Viemed Q4 2024 Update - $VMD

Quick update after Q4 2024

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

Price: $7.68 USD

MC: 318 million

EV: 308 million

1 year performance: -18%

VMD reported last night and held a call this morning. Results were a bit ahead of my expectations and the stock is up 3-4%.

*all numbers in USD unless stated otherwise

Quarter Recap

• Revenue came in at 60.7 million for the quarter vs 50.7 million last year.

• EBITDA came in at 14.2 million vs 12.8 million last year.

• Vent patients are at 11,795.

  • Up 14% yoy and 4% sequentially.

• PAP therapy patient count up to 21,338.

  • Up 43% yoy and 10% sequentially.

• Sleep resupply patient count up at 24,478.

  • Up 29% yoy and 11% sequentially.

• For the first time they issued full year guidance.

  • Revenue of 254-265 million. Up 16% at midpoint.

  • EBITDA of 54-58 million. Up 10% at midpoint.

  • This guidance includes a “typical” season dynamic to the business with Q1 being softer than Q4 with revenue ramping from there.

Call Notes

• They feel they have transitioned from being labeled a HME provider to a in-home clinical provider.

• They are not sure how the tariffs will affect the supply of the equipment. Their equipment is sourced domestically, but may have components supplied from outside US.

• They don’t know what the impact will be with the new administration, but they feel they are well positioned for a push for efficiency in hospital spend.

• Length of stay for vent patients has been stable at 17 months.

• The JV with East Alabama Medical seems to be going well, but they will be looking at larger ones in the future to justify the time and energy it takes.

• Feel it’s a better M&A environment for them than the Biden years.

• Nothing to note on the competitive bidding front. Seems like we are stable for 2025/26.

• Staffing division still growing.

• They shared some interesting stats on their market:

  • Ventilation

    • COPD alone is 25 million.

    • 2.5 in last stage of the disease.

    • 1.25 million reached chronic respiratory failure requiring their ventilation.

    • Industry penetration is in high single digits.

  • Sleep

    • Estimated 80 million suffering from sleep apnea and undiagnosed.

    • GLP-1 introduction has more people seeking PAP treatment.

    • And this increase in patients means more resupply.

Valuation

I have them at 6x EV/EBITDA on a trailing basis. And about 5.5x EV/EBITDA forward looking at the midpoint of guidance. I have a suspicion that they are being quite conservative on the EBITDA number for 2025, but we will have to wait and see.

Closing Thoughts

This was another good quarter for VMD. The business is growing nicely, although it does require capital to grow. They have navigated quite a bit of change since the pandemic and have set up the business for the future. I think it’s safe to say that the GLP-1 “threat” is actually a tailwind. Who would have thought.

The valuation is very reasonable in my mind. The last time we seen the company this cheap was when there was margin compression after they were transitioning off covid related revenue. It’s a bit puzzling for me to understand as they are executing very well and the market does not seem to care.

On top of the continued organic growth, there is a better M&A backdrop that they can take advantage of.

I hope this doesn’t get scooped up with this low valuation.

VMD continues to be a large position for me.

Thanks for reading.

Dean

* long VMD