Viemed Q1 '25 Update - $VMD

Business looks strong, share price not so much.

*Disclosure: I own shares in VMD. I am not a professional. Please do your own due diligence.

Price: $6.42 USD

MC: 267 million USD

EV: 263 million USD (not including announced acquisition of Lehan’s)

1 year performance: -11.7%

VMD reported last night and held a call this morning. The top line was a bit behind my expectations, but EBITDA was a bit ahead. Guidance was decent in my opinion. The stock is down 11.7% on the day.

*all numbers in USD unless stated otherwise

Quarter Recap

• Revenue came in at 59.1 million vs 50.6 million last year

  • This is an increase of 17%

• EBITDA came in at 12.8 million vs 10.1 million last year

  • A 21.6% margin

• Vent patient count up to 11,809 or 13% year on year

• PAP therapy patient count at 22,899 or up 7% sequentially

• Sleep resupply patient count down 6% sequentially to 22,941

  • Up 21% from Q1 2024

• They raised the low end of the annual guide to 256-265 million in revenue and 55-58 million in EBITDA

  • This does not include the recently announced acquisition that should close in Q3

• This is in the 10-Q regarding CMS (Centers for Medicare & Medicaid Services) NCD (National Coverage Determination)

  • CMS released a proposed decision memo on March 11, 2025, and a final determination is scheduled for June 9, 2025, although the timing may be extended or delayed. We have actively participated in the coverage analysis process, including the submission of formal comments, and we continue to engage with CMS, the Department of Health and Human Services, and members of Congress. The issuance of a revised or new NCD that clearly defines medical necessity criteria for ventilator use could significantly affect patient access, reimbursement, and utilization of ventilator therapies, and may have a material impact on our business.

Call Notes

• Ahead of where they had anticipated for Q1

• Vent revenue

  • Down 3% sequentially

  • Up 10% yoy

  • Result of sales restructuring last year

  • Now 54% of revenue

• Sleep

  • up 7% sequentially and 40% yoy

  • Sleep at 16% or revenue

• Staffing at 10% of revenue

• Oxygen at 10% of revenue

• Regulatory

  • CMS proposed non-invasive NCD

  • Comments due by April 10

• Acquisition of Lehan’s Medical Equipment

  • 80 year old family owned

  • Respiratory care and women’s health

  • Relationships with payors in Illinois

  • Can expand their products to rest of country

  • Can take VMD sleep and vents into Illinois

  • Has 6 locations

  • Double digit growth in their existing locations

  • They are looking to increase that growth into geographies where VMD already has a presence

  • Lehan’s has a larger amount of resupply revenue and therefore higher EBITDA margins

• Capex

  • Accelerated vent exchange with Phillips

  • Half of fleet refreshed at cost of 1 million

  • Capex should normalize in H2 2025

• Tariffs

  • 2025 supplies locked in

  • No material impact in the current year

• Guide

  • Expect yoy increase in revenue

  • Sequential revenue growth of 5-9%

  • Not including acquisition

• VA is dead

  • They mentioned that there has been too many changes with

Valuation

VMD is trading at about 5.2x EV/ttm EBITDA. The midpoint of their guidance gets them to 5x EV/2025 EBITDA. If we look ahead to 2026 with Lehan’s included, I get roughly 4.7x EV/EBITDA without much growth consideration.

Closing Thoughts

The CMS NCD really spooked investors. It could be very meaningful in the short term. We will have to wait and see if/how it impacts VMD. They have been through competitive bidding in the past and managed to come out the other side.

In the meantime they are executing well. The Lehan’s acquisition is a great example of what the team at VMD is capable of. It’s a great add in, expands their geographical reach and product portfolio.

Thanks for reading.

Dean

* long VMD