Viemed Healthcare (VMD) Q3 2026 Earnings Call Transcript

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DATE

Thu, Nov. 5, 2026

CALL PARTICIPANTS

• Chief Financial Officer - Trae Paul Fitzgerald
• Chief Executive Officer - Casey Hoyt

TAKEAWAYS

• Net Revenue -- $80.7 million, representing 12.2% year-over-year growth driven by expansion in sleep therapy and maternal health services.
• Net Income Attributable to Viemed -- $4.6 million, an increase of 32% over the prior-year quarter due to improved operating leverage.
• Adjusted EBITDA -- $17.1 million, reflecting a 24.4% sequential increase as revenue growth outpaced expense growth.
• Adjusted EBITDA Margin -- 21.1%, representing a sequential expansion of approximately 350 basis points from 17.6% in the second quarter.
• PAP Therapy Patients -- 43,861, an increase of 37.5% year over year as the company expanded its reach in the sleep therapy market.
• PAP Therapy Sequential Growth -- 16%, reflecting increased activity in patient setups during the third quarter.
• Sleep Resupply Patients -- 40,918, growing 22% year over year and 10.5% sequentially as the company focused on simplifying order processing.
• Ventilator Rental Revenue -- $37.5 million, up 7.4% year over year supported by higher average patient volumes.
• Ventilator Patient Count -- 12,552, representing the active patient count as of Sept. 30, 2026.
• Ventilator Revenue Trend -- $37 million for the current quarter, representing sequential growth from $36.4 million in the second quarter and $35.4 million in the first quarter of 2026.
• Gross Profit -- $46.2 million, or 57.3% of revenue, compared with 57.5% a year ago as the sales mix shifted toward equipment and supply sales.
• SG&A Expense -- $35.5 million, declining $1.6 million sequentially due to lower compensation-related accruals and benefit expenses.
• Accounts Receivable -- $34.9 million, an increase from $25.6 million at year-end due to audit-related payment timing and system migration delays.
• Full Year Revenue Guidance -- $316 million to $320 million, reflecting an increase to the lower end of the previous range based on year-to-date performance.
• Full Year Adjusted EBITDA Guidance -- $64 million to $66 million, narrowing the previous range of $64 million to $68 million.
• Net Capital Expenditure Guidance -- 8% to 9% of revenue, lowered from the previous 8.5% to 10% range as the company shifts toward less capital-intensive services.
• Operating Cash Flow -- $11.5 million, contributing to a year-to-date total of $35.5 million.
• Free Cash Flow -- $4.0 million, contributing to a trailing 12-month free cash flow total of $26.1 million.
• Debt Repayment -- $2.1 million, with an additional $2 million term loan repayment made in October to further reduce outstanding debt.
• Share Repurchases -- 115,000 shares, repurchased for approximately $1 million during the third quarter.
• Distribution Savings -- 50 basis points, representing the expected gross margin improvement from a new distribution partner and related cost initiatives.
• PAP Resupply Orders -- 12% sequential increase, supported by workflow changes and additional capacity in serving a larger patient population.

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RISKS

• Zehnder stated, "Enforcement and claims audit activity have picked up and our teams are devoting more resources to those reviews," noting that these reviews add administrative costs and can delay payment timelines.
• Zehnder indicated that delays associated with system migrations and other billing factors have extended the timing of cash collections and temporarily tied up working capital.

SUMMARY

Viemed Healthcare, Inc. (NASDAQ:VMD) reported record quarterly revenue and significant growth in net income, driven by expansion in sleep therapy and maternal health services. Management indicated that the company is transitioning to a standardized rollout for its women’s health business while managing increased regulatory audit activity across the home medical equipment industry. Management reported that the company's financial position remains flexible, supporting both debt reduction and organic expansion across its respiratory and sleep care platforms. The company increased its focus on less capital-intensive services, which contributed to sequential margin expansion and influenced the updated full-year guidance.

• Maternal Health Expansion: CEO Hoyt stated, "We are now on track to enter 2 additional states per quarter beginning in the fourth quarter, establishing a regular pace of expansion."
• Regulatory Advocacy: Hoyt noted that the company is advocating for a more targeted CMS audit model to reduce unnecessary provider burden while protecting patient access to medically necessary care.
• Distribution Capacity: Zehnder reported that a new distribution partner provides supplier capacity well beyond current needs and is expected to improve gross margins by approximately 50 basis points.
• Organic Growth Focus: Hoyt stated that management evaluates numerous acquisition targets but prioritizes organic growth because it is less expensive to expand next to potential targets than to purchase them.
• Operational Efficiency: Zehnder reported that billing expenses declined approximately 12% as revenue grew, reflecting workflow changes and the timing of system implementations.
• Referral Source Education: Hoyt reported that education for referral sources on new coverage rules is approximately 80% complete, though some partners require additional training to establish confidence in the compliance process.

INDUSTRY GLOSSARY

• Adjusted EBITDA: A non-GAAP financial measure that excludes certain non-cash and non-recurring items from net income to evaluate operating performance.
• CMS: Centers for Medicare & Medicaid Services, the federal agency that manages Medicare and state Medicaid programs.
• COPD: Chronic Obstructive Pulmonary Disease, a chronic inflammatory lung disease that causes obstructed airflow.
• DME: Durable Medical Equipment, which includes medical devices such as ventilators and oxygen concentrators.
• HME: Home Medical Equipment, used for patients whose care is being managed in a home setting.
• NCD: National Coverage Determination, a nationwide determination of whether Medicare will pay for an item or service.
• PAP: Positive Airway Pressure, a type of respiratory ventilation used primarily in the treatment of sleep apnea.

Full Conference Call Transcript

Operator: Greetings. Welcome to the Viemed Healthcare Third Quarter 26 Earnings Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. I will now turn the conference over to Trae Paul Fitzgerald, CFO. Thank you, Trae. You may begin.

Trae Paul Fitzgerald: Thank you, and good morning, everyone. Please note that our remarks in this conference call may include forward-looking statements under The U. S. Federal Securities Laws or forward looking information under applicable Canadian securities legislation. Which we collectively refer to as forward-looking statements. Such statements reflect the company's current views and intentions with respect to future results or events. And are subject to certain risks and uncertainties which could cause actual results or events to vary from those indicated in forward-looking statements. Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the securities regulatory authorities in certain provinces of Canada.

Because of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Forward looking statements made in this conference call are made as of today. And the company undertakes no obligations to update or revise any forward-looking statements except as required by law. The third quarter financial supplement and financial news release, as well as the related financial statements are available on the SEC's website. With that, I will turn the call over to our Chief Executive Officer, Casey Hoyt.

Casey Hoyt: Thank you, Trae. Good morning, everyone, and thank you for joining us. Before getting into the results, I want to thank our roughly 1.5 thousand employees. Their daily work with patients and referral partners is what makes our growth possible. I appreciate the care they provide and the work they put into serving more patients as Viemed continues to grow. The third quarter was another strong quarter for Viemed. With record revenue of $80.7 million representing 12.2% growth over last year. Just as importantly, that growth translated into stronger earnings. Net income attributable to Viemed increased 32% year over year and approximately 68% from the second quarter. We are continuing to grow the business at a double digit pace.

Demonstrating the earnings potential of the platform we have built. For the first time since the Lehan acquisition, both the current and prior year quarters include a full 3 months of Lehan's operations. That gives us a much clearer picture of our growth with a 12.2% increase reflecting expansion across our existing businesses rather than the incremental revenue contribution of an acquisition. Sleep therapy was a particular source of strength this quarter. And we are also seeing encouraging results from bringing maternal health services into our established Viemed markets. The success those initial maternal health markets gives us confidence to broaden the rollout.

We are now on track to enter 2 additional states per quarter beginning in the fourth quarter, establishing a regular pace of expansion. The markets we have already entered are still early in their development. We see years of opportunity to build volume within each state as we develop referral relationships and reach more patients. Each launch adds to that opportunity and so growth can continue within our existing markets as we expand into new ones. Breast pumps and related supplies are a practical example of how we can do more with the capabilities already in the company. Lehan brought a specialized experience in this business.

Viemed's existing payer relationships and reimbursement capabilities give us a way to extend it into markets we already know. The early results have given us the confidence to take that next step. As we open those markets, we will be paying close attention to fulfillment and reimbursement. We want the additional volume to become a productive part of the business with reliable service for mothers who depend on us. The 2-state cadence gives our teams a clear operating plan for the next stage. Our growing sleep patient population shows how we are expanding Viemed's reach and serving more people.

During the quarter, we served 43.9 thousand therapy patients, over 6 thousand more than the second quarter and 37.5% above a year ago. PAP setups also increased both sequentially and year over year. Growth is coming through in patients receiving therapy as well as the activity bringing patients into care. Resupply grew alongside that activity. We served 40.9 thousand resupply patients. Up approximately 22% from a year ago and 10.5% from the second quarter. Our expanding PAP patient population creates further opportunity to grow resupply and increasing participation in the program is a priority.

We are simplifying order processing to support that growth and make it easier for patients to receive supplies on time with the service that keeps them engaged over the course of their therapy. In ventilation, we have a longer revenue trend to assess under the revised CMS coverage rules issued in 2025. Ventilator rental revenue has increased in each quarter this year, from $35.4 million to $36.4 million and now $37 million For the first 9 months, was approximately 8% above the same period last year. The comparison is particularly meaningful because much of the 2025 period preceded the new CMS coverage rules.

Growing ventilation revenue against that comparison supports our confidence our ability to expand the business under the new framework. More broadly, we view the legislative and rule making environment as generally favorable to establish providers that invested in clinical care and compliance. Audit activity has increased across the DME industry including for providers with strong compliance programs. Our own teams are spending more time and resources responding to those reviews We are encouraged that CMS is examining its audit contractor model and specifically asked how to reduce unnecessary provider burden and protect patient access. We see an opportunity for more targeted consistent oversight and we intend to bring our experience to that discussion.

So providers can devote more of their resources to caring for patients. Our responsibility is to help patients receive the care they need. We support appropriate oversight and we will advocate for coverage policies and review processes that preserve timely access to medically necessary care. Our clinical teams see the needs of these patients every day and we intend to make sure those needs remain part of the policy discussions. The third quarter showed that we can grow the business under the new coverage framework and convert more revenue into earnings. We are serving more patients and the opportunities ahead in sleep and maternal health give us the confidence that we can enter into the final quarter of the year.

Todd will now discuss the financial results and operating priorities supporting our next stage of growth.

William Todd Zehnder: All right. Thank you, Casey, and good morning, everyone. All figures are in U.S. dollars, and our full results have been filed with the SEC. And I will refer to information included in the quarterly financial supplement which is also available on our Investor Relations website. Net income attributable to Viemed was $4.6 million or $0.11 per diluted share compared with $3.5 million or $0.09 per diluted share a year ago. And $2.8 million or $0.07 per diluted share in the second quarter of this year. Net income increased 32% year over year approximately 68% from the second quarter. Adjusted EBITDA was $17.1 million an increase of approximately 6% from the prior year quarter and 24% sequentially.

Adjusted EBITDA margin was 21.1% compared with 17.6% in the second quarter and 22.4% a year ago. The sequential margin expansion was approximately 350 basis points. Revenue continued to grow this quarter and SG&A declined from the second quarter. Both contributed to the sequential increase in profitability with several compensation and benefit adjustments also affecting the results. Revenue increased 3.3% from the second quarter with growth across rentals, equipment and supply sales and services. Other equipment rentals grew approximately 13.1% year-over-year and equipment and supply sales grew approximately 23.7% supported by sleep and women's health. Ventilator rental revenue was $37.5 million up 7.4% from a year ago supported by higher average patient count.

Gross profit was $46.2 million or 57.3% of revenue, compared with 57.5% a year ago and 57.7% in the second quarter. Revenue from sales and services represented 32% of revenue compared with 30.1% a year ago. The year over year shift forward shift towards equipment and supply sales affects gross margin because these offerings generally carry lower margins than equipment rentals while also requiring less capital investment. As we discussed last quarter, we added a new distribution partner that together with our existing suppliers gives us supplier capacity well beyond our current needs across all product lines to support future growth.

We are still implementing the related cost savings and expect them to improve gross margin by approximately 50 basis points once fully in place. SG&A was $35.5 million or 44% of revenue, compared with 47.5% in the second quarter and 44.4% a year ago. SG&A declined approximately $1.6 million sequentially. Year over year revenue grew faster than SG&A even as we added resources to support the larger business. Lower compensation related accruals and benefit expense contributed to the sequential decline. Phantom stock expense also came down substantially as expected following the large mark to market adjustment in the second quarter associated with the increase in our share price. Benefit rebates also reduced expense during the quarter.

Regular payroll and software spending increased as we added to serve a growing patient population. That additional capacity is supporting higher volumes, including a 12% sequential increase in the PAP resupply orders. At the same time billing expense declined approximately 12% as revenue grew. Reflecting the workflow changes and implementation timing. Our focus is on getting more volume through with the people and systems that we have in place. Compliance is another area where our personnel and systems can provide a competitive advantage as oversight increases across the industry. Enforcement and claims audit activity have picked up and our teams are devoting more resources to those reviews.

The documentation and follow-up work adds administrative and professional costs, and in some cases can extend payment timelines. Our success rate under these audits remains very strong. Those outcomes support our confidence in the care we provide and the documentation supporting it. Our teams are focused on submitting complete responses moving reviews towards resolution. The increase in accounts receivable had several drivers this quarter. Audit related payment timing was 1 contributor alongside other billing and collection factors including delays associated with system migrations. We believe the related revenue remains fully realizable. These delays have extended the timing of cash collections and temporarily tied up more cash and working capital.

Collections in October were extremely strong so we are confident that this will work itself out during the fourth quarter. Operating cash flow was $11.5 million After net CapEx of $7.5 million, free cash flow was $4 million Net CapEx represented approximately 9.2% of revenue. For the first 9 months of 2026, operating cash flow was $35.5 million and free cash flow was $15.2 million compared with $33.5 million and $17.3 million respectively a year ago. Lower equipment sales proceeds also affected the year to date cash flow comparison. As the prior year period benefited from the ventilator return program.

On a trailing 12-month basis, free cash flow was approximately $26.1 million The business continues to generate cash after funding equipment needs although the current quarter's collection timing reduced cash conversion. We continue to reduce debt and return capital during the quarter. We repaid approximately $2.1 million of term debt and repurchased and canceled 115 thousand shares for approximately $1 million At September 30, cash was $9.7 million and borrowings under our credit facility were $5.3 million with nothing on the revolver. We made an additional $2 million term loan repayment in October. Further reducing our outstanding debt. Our first use of capital is supporting the growth within Viemed.

Including the maternal health expansion and the needs of the larger sleep business. We retain the flexibility to consider acquisitions that fit our operations and return requirements and to repurchase shares when the value is attractive. The balance sheet allows us to evaluate those choices without committing to a fixed allocation among them.

Turning to our outlook, we are raising the lower end of our full year revenue guidance and now expect revenue of $316 million to $320 million compared with our previous range of $314 million to $320 million We are narrowing our adjusted EBITDA guidance to $64 million to $66 million compared with our previous range of $64 million to $68 million With 9 months complete, the narrower range reflects our results through September and our updated expectations for the fourth quarter. We are also lowering our net CapEx outlook to 8% to 9% of revenue compared with 8.5% to 10% previously. The increasing contribution from less capital intensive offerings reduces the equipment investment needed to support our growth.

Our revised outlook anticipates sequential growth in both revenue and adjusted EBITDA in the fourth quarter and excludes any potential future acquisitions or strategic transactions. As we finish the year, our operating priorities include improving collections and preparing the next maternal health markets for the rollout Casey described. We are seeing demand in the areas where we have addressed resources and our job is to turn that actively into earnings and cash as the business grows. With that, we will wrap up our prepared remarks and take your questions. Operator, please open the line.

Operator: Thank you. We will now be conducting a question-and-answer session. Our first question is from Ilya Zubkov with Freedom Broker. Please proceed with your question.

Ilya Zubkov: Good morning and thank you for taking my question. First is on the sales side. I see that sleep resupply patients grew 10.5% sequentially, but equipment and supply sales grew only about 2%. I am just wondering if the gap is timing, price mix or the contribution from women's health and how should we think about revenue per resupply patient from there?

William Todd Zehnder: Yeah. Hey, Ilya. Good morning. Yeah. When we think about the sales line, particularly in the maternal health and re supply. You are correct strong. There was a strong Q2. So if you are thinking about Q3 sequentially, I think the resupply was stronger. there is nothing that really comes to top of mind that was any sort of reduction off a Q2; other Q2 is just a really strong quarter as well in that regard. It sets the stage for really what we expect is probably our largest growth in Q4 will be in that line.

You are gonna see the best seasonality in Q4 for the sleep resupply side of the business and further pull through in sort of that PAP therapy that we were talking about this quarter with increased setups and increased rental patients is going to transition to resupply in the back half this year or the fourth quarter rather.

Ilya Zubkov: Mhmm. Good. Thank you. And 1 on margin, please, if I may. As the sales mix shifts towards lower margin, less capital intensive lines, What financial KPIs are you targeting over the next 2, 3 years? And what would you consider as a normalized margin framework?

William Todd Zehnder: Well, I would say that we want to grow all of all the way down the line from an EBITDA and net income perspective. But I think as we do move into more sales and services and have no CapEx net income growth probably becomes a little bit more important for us versus adjusted EBITDA. That also will translate into free cash flow, which you are hearing us talk a lot about because it is extremely important to us. And I think our trailing 12 months, I said it was maybe $26.1 million after growing organically this quarter 12.5%. So we are pretty pleased with that.

We are not gonna get too hung up on exact EBITDA margin as we continue to move I definitely think we will stay up in the 20-plus percent adjusted EBITDA for the time being. Great.

Ilya Zubkov: Thank you so much. I will cut the line.

Operator: Thanks. Our next question is from Mike Petusky with Barrington Research. Please proceed with your question.

Analyst: Hey, good morning, guys. Forgive me, I missed the first 5 minutes. So if you cover this, I apologize. But in terms of the Vent patient number in the quarter, that to me looks a little soft and sequentially down, and I am just curious, is that a function of just sort of the higher hurdle sort of service hurdle and with the NCD or can you speak to that? Is there any. Anything to be concerned about in patient number? Thanks.

Casey Hoyt: Yeah, I think you have a little bit of that, Mike, just with there is still an education process going on with the sales force and our referral partners. And so whenever you have change with how the approval process goes for these patients, Sometimes, yep, some referral sources get a little bit gun shy. However, I mean, the demand is there. I see that. what is happening despite us going through those hurdles, the competitor appears to be struggling a little bit more than we are just because we are so narrowly focused in complex respiratory.

So I think there is market share to be gained here as we establish that baseline of education and look to the future of really getting to these patients. We know the patients are not going away. We are still in an underserved population. Going in and out of the hospital, it is just our job to just continue to give these referral sources the confidence that look, we can manage the compliance on these patients despite having all these new rules that the NCD has laid out. And so it is been a little bit of taking that. Taking time to establish that new normal, but I would say that call it, 80% of the work is done.

And you know, we are excited about the patient population for the future.

Trae Paul Fitzgerald: Yeah. Hey. And, this is Trae. Let me add some context to that too. Just I think we talked about it in the prepared remarks, but that active patient count is a point in time Sometimes it can be especially in the NCD where we have some kind of noise in some of the compliance related active billing versus hold those sort of things. But in the quarter we had higher active average patients throughout the quarter. And that is why you are seeing vent revenue growing sequentially. But the point in time right at the end of the month went down a little bit. So you will-- that will-- that created a little bit of noise.

We think we are going to you know, we will start to stack that up here and in Q4 and into 2027?

Analyst: So, I mean, would you expect sort of a sequential increase in Q4 versus Q3? Because last year, you guys actually saw a slight decline from Q3 to Q4 in terms of vent patients. Would you given what you just said, I mean, would you expect that maybe a slight bump in Q4 versus Q3?

Casey Hoyt: that is the trends we are seeing right now, Mike. Yeah, we do expect that. I just think that with all the changes going on, whether it is in related or other changes going on, I think the vent active patient count has been a little bit more wobbly, and obviously, we have gotten a lot bigger. But, yeah, the current trends are showing that we will be back up in the fourth quarter. Okay. And then, just 1 more and I will let other folks have a shot here.

In terms of and again, forgive if I missed this, but in terms of, you know, the maternal health piece, did you guys talk at all or could you talk about you know, progress you are making in terms of, you know, turning on states or your progress in sort of getting a plan together for turning on states over the next year? Could you speak to sort of where you are in that rollout? Thanks. Yeah. I mean, we will. I am not going to go into this particular state, but it is going to be a 2-state cadence.

And we have already established our fulfillment partner, which has been a huge win in terms of creating the operational efficiencies for Lehan and their team who are leading the maternal health sector to really scale the, our network development team is in a good spot where they are moving ahead into the next states with establishing the contracts making sure that reimbursement is where it needs to be before we go into particular state. We have been analyzing a lot of data on expecting mothers and birth rates and things of that nature. For those particular states to where we go into the right ones first.

So, our team is really excited about the Salesforce that we have been dropping in behind some of these states. You know, we are seeing higher conversion rates from those referral partners that the sales folks are boots on the ground calling on. And so, you know, they are driving a good portion of the sales as we get those contracts up and running. So that is a that is a brand new model, if you will, to Lehan. So, you know, you put the technology in place where you get in front of the expectant the mothers that Leanne's built, and then you double down with some boots on the ground.

And you improve those conversion rates, and you got the right states and the right reimbursement, it is a recipe for success. We are super excited about. We expect to continue to grow it. All right. Terrific. Thanks, guys.

Operator: Thanks, Mike. Our next question is from David Storms with Stonegate. Proceed with your question.

David Storms: Good morning, fellows, and thanks for taking my questions. Maybe just wanted to stick with the maternal health rollout there. Do you have any further comments on what we should expect in terms of growth curves? I know you mentioned 2 states per quarter, sounds like. Should those states be pretty much fully developed after that quarter? Or is that just to get them on their feet before moving to the next 2 states?

Casey Hoyt: I mean, I can start if you can finish with the growth rate. No, they for sure, will not be fully developed within that quarter. that is just the onboarding process. So for example, you know, we did add, like, Texas as our first state. I mean, we are still doing so much work in and that was last year. So it is it is just a ramp up of having new hunting ground to go into. But it does. The business does start coming in almost immediately just because of the technology that we have and the marketing that we do. In those current states.

But then you have a growth strategy after that where you drop in boots on the ground and really get better at conversions and so on and so forth. So, yeah, that cadence is really just new hunting ground, and it will be increasing along the way throughout the year.

William Todd Zehnder: Yeah. I will just, I mean, kind of exactly what Casey said. You start out, you have hopefully, most of the contracts, but you do not have all of them. Start with digital marketing, and then as you gain traction, you put more personnel there. So the growth curve definitely takes some time. We have seen growth consistently throughout the year in Texas, and we just now started 2 other states. So would expect that to happen and the cadence will continue, like Casey said in his remarks, a state or 2 every quarter going forward. So it will continue ramping over time is the short answer.

David Storms: that is great. I appreciate that. I appreciate that. Sticking with that, you mentioned in your answer there that the boots on the ground are gonna be important and the people going to be important. I know in the past, we have talked about Salesforce training. Maybe any updates there on how that is progressing? What you are seeing kind of efficiencies that could be driving? Are you talking to specifically a maternal? Specifically in maternal, but also if you want to expand that to the rest of the business?

Casey Hoyt: Yes. I mean, the training is very important to us. We feel like the better our training gets, the more efficient all of our new sales reps onboard new patients. So we are a high dumping resources into further training. The breast pump sale is really it is way easier if you will than it is to train a complex respiratory rep. And so you are basically chasing that order and making sure that you have the appropriate documentation in place to authorize billing. And so when you have some help, with some people to chase some of those things down that technology cannot do, your conversion rates in those particular states go up.

But from a sales standpoint, it is a pretty easy sell. You just gotta find somebody who likes to work hard and stay busy and stay in front of these referral partners. that is perfect. I appreciate that.

David Storms: 1 more if I could sneak it in. I know you mentioned in the prepared remarks that you have a strong balance sheet that gives you some optionality for additional M&A. Just any thoughts as to what you are seeing on this front? Would that take the shape of Northlands Is there a target profile you would think about? Anything like that.

Casey Hoyt: The pipeline's active. I mean, up. Here's another way of looking at it. I mean, last year, we looked at over 40 deals and we passed on them. You know, the reason that you will see us pass on these deals is because it is less expensive for us to go in and organically grow next to them versus purchasing them. And so it takes a unique acquisition such as Lehan, such as H and P, which has the perhaps a geographic coverage gap or maybe some insurance contracts that we do not have. Or a new service line like Lehan did. For us to get really hot to trot about the M&A gain.

Make no mistake about it, they are out there, and we look at them constantly. it is just we are pretty darn picky because we organically grow so much faster, and it is and it is just more efficient to do it that way than going in and spending too much money.

William Todd Zehnder: Yeah. And I would say that to add to that, the reasons for m and a really have not changed in the priorities and the requirements Basically treating patients in the home is the first and really the most important And then like Casey said, if we can get geographic expansion, payer expansion, or even like we have proved out the product expansion. Those are the priorities with m and a. We do not we do not need to go acquire another vent company in an area that we have a lot of success in. that is that is our organic model, and we believe firmly in that.

David Storms: Understood. Thank you for taking my questions, and good luck in the next quarter. Thanks, David.

Operator: Our next question is from Andrew Graham with Oddens and Partners. Please proceed with your question.

Analyst: Hi, can you just repeat your comment as it related to cash flow? I think you said maybe a little bit of a hang up on accounts receivable side.

William Todd Zehnder: Yes. So we had higher AR. I mean, if you look on the balance sheet, I wanna say it was $35 million at the end of the quarter. Due to a few different things. Some are just like October 1 was 1 of the better days we have had, some things that should have been collected. In September. We had some, some audit things that slowed down cash flow that has resolved itself in October and the beginning of November. And those are the 2 main ones, and actually another A private payer audit that looks like it is resolving itself.

So when you have that, it actually hurt your earnings or your EBITDA, but it does slow down cash flow conversion. So fourth quarter will make that up, but it is why the third quarter was sort of uniquely low. Was there also something else going on? I. I am not looking at it, but was it my recollection would prepaid expense a drag as well in the quarter? Was prepaid expense? Yes, prepaid expense was a drag during the quarter. Some of it is just timing of like, temporary timing for the year, Andrew. it is you know, think all of our kind of tech renewals, insurance, all those things.

We pay annually up and it goes into prepaid in the third quarter. We also had some year end or not year end, but sort of fiscal year end for some of these programs for our self-health insurance, pharmacy rebates, and other product rebates that will convert the cash into the fourth quarter. So it is a part that contributed to Q3, but it is also a dynamic that traditionally exist in Q3, maybe a little bit more pronounced this year.

Casey Hoyt: Yeah. A prime example is we prepay all of our workers' comp, D&O, all of our insurance, and instead of financing it over a year just because we get a good rate of return by paying it and we have the cash. Same thing for, like, Trae's talking about some of these technology licenses that we pay them all upfront. We get a discounted rate. So we would rather use our cash than take a higher expense.

Analyst: Okay. But just to clarify, that was a little bit higher this year The drag was a little bit higher this year versus last year?

William Todd Zehnder: Mildly higher, but I would not say it is materially higher. Okay.

Analyst: All right. And then can you clarify your comment on the business I think you said you are about 80% complete. Are you referring to kind of the training and education of the referral sources or just kind of clarify that comment?

Casey Hoyt: Yes, that is an anecdotal just gut feeling, Andrew. Just keep that in mind. I was just saying that is the way it feels out there in the marketplace. Whenever you are talking to referral sources on education, we are still. You know, for the most part, they are up to speed on the NCD and new rules and the new landscape but you still run into your roughly 20% of folks that you have to double down on education and so on and so forth. So that is just a gut feeling just take that with a grain of salt. All right. Thanks a lot, guys. Appreciate the time.

Operator: All right, Andrew. We have reached the end of the question-and-answer session. I would like to turn the floor back over to management for closing comments.

Casey Hoyt: Okay. Thank you for joining us today. We appreciate all the questions and look forward to continuing to grow Viemed. We appreciate your trust. Hope everyone has a nice day. Take care.

Operator: We have reached the end of the conference. You may disconnect your lines at this time. Thank you for your participation.

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