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Date
Thursday, August 7, 2025 at 11 a.m. ET
Call participants
Chief Executive Officer — Casey Hoyt
Chief Operating Officer — Todd Zehnder
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Takeaways
Total revenue growth-- Revenue increased 14.7% year over year in fiscal Q2 2025 (period ended June 30, 2025), driven entirely by organic growth.
Core ventilation segment-- Accounted for 54% of revenue in fiscal Q2 2025; vent revenue grew 5% sequentially.
Sleep therapy segment-- Sleep therapy patients increased 15% sequentially.
Resupply program-- Patient count increased 10% sequentially. Further growth is anticipated as therapy patients enter the program after a typical lag of three to six months.
Staffing segment-- Contributed 8% of total revenue. Experienced a sequential decline due to softened labor demand.
Oxygen business-- Represented 10% of revenue in fiscal Q2 2025.
Gross margin-- Sequential improvement from fiscal Q1 2025 was attributed to growth in the sleep business.
Adjusted EBITDA-- Adjusted EBITDA grew 12% year over year to $14.3 million. Adjusted EBITDA margin was 22.7% in fiscal Q2 2025, compared with 23.3% in fiscal Q2 2024.
SG&A efficiency-- SG&A declined to 45.7% of revenue.
CapEx normalization-- Following the completion of the ventilator exchange program in June, CapEx is expected to normalize for the remainder of 2025.
Share repurchase program-- Initiated a 5% share buyback; by June 30, 2025, approximately 270,000 shares had been repurchased and canceled at a total cost of $1.8 million.
Liquidity and balance sheet-- Ended the quarter with $20 million in cash, $55 million available on credit facilities as of June 30, 2025, a $30 million accordion, $18 million in working capital as of June 30, 2025, and no net debt.
Acquisition of Lehan’s Medical Equipment-- Transaction closed July 1 and was funded with $9 million in cash and $18 million in borrowings on the credit facility at transaction close on July 1; Lehan’s expands Viemed Healthcare’s product mix into maternal health and broadens distribution for respiratory and sleep offerings in Illinois and Wisconsin.
2025 full-year guidance raised-- Net revenue guidance increased to $271 million-$277 million for fiscal 2025, implying 22% growth over 2024 at the midpoint. Adjusted EBITDA guidance raised to $59 million-$62 million for the full year, primarily due to Lehan’s integration.
Regulatory update: NCD final rule-- Management called the finalized National Coverage Determination (NCD) “a major opportunity”; the rule reduces step therapy requirements and is expected to “reduce our operational lift of swapping out equipment” as a result of the NCD final rule.
Competitive bidding outlook-- The possible return of competitive bidding was addressed, with earliest potential impact in 2027, and management asserted the company is “well-positioned to navigate any future iteration of the program.”
Summary
Management attributed all year-over-year revenue growth in fiscal Q2 2025 to organic expansion, not acquisitions. The Lehan’s Medical Equipment acquisition diversifiesViemed Healthcare(VMD 0.70%)'s revenue base by adding maternal health offerings and expanding market reach in Illinois and Wisconsin. CapEx normalized after the completion of a fleet-wide ventilator upgrade program in fiscal Q2 2025, which produced one-time gains and operational efficiencies. The board initiated and began executing a 5% share repurchase in fiscal Q2 2025, using available liquidity without adding net debt. New regulatory and competitive bidding updates present policy-driven growth opportunities, with management citing preparedness through both technological investment and operations.
Chief Operating Officer Zehnder stated that Lehan’s integration prompted higher full-year 2025 guidance for both revenue and adjusted EBITDA.
The sequential decline in the staffing segment was attributed directly to a softened labor market.
SG&A decreased as a percentage of revenue to 45.7%, due to continued leveraging of investments in sales talent and technology.
“The industry is still working through a handful of specifics and open questions with CMS, but their response has been very encouraging.” as stated by CEO Hoyt regarding regulatory shifts.
Gross margin percentages will become less relevant as the product mix continues to shift toward CapEx-light segments such as sleep resupply and staffing, as discussed by management in the fiscal Q2 2025 earnings call.
Industry glossary
NCD (National Coverage Determination): A U.S. federal policy issued by CMS (Centers for Medicare & Medicaid Services) specifying coverage criteria for medical technologies or therapies under Medicare.
Step therapy: A protocol requiring patients to try less expensive or more established treatments before gaining access to costlier or newer therapies.
Accordion (in credit facilities): An option in a loan agreement that allows the borrower to increase the total borrowing capacity on pre-negotiated terms.
Full Conference Call Transcript
Casey Hoyt: Okay. Thank you, Trey. Good morning, everyone, and thank you for joining us today. First and foremost, I want to give a big shout-out to our more than 1,200 employees and publicly welcome our newest family members from Lehan's Medical Equipment. Thank you for all that you do to care for our patients, providers, partners, and each other. We continue to grow Viemed Healthcare, Inc.'s trusted place in the home. We have an incredible team, and each of you is making a difference in the lives of our patients. This quarter underscores a clear theme. Our disciplined execution of the long-term strategy is driving tangible, measurable results.
We sustained impressive growth in our core in-home ventilation business, where we've established ourselves as a national leader and innovator. For the seventeenth consecutive quarter, we increased our active ventilator patient count at a strong and steady pace. That kind of consistency and scale doesn't happen by chance. It happens because we built the best-in-class clinical and operational model that addresses the deeply underserved population. We continue to expand our leadership in this critical area of care. At the same time, we're seeing even faster growth in our complementary product offerings. Especially sleep and resupply have been long strategic priorities. These offerings were developed intentionally to meet the evolving needs of our patient base. Results are clear.
Both sleep therapy and resupply have shown strong sequential and year-over-year growth, accelerating the diversification of our revenue mix and strengthening our margin profiles. Building on this momentum, we are successfully advancing another layer of the strategy, expanding our addressable at-home market. The recent acquisition of Lehan's Medical Equipment marks a critical step forward in this initiative. With Lehan's, we're entering the maternal health space, further diversifying our patient base and leveraging Viemed Healthcare, Inc.'s national infrastructure and payer relationships to reach new patient populations earlier in their healthcare journey. At the same time, we're using Lehan's footprint to expand our existing complex respiratory and sleep offerings in Illinois and Wisconsin, just as we've done organically in other markets.
Lehan's brings a scalable platform focused on maternal health, introducing a new population for us. Fulfillment technology aligns with our resupply model. With our payer relationship at Xtend nationally, we are well-positioned to grow this service beyond Illinois and Wisconsin. This represents a natural and strategic extension, reaching patients earlier in their care continuum, with the same operational discipline and compassion that define our respiratory services. Ultimately, the goal is to serve patients from the beginning of life through to the end, every stage in between. Our organization continues to become more efficient every quarter, supported by the fact that we've been able to enhance our growth while leveraging our cost structure. We are proud of our progress to date.
This has clearly become a story of diversification and execution. Now let's focus on the performance within our business in more detail in 2025. This accounted for 54% of our revenues and remained the strong performing product sector once again this quarter. Vent revenue was up 5% sequentially and up 11% year over year. This steady, reliable growth reinforces the strength of our core business. Right now, we're seeing our fastest growth in the sleep business. During the quarter, therapy patients were up 15% sequentially and 51% year over year. New patient setups were up an incredible 72% year over year.
We're focused on aggressively maintaining this growth trend with eight new sleep areas launched since the beginning of the year. We're seeing a similar growth trajectory with our patients in our resupply program, which was up 10% sequentially and 25% year over year. With the rapid growth of new patient starts and patients under therapy, we're expecting to see strong growth in resupply in the back half of this year and beyond as these patients get pulled over the entire program. We are also pleased to see an influx of patients transferring their sleep resupply needs to our program from our competitors.
This is a signal that our care continuum is working efficiently and solves a real problem for sleep patients and referral sources. While our staffing business was up year over year, for the first time, we did experience a sequential slowdown during the second quarter resulting from a softened labor demand. This business has seen significant growth over the past two years, and we believe we'll be on a more normalized pace going forward as we close on contracts that will be fulfilled throughout the back half of the year. Last quarter, we discussed some of the new regulatory announcements that have been recently introduced.
Now that the final rule, or what we anticipate is close to final, is in place on the NCD, I want to provide some color around what we're thinking. Overall, we're pleased with the NCD final rule. It's a major opportunity in terms of what we've been fighting for as a collective industry and as an individual company. The big win is that the tried and failed approach on BiPAP and step therapy is both. That's a huge victory for patients because the MA plans they're leaning on the step therapy as a means to divert and defer using non-invasive ventilation on patients.
Now, all the M and A plans will have to follow the NCD, making this less burdensome for the patient and reducing our operational lift of swapping out equipment. The new STD does require a document and report usage metrics on the patient. However, we've been preparing for this requirement for a while, and we are ready with our Engage Care Manager technology platform, which has been designed to help us document usage and compliance. The last point I'll make here on the NCD is that not everyone in the industry is ready for this. We believe the mom-and-pop operators who don't have the scale may struggle with this NCD.
We expect this could lead to some asset opportunities down the road or possibly industry consolidation. This is where our business model, which emphasizes improving quality of life across the full patient journey, not only benefits patients but also positions us to operate effectively in an increasingly complex environment. We're pleased that CMS heard us on the patient's struggles and connected with just how effective noninvasive ventilation is for this high-touch COPD population. The industry is still working through a handful of specifics and open questions with CMS, but their response has been very encouraging. A home care noted it's never seen such an abrupt shift.
What was originally proposed and what we ended up with as they acknowledged the patient concerns. The other recent news that the potential return of competitive bid for DME is now being discussed by this administration. As before, we remain well-positioned to navigate any future iteration of the program. Our view is that the more providers tend to succeed in the competitive bidding environment. Although CMS has not indicated when the program might resume, the typical twelve to eighteen-month implementation period following rule finalization suggests that the earliest it could take effect is 2027, with a possibility of delays taking it into 2028 or 2029.
The good news is, thanks to the recent NCD resolution, our industry has never been more aligned and well-positioned to educate regulators and present solutions nationwide. Overall, we're proud to be so well-positioned in the current environment. This quarter's results reaffirm the resilience of our model and the discipline of our execution. We said we would need complex respiratory care. And we've delivered 17 quarters of consecutive growth in our core ventilation business. We said we'd scale complementary services. Sleep and resupply are now our fastest-growing segments. We said that staffing would enhance our ability to meet clinical demand across the organization while adding a new layer of diversification.
And today, accounts for approximately 10% of our total revenue with 75% of the offering supported by behavioral and social service needs. We said we'd expand through disciplined M and A. Our successful integration of H and P and Home Ed proved that we had the team to do so. And now our transaction of Lehan's Medical stands to prove we are headed towards another frontier of delivering on diversification, to a new batch of patients in maternal health. This is just progress. It's execution at the highest level. It's proof that our long-term diversity was delivered and our vision is coming to fruition.
We are more confident than ever in our ability to keep delivering further value for our state. For more on our operational and financial results for the quarter, I'll now turn it over to Todd Zehnder, our Chief Operating Officer. Todd?
Todd Zehnder: Thank you, Casey. Reviewing the financial results, all figures are in US dollars and the full results have been made available on the SEC website. In my comments today, I'll reference disclosures we have made available in our quarterly financial supplement. The supplement can be found on our IR website. Our year-over-year revenue increased 14.7% and was entirely driven by organic growth this quarter, keeping us within the range we had anticipated for organic growth during the year. The core vent business accounted for 54% of the revenue, the sleep business increased to 19% of revenues, the staffing business was 8%, and oxygen was 10% of revenue.
Gross margin was 58.3% for the quarter, compared with 59.8% for 2024 and 56.3% in 2025. The year-over-year decline was consistent with what we've been calling out the last several quarters. Namely, that while margins remain quite strong and steady in our core vent business, its percentage of overall revenue has declined year over year on a much larger base. The year-over-year comparisons for us on the gross margin line are becoming less relevant as we focus more on the CapEx light businesses such as sleep resupply and staffing, that allow us to leverage SG and A and drive net income, adjusted EBITDA, and cash flow growth.
That being said, we did see a sequential improvement from Q1 due to the growth in the sleep business outpacing the growth of all of our other businesses. When we layer in Lehan's in the second half of the year, we'll continue to see even more evolution of the gross margin as a less relevant measure. Adjusted EBITDA for the quarter grew 12% year over year to $14.3 million driven by strong organic growth and contributions from each of our businesses. Adjusted EBITDA margin for the quarter was 22.7% in line with our full-year projection compared with 23.3% a year ago.
We continue to leverage our investments in new sales talent and technology with SG and A at 45.7% of revenue in the quarter, a 250 basis point improvement year over year. This improvement not only puts us ahead of our original full-year projections but also sets the stage for continued SG and A leverage as we benefit from a more favorable product mix and sustained operational efficiencies. Turning to CapEx, recall that last quarter we introduced some incremental disclosure in our supplemental for net CapEx over the trailing eight quarters to highlight the impact of our vent exchange program with Philips.
This was a once-in-a-lifetime opportunity to upgrade our vent fleet and significantly extend the life of the fleet as well. We believe this program has set us up to support the continued growth we're experiencing from net vent ads. Now that we've completed the exchanges, we expect our CapEx to normalize going forward. We also expect this completion and the lower cash taxes from the final legislation packages to lead to improvement in our adjusted free cash flow sequentially through the balance of the year. We continue to fund our CapEx out of discretionary cash flow and manage the business in order to drop free cash flow onto the balance sheet.
Tariffs continue to be in the news but like others in our industry, we have yet to see a material impact. For 2025, our supplier contracts are already locked in, and we're in constant contact with our suppliers for any indications that tariffs could impact us. I would also note that we believe the Nairobi protocol should continue to exempt most medical equipment from any tariffs. Our balance sheet continues to create optionality for us to grow. As of June 30, we had $55 million available on our credit facilities and a $30 million accordion if needed. $20 million of cash on hand at quarter end, and a working capital balance of $18 million with no net debt.
This liquidity enabled us to put in place our third share repurchase program since going public. In early June, the board authorized us to repurchase 5% of our outstanding common stock. We wasted no time in executing on the program during the quarter. By June 30, we had acquired and subsequently canceled approximately 270,000 shares under the program for a total cost of $1.8 million. The share repurchases are an accretive use of capital and we have ample liquidity to fund the program and inorganic growth. The strong balance sheet gave us the confidence to pursue the Lehan's acquisition as well.
The transaction closed on July 1, and we funded it with a combination of $9 million of cash and $18 million of borrowings on the credit facility. We anticipate paying down this debt opportunistically. In conjunction with executing on the share buyback. Based on our results for the second quarter, and the inclusion of Lehan's effective July 1, we've raised our guidance for the full year 2025. Our net revenue range is now $271 million to $277 million, implying 22% growth over 2024 at the midpoint. We also raised the adjusted EBITDA range to $59 million to $62 million, which implies 18% growth over 2024 at the midpoint.
Both increases in the ranges are primarily related to the inclusion of Lehan's for the second half of this year. In our quarterly supplement, we provided some additional commentary and assumptions on our guidance. I'll cover these briefly. First, we still expect organic growth year over year in each quarter to be roughly consistent with increases we experienced in 2024. With the inclusion of Lehan's, we'll obviously see a bit more of total revenue growth than we had originally forecast. We expect organic sequential revenue growth in Q3 through Q4 to be in a range of 5% to 9%. The adjusted EBITDA ranges for the full year assume an adjusted EBITDA margin of approximately 22%.
With the completion of our ventilator exchange program in June, CapEx is expected to normalize for the remainder of the year. With two quarters of record revenue so far built on solid execution and organic growth, we're entering 2025 with even a stronger outlook. We've actively deployed capital into a tremendous growth opportunity in Lehan's, that sets us up nicely for this year and beyond. And we've used our available liquidity to repurchase over $1.8 million worth of shares in the second quarter with additional shares already bought during the third quarter. Thank you for joining us today. This concludes our prepared remarks. And we will now open up the floor for questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 to remove yourself from the queue. It may be necessary to pick up the handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Ryan Langston with TD Cowen. Please proceed with your question.
Ryan Langston: Thanks. Good morning. On the vent program upgrade and exchanges, can you maybe go into a little bit more detail on sort of the benefits of that move, I guess, both from a financial and a clinical perspective?
Todd Zehnder: Yes, sure, Ryan. I mean, the financial part is pretty clear. Philips ended up buying these back. The price that they paid us depended on the age of the vent. So we got cash back for the vent, which was generally higher than our net book value as you can see through the gains that came through the P and L. And the clinical, the true clinical value is that we got a vent that had a born-on date of this year versus vents that could be anywhere from five to ten years old.
So we got a new asset that had lower repairs and maintenance, didn't have to get PM'd as much, and a new what we depreciate, a ten-year life. The vents have obviously gotten more and more technologically favorable with Bluetooth connectivity, different features. So it's just been a good program. It's unfortunate that Philips had to go through it, but we took full advantage of it.
Ryan Langston: Got it. And I guess you know, Doctor Oznow has been kind of in his seat for a few months. You know, I think CMS has been fairly aggressive to some places like MA, home health, the OPPS rule in particular. I guess, do you have a view or do we know maybe what you know, he sort of thinks about DME in general? Thanks.
Casey Hoyt: Hey. Wish I knew what Doctor Oz was thinking, but, I mean, the administration has just shown that they're looking to cut costs in all sectors of government. And so the competitive bidding pressure is definitely coming from what we understand the White House level all the way to the top. But it's you know, they kind of really and they were the ones that initiated it the first go-round in the first Trump administration. So, you know, they took a page out of that playbook, but I was gonna cut that does it all refreshed it. Submitted it. So we'll just have to wait and see.
But you know, we're going through the same process as an industry to just kind of give them the feedback that they need to roll out a successful competitive bidding program because, you know, competitive bidding doesn't have to be a bad thing if it is structured the right way. And so that's the level that we're at. It's just providing a lot of education, a lot of feedback to Doctor Oz and his team.
Ryan Langston: Got it. Thank you.
Casey Hoyt: Alright. Thanks, Ryan.
Operator: Thank you. Our next question comes from the line of Ilya Zubkov with Freedom Broker. Please proceed with your question.
Ilya Zubkov: Good morning. Thank you for taking my questions. So I have a couple of questions on the revenue side. I see that there's been a notable uptick in sleep therapy patient count. Just curious whether there are any unusual factors that contributed to this growth.
Todd Zehnder: Nothing that we can point out, Ilya. I mean, obviously, we have grown our sleep sales staff some, but we've also just opened it up over the last few years of letting our entire Salesforce sell sleep. And as we become more sound and savvy, maybe more of those referral sources are sending more orders into us. We read everything like most of the investors do, and it does not appear that GLP ones are doing anything negative to us. It's maybe coincidental, but maybe not that our sleep business has been growing rapidly since GLP ones have come about.
So that might play into some of the manufacturer studies that show that people are taking sleep health a little bit more seriously as they lose some weight. So it could be a combination of all of that. We're very happy with the growth and the scalability of sleep around the country. As you can see, it makes 19% of our revenues now. And we're just gonna keep growing it as fast as we possibly can.
Casey Hoyt: Yeah. And I would add to that, Ilya, that you know, just a reminder when we're thinking about the sleep therapy patients, you know, we will see a lag between our pap therapy patients that then become three, six months later roll into our sleep program, and Casey alluded to that in his prepared remarks. And so we talk about new pap therapy setups being up 72% year over year, you're not gonna see that type of growth in the resupply. You know, it's gonna be delayed a little bit longer tail for another three to six months, which is really why we're excited about the back half of the year.
And then looking into next year, as you know, we have a more maturing sleep program.
Ilya Zubkov: Okay. Got it. Thank you. And could you also elaborate on the quarterly revenue dynamics in the staffing business? So what drove the decline in service revenue in Q2?
Todd Zehnder: Oh, well, 76% of the business is coming from behavioral health and social service needs and we're fulfilling it throughout the country with different state agencies and so on and so forth. So we're getting appropriations to do business and up to the state to let us know how many folks they need. But yeah, we're pleased with that shift in the business. You know, we caught up here when we started staffing originally, it was in the middle of a clinical labor shortage, find our own respiratory therapist to find some nursing for our referral sources, and that has shifted throughout over the years. And so they've been pretty scrappy.
They've been you know, even though they had a sequential slowdown this quarter, we're optimistic for some of the appropriations that they landed for the back half of the year. We'll just it's kind of up to the stage that we won the awards with to see how much they wanna fulfill those needs. So but we're in a good spot with it for it to be on a more normalized level.
Ilya Zubkov: Great. Thank you. That's very helpful.
Operator: All right. Thank you, Ilya. Thank you. To join the queue. And it looks like we have reached the end of the question and answer session. Turn the call back over to management for closing remarks.
Todd Zehnder: We want to thank everybody for participating. We're obviously very excited about the back half of the year. And if anybody has follow-up questions, just reach out to us. Have a great day.
Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.