Viemed Healthcare, Inc. (VMD) Earnings

Management highlights

### Patient Growth & Ventilation Business Update - ViMed ended Q2 with a record 12,635 active ventilator patients, adding 546 new patients in the quarter for 4.5% sequential growth, the second-highest quarterly ventilator setup volume in company history. - Usage compliance improved more than 25% YoY, driven by process adaptations to the new CMS national coverage determination (NCD) for home mechanical ventilation. Physicians, referral sources, and patients now have greater clarity on qualification and documentation requirements, and underlying clinical demand remains substantial. - The addressable market for at-home ventilation remains far larger than the current patient population, and the company continues to refine internal processes under the new coverage framework. ### Diversified Business Line Expansion - PAP (sleep therapy) setups reached a quarterly record, with total sleep therapy patients growing 5% sequentially and 44% YoY. Resupply patients grew 10% sequentially and 47% YoY, building a recurring revenue base. - Maternal health hit a new quarterly high for breast pump deliveries, with 9% sequential growth in legacy markets, validating the growth strategy from the Leehan acquisition that leverages ViMed's existing payer relationships, infrastructure and referral channels. The company is expanding fulfillment and technology capacity to enter new national markets. ### Operational & Organizational Improvements - The company completed a sales organization reorganization, adding a fourth sales division to expand geographic coverage, create internal promotion pathways for employees, and support future growth. An updated training program is reducing ramp time for new sales representatives. - A new intake workflow system reduced PAP order qualification review time from days to under an hour, enabling 16% sequential PAP setup growth without expanding fulfillment infrastructure. The system has now been integrated into the complex respiratory business to improve onboarding and scalability. - The company brought sleep resupply call center operations in-house to support long-term scalability, and implemented a new national distribution partnership for maternal health to reduce costs as volume scales. ### Capital Allocation - Organic growth remains the top capital priority, followed by accretive platform-aligned acquisitions, share repurchases when valuations are attractive, and debt repayment. During Q2, ViMed repaid $2.2 million in debt and repurchased 531,000 shares for $5.1 million. The company ended the quarter with more cash than total debt and substantial unused credit capacity.

Guidance

• Full-year 2026 net revenue guidance is revised to $314 million to $320 million, up from the prior range of $312 million to $320 million, reflecting stronger than expected first-half performance across all business lines. • Full-year adjusted EBITDA guidance is revised to $64 million to $68 million, down from the prior range of $65 million to $69 million, reflecting the faster growth of lower-margin, less capital-intensive product and service lines. • Full-year net capital expenditure guidance is lowered to 8.5% to 10% of revenue, down from the prior 9% to 10.5% range, driven by the higher share of less capital-intensive revenue. • Management expects adjusted EBITDA margin of at least 20% for the full year, with continued sequential revenue growth through the second half of 2026.

Segment performance

Total Q2 2026 revenue was $78.1 million, a 24% year-over-year (YoY) increase and 4% sequential increase from Q1 2026. 1. Ventilator rental revenue: $36.4 million, an 8% YoY increase, representing 47% of total revenue (down from 54% in the prior year quarter). 2. Other rental revenue: $16.4 million, a 19% YoY increase. Total rental revenue (ventilator + other) was $52.8 million, representing 68% of total revenue (down from 76% YoY), while the total rental base grew 11% YoY. 3. Equipment sales: $19 million, nearly doubled YoY, with growth across sleep resupply and maternal health lines. 4. Service revenue: $6.3 million, a 7% YoY increase. Gross profit was $45 million, equal to 57.7% gross margin (down from 58.3% YoY, up from 56.8% sequentially). Net income attributable to ViMed was $2.8 million (7 cents per diluted share), and adjusted EBITDA was $13.7 million (17.6% margin, down from 22.7% YoY, impacted by a $1.2 million non-recurring gain from ventilator returns in the prior year quarter). Operating cash flow was $15.9 million, free cash flow was $8.6 million, and net capital expenditure was $7.3 million (9.3% of revenue).

Risks & headwinds

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from current projections, as detailed in the company's regulatory filings with the SEC and Canadian securities authorities. Short-term margin pressure has occurred due to transitional cost duplication during operational changes, higher investment in growth capabilities, and temporary distribution/inventory costs in the scaling maternal health business. The sales reorganization process creates short-term operational lift and disruption during implementation. Compliance with new CMS coverage requirements creates ongoing process change burdens, and workforce capacity for respiratory therapists is still being adjusted to align with new coverage and compliance rules.

Analyst Q&A

• Q: What key changes were made to the on-the-ground sales organization during the recent reorganization, and how has this contributed to patient growth? /

  A: Management added a fourth sales division, creating a new sales director role from an existing regional manager to expand geographic coverage across all U.S. markets. The reorganization also creates clear internal promotion pathways to retain talent. A refined, proven training program reduces ramp time for new sales representatives, while improved field compliance processes from respiratory therapists (RTs) increase patient retention under the new NCD rules. Both improved new patient acquisition and higher retention are driving ventilator growth, with further room for improvement in compliance processes. The organization expects continued incremental reorgs as it scales.

• Q: Between maternal health and sleep resupply, which business line is driving the shift in revenue mix reflected in the updated guidance? /

  A: Management expects maternal health to deliver faster percentage growth than sleep resupply, though both lines will outgrow core ventilator rental revenue. Significant planned operational changes, including bringing the sleep resupply call center in-house and rolling out new distribution for maternal health, created transitional disruption in the first half to prepare for sustained large-scale growth. Both business lines are expected to deliver significant growth, with lower capital requirements than core rental even though they carry lower EBITDA margins.

• Q: Did the strong Q2 ventilator patient growth include approvals for patients that were previously denied under the new NCD rules? /

  A: While newly approved previously denied patients made up a small portion of the growth, the majority of the quarter's growth came from new patient orders. Clearer formulary rules for Medicare Advantage and private insurance plans have made it easier to onboard more patients, alongside a more effective sales structure, improved compliance processes, and reduced patient billing holds following annual insurance open enrollment season. Management called Q2 one of the strongest patient growth quarters in the company's history and expects momentum to continue.

• Q: What operating leverage will drive margin expansion toward the 20% full-year target in the second half of 2026? /

  A: The first half of the year typically carries lower margins than the second half, and the 2026 second half is expected to be broadly aligned with the 23% margin the company delivered in the 2025 second half. Cost duplication from transitional operational changes in Q2 will ease in the second half. New scalable systems including the automated intake workflow and new national distribution for maternal health will reduce the need for proportional back-office hiring as order volumes grow. While the revenue mix shift to lower-margin lines has structurally lowered overall EBITDA margin, it also reduces capital needs and will expand net income margins over time.