Viemed Quick Update - $VMD
Quick update after Q1 2024
*Disclosure: I own shares in VMD. I am not a professional. Please do your own due diligence.
Price: $7.66 USD
MC: 310 mil
EV: 313 mil
1 year performance: -29%
VMD reported Monday after the close and held a call yesterday morning. Revenue was ahead of my expectations and EBITDA was a tad below. The stock was off almost 7% yesterday. I think the market was expecting higher EBITDA margins.
Quarter Recap
Revenue of 50.6 million.
up 26% yoy (including the HMP acquisition).
EBITDA of 10.2 million.
up 21% yoy.
They guided for 53.8-54.8 million in revenue in Q2.
This equates to about 7% sequentially.
Call Notes
They took a hit to FCF due to the disruptions from the cyberattack at Change Healthcare. They have been slower to receive payments. They are working to not take a write-off due to the disruption. It sounded like they would be able to get back to a more typical level of working capital by the end of Q2.
They mentioned that the GLP-1 drugs seem to be a tailwind at this point. As a patient seeks treatment for sleep apnea they may get multiple treatment options including something offered by VMD.
There were some higher costs from a seasonal basis that impacted margins this quarter.
They announced a partnership with East Alabama Health finalized April 1. Though small in nature, they are optimistic about having more of these in the future.
They were quite confident that the rest of the year was going to be strong revenue growth and normalized margins.
Valuation
I have them trading at a bit under 6x EV/run rate EBITDA. This is pretty cheap in my opinion given the 15-20% organic growth and M&A potential.
Closing Thoughts
To me VMD is executing well. Anything healthcare related to GLP-1 drugs seems to be out of favor at the moment. The market doesn’t like the uncertainty of the long term impact of GLP-1 drugs on the business. I am betting the market is overreacting.
You can see some peers trading at lower valuations than in the last 3 years. Below is AHCO and OMI.
Thanks for reading.
Dean
* long VMD
Regarding “cyberattack at Change Healthcare” VMD is not the only one that is going through the problem (most of us in the industry, does… I would even say all?) so at some point I think 99.9% or close to it would be recouped … you could even look at it as tailwind because smaller players who got hit , either would had to close down or take a loan to “survive “ the surprised cyber attack/ closing of the revenue stream