Greetings, and welcome to the Viemed First Quarter 2024 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Todd Zehnder, Chief Operating Officer. 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 U.S. Federal Securities Laws or forward-looking information under applicable Canadian securities legislation, which we collectively refer to as forward-looking statements. Such statements reflect the company's current views and intentions with respect to future results or events and are subject to certain risks and uncertainties, which could cause 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 securities 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 first 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. Thank you for joining our call today. I'm excited to share that the first quarter of 2024 has set a solid foundation for Viemed's trajectory this year. Operationally, we are ahead of schedule despite encountering some cash flow disruptions related to the Change Healthcare situation, which we'll cover later on in the call. Our revenue grew by an impressive 28%, a testament to the dedication and tireless efforts of our more than 1,000 team members. At Viemed, we recognize that our employees are our most valuable asset and investing in their development and well-being is paramount to our success. Onto the quarter update, our new sales restructuring is showing tremendous success with sales rep net production up over 30% from Q4, putting us ahead of schedule in achieving our internal goals for the year. The structure has proven to help keep our managers and trainers closer to home, which is making them more effective in the field, working with new and existing reps. We have also been able to support more of their professional ongoing skill development through offering more mentorship oversight and instruction. Moreover, we are achieving a healthy work-life balance for our people, which is creating an environment for further growth within our existing infrastructure. A lot of good work was completed on our first hospital joint venture project with HomeMed at the East Alabama Medical Center, which was completed on April 1. This partnership exemplifies our belief in leveraging synergies between Viemed's clinical expertise and business acumen with the immediate patient needs within the hospital networks. This model will account for bringing more service and technology into the home for the patients of East Alabama while cultivating an improved complex respiratory program inside of the medical center. Our team views this opportunity as a new way of growing our business and is laser-focused on making this project a success, one that we will replicate around the country. Discussions with other hospital joint ventures are actively underway. Furthermore, our integration of the HMP acquisition is hitting its stride and driving product diversification for our business. This product diversification and talent from our HMP team have been a major driver of our success, particularly with the hospital joint venture strategy. With the help and expertise of the HMP team, we were able to offer a full suite of DME products to help support the patients of East Alabama, extending our offering to go beyond respiratory. By joining forces, we're not only poised to revolutionize care delivery but also to drive tangible improvements in hospital profitability while significantly expanding our reach into previously untapped markets. Our merger and acquisition pipeline is gaining traction, and we are starting to see more conversations and activities from prospective targets. With that being said, we remain steadfast in our commitment to organic growth as a primary driver of our business. We still view strategic acquisitions and joint ventures as complementary springboards to our organic growth strategy. This strategy allows us to focus on making prudent transactions as we do not have to rely on M&A to grow the business. We also focused a good portion of our efforts in Q1 around innovating our care delivery model. We've implemented innovative technology processes that harness the power of machine learning capabilities, which are evolving our operations, particularly in streamlining time-consuming back-office tasks such as reauthorization submissions. By automating these processes, we've not only enhanced efficiency but also freed up valuable resources, allowing our team to redirect their efforts towards delivering high-quality care to our patients. We work closely with two of our vent manufacturers to connect their devices to engage Care Manager 2.0, our proprietary clinical and operational platform. Effective care delivery in the modern health care landscape necessitates the seamless integration of exceptional service with cutting-edge technology. Our technology-centric approach enables us to seize data-driven opportunities, capitalize on emerging trends, and strengthen our ability to deliver value-driven solutions for our payers and hospital partners. As legacy manufacturers such as Philips are gradually exiting certain product categories, the industry is paving the way for the emergence of a new generation of manufacturers, equipped with the expertise to develop and deliver improved technologies and enhanced connected capabilities. Furthermore, we're poised to capitalize on incentive programs related to Philips trade-ins and remediation on the Trilogy 100 ventilators, enabling us to significantly lower the age of our ventilator asset base in an extremely cost-competitive manner. ResMed has also completed a few studies on the effects of GLP-1 drugs for sleep apnea patients. The latest data is showing that there is a 10.5% higher propensity to start PAP over those not using the GLP-1 drug. More patients are going to see their physician about their weight problems, and the data shows that while the drug helps reduce AHI by 59% to 63%, the patients are still left with moderate sleep apnea, which means they will suffocate every 3 minutes of sleep after treatment with the drugs is administered. We also saw an announcement that the Samsung Galaxy Watch is now de novo authorized by the FDA to detect signs of sleep apnea, which should pave the way for Google Fitbit and Apple Watch to follow suit. The emergence of these technological advancements stands to streamline the diagnosis of sleep therapy into the mainstream population. We expect this development to be significant for growth in our sleep and resupply business. On the regulatory front, Viemed continues to navigate the evolving landscape of health care policy and reimbursement. Despite industry efforts, the government is yet to resolve a regulatory relief package for the expiration of the 75-25 blended rate, the last remnant of the COVID-related relief measures stemming from the pandemic. As a reminder, our comprehensive analysis suggests that the long-term impact on our business is expected to be minimal, thanks to a combination of factors, including our diversified product mix and strategic rural concentration. Looking ahead, we remain optimistic about the reimbursement environment and the stability of rates indexed to inflation. The indexing mechanism serves as a natural hedge for our operations, providing a degree of predictability and financial security. Moreover, our proactive approach to monitoring regulatory developments and engaging with policymakers positions us to adapt swiftly to changes and capitalize on emerging opportunities. With more financial and operational updates on the quarter, I will now hand the call over to our Chief Operating Officer, Todd Zehnder.

Thanks, Casey. In reviewing the financial results, all figures are in U.S. dollars and the full results have been made available on the SEC's website. Our core business generated net revenue of $50.6 million during the first quarter of 2024 compared to net revenues of $39.6 million in the first quarter of '23, which equates to a 28% increase. Our revenue was relatively flat sequentially, which is not uncommon when comparing Q4 to Q1, and as we'll discuss later, we expect rapid sequential growth throughout the year. Operationally, the first quarter was extremely strong. But as we've indicated in the past, it also brings seasonal challenges due to reoffs and patients switching or resetting insurance plans. When comparing Q1 '24 to Q4 '23, our AR reserves were approximately $2.5 million higher in the current quarter, which shows how operationally strong the quarter was and why we're excited about the rest of this year. As in the past, we continue to stay optimistic that we will be able to continue our high organic growth rates as well as additional inorganic opportunities on top of the recent joint venture. Our first quarter revenue from Vince was approximately 58% compared to 65% in the first quarter of 2023. Our gross and EBITDA margins are still strong as we are focused on both margin and diversification. We continue to be successful in managing our cost structure this year, and it is showing in both gross and EBITDA contribution. Consistent with prior years, our first quarter margins are lower than other periods due to higher bad debt reserves and cyclical costs that tend to be higher earlier in the year. Our gross and EBITDA margins during the quarter came in at 59% and 20% respectively. Our first quarter gross and EBITDA amounts came in at $29.8 million and $10.1 million, respectively. We are once again very excited about the beginning of the year from an operational perspective and know that the fast start will translate into solid financial performance throughout the year. Our SG&A for the quarter totaled approximately $24.8 million compared to $19.8 million in the first quarter of 2023. G&A as a percentage of revenue decreased from 50% during the first quarter of 2023 to 49% during 2024 and continues our theme of managing our G&A well. As mentioned, certain items such as payroll taxes and PTO accruals reset in the first quarter each year. Therefore, the sequential comparison from Q4 to Q1 is always a challenge. We expect our annual margins to approximate prior years as these items normalize throughout the year. We will continue to invest in our patient and employee experiences and once again expect to grow revenues at a faster rate than expenses. For the quarter, we invested approximately $5.8 million on capital expenditures, spread out amongst our various respiratory products. We continue to allocate capital across a diverse supplier network and once again have had no problems with procuring the equipment necessary to service our growing patient base. We have once again funded our CapEx out of discretionary cash flow and continue to manage the business in order to drop free cash flow onto the balance sheet. Our percentage of CapEx to EBITDA was healthy at 57%. We will continue to disclose our annual discretionary free cash flow but the quarter fluctuations in that metric make it less relevant. This quarter, in particular, saw a lower cash build and significant increase in our accounts receivable. As most everyone is aware, the cyber attack on Change Healthcare during February has put some operational and financial stresses on the health care system. As we briefly discussed during our last call, our team began to redirect certain claims during March to alternate payment clearing houses. While we were able to move swiftly on some of our larger carriers, the process to redirect all of our payers remains ongoing. We are confident that we have moved the majority of the dollars and have seen payments pick up over the last few weeks. We are optimistic that the vast majority of the delayed cash deposits should be caught up by the end of the second quarter. Our goal currently is to make sure the changed situation turns out only to be a delay in cash collections. And in order to do that, our team is working diligently to make sure all claims are filed and accepted through alternate options. I'm very proud of the revenue cycle team, along with our workflow partner Bonafide and the diligence that we have shown in this process. Our capital allocation opportunities remained consistent with last year, and we will reiterate that our organic growth is the highest priority. Our inorganic growth, debt paydown, and then equity buybacks continue to fall into the second through fourth slots as priorities. We are happy to have recently announced our first joint venture and also remain very proud of our pristine balance sheet. We ended the quarter in a net cash positive position once again and have total long-term debt of $5.9 million. Our working capital at the end of the quarter was $8.4 million. All in all, we remain excited and proud about all of our metrics and continue to look forward to upcoming quarterly results. Moving on to the second quarter, we have provided net revenue guidance in the $53.8 million to $54.8 million range related to our core business, which includes approximately $1 million related to the recent joint venture. The midpoint of our net revenue guidance is up 25% over the core revenue in the second quarter of 2023 and is showing extremely impressive sequential growth. As stated last quarter, the first quarter brings some seasonality challenges, but our operational success during the quarter has set up a path to rapid growth throughout the year. We remain active in our discussions with investors and analysts and once again have seen our U.S. institutional ownership increase over the last couple of quarters. We remain excited about telling our story of growth and see the current market as an opportunity to attract new investors. At this time, I'm going to turn the call back over to Casey to wrap things up.

Thank you, Todd. As we reflect on the remarkable achievements of the first quarter of 2024, we are filled with a profound sense of optimism and enthusiasm for our journey ahead. Throughout the call, we've discussed our robust financial performance, strategic initiatives, and the resilience of our team in the face of challenges. Our view of the emergence of GLP-1 drugs is aligned with the data available and should be a major opportunity for us. The technological advancements of mainstream wearables hold the potential to revolutionize the diagnosis and management of home sleep studies and drive tremendous patient volume our way. Despite encountering some cash flow disruptions related to the Change Healthcare situation, our unwavering commitment to operational excellence has propelled us forward, ensuring that Viemed remains well-positioned for sustained growth and success. The first quarter of 2024 marked a significant milestone for Viemed, with our net revenue growing by an impressive 28% compared to the same period last year. Looking ahead to the second quarter and beyond, we remain extremely optimistic about our prospects for continued growth and success in all of our core products. Our guidance for net revenue reflects our confidence in the strength of our core business and the effectiveness of our growth strategies. As we embark on this exciting journey, we are deeply grateful for the ongoing support and confidence of our investors, analysts, employees, and partners. Together, we will continue to push the boundaries of innovation, drive positive change, and deliver superior value to all stakeholders. Thank you once again for your continued trust and support. We look forward to sharing our progress with you in the quarters to come. This concludes our prepared remarks. Thank you. We'll now open up for further questions.

Our first question comes from Brooks O'Neil with Lake Street Capital Markets.

I want to welcome Glen and express my happiness at having a new face on board. I believe he will be instrumental in attracting new investors. To begin, I'd like to ask a question. I understand that it's not your responsibility to align with my modeling, but the expenses were a bit higher than my projections for Q1. If I heard correctly, you attributed most of that to seasonal factors in Q1. However, are there any specific expense items that you would identify as more of a trend rather than just typical seasonal fluctuations?

No, not at all, Glen Brooks. If you look back to the first quarter of last year, we experienced a similar trend. Things reset at the beginning of the year. When you compare our margins from the first quarter to the previous first quarter, they are not really out of the ordinary. We are completely confident that expenses as a percentage of revenue will be in line or likely much better than last year. As I mentioned in my prepared remarks, we believe margins will remain relatively flat, depending on various factors such as diversification, but we are confident that nothing is indicating a negative trend.

Yes. That's great, Todd. Let me just ask you this. I don't think I recall hearing or thinking a lot about sales force restructuring. Are there any notable things you'd call out that you did that you think truly will drive, I mean, obviously, a 30% improvement in productivity is pretty good. So that's fantastic. But what is it exactly that you guys did that you think has unlocked some of the productivity of the sales organization?

Well, I think the most important driver right now is the fact that we've extended our reach with promoting 12 more territory managers. Those 12 managers are now out in the field working with veteran reps and new reps, helping them with training and development and so on and so forth. If you think about last year, we had 3 sales trainers and 3 managers doing that same work. So we've doubled the ability to get our experienced people out into the field. That's producing at a higher rate. We're actually doing some cleanup work. So the good news is we're doing all of this growth with a little bit less reps than we did last year. However, we are set up to grow at a higher rate now and expand with new reps. We just saw a major opportunity in the restructuring, and really the main thesis was, let's get our middle-tier reps up to top-tier reps and that's working now. So we're very excited about it. And, I mean, I think the best is yet to come because we're really just getting started with it.

Great. Great. So my last question is you guys hit on two of the big topics going on in health care today, the GLP-1s and the Change Healthcare thing. So I guess I'd be remiss if I didn't ask you about, is there going to be any impact business from AI.

There already is some machine learning. We hesitate to call it AI, call it machine learning. We've developed our own tool here in-house that is going through some of the HIE exchanges, health information exchanges that are with the Ethicon Cerner and have all the hospital info into them to find some of the missing data that we require for our reauthorization. And that's exciting because it's getting smarter every day and starting to help us operationally. Now on the back end of that in terms of just exploring AI solutions, we've had all of our head lieutenants, all of our VPs to go out and uncover solutions that will help us. And I will say that we're vetting a number of them right now that stand to improve operations and efficiency. So I'm excited about this movement. We've got our own tool in-house, and we've got others that we're going to lean on through various vendors.

And our next question comes from Doug Cooper with Beacon Securities.

Let's discuss the sequential growth, which stands at 7% and is quite impressive. Is there a specific product responsible for this growth, such as sleep, or is it more evenly distributed among various products?

This quarter, I would say the strongest performers were Vince and sleep, just from a 40,000-foot view. ReSupply had a really good start to the year, and Vince, like Casey said, is 30% higher in productivity this quarter compared to last year. So everything performed well across all the product lines, but those are the ones that stand out to kind of buzz that led the charge.

Okay. You see, obviously, early in the game here, we're not even halfway through Q2, but do you see that 7% sequential growth continuing for the balance of the year, that would put you pretty much far in advance of where we're modeling right now.

I believe that Q2 showed a 5.5% growth compared to Q1, and we are very optimistic about the current setup.

Okay. The expiration of the 75-25, what was the actual impact of that? And then that was offset by what CPI increases and obviously just some growth in the business. Can you segment those items?

I will exclude growth from the calculation and mention that nearly $1 million, slightly less than that, was the impact from the Viemed-HMP complex combined at a 75-25 ratio. The CPI adjustment was a bit higher than that. I estimate a benefit of around $0.25 million from rate changes, while the rest relates to normal operations. Although our net revenue remained flat, I assess growth on a gross basis and note that we added approximately $2.5 million to the allowance this quarter. This represents the growth aspect you inquired about.

You mentioned the GLP-1 drugs and referenced a ResMed study. Following that study, another company released their drug specifically aimed at sleep apnea rather than weight loss. Do you have any thoughts on that?

I didn't really have the opportunity to look into the study comparing the safety of their drug to GLP-1 receptors yet, Doug. So I prefer not to provide any comments on it.

I don't think it's been released yet. I believe there are only highlights available. I think the study is still not clear, right?

Yes, it's underway. I mean, I think, look, here's the most important piece that we got just from the ResMed comments and their analysis of their 600,000 patients that were on path. And it does show that it reduces AHI, which it may bring a CPAP patient from severe down to moderate. But what they're seeing is a spike in volume of the patients that are going in to analyze their weight gain or weight loss scenario, doctors are still saying, look we can put you on this drug and we'll get you down 40, 50 pounds, but you're still going to have moderate sleep apnea and sleep apnea will be a part of your program in conjunction with the GLP-1 drug. So ResMed and our view as well, because of our numbers and because of the growth that we've been experiencing in sleep throughout the country for the last 1.5 years, 2 years since these drugs have been out, it's kind of proven that these things are going to help with our growth versus be against us. And so we're excited about that. And I think that all the technology on the back end that I was talking about in the call with making home sleep testing more mainstream to wearables is going to just drive more and more patients into addressing their sleep concerns, which should play into our hands down the road as well.

So two follow-ups on that, Casey. Just what do you think the regulatory reimbursement? Will there be any change in that given what's happening in the industry, part A. And B, your M&A strategy going forward. Is it focused on respiratory still or sleep and/or other areas? And have you seen multiples come down that people want to pay? Obviously, the public companies have taken it to a pretty big multiple hit turned over the past few months.

Yes, we haven't observed much change in multiples. Our focus on respiratory remains a priority as we consider M&A targets. There are additional products from some of these targets that interest us, which differ from what we currently have. I mentioned HMP and how their expanded business, which encompasses a full range of durable medical equipment, was a significant factor in our discussions that led to our first joint venture. This experience made us realize that a comprehensive offering may be precisely what the joint venture and hospital systems require. We are currently developing this model and its complete value proposition as we engage with other joint venture prospects across the country. Therefore, our M&A strategy has evolved; we are not solely targeting respiratory durable medical equipment but also pursuing hospital-owned DME that provides a more comprehensive range. We have already initiated discussions with those companies and have them lined up in our pipeline.

Okay. And just one last one for me, if I could. Todd, the resupply revenue, I think last quarter was $5 million on 33,000 patients. Do you have just an update on what it was this quarter? Revenue in patients was?

It looks like I currently have that at $4 million. So $5 million might be a little high because I think we're seeing an increase quarter-over-quarter, but I'll have to confirm that later.

And our next question comes from Alex Graf with River Ridge Capital.

Just had a quick one on the automating of reauthorization. Could you maybe give us a better sense of a little bit more granularity in terms of what resources will be freed up and how Viemed intends to see those resources?

Yes. Currently, we are piloting our proprietary Engage software to streamline compliance by downloading loads, and we are also utilizing an internally developed tool to search through the health information exchanges mentioned earlier. If we can successfully match a quality download with adequate notes, it will free up several team members. Our corporate office team, which handles data collection, could see reduced workload, as could respiratory therapists who would no longer need to visit homes to retrieve machine downloads, and salespeople who won't have to contact physician offices for notes during challenging situations. While we haven't fully realized these benefits yet, this initiative is ongoing. Ultimately, this approach allows salespeople to focus on selling, therapists to assist more new patients, and the back office to process more orders efficiently.

Understood. That's helpful. So I guess overall takeaway should be that, that largely should help kind of build revenue and become more efficient from a cost perspective. So in terms of costs as a percentage of sales, do you guys think this initiative should lead to an improvement of that or continued improvement.

Yes. I also believe that if we can do this more promptly, we can process reauthorizations more quickly, which will reduce the time people spend on hold. This should enhance our overall outcomes. Whether by utilizing our technology or increasing staff to minimize wait times for patients, we are consistently looking to make improvements.

Our next question comes from Jeff Bronchick with Cove Street Capital.

Could you elaborate on your comments regarding the receivables related to the UNH situation? Are there any concerns, or is it so complicated that it might result in a write-off that isn't significant? How is this situation impacting us financially?

Yes. At this stage, our primary focus is to prevent any write-offs. Currently, we are experiencing a cash flow impact and are approximately $4 million ahead in accounts receivable compared to cash collections for the first quarter. We have been working to reduce that number, but it requires adjustments on a carrier-by-carrier basis from Change Healthcare to an alternate clearing house. It's essential to have the data organized and to ensure that once changes are implemented, they are accepted without rejection. There is still more work to be done, but our team is dedicated to ensuring that smaller carriers can process claims without delays that would lead to issues with timely filing in six months. At this moment, we do not anticipate any additional write-offs, and I am confident in this statement, though it requires ongoing effort. The entire industry is currently facing similar challenges.

And just again, just when you recap the regular environment, and my guess is nothing happens this year because it's an election year. But maybe just talk about some of the things that aside from the 75-25 that have come up or not are positive or not just an overall viewpoint.

I'll take that question. Some of the positive developments we've noticed from a regulatory standpoint have emerged on a state-by-state level. There's a practice known as step therapy, where certain payers' medical policies require patients to attempt and fail using a less effective device before approving a ventilator. This adds another layer of authorization and places an unnecessary burden on patients, who must document their struggles with the lesser device before they can obtain a ventilator. This is unacceptable, especially since there is no clinical evidence supporting this approach. We've successfully changed legislation in places like Oklahoma and Louisiana, and we're currently working on similar efforts in Louisiana and Mississippi, which have faced little opposition because it makes sense. We're also seeing similar efforts gaining traction in Washington, D.C. Home Care, one of our industry associations, is supporting this initiative and spreading the message nationwide. Overall, I consider this a significant win for us. We've dealt with this burden for the past couple of years, so any relief would be greatly beneficial. Beyond that, there are a few regulatory matters that don't greatly influence Viemed, such as those related to diabetes. Overall, we are stable regarding the factors affecting our business. The only thing outside of the 75-25 ratio that impacts reimbursement isn't a significant pressure for us. Therefore, we're quite pleased with the current regulatory environment, which is the most stable it's been since I started running the business.

Yes. I want to add that we frequently receive questions about competitive bidding and whether it will return. While we can't definitively say yes or no, there's a possibility it might come back. We're approaching a point where we feel confident it won't be in place by 2025. Typically, announcements are made about 18 months in advance. Therefore, if we don't receive any updates from CMS in the coming months, we will likely conclude that it won't be applicable for 2026 either. We're not concerned about competitive bidding, as we participated in the last round which was canceled. However, we don't anticipate its return in the near future due to the way it has been managed if it does come back.

There are no further questions at this time. I'll hand the floor over to Todd Zehnder for closing comments.

All right. We want to thank everybody for their participation, and please follow up if you have any additional questions.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.