The Big Picture - forecasting the futureWe are nearing the end of a twenty-four month pandemic period that started in March 2020.
A fundamental analysis on performance during the pandemic is unreliable in terms of predicting the future. Can we simply go back to the pre-pandemic period and project that the trends from 2018 and 2019 will resume in 2022? Probably not because there are many changes that happened to VMD and in the environment that will impact the business. The biggest influences are:
Patients
In Q4 2019, VMD reported 7759 patients, which was a 31% increase in that year.
In Q3 2021, VMD reported 8200 patients, which represents approximately a 5.7% increase (Ouch!) over the 21 months.
Employees
In Q4 2019, VMD reported 418 employees
In January 2022, VMD lists 656 employees, which is a 57% increase over 25 months. (Wow!)
Current Assets (in '000)
In Q4 2019, VMD reported current assets of $27,811 and current liabilities of $25,912 giving it a working capital of $1,899.
In Q3 2021, VMD reported current assets of $47,366 and current liabilities of $20,199 giving it a working capital of $27,167. (Strong!)
Care Model
At the end of 2019, the standard was for RTs to physically visit patients at home for monitoring. This face-to-face interaction was also built into the reimbursement protocols.
Now, virtual meetings and its Patient Engagement Platform to monitor are the norm. This represents a substantial improvement in monitoring frequency and cost efficiencies for travel time and expenses. VMD has also begun to engage Social Workers to increase patient utilization of the vents.
Investment
Since 2019, VMD has invested in Verustat that has built their remote patient monitoring platform.
Referrals
Sales now offer a new revenue source to its physician network around the country. It allows physicians to bill for safely monitoring patients inside of the home that are struggling with chronic diseases.
OIG report re-reimbursement
VMD is appealing the request for reminbursement. They are proceeding through
1) Reconsideration appeals, 2) Administrative Law Judge appeals, 3) Medicare Appeals Council review, and ultimately through 4) Federal Court, if necessary. The timelines for this complete process is probably years.
The VMD opinion on this liability can be found in their 2021 Q3 filing and reads:
"Based on initial discussions with CMS, a review of the current facts and circumstances as we understand them, and the nature of the requests, we have determined that a loss is not probable but may be reasonably possible. Accordingly, no related accrual has been recorded. The value of the population of associated claims within the 4-year reopening period prescribed by statute, including any potential interest, is approximately $9 million. Management estimates that a possible loss, if any, will not exceed this amount."
Research
The benefit of using NIV is not universally understood by physicians or payors. Research has advanced this knowledge during the pandemic but organizations like the VA are not yet fully on board. VMD is convinced that NIV is cost effective and appropriate for a sizeable population of COPD patients.
Hospitals
The reputation of care within Hospitals has taken a hit during the pandemic. Furthermore, Hospitals have a backlog to catch up on other types of care now that COVID is retreating. Hospital staff are burnt out and are quitting. COPD patients are more likely to be discharged especially if home care is preferred by the patient and possible.
Recruiting staff
VMD Health Care Staffing platform was launched to "to support internal resource fulfillment as well as external, contractual placement of allied health and nursing professionals".
Reimbursement rates
The recent increase approved for CMS billing codes took effect in 2022 and will flow to the bottom line.
Share price
Dec 31, 2019 - $8.13 Cdn
Feb 22, 2019 - $4.94 Cdn
Short term
Outlook for 2021 Q4 and 2022 Q1 results will be affected by the tail end of the pandemic, however, any management's full-year guidance or growth rate guidance will be more relevant.
Management's resilience
Their resilience during the events of the last two years is pretty remarkable. However, the financial performance has not been robust. Wall street investors are only interested in future performance.
Institutional investors
There is a recent decline in holdings of institutional investors. Microcaps such as VMD will have to work hard to get noticed by investors.
Any further observations are welcome.