Form 8-K/A - Current report: [Amend]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

August 2, 2023 (June 1, 2023)

Date of Report (Date of earliest event reported)

Viemed Healthcare, Inc.

(Exact name of registrant as specified in its charter)

British Columbia, Canada

001-38973

N/A

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(I.R.S. Employer
Identification No.)



625 E. Kaliste Saloom Rd. Lafayette, Louisiana						70508
(Address of principal executive offices)						(Zip Code)

(337) 504-3802

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, no par value	VMD	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

EXPLANATORY NOTE

This current report on Form 8-K/A (this "Amendment") is filed as an amendment to the current report on Form 8-K of Viemed Healthcare, Inc. (the "Company”) filed with the Securities and Exchange Commission (the “SEC”) on June 1, 2023 (the “Initial Report”) relating to the acquisition (“Acquisition”) of Home Medical Products, Inc. (“HMP”) by Viemed, Inc., a wholly-owned subsidiary of the Company. This Amendment is filed solely to provide, and amends the Initial Report to include, the historical financial statements of HMP and the pro forma financial information of the Company that are required by and described in parts (a) and (b) of Item 9.01 below. As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company has set forth the complete text of Item 9.01, as amended. This Amendment speaks as of the filing date of the Initial Report, does not update information in the Initial Report to reflect events that have occurred subsequent to the filing date of the Initial Report, and does not modify or update in any way disclosures made in the Initial Report. Except as described above, no other modification to the Initial Report is being made by this Amendment. Accordingly, this Amendment should be read in connection with the Initial Report, which provides a more complete description of the acquisition of HMP.

Item 9.01. Financial Statements and Exhibits


			(a)			Financial statements of businesses acquired
						1.The audited consolidated financial statements of HMP as of December 31, 2022 and for the fiscal year ended December 31, 2022 are filed herewith as Exhibit 99.2 hereto and incorporated herein by reference. 2.The unaudited consolidated financial statements of HMP as of and for the three month period ended March 31, 2023 are filed herewith as Exhibit 99.3 hereto and incorporated herein by reference.
			(b)			Pro forma financial information
						The unaudited pro forma condensed combined financial information for the Company as of and for the three month period ended March 31, 2023 and for the year ended December 31, 2022, giving effect to the acquisition of HMP, is attached hereto as Exhibit 99.4 and incorporated herein by reference. The unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what the Company's results of operations or financial position would have been had the transactions reflected occurred on the dates indicated or to project the Company’s financial position as of any future date or the Company’s results of operations for any future period.
			(d)			Exhibits
						The following exhibits are filed with this Current Report on Form 8-K:


Exhibit Number						Description
2.1						Stock Purchase Agreement dated April 18, 2023 by and among Viemed, Inc., the Stockholders and Home Medical Products, Inc. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on April 19, 2023.*

10.1						Credit Agreement, dated November 29, 2022, among Viemed, Inc., as borrower, certain subsidiaries of Viemed, Inc., as guarantors, the lenders from time to time party thereto, and Regions Bank, as administrative agent and collateral agent. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 29, 2022.
23 .1						Consent of Horne, LLP.
99.1						Press Release dated June 1, 2023. Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed June 1, 2023.
99.2						Audited consolidated financial statements for Home Medical Products, Inc. as of and for the fiscal year ended December 31, 2022 and the accompanying notes thereto.
99.3						Unaudited consolidated financial statements of Home Medical Products, Inc. as of and for the three months ended March 31, 2023.
99.4						Unaudited pro forma condensed combined financial information as of and for the three months ended March 31, 2023 and for the year ended December 31, 2022, and the accompanying notes thereto.
104						Cover Page Interactive Data File, formatted in Inline XBRL and included as Exhibit 101.

* Schedules (or similar attachments) to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to supplementally furnish copies of any omitted schedules (or similar attachments) to this exhibit to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 2, 2023



VIEMED HEALTHCARE, INC.

By:						/s/ Trae Fitzgerald
						Trae Fitzgerald
						Chief Financial Officer

Consent of Independent Auditor

We consent to the incorporation by reference in the following Registration Statements:

1.Registration Statement (Form S-8 No. 333-233412) pertaining to the Amended and Restated Stock Option Plan of Viemed Healthcare, Inc.,

2.Registration Statement (Form S-8 No. 333-233411) pertaining to the Amended and Restated Viemed Healthcare, Inc. Restricted Share Unit and Deferred Share Unit Plan,

3.Registration Statement (Form S-8 No. 333-239323) pertaining to the Viemed Healthcare, Inc. 2020 Long Term Incentive Plan, and

4.Registration Statement (Form S-3 No. 333-248573) of Viemed Healthcare, Inc.

of Viemed Healthcare, Inc. of our report dated August 2, 2023, relating to the consolidated financial statements of Home Medical Products, Inc., appearing in this Current Report on Form 8-K/A.

/s/ HORNE LLP

Ridgeland, Mississippi

August 2, 2023

HOME MEDICAL PRODUCTS, INC.

AND SUBSIDIARY

Jackson, Tennessee

Consolidated Financial Statements

Year Ended December 31, 2022

CONTENTS



Independent Auditor's Report			1 – 2


Consolidated Financial Statements

Consolidated Balance Sheet			3

Consolidated Statement of Income			4

Consolidated Statement of Shareholder's Equity			5

Consolidated Statement of Cash Flows			6

Notes to Consolidated Financial Statements			7 – 16

INDEPENDENT AUDITOR'S REPORT

Members of the Board

Home Medical Products, Inc. and Subsidiary

Opinion

We have audited the consolidated financial statements of Home Medical Products, Inc. and subsidiary (collectively, the "Company"), which comprise the consolidated balance sheet as of December 31, 2022, the related consolidated statements of income, shareholders' equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

•Exercise professional judgment and maintain professional skepticism throughout the audit.

•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

/s/ HORNE LLP

Ridgeland, Mississippi

August 2, 2023


HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2022
			2022
ASSETS
Current assets
Cash and cash equivalents	$	846,696
Certificates of deposit			52,343
Accounts receivable, less allowance for doubtful accounts of $1,908,644			3,442,393
Inventory			752,172
Other receivables			469,796
Prepaid expenses			83,584
Total current assets			5,646,984
Property and equipment, at cost			16,148,668
Less accumulated depreciation and amortization			(11,237,710)
Property and equipment, net			4,910,958
Other assets
Certificates of deposit, less current portion			821,773
Finance lease, right-of-use assets			878,189
Operating lease, right-of-use assets			363,293
Investments in limited partnership			25,000
Goodwill			892,775
Other intangible assets, net of accumulated amortization of $505,578			121,384
Total other assets			3,102,414
Total assets	$	13,660,356

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,640,374
Deferred revenue			786,203
Accrued liabilities			756,578
Current maturities of long-term debt			5,158,385
Borrowings on line of credit			689,889
Notes payable, related party			271,838
Finance lease liabilities, current portion			491,983
Operating lease liabilities, current portion			232,688
Total current liabilities			11,027,938
Non-current liabilities
Long-term debt, less current maturities			1,257,483
Finance lease liabilities, less current portion			354,724
Operating lease liabilities, less current portion			132,656
Total non-current liabilities			1,744,863
Total liabilities			12,772,801
Shareholders' equity
Common shares, $1.00 par value; 1,000 shares authorized, issued and outstanding			1,000
Retained earnings			756,982
Total Home Medical Products, Inc. shareholders' equity			757,982
Noncontrolling interest in consolidated subsidiary			129,573
Total shareholders' equity			887,555
Total liabilities and shareholders' equity	$	13,660,356

See accompanying notes.


HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY
Consolidated Statement of Income
Year Ended December 31, 2022

			2022
Revenue	$	31,850,810
Cost of revenue			13,289,274
Gross profit			18,561,536
Operating expenses
Selling, general and administrative			17,631,552
Depreciation and amortization			862,585
Gain on disposal of property and equipment			(19,553)
Operating income			86,952
Non-operating expenses
Interest income (expense), net			(421,304)
Other income			89,481
Net loss			(244,871)

Net income attributable to noncontrolling interest
in consolidated subsidiary			30,157
Net loss attributable to Home Medical Products, Inc.
and subsidiary	$	(275,028)

See accompanying notes.


HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY
Consolidated Statement of Shareholder's Equity
Year Ended December 31, 2022

			Common			Retained			Noncontrolling
			Shares			Earnings			Interest			Total
Balance at January 1, 2022	$	1,000		$	1,032,010		$	99,416		$	1,132,426
Net income (loss)			-			(275,028)			30,157			(244,871)
Balance at December 31, 2022	$	1,000		$	756,982		$	129,573		$	887,555

See accompanying notes.


HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
Year Ended December 31, 2022

			2022
Cash flows from operating activities
Net loss	$	(244,871)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization			6,137,667
Provision for uncollectible accounts			5,144,142
Gain on disposal of equipment			(19,553)
Noncash operating lease expense			254,806
Changes in operating assets and liabilities
Accounts receivables			(5,175,445)
Inventory			978,631
Other receivables			389,113
Prepaid expenses			69,059
Accounts payable			(506,619)
Accrued expenses			170,481
Deferred revenue			(46,396)
Operating lease liability			(234,493)
Net cash provided by operating activities			6,916,522

Cash flows from investing activities
Certificates of deposit			(9,129)
Purchases of property and equipment			(2,710,549)
Net cash used in investing activities			(2,719,678)

Cash flows from financing activities
Increase in borrowings on line of credit			61,887
Principal payments on finance lease liabilities			(567,930)
Principal payments on payables due to related party			(36,829)
Proceeds from long-term debt			5,942,921
Principal payments on long-term debt			(10,213,980)
Net cash used in financing activities			(4,813,931)

Net decrease in cash and cash equivalents			(617,087)
Cash and cash equivalents at beginning of year			1,463,783
Cash and cash equivalents at end of year	$	846,696

Supplemental disclosures of cash flow information
Cash paid for interest	$	421,922
Supplemental disclosures of non-cash investing and financing activities
Right-of-use assets obtained in exchange for new finance lease liabilities	$	506,337
Medical equipment obtained through vendor equipment obligations	$	2,235,826
Reduction in finance lease liabilities with proceeds from disposal of finance lease right-of-use assets	$	45,912

See accompanying notes.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Summary of Significant Accounting Policies

Organization and Nature of Business

Home Medical Products, Inc. ("HMP") is a provider of home medical equipment ("HME") incorporated under the laws of the State of Tennessee and offers in-home medical products and services to patients through its offices in Tennessee, Mississippi, and Alabama.

Doc Supply of West Tennessee, LLC ("Doc Supply") is a 67 percent-owned subsidiary of HMP. Doc Supply provides rehabilitation medical equipment and accessories to patients in West Tennessee, North Mississippi, and East Arkansas.

Principles of Consolidation

The consolidated financial statements include the accounts of HMP, its wholly-owned subsidiaries, and Doc Supply (the "Company"). All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most sensitive estimates included in these consolidated financial statements relate to contractual discounts under third-party contracts and the allowance for uncollectible accounts.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of the following at December 31, 2022:


Cash	$	334,688
Money market accounts			512,006
Total	$	846,694

Certificates of Deposit

Certificates of deposit with original maturities greater than three months and remaining maturities less than one year are classified as current assets. Certificates of deposit with remaining maturities greater than one year are classified as noncurrent assets.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are regularly reviewed for collectability and an allowance is recorded to cover the estimated bad debts and billing modifications. The accounts receivable are presented on the Consolidated Balance Sheet net of the allowance for doubtful accounts. It is possible that the estimates of the allowance for doubtful accounts could change, which could have a material impact on operations and cash flows.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

An allowance for doubtful accounts and a corresponding provision for bad debts are established based on an aging of receivables and historical collection percentages. Actual write-offs of amounts determined to be uncollectible are charged against the allowance for doubtful accounts. The allowance for doubtful accounts is evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the accounts in light of historical experience, the nature and volume of the accounts and the agreements with the respective third-party payors.

Inventory

Inventory represents non-serialized supplies that consist of equipment parts, consumables, and associated product supplies and is expensed at the time of sale or use. The Company values inventory at the lower of cost or net realizable value. Obsolete and unserviceable inventories are valued at estimated net realizable value.

Property and Equipment

Property and equipment are recorded at cost and presented on the Consolidated Balance Sheet net of accumulated depreciation. Expenditures for maintenance and repairs necessary to maintain property and equipment in efficient operating condition are expensed as incurred. Major renewals and improvements that extend the useful life or capacity of the asset are capitalized.

Depreciation is computed using the straight-line method with useful lives of the property ranging from one to 10 years. The estimated useful lives for each class of depreciable assets are as follows:


Description			Years
Medical equipment			1 – 5
Computer equipment			5
Office furniture and fixtures			5 – 10
Leasehold improvements			Shorter of useful life or lease
Vehicles			5

Goodwill and Other Intangible Assets

The Company's goodwill was recorded as a result of business combinations in prior years and was accounted for using the acquisition method of accounting. The Company does not amortize goodwill but tests it at least annually for impairment or whenever events or circumstances indicate that the carrying value may not be recoverable in accordance with the Accounting Standards Codification ("ASC") Topic 350, Intangibles – Goodwill and Other, ("ASC 350"). No impairment loss resulted from the Company's impairment tests performed for the year ended December 31, 2022.

Other intangible assets consist of customer relationship intangibles and noncompete agreements acquired by the Company in connection with acquisition of businesses. Customer relationship intangibles and noncompete agreements, designated as finite-lived intangible assets in accordance with ASC 350, are amortized using the straight-line method over their estimated useful lives and are reviewed for impairment in accordance with the provisions of ASC 350. Future amortization expense of other intangible assets is expected to be $41,384, $40,000, and $40,000 in 2023, 2024 and 2025, respectively.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

Impairment of Long-Lived Assets

The Company evaluates long-lived assets, other than goodwill, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount to estimated undiscounted future cash flows. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized based upon the amount by which the carrying amount exceeds the fair value of the asset. There was no impairment loss recognized in 2022.

Income Taxes

HMP, with the consent of its shareholders, has elected under the Internal Revenue Code and similar provisions of state law, to be taxed as an S Corporation. Doc Supply is a limited liability corporation that has elected to be taxed as a partnership for federal and state income tax purposes.

The shareholders of HMP and members of Doc Supply separately account for their proportionate share of the Company's income, deductions, losses and credits for federal income tax purposes. Therefore, no provision or liability for federal income taxes has been included in the accompanying consolidated financial statements.

HMP and Doc Supply are subject to state income taxes on income apportioned to the state of Tennessee. Tennessee state income taxes consist of taxes currently due or refundable and deferred income taxes accounted for using the liability method. Deferred income taxes relate to temporary differences between assets and liabilities recognized differently for financial reporting purposes and the amounts used for income tax purposes. State deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Tennessee state income taxes were not significant as of and for the year ended December 31, 2022.

Advertising

Advertising costs are expensed as incurred. Advertising expense was $71,142 for the year ended December 31, 2022.

Revenue Recognition

Revenue from a customer consists of sales and rentals of home medical equipment and medical services. Patient revenues are billed to and collections received from Medicare, Medicaid, third-party insurers, co-insurance and patient-pay. Patient revenue is recognized net of contractual adjustments and bad debt based on contractual arrangements with third-party payors, an evaluation of expected collections resulting from the analysis of current and past due accounts, past collection experience in relation to amounts billed and other relevant information. Contractual adjustments result from the differences between the rates charged for services and reimbursement rates paid by government-sponsored healthcare programs and insurance companies for such services.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

The Company's contracts with customers often include multiple products and services, and the Company evaluates these arrangements to determine the unit of accounting for revenue recognition purposes based on whether the product or service is distinct from other products or services in the arrangement and should be accounted for as a separate performance obligation. A product or service is distinct if the customer can benefit from it on its own or together with other readily available resources and the Company's ability to transfer the goods or services is separately identifiable from other promises in the contractual arrangement with the customer (e.g. patient). Revenue is then allocated to each separately identifiable good or service based on the standalone price of the items underlying the performance obligations. Most of the Company's products fall in the Medicare fee-for--service program which is a payment model where services are unbundled and paid for separately. These services are paid based on a Medicare determined price that is publicly available on the Centers for Medicare and Medicaid Services website. For commercial payors, durable medical equipment ("DME") companies must negotiate in-network pricing separately, though in general, the Company's payors tend to benchmark their contract rates and coverage policies closely to those of Medicare.

The Company considers performance obligations for sales and rentals to be met when the customer receives the equipment, and revenue for rentals is recognized over time, over the respective rental period. For revenue associated with HME rentals, the Company recognizes revenue in accordance with the Financial Accounting Standards Board ("FASB") ASC Topic 842, "Leases," ("Topic 842"). For any HME sales and services, the Company recognizes revenue under FASB ASU 2014-09, "Revenue from Contracts with Customers," ("Topic 606") and related amendments.

The Company recognizes equipment rental revenue over the non-cancelable lease term, which varies based on the type of equipment rental, less estimated adjustments, in accordance with Topic 842. The Company has separate contracts with each patient that are not subject to a master lease agreement with any third-party payor. The Company would first consider the lease classification issue (sales-type lease or operating lease) and then appropriately recognize or defer rental revenue over the lease term.

The revenues from each major source are summarized in the following table:


Revenue from rentals under Topic 842	$	17,338,367
Revenue from sales and services under Topic 606			14,512,443
Total revenues	$	31,850,810

Revenue Accounting under Topic 842

The Company leases HME such as non-invasive and invasive ventilators, CPAP machines and other equipment such as hospital beds, walkers, crutches, tens units, specialty mattresses and lifts to customers for a fixed monthly amount on a month-to-month basis. The customer generally has the right to cancel the lease at any time during the rental period. The Company considers these rentals to be operating leases.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

Under FASB Topic 842, the Company recognizes rental revenue on operating leases on a straight-line basis over the contractual lease term which varies based on the type of equipment rental. The lease term begins on the date equipment is delivered to patients, and revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including Medicare, private commercial payors, and Medicaid. Certain customer co-payments are included in revenue when considered probable of payment, which is generally when paid.

Revenue Accounting under Topic 606

The Company sells HME, replacement parts and supplies to customers and recognizes revenue based on contractual payment rates as determined by the payors at the point in time where control of the good or service is transferred through delivery to the customer. The customer and, if applicable, the payors are generally charged at the time that the product is sold.

The Company determines its estimates of contractual allowances and discounts based upon contractual agreements, its policies and historical experience. While the rates are fixed for the product or service with the customer and the payors, such amounts typically include co-payments, co-insurance and deductibles, which vary in amount, and are due from the patient. The Company includes in the transaction price only the amount that the Company expects to be entitled, which is substantially all of the payor billings at contractual rates. The transaction price is initially constrained by the amount of customer co-payments, which are included in the transaction price when considered probable of payment and included in revenue if the product or service has already been provided to the customer.

Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenue and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application or claim denial.

Returns and refunds are not accepted on equipment sales. The Company does not offer warranties to customers in excess of the manufacturer's warranty. Any taxes due upon sale of the products or services are not recognized as revenue. The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of December 31, 2022.

Leases

The Company accounts for lease arrangements in accordance with Topic 842. Topic 842 requires lessees to recognize most leases on their balance sheet as a right-of-use ("ROU") asset representing the right to use an underlying asset and a lease liability representing the obligation to make lease payments over the lease term, measured on a discounted basis. Topic 842 also requires additional disclosure of key quantitative and qualitative information for leasing arrangements. Similar to the previous lease guidance, Topic 842 retains a distinction between finance leases (similar to capital leases in Topic 840, Leases) and operating leases, with classification affecting the pattern of expense recognition in the income statement.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. A contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company made an accounting policy election available under Topic 842 not to recognize ROU assets and lease liabilities for leases with a term of 12 months or less. For all other leases, ROU assets and lease liabilities are measured based on the present value of future lease payments over the lease term at the commencement date of the lease. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives. To determine the present value of lease payments, the Company uses the interest rate implicit in the lease, if known, or the Company's incremental borrowing rated for borrowings under similar terms if the implicit rate is not known.

Recently Adopted Accounting Pronouncements

On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, The standard replaces the current incurred loss impairment model that recognizes losses when a probable threshold is met with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. Further, the FASB issued ASU 2019-04 and ASU 2019-05 to provide additional guidance on the credit losses standard. While the adoption of ASC 326 could result in a higher allowance for credit losses on receivables within the scope of the standard due to the prescribed measurement principles, the Company does not expect the impact of the adoption on the consolidated financial statements to be material.

Recently Issued Accounting Pronouncements

In September 2022, the FASB issued ASU No. 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations that are outstanding at the end of the reporting period. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023. The Company does not expect the update to affect the recognition, measurement, or financial statement presentation of supplier finance program obligations, but is evaluating the impact of the update on related disclosures upon adoption.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Property and Equipment

A summary of property and equipment as of December 31, 2022 follows:


Medical equipment (including leased equipment)	$	13,941,299
Computer equipment			249,225
Office furniture and fixtures			431,217
Leasehold Improvements			32,156
Vehicles			1,494,771
Total			16,148,668
Less accumulated depreciation and amortization			(11,237,710)
Property and equipment, net of
accumulated depreciation and amortization	$	4,910,958

Note 3. Line of Credit and Long-Term Debt

In July 2021, the Company entered into a credit facility (the "Credit Facility") with a financial institution. The Credit Facility provides a $1,000,000 ("Credit Limit") revolving line of credit (the "Revolving Line of Credit") maturing July 26, 2023. Available borrowing are equal to the lesser of the Credit Limit or borrowing base, as defined. The Revolving Line of Credit bears interest at variable rates. As of December 31, 2022, outstanding borrowings under the Revolving Line of Credit totaled $689,889. Available borrowings on the line of credit totaled $310,111 at December 31, 2022.

A summary of the Company's long-term debt as of December 31, 2022 follows:


Equipment obligations consisting of installment notes payable for medical equipment and other financing for medical equipment that transfer ownership to the Company at the end of the lease term, payable in monthly installments through 2026, including interest at zero percent to 7.99 percent.	$	5,341,204
Notes payable to banks due in monthly installments, including interest at 4.25 percent to 6.00 percent, through 2026, collateralized by certain equipment and certificates of deposit.			927,965
Other notes payable			146,699
Total			6,415,868
Less current maturities			5,940,455
Long-term debt, less current maturities	$	475,413

A summary of future annual maturities of notes payable outstanding at December 31, 2022, is as follows:


Year Ending December 31,		Amount
2023	$	5,940,455
2024		412,693
2025		52,353
2026		10,367
	$	6,415,868

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Leases

The Company leases vehicles under a master lease agreement with terms ranging from three to five years which are accounted for as finance leases. Under the terms of the master lease agreement, Company guarantees the residual values of the individual vehicles. Management determined that it is not probable that amounts will be owed under the residual value guarantees. Accordingly, such guaranteed residuals are excluded from the finance lease liability as of December 31, 2022. The Company is subject to per mile charges on vehicle mileage that exceed certain specified levels. Per mile charges are accounted for as variable lease payments and are not significant for the year ended December 31, 2022. The lessor provides insurance and maintenance services under the terms of the master lease agreement which are accounted for separately from the leasing arrangement.

The Company leases its operating facilities under operating leases that range from month-to-month lease terms to up to five-year terms. Certain of the facility leases contain renewal options that are included in the lease term if it is reasonably certain at inception that the renewal option will be exercised. In accordance with the Company's accounting policy election, the Company does not recognize a ROU asset or lease liability for short-term leases with a term of 12 months or less.

Operating lease cost is recognized on a straight-line basis over the lease term. Finance lease cost is recognized as a combination of the amortization expense for the ROU assets and interest expense for the outstanding lease liabilities, and results in a front-loaded expense pattern over the lease term. The components of lease expense are as follows for the year ended December 31, 2022:


Operating lease cost	$	254,806
Finance lease cost – amortization of right-of-use assets			597,550
Finance lease cost – interest on lease liabilities			30,505
Short-term lease cost			627,091
Total lease cost	$	1,509,952

Future undiscounted cash flows for each of the next five years and thereafter and a reconciliation to the lease liabilities recognized on the balance sheet are as follows as of December 31, 2022:


Year Ending December 31			Operating Leases	Finance Leases
2023	$	242,683		$	523,105
2024			117,194	229,533
2025			17,957	143,089
Total undiscounted operating lease payments			377,834	895,727
Less: imputed interest			(12,490)	(49,020)
Present value of lease liabilities	$	365,344		$	846,707

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Continued

The weighted average remaining lease term and discount rate for lease liabilities included in the accompanying consolidated balance sheet are as follows:


		Operating Leases	Finance Leases
Weighted average remaining lease term (years)	1.69		1.98
Weighted average discount rate	4.25%		5.32%

The cash paid for amounts included in the measurement of lease liabilities:


Cash flows from operating leases	$	254,806
Cash flows from finance leases	$	572,840

Note 5. Employee Benefit Plan

The Company maintains a 401(k) plan for the employees of the Company who have completed one year of employment. The Company's matching 401(k) contribution is based on a percentage of employee deferrals. Benefits are generally payable, depending on vesting, upon termination of employment, retirement (at age 65) or upon disability. Contributions to the plan during 2022 were $102,754.

Note 6. Concentration of Credit Risk

At December 31, 2022, the Company had funds on deposit with federally insured banks of which approximately $331,978 was in excess of the $250,000 federal deposit insurance coverage limits.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential credit losses and such losses have been within management expectations.

Note 7. Related Party Transactions

The Company has payables due to the owners and affiliates on demand in the amount of $283,881 at December 31, 2022.

The Company leases certain of its operating facilities under short-term operating leases from S&K Partners, a related party through common ownership. Total short-term lease expense on such leases totaled $516,000 for the year ended December 31, 2022.

HOME MEDICAL PRODUCTS, INC. AND SUBSIDIARY

Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Commitments and Contingencies

Periodically the Company is involved in various external governmental investigations, audits and reviews. Reviews, audits and investigations of this sort can lead to government actions, which can result in the assessment of recoupment of reimbursement, civil or criminal fines or penalties, or other sanctions, including restrictions or changes in the way the Company conducts business, loss of licensure or exclusion from participation in government healthcare programs. The Company accrues estimates for resolution of any legal and other contingencies when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies.

Note 9. Subsequent Events

Subsequent events have been evaluated through August 2, 2023, the date that the consolidated financial statements were available to be issued, and determined there were no events occurring during that period necessary to disclose other than those described below.

Effective January 1, 2023, HMP transferred its ownership in Doc Supply to the members of HMP and an employee of HMP.

On April 18, 2023, Viemed Healthcare, Inc. entered into a definitive stock purchase agreement with the Company and the Company's shareholders to acquire 100 percent of the equity ownership of the Company. The transaction closed on June 1, 2023, in exchange for approximately $28 million in cash, subject to customary post-closing net working capital and other adjustments.

On June 20, 2023, HMP repaid all outstanding borrowings associated with its Credit Facility, amounting to $1,005,695. The repayment was made in accordance with the terms and conditions specified in the Credit Facility agreement. On June 21, 2023, the Company discharged two term loans with outstanding principal amounts of $629,698 and $35,841, respectively. This repayment of term loans was executed in adherence to the contractual obligations stipulated in the respective loan agreements.

HOME MEDICAL PRODUCTS, INC.

Jackson, Tennessee

Financial Statements

Three Months Ended March 31, 2023

CONTENTS



Financial Statements

Balance Sheet			1

Statement of Income			2

Statement of Shareholder's Equity			3

Statement of Cash Flows			4

Notes to Financial Statements			5 – 14


HOME MEDICAL PRODUCTS, INC.
Balance Sheet
March 31, 2023

			2023
ASSETS
Current assets
Cash and cash equivalents	$	310,636
Certificates of deposit			874,117
Accounts receivable, less allowance for doubtful accounts of $2,127,070			2,823,695
Inventory			588,653
Other receivables			718,172
Prepaid expenses			102,223
Total current assets			5,417,496

Property and equipment, at cost			15,382,799
Less accumulated depreciation and amortization			(11,165,134)
Property and equipment, net			4,217,665

Other assets
Finance lease, right-of-use assets			656,517
Operating lease, right-of-use assets			215,435
Investments in limited partnership			25,000
Notes receivable, related party			66,962
Goodwill			593,247
Other intangible assets, net of accumulated amortization of $514,533			112,429
Total other assets			1,669,590
Total assets	$	11,304,751

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,450,934
Deferred revenue			738,590
Accrued liabilities			773,309
Current maturities of long-term debt			4,777,533
Borrowings on line of credit			1,004,889
Finance lease liabilities, current portion			379,387
Operating lease liabilities, current portion			160,700
Total current liabilities			10,285,342

Non-current liabilities
Long-term debt, less current maturities			203,834
Finance lease liabilities, less current portion			256,139
Operating lease liabilities, less current portion			56,789
Total non-current liabilities			516,762
Total liabilities			10,802,104

Shareholders' equity
Common shares, $1.00 par value; 1,000 shares authorized, issued and outstanding			1,000
Retained earnings			501,647
Total shareholders' equity			502,647
Total liabilities and shareholders' equity	$	11,304,751

See accompanying notes.


HOME MEDICAL PRODUCTS, INC.
Statement of Income
Three Months Ended March 31, 2023


			2023
Revenue	$	6,958,311
Cost of revenue			2,513,971
Gross profit			4,444,340
Operating expenses
Selling, general and administrative			4,478,777
Depreciation and amortization			223,319
Gain on disposal of property and equipment			(20,299)
Operating income			(237,457)
Non-operating expenses
Interest income (expense), net			(122,540)
Other income			40,350
Net loss	$	(319,647)

See accompanying notes.


HOME MEDICAL PRODUCTS, INC.
Statement of Shareholder's Equity
Three Months Ended March 31, 2023


			Common			Retained			Noncontrolling
			Shares			Earnings			Interest			Total
Balance at January 1, 2023	$	1,000		$	821,294		$	129,573		$	951,867

Distribution of Doc Supply			-						(129,573)			(129,573)

Net loss			-			(319,647)			-			(319,647)

Balance at March 31, 2023	$	1,000		$	501,647		$		-	$	502,647

See accompanying notes.


HOME MEDICAL PRODUCTS, INC.
Statement of Cash Flows
Three Months Ended March 31, 2023

			2023
Cash flows from operating activities
Net loss	$	(319,647)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization			1,233,496
Provision for uncollectible accounts			(146,789)
Gain on disposal of equipment			(20,299)
Noncash operating lease expense			45,338
Changes in operating assets and liabilities
Accounts receivables			186,667
Inventory			(33,910)
Other receivables			(168,856)
Prepaid expenses			(18,639)
Accounts payable			383,298
Accrued expenses			42,094
Investment in subsidiary			126,545
Deferred revenue			(47,613)
Operating lease liability			(45,338)
Net cash provided by operating activities			1,216,347

Cash flows from investing activities
Purchases of property and equipment			(408,389)
Net cash used in investing activities			(408,389)

Cash flows from financing activities
Increase in borrowings on line of credit			315,000
Principal payments on finance lease liabilities			(148,111)
Principal payments on payables due to related party			(150,003)
Proceeds from long-term debt			1,265,036
Principal payments on long-term debt			(2,447,288)
Net cash used in financing activities			(1,165,366)

Net decrease in cash and cash equivalents			(357,408)

Cash and cash equivalents at beginning of year			668,044
Cash and cash equivalents at end of year	$	310,636

Supplemental disclosures of cash flow information
Cash paid for interest	$	122,595

Supplemental disclosures of non-cash investing and financing activities
Non-cash reduction in related party payable/receivable	$	200,840

See accompanying notes.

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Summary of Significant Accounting Policies

Organization and Nature of Business

Principles of Consolidation

The consolidated financial statements include the accounts of HMP and its wholly-owned subsidiaries (the "Company"). All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most sensitive estimates included in these financial statements relate to contractual discounts under third-party contracts and the allowance for uncollectible accounts.

Cash and Cash Equivalents


Cash	$	136,190
Money market accounts			174,446
Total	$	310,636

Certificates of Deposit

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are regularly reviewed for collectability and an allowance is recorded to cover the estimated bad debts and billing modifications. The accounts receivable are presented on the Balance Sheet net of the allowance for doubtful accounts. It is possible that the estimates of the allowance for doubtful accounts could change, which could have a material impact on operations and cash flows.

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

Inventory

Property and Equipment

Property and equipment are recorded at cost and presented on the Balance Sheet net of accumulated depreciation. Expenditures for maintenance and repairs necessary to maintain property and equipment in efficient operating condition are expensed as incurred. Major renewals and improvements that extend the useful life or capacity of the asset are capitalized.

Depreciation is computed using the straight-line method with useful lives of the property ranging from one to 10 years. The estimated useful lives for each class of depreciable assets are as follows:


Description			Years
Medical equipment			1 – 5
Computer equipment			5
Office furniture and fixtures			5 – 10
Leasehold improvements			Shorter of useful life or lease
Vehicles			5

Goodwill and Other Intangible Assets

Other intangible assets consist of customer relationship intangibles and noncompete agreements acquired by the Company in connection with acquisition of businesses. Customer relationship intangibles and noncompete agreements, designated as finite-lived intangible assets in accordance with ASC 350, are amortized using the straight-line method over their estimated useful lives and are reviewed for impairment in accordance with the provisions of ASC 350. Future amortization expense of other intangible assets is expected to be $31,038, $40,000, and $40,000 in the remaining nine months of 2023, 2024 and 2025, respectively.

Impairment of Long-Lived Assets

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

Income Taxes

HMP, with the consent of its shareholders, has elected under the Internal Revenue Code and similar provisions of state law, to be taxed as an S Corporation.

The shareholders of HMP separately account for their proportionate share of the Company's income, deductions, losses and credits for federal income tax purposes. Therefore, no provision or liability for federal income taxes has been included in the accompanying financial statements.

HMP is subject to state income taxes on income apportioned to the state of Tennessee. Tennessee state income taxes consist of taxes currently due or refundable and deferred income taxes accounted for using the liability method. Deferred income taxes relate to temporary differences between assets and liabilities recognized differently for financial reporting purposes and the amounts used for income tax purposes. State deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Tennessee state income taxes were not significant as of and for the three months ended March 31, 2023.

Advertising

Advertising costs are expensed as incurred. Advertising expense was $13,447 for the three months ended March 31, 2023.

Revenue Recognition

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

The revenues from each major source are summarized in the following table:


Revenue from rentals under Topic 842	$	3,761,001
Revenue from sales and services under Topic 606			3,197,310
Total revenues	$	6,958,311

Revenue Accounting under Topic 842

Revenue Accounting under Topic 606

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

Leases

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

Recently Adopted Accounting Pronouncements

On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, The standard replaces the current incurred loss impairment model that recognizes losses when a probable threshold is met with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. Further, the FASB issued ASU 2019-04 and ASU 2019-05 to provide additional guidance on the credit losses standard. While the adoption of ASC 326 could result in a higher allowance for credit losses on receivables within the scope of the standard due to the prescribed measurement principles, the impact of the adoption on the financial statements was not material.

Recently Issued Accounting Pronouncements

Transfer of Ownership

Effective January 1, 2023, the Company assigned its 67-percent ownership in Doc Supply of West Tennessee, LLC ("Doc Supply") to the members of the Company and an employee of the Company. The Company distributed two-thirds of the Company’s interest in Doc Supply to the Company’s members in exchange for a reduction in amounts payable to the members. They also distributed the remaining one-third interest to an employee of the Company as an employee bonus. Management determined that the carrying value of the Company’s investment in Doc Supply approximated the fair value as of 1/1/23. The Company evaluated the loss of control under ASC 810-10-40 Derecognition and concluded that the transaction resulted in the derecognition of the carrying value of net assets of the subsidiary and carrying amount of noncontrolling interest at the date control is lost. It also results in the recognition of 1) the fair value of the proceeds from the transaction, 2) fair value of any noncontrolling investment retained in the former subsidiary and 3) reclassification to income any amounts recognized in other comprehensive income in relation to the subsidiary. Any difference resulting from the above is recognized as gain or loss in the statement of income. The net assets distributed is approximately $397,000.

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Continued

The following table summarizes the transaction:


Cash and cash equivalents	$	178,652
Accounts Receivable			578,820
Inventory			197,429
Property and equipment			52,377
Other assets			468,783
Accounts Payable			(572,738)
Debt			(252,249)
Other liabilities			(253,539)
Net assets	$	397,535
Noncontrolling interest	$	129,573
Distribution of the Investment in Doc Supply	$	267,962

Note 2. Property and Equipment

A summary of property and equipment as of March 31, 2023 follows:


Medical equipment (including leased equipment)	$	13,250,548
Computer equipment			290,096
Office furniture and fixtures			434,431
Leasehold Improvements			32,156
Vehicles			1,375,568
Total			15,382,799
Less accumulated depreciation and amortization			(11,165,134)
Property and equipment, net of accumulated depreciation and amortization	$	4,217,665

Note 3. Line of Credit and Long-Term Debt

In July 2021, the Company entered into a credit facility (the "Credit Facility") with a financial institution. The Credit Facility provides a $1,000,000 ("Credit Limit") revolving line of credit (the "Revolving Line of Credit") maturing July 26, 2023. Available borrowing are equal to the lesser of the Credit Limit or borrowing base, as defined. The Revolving Line of Credit bears interest at variable rates. As of March 31, 2023, outstanding borrowings under the Revolving Line of Credit totaled $1,004,889. There are no available borrowings on the line of credit at March 31, 2023.

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Continued

A summary of the Company's long-term debt as of March 31, 2023 follows:


Equipment obligations consisting of installment notes payable for medical equipment and other financing for medical equipment that transfer ownership to the Company at the end of the lease term, payable in monthly installments through 2026, including interest at zero percent to 7.99 percent.	$	4,161,987
Notes payable to banks due in monthly installments, including interest at 4.25 percent to 6.00 percent, through 2026, collateralized by certain equipment and certificates of deposit.			714,773
Other notes payable			104,607
Total			4,981,367
Less current maturities			4,777,533
Long-term debt, less current maturities	$	203,834

A summary of future annual maturities of notes payable outstanding at March 31, 2023, is as follows:


Twelve Months Ending			Amount
March 31, 2024	$	4,777,533
March 31, 2025			188,225
March 31, 2026			15,609
	$	4,981,367

Note 4. Leases

The Company leases vehicles under a master lease agreement with terms ranging from three to five years which are accounted for as finance leases. Under the terms of the master lease agreement, Company guarantees the residual values of the individual vehicles. Management determined that it is not probable that amounts will be owed under the residual value guarantees. Accordingly, such guaranteed residuals are excluded from the finance lease liability as of March 31, 2023. The Company is subject to per mile charges on vehicle mileage that exceed certain specified levels. Per mile charges are accounted for as variable lease payments and are not significant for the three months ended March 31, 2023. The lessor provides insurance and maintenance services under the terms of the master lease agreement which are accounted for separately from the leasing arrangement.

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Continued


Operating lease cost	$	47,798
Finance lease cost – amortization of right-of-use assets			154,938
Finance lease cost – interest on lease liabilities			9,305
Short-term lease cost			160,959
Total lease cost	$	373,000

Future undiscounted cash flows for each of the next five years and thereafter and a reconciliation to the lease liabilities recognized on the balance sheet are as follows as of March 31, 2023:


Twelve Months Ending			Operating Leases	Finance Leases
March 31, 2024	$	165,897		$	403,761
March 31, 2025			48,811	176,872
March 31, 2026			8,979	91,872
Total undiscounted operating lease payments			223,687	672,505
Less: imputed interest			(6,198)	(36,979)
Present value of lease liabilities	$	217,489		$	635,526

The weighted average remaining lease term and discount rate for lease liabilities included in the accompanying balance sheet are as follows:


		Operating Leases	Finance Leases
Weighted average remaining lease term (years)	1.87		1.81
Weighted average discount rate	4.25%		5.47%

The cash paid for amounts included in the measurement of lease liabilities:


Cash flows from operating leases	$	47,798
Cash flows from finance leases	$	157,416

Note 5. Employee Benefit Plan

HOME MEDICAL PRODUCTS, INC.

Three Months Ended March 31, 2023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6. Concentration of Credit Risk

The Company maintains cash balances at several banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000 at March 31, 2023. At March 31, 2023, the Company had no uninsured balances in excess of these insured limits. The Company has not experienced any losses in such accounts.

Note 7. Related Party Transactions

The Company has receivables from the owners and affiliates in the amount of $86,724 at
March 31, 2023.

Note 8. Commitments and Contingencies

Note 9. Subsequent Events

Subsequent events have been evaluated through August 2, 2023, the date that the financial statements were available to be issued, and determined there were no events occurring during that period necessary to disclose other than those described below.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial statements combine the separate historical financial information of Viemed Healthcare, Inc. ("Viemed") and Home Medical Products, Inc. ("HMP") after giving effect to the acquisition (as described in Note 1 below), and the pro forma effects of certain assumptions and adjustments described in “Notes to the Unaudited Pro Forma Condensed Combined Financial Statements” below. The unaudited pro forma condensed combined financial statements give effect to the acquisition, as if it had been completed as of March 31, 2023 for purposes of the unaudited pro forma condensed combined consolidated balance sheet, and as of January 1, 2022 for the purposes of the unaudited pro forma condensed combined consolidated statements of income.

The preparation of the unaudited pro forma condensed combined financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma condensed combined financial statements should be read together with:

•the accompanying notes to the unaudited pro forma condensed combined financial statements;

•Viemed’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2022, included in Viemed’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 2, 2023;

•HMP’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2022, filed as Exhibit 99.2 to this Form 8-K;

•Viemed’s separate unaudited historical condensed consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2023, included in Viemed’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, filed with the SEC on May 8, 2023; and

•HMP’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2023, filed as Exhibit 99.3 to this Form 8-K.

In connection with the plan to integrate the operations of Viemed and HMP following the completion of the acquisition, Viemed anticipates that nonrecurring charges will be incurred. Viemed is not able to determine the timing, nature, and amount of these charges as of the date of this Form 8-K. However, these charges will affect the results of operations of Viemed and HMP, as well as those of the combined company following the completion of the acquisition, in the period in which they are incurred. The unaudited pro forma condensed combined financial statements do not include the effects of costs associated with any restructuring or integration activities resulting from the acquisition, as such costs cannot be determined at this time.

The pro forma financial information reflects adjustments that management believes are necessary to present fairly, the combined pro forma financial position and results of operations following the closing of the acquisition as of and for the periods indicated. The adjustments are based on currently available information and assumptions that management believes are, under the circumstances and given the information available at this time, reasonable. These adjustments are based on preliminary estimates and will be finalized within the measurement period that will not extend beyond 12 months from the close of the acquisition. Differences between these preliminary estimates and the final acquisition accounting may arise, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined consolidated financial information and the combined entity’s future results of operations and financial position.

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the acquisition. It has been prepared for informational purposes only and is subject to a number of uncertainties and assumptions. Additionally, the unaudited pro forma condensed combined financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the acquisition been completed as of the dates indicated or that may be achieved in the future.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET

As of March 31, 2023

(Expressed in thousands of U.S. Dollars, except share amounts)


	Viemed Healthcare, Inc.		Home Medical Products, Inc.		Pro Forma Adjustments			Pro Forma Combined
ASSETS
Current assets
Cash and cash equivalents	$	23,544	$	1,185	(16,400)		(a)	$	8,329
Accounts receivable, net of allowance for doubtful accounts	16,320		2,824					$	19,144
Inventory	3,447		589					$	4,036
Income tax receivable	—		—					$	—
Prepaid expenses and other assets	3,394		820					$	4,214
Total current assets	$	46,705	$	5,418				$	35,723
Long-term assets
Property and equipment, net	68,438		5,090		(540)		(b)	$	72,988
Equity investments	1,994		25					$	2,019
Debt investment	2,057		—					$	2,057
Deferred tax asset	3,844		—					$	3,844
Goodwill	—		593		28,862		(c)	$	29,455
Intangible asset, net	—		112		575		(d)	$	687
Other long-term assets	1,596		67					$	1,663
Total long-term assets	$	77,929	$	5,887				$	112,713
TOTAL ASSETS	$	124,634	$	11,305				$	148,436

LIABILITIES
Current liabilities
Trade payables	$	4,262	$	2,451				$	6,713
Deferred revenue	4,698		739					$	5,437
Income taxes payable	1,247		—					$	1,247
Accrued liabilities	12,817		773					$	13,590
Current portion of lease liabilities	397		540					$	937
Current portion of long-term debt	—		5,782		250		(e)	$	6,032

Total current liabilities	$	23,421	$	10,285				$	33,956
Long-term liabilities
Accrued liabilities	1,010		—					$	1,010
Long-term lease liabilities	162		313					$	475
Long-term debt	—		204		12,750		(f)	$	12,954
Total long-term liabilities	$	1,172	$	517				$	14,439
TOTAL LIABILITIES	$	24,593	$	10,802				$	48,395



SHAREHOLDERS' EQUITY




TOTAL SHAREHOLDERS' EQUITY	$	100,041	$	503	$	(503)		$	100,041

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	124,634	$	11,305				$	148,436

See accompanying notes to the unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended March 31, 2023

(Expressed in thousands of U.S. Dollars, except outstanding shares and per share amounts)


	Viemed Healthcare, Inc.		Home Medical Products, Inc.		Pro Forma Adjustments		Pro Forma Combined
Revenue	$	39,556	$	6,958			$	46,514

Cost of revenue	15,552		2,514		(23)	(l)	18,043

Gross profit	$	24,004	$	4,444			$	28,471

Operating expenses
Selling, general and administrative	19,762		4,479		(531)	(g)	23,710
Research and development	780		—				780
Stock-based compensation	1,391		—				1,391
Depreciation and amortization	240		223		21	(i)	484
Gain on disposal of property and equipment	(22)		(20)				(42)
Other (income) expense, net	(81)		(40)				(121)
Income from operations	$	1,934	$	(198)			$	2,269

Non-operating income and expenses

Income from equity method investments	(35)		—				(35)
Interest (income) expense, net	(49)		123		260	(j)	334

Net income before taxes	2,018		(321)				1,970
Provision for income taxes	501		—		(12)	(k)	489

Net income	$	1,517	$	(321)			$	1,481


Net income per share
Basic	$	0.04					$	0.04
Diluted	$	0.04					$	0.04

Weighted average number of common shares outstanding:
Basic	38,156,777						38,156,777
Diluted	40,016,693						40,016,693

See accompanying notes to the unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME

For the Year Ended December 31, 2022

(Expressed in thousands of U.S. Dollars, except outstanding shares and per share amounts)


	Viemed Healthcare, Inc.		Home Medical Products, Inc.		Pro Forma Adjustments		Pro Forma Combined
Revenue	$	138,832	$	31,851	(5,706)	(l)	$	164,977

Cost of revenue	54,152		13,289		(1,610)	(i)(l)	65,831

Gross profit	$	84,680	$	18,562			$	99,146

Operating expenses
Selling, general and administrative	68,161		17,632		(5,568)	(h) (l)	80,225
Research and development	2,696		—				2,696
Stock-based compensation	5,202		—				5,202
Depreciation and amortization	1,012		863		50	(i)(l)	1,925
Loss (Gain) on disposal of property and equipment	346		(20)		7	(l)	333
Other (income) expense, net	(989)		(89)		(93)	(l)	(1,171)
Income from operations	$	8,252	$	176			$	9,936

Non-operating income and expenses

Income from equity method investments	935		—				935
Interest expense, net	(197)		(421)		(1,034)	(j)(l)	(1,652)

Net income before taxes	8,990		(245)				9,219
Provision for income taxes	2,768		—		59	(k)	2,827

Net income (loss)	$	6,222	$	(245)			$	6,392
Net income attributable to noncontrolling interest in consolidated subsidiary	—		(30)		(30)	(l)	—

Net income per share
Basic	$	0.16					$	0.17
Diluted	$	0.16					$	0.16

Weighted average number of common shares outstanding:
Basic	38,655,403						38,655,403
Diluted	39,807,434						39,807,434

See accompanying notes to the unaudited pro forma condensed combined financial statements.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

On June 1, 2023, Viemed, Inc. ("Viemed"), a wholly-owned subsidiary of Viemed Healthcare, Inc. (the "Company"), completed its previously announced acquisition of Home Medical Products, Inc., (“HMP”), which operates throughout Tennessee and in Alabama and Mississippi (collectively, the “HMP Acquisition”). The HMP Acquisition was consummated pursuant to the terms and conditions of a definitive Stock Purchase Agreement (the “Purchase Agreement”), dated April 18, 2023, by and among Viemed, HMP, Kevin Atkins and David Steele (collectively, the “Stockholders”). Viemed acquired from the Stockholders 100% of the equity ownership of HMP in exchange for approximately $28 million in cash, subject to customary post-closing net working capital and other adjustments.

The unaudited pro forma condensed combined consolidated balance sheet and statements of income, including per share data, are presented after giving effect to the HMP Acquisition. The pro forma financial information assumes that the HMP Acquisition occurred on January 1, 2022 for purposes of the unaudited pro forma condensed combined consolidated statements of income and on March 31, 2023 for the purposes of the unaudited pro forma condensed combined balance sheet and gives effect to the HMP Acquisition, for purposes of the unaudited pro forma condensed combined consolidated statements of income, as if it had been effective during the entire periods.

The HMP Acquisition will be accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”); accordingly, the difference between the purchase price over the estimated fair value of the assets acquired (including identifiable intangible assets) and liabilities assumed will be recorded as goodwill.

The pro forma financial information includes estimated adjustments to record the assets and liabilities of HMP at their respective fair values and represents management’s estimates based on available information. The pro forma adjustments included herein will likely be revised as additional information becomes available and as additional analysis is performed. The final allocation of the purchase price will be determined after completion of a final analysis to determine the fair values of HMP’s tangible and identifiable intangible assets and liabilities as of the closing date and any differences could be material.

NOTE 2. PRO FORMA ADJUSTMENTS

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current valuations, estimates and assumptions that are subject to change and such change could be material.

Adjustments to the Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet

Explanations of the adjustments to the unaudited pro forma condensed combined consolidated balance sheet are as follows:

(a) Represents the following adjustments:

•Increase of $13 million to reflect the issuance of debt to fund the HMP Acquisition

•Reduction of $29.4 million to reflect the cash purchase price paid or payable in connection with the HMP Acquisition.

(b) Represents adjustments to reflect the estimated fair value of property and equipment acquired.

(c) Represents the estimate of Goodwill of $28.9 million as a result of the total purchase price paid by Viemed exceeding the fair value of assets purchased and liabilities assumed.

(d) Represents adjustments to reflect the estimated fair value of acquired identifiable intangible assets.

(e) Represents the increase of $250,000 to reflect the current portion of long-term debt incurred to fund the HMP Acquisition.

(f) Represents the increase of $12,750,000 to reflect the non-current portion of long-term debt incurred to fund the HMP Acquisition.

Adjustments to Unaudited Pro Forma Condensed Combined Consolidated Statements of Income

Explanations of the adjustments to the unaudited pro forma condensed combined consolidated statements of income are as follows:

(g) Adjustment represents the elimination of historical nonrecurring transaction costs of $206,000 and non-recurring compensation costs of $325,000 incurred during the three months ended March 31, 2023.

(h) Adjustment represents the elimination of non-recurring compensation costs of $1,600,000 incurred during the year ended December 31, 2022.

(i) Adjustment represents

•Increase of amortization expense for acquired identifiable intangibles over an estimated useful life of 5 years using the straight line method assuming the acquisition closed on January 1, 2022. The estimated amount of increased amortization of acquired identifiable intangibles is $25,400 for the three months ended March 31, 2023 and $101,600 for the year ended December 31, 2022.

•Reduction of depreciation expense related to the estimated fair value of fixed assets acquired. The estimated amount of reduced depreciation is $4,000 for the three months ended March 31, 2023 and $16,500 for the year ended December 31, 2022.

•Reduction of cost of revenue related to the estimated fair value of fixed assets acquired. The estimated amount of reduced cost of revenue is $23,000 for the three months ended March 31, 2023 and $91,000 for the year ended December 31, 2022.

(j) Represents adjustments to reflect estimated interest expense associated with the issuance of new debt in order to partially fund the HMP Acquisition.

(k) Represents adjustments to reflect pro forma statutory income tax rate of 25.9%, which has been applied to HMP.

(l) Represents the following adjustments to eliminate the activities associated with a controlling interest in a non-acquired consolidating subsidiary

•Decrease of Revenue of $5.7 million

•Decrease of Cost of revenue of $1.5 million

•Decrease of Selling, general, and administrative expense of $4.0 million

•Decrease of depreciation and amortization expense of $35,000

•Decrease of gain on disposal of equipment of $7,000

•Decrease of interest expense of $6,000

•Increase of Other income of $93,000

•Elimination of Net income attributable to non-controlling interest in consolidated subsidiary

NOTE 3. PRO FORMA ALLOCATION OF PURCHASE PRICE

The following table shows the pro forma allocation of the consideration paid for HMP’s common equity to the acquired identifiable assets and liabilities assumed and the pro forma goodwill generated from the transaction.


Purchase Price
Cash paid or payable	$	29,400

Identifiable Assets
Cash and cash equivalents	921
Accounts receivable	2,014
Inventory	582
Prepaid expenses and other assets	535
Property and equipment, net	4,550
Lease assets	756
Identifiable intangibles	687
Other long-term assets	25
TOTAL ASSETS	10,070

Identifiable Liabilities
Trade payables	2,144
Deferred revenue	732
Accrued liabilities	1,195
Current portion of lease liabilities	536
Current debt	4,558
Long-term lease liabilities	207
Long-term debt	836
TOTAL LIABILITIES	10,208

Net assets (liabilities) acquired	(138)
Resulting goodwill	$	29,538

Cover	Aug. 02, 2023
Cover [Abstract]
Document Type	8-K/A
Document Period End Date	Aug. 02, 2023
Entity Registrant Name	Viemed Healthcare, Inc.
Entity File Number	001-38973
Entity Incorporation, State or Country Code	Z4
Entity Address, Address Line One	625 E. Kaliste Saloom Rd.
Entity Address, Postal Zip Code	70508
Entity Address, City or Town	Lafayette
Entity Address, State or Province	LA
City Area Code	337
Local Phone Number	504-3802
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common shares, no par value
Trading Symbol	VMD
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Central Index Key	0001729149
Amendment Flag	false

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