. So everything is good there.

Okay. Great, guys. Congratulations.

Thanks, Doug.

Thank you. Our next question is from Andrew Rem with Odinson Partners. Please proceed with your question.

Hey, gentlemen, great quarter. Congrats to your team. You guys are doing a great job executing.

Thank you.

Just maybe going back to HMP, what was their kind of organic growth profile prior to the acquisition or at the time of the acquisition?

Well, if you look at it over kind of a three-year period, I want to say the CAGR would be somewhere in the kind of high teens, low 20s. The last year wasn't as high. They had just slowed down to probably upper single digits. So we're hopeful that when we bring our skill set of growing the complex respiratory, we can get it back to kind of our organic growth rates, which is in that mid-20 type range.

Okay. And then, is that kind of factoring in the opportunities around ventilation as that sounds like that wasn't really necessarily a strength for them, but it is for you.

Yes. That's the goal. That's the goal, is to have them continue to grow their ventilation business at a much higher rate than they were historically. And then our sort of benchmark for them is if we can keep them growing at our growth rate, then we're doing a pretty good job.

Okay. Can you elaborate on your comment about the good cultural fit between you and HMP? Please define that a bit more.

The best way to define it is that they're patient-centric. They put the patient first, which is something that is extremely important to us. They're just good people that are looking to do the right thing, and that's what we're looking for. We can work with that whenever we have the passion and the bleeding-heart clinicians at our side, and that's what we saw with HMP. So we're kind of just springboarding that passion into their communities.

And then on just operating expenses. Can you maybe talk about second half of the year and as you go into '24 and kind of beyond, ability to kind of leverage maybe more just kind of the SG&A expense? Obviously, you had inflation pressure last year. You're getting some of that product with the improvement in reimbursement, but other things that you guys can do operationally to kind of leverage those expenses?

We are proud that general and administrative expenses only increased by 17% this quarter, while revenue rose by 31%. This progress shows that we are effectively scaling our operations. We are capitalizing on our growing revenue base to manage C-level expenses. While we do not plan to slow down the growth of G&A, as it contributes to our impressive organic growth rates, we continue to seek new sales talent and innovative strategies. We have consistently invested in our business's future, which has resulted in above-average organic growth rates. We expect to grow our margins, but replicating this year's 200 basis point bottom-line increase in 2024 may prove challenging. Nevertheless, we do plan to pursue margin growth and are optimistic about our ability to continue improving, though the exact rate of growth remains uncertain.

Is your expectation for improvement in the following year based on reimbursement and your internal operations? While we aim to improve next year, it may not be at the same rate. How much of that improvement is within your control?

There are likely three factors at play. You mentioned two of them. First is the reimbursement aspect. Midyear CPI was around 3% to 3.5%, so we anticipate an average of about 2% next year, which isn't particularly significant. The majority of the impact will come from our actions. We consistently remind everyone that ventilation offers a higher EBITDA margin, which is why we are diversifying our product base. As I noted earlier, we reduced our dependence on a single area from 69% last year to 60%. Much of our new business is connected to higher-margin products later in their life cycles. Therefore, while some elements of revenue composition depend on us, we also allow it to evolve naturally. The primary factor we can manage is our costs. We anticipate corporate efficiencies from scaling, as we won't require two sets of leadership for a doubled operation. These are the measures we can implement. Additionally, we are committed to investing in our future, which is crucial to us. Notably, our EBITDA increased by 52% year-over-year this quarter, and our goal is to continue that growth.

All right. Thanks, guys. Thanks a lot. And again, congrats to your team.

Thanks, Andrew.

Our next question is from Eric Coldwell with Baird. Please proceed with your question.

Hey, thanks very much and good morning. I have, I think, three questions. The first one, I'd like to hear a bit about your traction with payers. I know it's still very early with HMP, but as you broaden your scale and your geographies and capabilities. I'm curious what your recent conversations with payers have been? And have you been able to expand any network access? Or do you have any opportunities that you could highlight for us as you look over the next 12 months?

We have made significant progress with payers this year. Our network development team has been very active, adding 5 million lives to our network so far, with another 5 million expected to come on board. We are pleased with their efforts. However, we still face challenges with larger payers like United and Humana. While we do some out-of-network work for them, there are great opportunities to bring them on board. Overall, our conversations with other payers have been very positive. They recognize that our data shows we can save money through our complex respiratory model by ensuring patients receive timely care. They appreciate our unique approach to treating a seriously ill and costly group of patients. This understanding is why we added 5 million lives, and we will continue to emphasize this message through data.

Since you mentioned Humana, I recognize that they represent a major managed care organization, and that conversation may be more challenging at this time. However, I don't think it's a significant concern for you considering your historical underweighting in that area and certain geographic factors. Regarding their recent exclusive deal with Rotech and Adapt for specific products, I’m interested to know if that influences your perspective. I understand that not all categories were included, but I am curious about your thoughts on that type of arrangement.

For our company, it didn't really affect us because we weren't doing much business with United and Humana. From my perspective, kudos to Apria and Rotech for securing that deal. It's yet to be seen whether they will be able to manage the entire network of Humana, including both United and Humana now. In my view, the jury is still out on their ability to continue supporting the coverage area. It doesn't concern us much since we weren't servicing those patients in the first place. We'll just have to wait and see how that develops.

That's fair. Regarding the commentary on the organic growth rates, which are clearly impressive, I'm curious about how much of that organic growth can be attributed to an increase in market volumes, such as more patients getting on their first prescription, or if this is mainly a continuation of the expansion of the sales and payer networks along with some market share gains. I'm trying to understand the underlying market dynamics and what you've observed in your core categories.

Are you referring to existing areas versus new areas with that question?

It seems that the growth rates in your core areas are being compared on a like-for-like basis. Are you noticing any changes in overall patient volume, national prescription trends, or new access due to regulatory or statutory changes in recent years? Or is the market relatively stable? The growth appears to be linked to the recovery in sleep following the recall, but besides that, is there a more substantial underlying growth that exceeds market performance? Is this primarily due to gaining market share, or is there something else contributing to it?

We typically operate within a range of 85% to 90% for same-store sales, though I don't have the specific quarterly figure. It usually takes some time for our new representatives to become fully effective, and once they do, their performance progressively improves. Our top representatives usually handle the majority of the growth. There’s nothing particularly unique about this quarter; these growth rates fluctuate slightly over time, but they are consistent due to our sales-driven approach. We focus heavily on recruiting, training, and retaining new sales reps in different areas to boost same-store sales. Recently, we have expanded the range of products available for our experienced representatives to sell, such as sleep aids, oxygen, and percussion vests, allowing us to maintain strong growth rates. The complex respiratory market, especially for COPD and neuromuscular conditions, remains under-served, presenting ongoing opportunities for growth. We are committed to finding new ways to reach more individuals and promote therapy.

Last one for me, if I have time. With the public health emergency ending last quarter, you have a partial impact already. This will be a full quarter. Are there any significant changes in market dynamics, reimbursement, regulatory changes, or audits that you are observing? Are there any important aspects that people should focus on in a post-public health emergency environment?

No, not really. You covered everything, but fortunately, or perhaps unfortunately, during the relief, we didn't experience a significant revenue boost from the blended rate. It affected us somewhat, but it was so minor that it didn't require us to address it or consider it from a modeling standpoint. It blended in quite easily when we analyzed everything. There hasn't been any urgent reaction suggesting that we're facing a problem. It’s pretty much business as usual with no issues on that front.

One other thing I'll add is there is a movement inspired by the Public Health Emergency where we didn't have to get Certificates of Medical Necessity to standardize them for oxygen, which would reduce audit pressure on the oxygen business. I believe that's a positive outcome from the PHE, as we look to adopt what worked during that time moving forward. We'll wait to see if the Centers for Medicare & Medicaid Services agrees, but it should be beneficial for both us and them in terms of reducing order pressure.

Yeah, perfect. Well, again, congrats. Nice results here and look forward to seeing you guys next month. Thanks so much.

Thanks, Eric.

Thank you, Eric.

Thank you. There are no questions at this time. I'd like to hand the floor back over to management for any closing comments.

All right. We want to thank everybody for participating once again on the call, and we look forward to visiting with anyone that has follow-up questions in the near future. Have a good day.

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.