Viemed Healthcare Inc VMD

The Big Picture - forecasting the future

[donmayne]

We 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.

[donmayne]

Correction on the share price.  It should read: Share price Dec 31, 2019 - $8.13 Cdn Feb 22, 2022 - $4.94 Cdn  

[jomen1789]

At this rate, Viemed will be kicked out of the Russell 3000 Index due to its dismal performance. This excellent post from Donmayne sums up Viemed's poor performance: https://stockhouse.com/companies/bullboard?symbol=t.vmd&postid=34427585 Of the 8500+ stocks trading above $3 US, VMD's 12 month share performance falls below the 8 percentile mark.   Of the 3000

[donmayne]

Since my post Jomen, the share price has dropped further losing 64% of its value in the last year.  The two percentages are 4.7% and 2.5%. Casey Hoyt holds 2,133,446 shares outright.  They were worth $27 million last year and are now worth $10 million.   Insiders as a group hold more than 11.45% of the company which is a big portion of the $300 million decline in market

[Moemoney42]

Thanks for the summary Don.. I'm actually perplexed by the stock action over the last year.. wished I would have sold all my stock back in May 2021 when I unloaded a bit for just under $11.. hindsight eh.. LOL..

[esifor]

The stock price does not reflect the underlying fundamentals of the company. The company's management has little control over the investor sentiments and emotions. With rise of retail investor access to markets, majority of investment flows to big known names and small caps which are the growth engines are significantly undervalued while large caps have unsustainbale P/Es. You should look at

[besttobe]

VMD is no longer a growth stock, because it is not growing and the EPS has been flat for awhile.  No point for investing in it. 

[Moemoney42]

Yup and here's another cliche quote from Buffet.. "the market can stay irrational far longer than you can remain liquid".. and by the action of the enemic trading volumes and continuing drop in share price I'd say this "boxing day sale" could be considered a boxing year sale.. :-/  Only problem is the shareholders are the ones getting beaten up..!

[sollmg]

Even Morningstar has VMD at a fair value of 10.22 USD.

[donmayne]

We are all in the same boat.  Holding VMD during the pandemic was not unreasonable given that business was only on pause due to hospital access for new patients. Twice when the covid abated the company reported a return to higher uploads of new patients. But Covid kept returning with new variants. Fortunately Omicron looks like it will end the pandemic.   In their most recent Q3

[besttobe]

Even before the pandemic began, the stock tanked because growth slowed and earnings were flat. Look at the chart.... 

[jomen1789]

Also, this Glassdoor review peers into Viemed itself: https://stockhouse.com/companies/bullboard?symbol=t.vmd&postid=34430996 We can see that the morale of their employees is low because Respiratory Therapists are overworked and lost many benefits. However, by gleaning into that review we can see a glimmer of hope; rank and file employees lost their Phantom Share dividend starting from

[LongTerm3]

Jomen,     If i read this correctly Viemed doesn't give out Phantom shares for employees going forward? Do you have any idea if they took the Phantom shares away from themselves?     In January management received shares if I remember. Was that RSU's or Phantom, or both? Thanks,