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    VIEMED HEALTHCARE (VMD)

    VMD Q2 2024: Sales Efficiency Up; NIV Penetration Still Below 10%

    Reported on Aug 8, 2024 (Before Market Open)
    Pre-Earnings Price$6.53Last close (Aug 7, 2024)
    Post-Earnings Price$6.40Open (Aug 8, 2024)
    Price Change
    $-0.13(-1.99%)

    What went well

    • Sales Force Efficiency: The executives emphasized improved sales productivity—illustrated by increased vent setups per rep and efficient targeting (“3 shots per man”)—which supports robust revenue growth.
    • Underpenetrated Noninvasive Ventilation Market: With noninvasive ventilation penetration remaining sub-10% in a largely underserved market, there's significant room for future growth driven by positive clinical outcomes and expanded research.
    • Resilient Service Revenue Base: The healthcare staffing division is delivering steady, nonseasonal revenue, indicating a reliable recurring business stream that underpins overall performance.

    What went wrong

    • Uncertainty around the Philips vent buyback program: The company’s reliance on the Philips buyback and remediation process introduces uncertainty regarding the timing and execution of replacing aging ventilators, potentially impacting future cash flows and operational performance.
    • Headwinds from Change Healthcare issues and cybersecurity challenges: The ongoing challenges with Change Healthcare—including increased accounts receivable due to disrupted cash collections amid cybersecurity issues—could indicate potential operational vulnerabilities and financial pressures.
    • Rising SG&A expenses amid integration efforts: Increased SG&A costs compared to the previous year and the complexities involved in integrating new acquisitions like East Alabama HomeMed may exert pressure on margins and overall profitability.

    Q&A Summary

    1. Philips Recall
      Q: Benefits and risks of Philips buyback?
      A: Management confirmed the program is highly successful, having sold about 15% of the fleet, which allows cost‐advantaged equipment replacement and has already generated an accounting gain.

    2. M&A Multiples
      Q: How are M&A multiples trending?
      A: Management explained that discussions indicate public multiples are not significantly depressed relative to private ones, and they remain prudent in evaluating deals.

    3. Sales Strategy
      Q: How effective is the sales team?
      A: Management highlighted an efficient approach—aiming for 3 shots per man—with improved training and cross-selling that’s driving robust growth.

    4. JV Expansion
      Q: Can the JV model be replicated?
      A: Management intends to leverage real-world data from the successful HomeMed JV to support further similar opportunities later this year.

    5. Sleep Resupply
      Q: What fuels sleep revenue growth?
      A: Management pointed to the sleep resupply program as a major cash-positive driver, underpinning strong segment growth with recurring revenue.

    6. NIV Penetration
      Q: What is the NIV market share?
      A: Management noted that noninvasive ventilation currently penetrates less than 10% of the market, with Medicare at 6%, leaving substantial room for growth.

    7. Staffing
      Q: Is service revenue seasonal?
      A: Management clarified that the healthcare staffing division is non-seasonal, with steady revenue growth fueled by new contracts.

    8. GLP-1 Exposure
      Q: What percent of patients use GLP-1 drugs?
      A: Management did not track this metric directly, but referenced peer estimates around 12%, implying a similar figure for their patients.

    Analyst Coverage

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