Good day, everyone, and welcome to today's Viemed Fourth Quarter and Year-end 2019 Earnings Call. Just as a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Todd Sender, Chief Operating Officer. Please go ahead.

Good morning, everyone. Please note that our remarks in this conference call may include forward-looking statements under the U.S. federal securities laws are forward-looking information under applicable Canadian securities legislation, which we collectively refer to as forward-looking statements. Such statements reflect the company's current views and intentions with respect to future results or events and are subject to certain risks and uncertainties, which could cause the actual results or events to vary from those indicated in our forward-looking statements. Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the securities regulatory authorities with certain provinces of Canada. Because of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. The forward-looking statements made in this conference call are made as of the date hereof, and the company undertakes no obligation to update or revise any forward-looking statements, except as required by law. The year-end financial results news release, including the related financial statements, is available on the SEC's website. Now I'll turn it over to Casey to get things started.

Good morning, everyone. And thank you for joining our call today. I'm thrilled to have the opportunity to report on yet another record quarter and overall year for Viemed. Our team was able to achieve a 38% growth rate in 2019, which is an amazing number. However, as most who are familiar with our story are aware, we were a very patient-centric organization who prides itself on its people, partnerships and performance. The vast majority of our patients come to us at the end-of-life stage with only 17 months to live. We help these folks stay comfortable within their home environment and provide more opportunities for them to live their lives a little longer and healthier. While 38% is impressive, the number in 2019 that we are most proud of is that we set up over 5,700 vent patients during the year. Our metrics from KPMG and PRECISION, Harvard Medical School study show that for every 6 to 8 patients placed on therapy, we save a life, which means our folks at Viemed save somewhere between 700 and 1,000 lives this past year. These are the metrics that are a testament to our people's hard work, dedication and commitment to the patients within their local communities that they serve. Because of the decisions that our clinicians make on a daily basis to be on call 24/7, drive longer distances, wake up early and work great, go the extra mile, so many people around our nation are cared for, educated, loved and overall have a better quality of life. I appreciate each and every one of our employees and recognize that we cannot achieve these financial milestones without the continued passion for our mission. Moving on to the fourth quarter. I'd like to begin with our movement into the VA. Earlier…

Okay. Thank you, Casey. In reviewing the financial results, all figures are in U.S. dollars and the full results will be made available on the SEC website as well as SEDAR. We generated net revenue of $21.4 million during the fourth quarter of 2019 as compared to net revenues of $16.6 million in the fourth quarter of 2018, which equates to a 30% increase. During this quarter, we began to show our revenue net of any expected bad debt expense, whereas the bad debt piece was previously recorded in SG&A. All of the prior year figures that I'll be citing have been adjusted for that netting. Additionally, we have begun to record a piece of our rental revenue as deferred revenue. We have actually recasted our prior results as this change in accounting would impact the numbers from the inception of the company. I want to point out that this entry, in no way, changes the collectibility of the revenue, and in many cases, we have already received the cash for the revenue that we are deferring. This is just a change that our new accounting firm presented to us. And when looking at our U.S. peers, it appears this is very common to show on the balance sheet. Additionally, it is important to note that this is a non-cash entry and had zero impact on the economics of our business. It is nearly a method of accounting that we have adopted. Revenue for the year came in at $80.3 million, which is a 38% increase over the 2018 amount. This marks another year of roughly 40% organic growth. Our vent patient growth was once again strong as we grew approximately 5% during the sequential quarter and 30% year-over-year. Just a reminder that all this growth has been organic as…

Thank you, Todd. For those of you that have followed us for the past 3 years, you've seen us grow almost 40% in 3 consecutive years and expanded to 34 states. As I reflect on the future potential for growth in 2020, 2021 and beyond, I view it will come to us through many different channels. Certainly, our organic growth strategy of placing more people in underserved areas, but also in the form of treating earlier-stage patients with our vast network of clinicians inside of new health systems such as the VA. We will be working with many different payer source and conducting more cash transactions. We will continue to form and develop all sorts of strategic partnerships with ACOs, managed care groups and hospital systems struggling to accommodate the patients that are headed their way. We remain nimble so that we can quickly capitalize on any short or long-term regulatory ship opportunities. We will keep our war chest full and ready for any strategic acquisitions that might pop up along the way. Our unique company culture of helping people living better lives, all while living ours, will be at our core. Our network of clinicians will be our greatest asset, and they will always be forever expanding. We are only scratching the surface of what Viemed aspires to become, the largest home respiratory company in the country. Thanks to all of our investors who have chosen to join us on this ever so important mission of saving lives. This concludes our prepared remarks. We will now open up the floor for questions.

Thank you. [Operator Instructions] We'll go first to George Brooks O'Neil (sic) [Brooks Gregory O'Neil] of Lake Street Capital Markets.

Good morning, Congratulations on another great year. So I'm particularly excited about the VA opportunity. I know you've been working on that for quite a while. So can you give us any color at all on the 3-year contract, national contract you signed?

Yes. I mean, it's a national contract. And it's a separate - coming from a separate bucket of money that really the MISSION Act inspired, Brooks. Right now, where we're at, we have lots of physicians inside of the VA that are sending us patients. What's unfortunate is that we've got a backlog inside of this new bucket of money, if you will, coming from the VA on how they're processing it. So we - we're very excited about the national contract. We have a lot of opportunity, et cetera, our way. Now it just becomes about processing this -- the administrative hurdles of getting paid basically for the patient that are headed our way.

Sure, sure. That sounds great. Let me ask you about a different topic. So obviously, you continue to expand geographically, and you've said your focus had shifted a little bit towards the larger metropolitan areas' physician for competitive bidding. Can you just talk a little bit about what you're finding in those markets? Obviously, you get a little less operating leverage because there's no infrastructure to take advantage of. But how has the response been? Is there any difference in terms of the response from physicians in those areas? And just how is that all going for you?

Yeah. I mean, I'll start, and I'll let Todd comment maybe at the end. We spent a lot of last year, as you know, Brooks, getting ready for competitive bidding, getting set up in these metropolitan areas. We've accomplished that and submitted our bid. We - by default, started placing folks inside of the next [indiscernible] areas in the first, let's call it, 3 quarters of 2019. We found we had a little bit of a slower growth rate in those areas. But -- so we started to say, hey, let's go ahead and step back out of the metropolitan zone into the rural spots where we have been so successful in the past. That's why you saw our growth rate, I think, in Q4 go up about 5% from where it was in Q3. We're going to - we're in position for competitive bidding. We've got the states highlighted. We've done all the regulatory work. The bids were submitted. Now it's hit, we're going to wait and see which ones that we win. And we'll split into those areas as we uncover what the rates are and contents [ph] For now we're just going to continue growing as we always have in the past and stay on track for these growth rates that we've historically gained.

Yes. And then allow me to cut off Todd at your comments but you highlighted the 40% growth over the last couple of years. Do you guys think you can continue to grow at 40% in the current environment? Or what would be your goal for 2020 and beyond?

I'll say this, our goal is to continue that growth rate, while if you look at first quarter guidance, we haven't guided to that. It is continuing to be our goal. I would say that we have a lot of things that haven't started impacting revenue in a material way. The VA is a prime example of what our patient engagement platform could do from a major ACO contract or a payer contract. There is just a lot of things that could have a big impact on revenue that we know we've been investing in for years. And sometimes, investors get frustrated that we're putting the cost into the middle part of the P&L, we're not seeing the revenue growth. But that's what we would consider part of our long sales cycle processes, and we're seeing some green shoots come from that. So while no formal guidance that says 40%, there's no reason that this team can't continue to do that. We just - we know that the numbers are getting bigger and so the challenge gets harder and harder every year. But that's why we show up every day to keep trying to save that many lives.

Absolutely. Let me ask one last question. I appreciate all the color, guys. Is can you just tell us a little bit more about the successes or issues you're having with the product line expansions, particularly curious about whether you see them being complementary, whether you're having any issues, whether view them as real growth accelerators, or just sort of what's going on with the new product additions that have been brought out in the last year or two?

I think they've all - I mean, I wouldn't say there's any major challenges, Brooks, other than we're just doing so much, we're growing so fast, and that gives us challenges. But that's what we're - that's what we structured the company for. They've all been complementary in their own way. I mean, the vest product line has been our largest, our fastest-growing from a notional amount, and it's just such a good product to offer because so many of our COPD patients fight bronchiectasis. And so that disease state has been a very good one to come in and offer to our referring physicians and to our patients. The O2, obviously, as you guys - as we talked about earlier in the year, it's more of a precursor because our patients are ultimately going to end up - our patients end up on O2 before they end up on vents. And so that's just been another good one that we've rolled out around the country. I mean, that technology has changed so much over the last few years, and we see that being a really good growth. And then looking back, I mean, we've got a lot of things going on within our sleep business, our resupply program. We'll do it with e-commerce work now. So there's a lot of good that's going to diversify the company. We're still a vent-centric business because that's our specialty, but these ancillary product lines have really good margin enhancement when it's all looked at in total. Our existing sales force can go out there and sell them. And it's really having a big impact as you could - you heard from Casey's prepared remarks, I think we're up to 15% or 16% of our revenue is coming from these other product lines, which is a major move over a 12 to 18 month period.

Absolutely. That’s great. Keep up the good work, guys. Thanks a lot.

Thanks, Brooks.

[Operator Instructions] We'll go next to Nick Corcoran of Acumen Capital. Please go ahead.

Hi, guys. Thanks for taking my questions.

Hey, Nick.

I think most of my questions have been answered. But in terms of bad debt expense, can you maybe just give a little bit of color on how you felt about bad debt expense in the quarter and how you see it trending going forward?

Yeah. Bad debt came back down to probably a more reasonable amount. It was 11.8% for the fourth quarter. We're obviously netting that out, but we still disclose what it is. And for the year, it came in at 10.9%. If you guys remember, I talked about - this year was a little lumpy because of the billing workflow integration, and I feel like we're in really good shape from that standpoint now. Our system is up and running. I mean, the visibility that we have from the field in a real-time basis now, it's second to none. I mean, it took us a while to get there, but we -- and at the same time, we were growing 40%. So it was a little lumpy last year. But I feel good about where we ended up, 10.9% for the year. And that's at sort of the middle of the range of what we've always said as a company. We're sort of a 9% to 13% bad debt, if you look at it over the history. And if you look at DMEs around, that's sort of in line with people. So I feel like we're back at a good state. I feel like it's going to be more stable going forward now that we've integrated the system. And once again, it's hard for people to recognize the investment that was made. But now we have virtually a paperless model for our RTs in the home. And when they finish setting up a patient, it's all tablet-based and it comes directly into our workflow system, and it can be built out. There is just so many efficiencies that are hard for us to explain to every investor, but it's been a major accomplishment to all the different departments. It starts with our technology team, then pushes all the way out through the therapists in the field, and then ultimately, our billing European home office.

Great. And then maybe we should go into patient growth. Historically, you've been kind of targeting the 6% to 8% range. Just looking at your guidance, it seems to be below that. Can you maybe give a comment on what you expect going forward?

Yeah. I mean, that kind of goes back to Brooks' question. I mean, we ended this year at 31%. It was a little - it was front-end loaded last year. We recognize that. I think we're going to be a little bit more consistent this year, if I had to guess. I think we can clearly get to those levels. And there are so many factors that go into that, new salespeople, attrition rates, flu seasons, all those type of things. And so we're cognizant of making sure we guide appropriately. But I would like to say that, once again, these don't include the big impacts that we're talking about that we see - we're starting to feel some momentum come through some of these bigger projects that we've been working on. We can't guide to that yet because nothing is in the bag, but we're starting to, once again, see some real good green shoots.

Great. That’s all from me. Thanks.

Up next from Beacon Securities, we'll hear from Doug Cooper.

Hi. Good morning, guys. Just back on the VA, can you just give us an idea of how many patients you think will be applicable for the therapy and when you might start the first onboarding after the bid work all gets done?

I can start at a very high level on that. I mean, we had 9 million patients inside of the VA. We've always estimated, Doug, that we've had about 300,000 to 600,000 Stage IV COPD-ers in there because they're three times more likely to have COPD. That's a company guesstimate, if you will. But what I can tell you that's different about the VA opportunity than the way that we do business now is they're asking us to get in on the front end of the disease state. They want us to lead on our network of clinicians, to go out into these rural areas, make assessments, make recommendations on what types of equipment - what type of equipment needs to have on Stage I, II and III COPD. So that's really exciting to us. That could bring the number up substantially. But I wish I had a number for you to give you on how many patients. We know it's a ton and it's a major opportunity because it's underserved, but I just don't have anything concrete for you.

When you say you got a national contract, it's not a sole source contract? Is there other companies in there or you basically got the VA to yourself?

No, there's other companies, but this is just so new that we have the ability to be a leader in this movement is what we would say because, like Casey said, there are so many just back-office things that had to be done. I feel like we're in pretty good shape to be a fast capturer of this business.

Moving on to ancillary revenues. Casey, you said it was, I think, 16% revenue in Q4, I think is what you said. What do you think will be a realistic goal as you continue to grow your vent business? Obviously, that will continue to grow. But what would you like other revenues to be as a percentage of maybe, say, 24 months out?

Doug, if we could move it that same level again this year, I would be very pleased with that. Because the whole point of this, we're growing vents fast. We know that. And in order to move that percentage, you've got to outgrow that growth rate. And I feel that that's doable. We have a variety of different services that are growing exponentially. And truthfully, if we - one of the things we're really working and it encompasses the VA and it encompasses other payers as well is being paid for our services. I mean, Casey mentioned it. Our RT are the largest asset this company has. Our clinicians are second to none. And so while our property - or vent property is a huge asset, we're striving to diversify the company to where our labor force is as valuable as those vents, and I think we're on the cusp of doing that. So when you think of that as well, we can make a real material impact. But just on products alone, if we can move that number another 4 to 5 points or whatever we did this year, during 2020, I'd be extremely excited because it's just diversifying the company from being a vent-only company, if you will.

Yes. I guess I look - just looked on SEDAR. The stuff is still not here. The financial is still haven't filed. Is it on the SEC now? Or when do you expect it to be on SEDAR?

No, the 4K should be filed sometime today.

The stock has been pretty weak, obviously, the last few months, seems to certainly not be reflected in the growth numbers you just posted. Do you think this has continued to be a concern about what the competitive bidding and what it might do for margins in 2021? And maybe you can even give us a base case or a worst case or upside of what, if competitive bidding comes in, what it could do to your margins.

Yeah. Okay. So on the first point, is the stock weak because of that? We -- it's hard for us to say. There is 1,000 things that move stock markets. But I'm sure that uncertainty is one of the things that has people concerned. And we understand that. We've always said competitive bidding, while an uncertainty in the short term, will give us the ability to grow faster in the long term. We've had to split around and get ready for the competitive bidding in 2021, and we've done that and we got our bid advantage. So we are positioned to outgrow any rate compression that comes at us with - as long as it's reasonable, we don't want to speculate on winning bids and rate because we're as knowledgeable as anybody. We just know that we bid a certain rate everywhere. We don't know if we'll win all 120-something at the rates we bid or if we'll win some, lose some. We got ourselves in a position to continue to grow the company. And in these types of situations, we're firm believers that scale matters. And being the third largest vent company in the country, we think that, ultimately, we're a winner in that business.

Okay. And down here, would you give any thought to purchasing stock, put an idea in place?

Obviously, that would be a public disclosure that we will make. But right now, with the competitive bidding program coming up. I can tell you that we're trying to leave ourselves very nimble to be acquisitive if it needs to happen or could happen. Nothing is out of the question. But things are a little different than 1.5 years ago when we put that in place.

Okay. That’s it from me. Thanks very much, guys.

Thanks, Todd.

Moving on to Michael Eisner [ph]. Please go ahead.

Hi. What are you hearing from your respiratory therapists out in the field, from your patients about how they feel if they have to go to a hospital instead of getting in-home care? Have you gotten any feedback?

In reference to the coronavirus, Michael, is what you're asking?

Yes, yes. I'm sorry, yes, the coronavirus. Yes.

Right. We don't hear any feedback from our RTs. I mean, we've sent out notifications that guys were just - this is a respiratory disease, and we remain ready to go in the event that we are called upon by the government or the VA for that matter. But it's just - it's really too early to tell. As I mentioned in my comments, in my prepared remarks, I mean, we just kind of stand ready at this point. I mean, there's so few cases in the U.S. and it's just a PDP issue at this point. But we don't have any feedback from the RTs that they're worried about running into this or anything like that.

I think one thing to add, Michael, is if your question was poised at this is that our service by treating patients in the home is so valuable because they're not going to public facilities. Our patients, in many cases, are homebound and that gives you an installation from not having diseases spread as long as it doesn't come into your home. So we once again think that the home-based model for all the different reasons is so much more valuable. And that leaves the facilities to deal with this - the coronavirus or any other things that need to be treated in the facility.

Yes, I agree with you. I was just wondering what you were hearing from people, from your patients, if they had any comments about that. And do you have enough vents in stock?

Yes. To start with our patients, we do. We have no issues as far as the growth that we're expecting or we've got a great vent supply. None of our manufacturers have told us that they're running into any issues from the whole - the China slowdown. And we will be monitoring that very real time.

And any idea when the new VA study will start?

We don't have a start date, but we've already submitted the - it's in the early phase of the pilot program right now, and the ball is in their court. These things take a lot of time.

Yes. And you don't really know how many patients yet?

Not yet. But in the pilot program, we'll have around, what, probably less than 50. And then that, we are being told, we'll take, call it, a quarter, 3 months. And then from there, we'll launch the official study.

All right. And I think you went up some patient count from 3% to 5% in the last 2 quarters. Any comment next quarter or anything?

Yes. I mean, look, like I told, I think, maybe Nick earlier, the growth in the first half was a lot faster last year than the back half. And that has a variety of different reasons. I would expect our growth to be more progressive during the current year. Our guidance has us a little bit less than the 40% if you annualize it right now. But like I told maybe Brooks earlier, our goal is to continue this growth rate. We just got to continue to drive that business every day and keep expanding our clinical protocols, keep our patients alive, try to reduce our first 3 month pickup. That's where we're dealing with very sick patients. And so there is a lot of things that are going to move this around. And we're - we're just driving and trying to keep that historical growth rate going.

And one final question. What's the life expectancy when you pick up new patients at this point? Has it changed on that part?

No. On average, we're still around that 17 month period. And that's a lot of what we're trying to invest in this technology for so that we can try to slow down the first few months pickup and drive that overall length of stay up to 18 months or 19 months. That's our goal, is to keep these patients alive longer, and importantly, not having to revisit the hospital during those 17, 18, 19 months.

Yes, that's why I was going back to the coronavirus because no one wants to go back to any hospital at this point.

Yes.

All right. Thank you.

Thanks, Michael.

[Operator Instructions] And actually, it does appear that there are no additional time for questions at this point. Just one moment here, and I will turn the conference back over to our speakers for any additional or closing remarks.

All right. We want to thank everybody for listening in, and obviously, follow-up with us through e-mails or calls if you need to reach us. And we look forward to seeing you guys out on the road.

And again, ladies and gentlemen, that does conclude today's conference. We thank you all for joining.