Viemed Q2 2024 Update - $VMD
Quick update after Q2 2024
*Disclosure: I own shares in VMD. I am not a professional. Please do your own due diligence.
Price: $7.26 USD
MC: 294 million
EV: 298 million
1 year performance: -12%
VMD reported on Wednesday last week after the close and held a call Thursday morning. Results were ahead of my expectations and the stock was up 8-9% on Thursday.
*all results are in USD unless stated otherwise.
Quarter Recap
Revenue came in at 55 million vs 43.3 million last year.
That’s up 27% year over year ad 9% sequentially.
Gross profit was 32.9 million vs 26.1 million last year.
EBITDA came it a 12.8 million vs 9.8 million last year.
Vent patients were up to 10,950 from 10,450 in Q1 2024.
They had an impairment of 2.173 this quarter, more details below.
Guidance midpoint is for 15.6% growth for Q3.
AR still elevated due to the Change Healthcare cyber attack.
Call Notes
HomeMed integration is on track.
The sales force restructuring is going well.
There was a 15% increase in average monthly vent setups per sales rep.
Sleep is not 15% of total revenue.
AAHomecare is pushing to reinstate the 75-25 blended rates.
This is telling as it’s a national association advocating rather than specific companies like VMD.
Vent revenue is 56% of total vs 60% last year.
The impairments are for an increase in reserve against a former vendor filing for bankruptcy as well as a mark down of an investment they made.
Philips recall is presenting an opportunity to upgrade their fleet of vents. So far they have sold back about 15%.
They don’t have an exact number of sleep patients who are on GLP-1 drugs, but feel the industry average of around 12% is a reasonable expectation.
Valuation
I have VMD trading at about 6x EV/run rate EBITDA. It would be about 5.3x EV/forward EBITDA. This does not include any potential M&A and modest organic growth.
Closing Thoughts
The company is executing well. Despite the negativity around GLP-1 drug impact, VMD is showing no sign of slowing down. Also as AR comes down the balance sheet will strengthen. Valuations are being compressed mainly due to the GLP-1 drug potential impact. OMI recently acquired Rotech (private) for about 6.3x EBITDA. My opinion is that Rotech business is not as high quality as VMD.
Below are the last 5 years of EV/EBITDA for VMD. I think 10-12x EV/EBITDA is fair for VMD.
Thanks for reading.
Dean
* long VMD