Greetings, and welcome to the Viemed Healthcare Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to our host, Trae Fitzgerald, Chief Financial Officer. Thank you. You may begin.

Thank you. Good morning, everyone, and thanks for joining us today. Please note that our remarks in this conference call may include forward-looking statements under the U.S. federal securities laws or forward-looking information under applicable Canadian securities legislation, which we collectively refer to as forward-looking statements. Such statements reflect the company's current views and intentions with respect to future results or events and are subject to certain risks and uncertainties, which could cause actual results or events to vary from those indicated in forward-looking statements. Examples of such risks and uncertainties are discussed in our disclosure documents filed with the SEC or the security regulatory authorities in 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 today, and the company undertakes no obligations to update or revise any forward-looking statements, except as required by law. Third quarter financial supplement and financial news release as well as the related financial statements are available on the SEC's website. I'll now turn it over to our CEO, Casey Hoyt, to get things started.

Okay. Thanks, Trae, and good morning, everyone. I'm excited to be here today to discuss another outstanding quarter for Viemed, a quarter where we continue to differentiate care, accelerate innovation and deliver strong results that set the stage for sustained long-term success. Our team continues to execute at a high level, driving growth across all of our core service lines while expanding the reach and impact of our patient care model. As of quarter end, our team has grown to 1,386 dedicated employees across the country. This includes the new members of our Viemed family who joined us through the acquisition of Lehan's Medical Equipment. Because the Lehan's team onboarded early in the quarter, we were able to experience a full quarter of collaboration and integration, which has been incredibly rewarding to watch unfold. I'm proud of the dedication and teamwork shown by both our existing staff and our new colleagues as they work together to align systems, processes and culture. Their focus and adaptability have ensured a seamless transition and strengthened our ability to serve patients with consistency and compassion. With our expanded team and broader service capabilities, we continue to deliver exceptional care to the patients, providers and partners who rely on us every day. That commitment to high-quality service and clinical excellence reinforces Viemed's reputation as a trusted leader in home-based health care. With that foundation, let's turn to how our strategic execution this quarter reflects both our vision and our ability to translate strategy into measurable results. Our long-term vision remains clear to expand geographic access to high-quality home-based care, diversify our product service offerings and deliver operational excellence at scale. This quarter represents a meaningful milestone in that journey. While our core ventilation business continues to grow at impressive levels, it now accounts for less…

All right. Thank you, Casey, and good morning, everyone. In reviewing the financial results, all figures are in U.S. dollars and our full results have been filed with the SEC. I'll be referencing information available in our quarterly financial supplement, which can also be found on our Investor Relations website. Starting with the top line, we delivered record revenue of $71.9 million, representing 24% growth year-over-year and 14% sequential growth from the second quarter. This strong performance reflects both solid organic growth and the immediate accretion from the Lehan's acquisition, which continues to diversify our business and strengthen our foundation for long-term expansion. Gross profit for the quarter was $41.3 million or a 57.5% gross margin. Adjusted EBITDA reached $16.1 million, up 16% from the prior year, representing a 22.4% margin, a strong result given our continued investments in growth and diversification. Net income for the quarter was $3.5 million or $0.09 per diluted share. Operationally, we continue to see solid momentum across our diversifying patient base. In addition to steady growth in ventilation, PAP therapy patients increased 64% year-over-year and 21% sequentially in the third quarter. Our portfolio is also expanding with the addition of maternal health products from Lehan's acquisition. This mix is broadening our reach, improving scalability and supporting an efficient growth model as we continue to scale. On the cost side, SG&A expenses were 44.4% of revenue, a 160 basis point improvement compared to last year and a 130 basis point improved sequentially. This progress reflects the benefit of our evolving product mix, where our newer offerings tend to carry lower gross margins, but also require less fixed infrastructure, resulting in lower SG&A. Combined with our disciplined cost management and ongoing investments in technology, operations and people, these efficiencies are driving continued improvement in operating leverage…

[Operator Instructions] Your first question comes from Doug Cooper with Beacon Securities.

Congratulations on another good quarter. Just first of all, Todd, I just wanted to confirm, excluding the contribution from Lehan's, which I guess was a full quarter contribution, organic growth, I get around 13%, 14%. Is that in the ballpark?

14%, I believe, is on the revenue growth. It was -- yes, 14%.

Okay. What do you -- just on the sleep, obviously, tremendous numbers there. What do you attribute the growth to? You're certainly seeing much higher growth than anybody in the peer group. So are you gaining share there? Or what do you -- maybe just talk about that a little bit?

Yes. I mean we're gaining share everywhere we go. You got to keep in mind, Doug, that we really didn't start selling sleep until, I guess, right before COVID around the country. While it was a big part of our corporate upbringing in company history, we started in sleep over here in Louisiana back in '06 and kind of grew into ventilation. So we have a lot of experience with the product and the offering. But we chose not to launch it until we had good insurance contracts and infrastructure set up throughout the country. So it's -- even though it's been around since our inception, we really haven't started pushing it until, call it, 5, 6 years ago. So what you're seeing is we're now hiring reps specific to selling sleep. They're not complex respiratory reps. They're heavily focused on sleep and we'll probably leverage them some breast pump sales for those reps as well throughout the country. But everywhere they go, they're gaining market share in their prospective towns, clicking on all cylinders. We've really done a good job of training them up and getting them to be armed and dangerous and ready to hit new referral sources. we're able to hire a different type of rep than your traditional complex respiratory rep, just a young and hungry go-getter, fits the bill sometimes for the sales rep. And so we're seeing a lot of good success with just some good people -- spread out throughout the country.

Right. Well, congratulations on that. Just looking at -- I've been reading -- seeing competitive bid keep popping up in articles around, obviously, the government shutdown now, but just some comments around competitive bidding and do you think it comes back? And I'm assuming Lehan's, the breast pump just as, for instance, probably doesn't have any issue with that, but maybe just comment generally on the situation there.

Yes. I mean we fully anticipate competitive bidding coming back at some point. And I think like we said last time, if you're operationally sound and if you're larger, you probably tend to win more contracts. So we're not afraid of the bidding program. I think it was heavily commented on by public, and there's a lot of interest in making sure the program is designed correctly. So we'll be paying attention to what the final rule looks like when and if it does come out. And we fully anticipate being a participant in virtually all of those CBAs. As it relates to the maternal side of the business, no, I mean, obviously, Medicare is not going to be paying for breast pumps as that's a 65-year-old generally. And so not going to be in that business market. So that's heavily commercial and Medicaid around the country. So that program is rather insulated from any competitive bidding program. And the other thing I would say, just as a reminder for everyone is that we still generate a significant portion of our revenue stream in the competitive bid products, be it sleep and oxygen primarily from our rural areas. And so those have some impact, but not as dramatic as these large MSAs where the significant potential either consolidation or rates are existing.

Right. And just final one for me. Another good quarter, all the KPIs trending in the right direction. Stock is down 2.5%. The stock based on your guidance for this year, let alone next year, just on this year, I think it trades about 4x EBITDA. And obviously, while you've been buying back a bunch of stock, the whole health care sector in general is underperforming. And a couple of years ago, all the focus on the Ozempics and GLP-1 drugs, Novo Nordisk I think is down 60% from its peak. What do you think is going to take to get investor interest and get this sector turned around? And I'll leave it there.

Yes. Thanks, Doug. And I'll tell you, it's one of the harder questions we get because we know we're not the market it is. But I'll tell you, the way that we are forecasting our free cash flow, I think a multiple reset is just going to have to happen because we're generating as much discretionary free cash flow as anybody in the industry or most health care providers. So I don't know exactly how that will translate into the stock price. But as we've done in the past, we will monitor capital allocation very aggressively to the extent we see the best use of capital is returning that to shareholders virtually -- I mean, very likely through buybacks, we'll continuously analyze that. Right now, we're paying off the debt as fast as we ever thought we could. And once that runs out, we'll look at the acquisition landscape and be very in tune to additional buybacks if the stock warrants that.

Your next question comes from Robert Lynch with Stonegate.

Just dialing in here for Dave Storms. Congratulations on the quarter. I just have a few questions here. First one being around the payer mix this quarter. It looks like it shifted with lower Medicare exposure. So I guess what are you seeing on the authorization friction, realized rates and DSO as the mix tilts further for Medicare? And how should we think about audit risk into 2026?

Yes. I mean we're definitely seeing the payer mix shift pretty aggressively just as the product mix is shifting aggressively and the sales and rental shift is on. And all of that is in our supplement. And really, that's as a result of further diversification. Bringing on Lehan's is a -- they're virtually a 0% Medicare company. I mean they have some in their sleep and other DME. But all of that breast pump revenue, which you can see now makes up 6% of our company, that is a non-Medicare and a lot of that revenue would be in that wedge of sales, which is 30%. I do want to comment, though, Medicare is a great payer. They don't -- they pay timely. They do audit. We all know that, but we welcome audits because we tend to do pretty well with it. And I think what you're seeing, and I don't have an updated DSO, but our AR is pretty low right now. And that means that our revenue cycle team is converting those bills into cash, and we're using that cash to pay down the debt or all those other capital allocation priorities that I just mentioned.

Great. I really appreciate the color there. I guess next one around just some operational levers -- excuse me, what levers do you think you can pull to protect mix and margin as sleep and resupply end up outgrowing vents and especially as the Chicago footprint scales under the Lehan's acquisition, I guess what does that look like?

Well, I think what you'll see is gross margin, if we grow sleep as fast as we're growing it, we'll always have some pressure. We are doing some things that, in Casey's prepared remarks, talked about some technology initiatives that we are using. Just on the sheer number of new patients, we're using some, if you want to call it, AI-based intake, and it's really streamlining the process, helping shave off days to get patients set up, which means that there should be better compliance. All of those things are things that will help the sleep division operate efficiently and hopefully at a higher margin. But it's going to be hard to offset the difference in the gross margin between a vent patient and a sleep patient. With that said, I want to point out, we had a 160 basis point improvement in SG&A amongst the company at a total level, which we think that if we give up a little bit in the gross margin, we should be able to make that up on the SG&A line. And as long as our free cash flow, our net income margins continue to hang in there, we're entirely comfortable about how we're diversifying the company.

Sounds great. One last one for me around growth. So you guys had an emphasis on rural communities. So what geographies, I guess, do you have with like Tier 1 going into the new year, what's the focus?

Yes. I mean the focus is really to stay kind of close to where our next rep is, which does put us in the rural markets. I mean, we're not strong in New York City. We're not strong out West. But we have plenty of opportunity to just hop 60 miles away from the next rep, not run into each other and then be able to leverage a lot of our clinicians. So that's always the wisest way to grow. And we're constantly looking for that next market that makes good sense for us to go to. Today, we have lots of just new data points and AI tools that are really teeing up the opportunity for us down the road. That's very interesting, and that's evolving every day. So we've got more ammunition than we've ever had before to making wiser decisions on when to go and how far to go and so on and so forth. But traditionally, we're just trying to just expand from where we exist today, which is the Deep South into the COPD prevalent areas of the coal miners' region in the hills of Kentucky and Tennessee and West Virginia and so on and so forth. It's not that we're ignoring rural, I mean, metropolitan zones, but that's just been our sweet spot. There's plenty of area to grow right down the road from where we're at.

Yes. And then I guess I would add too, Robert, on the maternity side, it's really nationwide, right? We don't provide -- we provide those in very limited areas right now outside of Lehan's, Illinois. We started doing some of that with our legacy business as well, but 2026 is going to be a nationwide approach to maternity across everywhere that we currently operate and don't have that offering.

Your next question comes from Ilya Zubkov with Freedom Broker.

I have a question related to the sleep therapy business. I've noticed that revenue per one patient in this segment has been declining sequentially this year. Could you please explain the main factors driving this trend?

Yes, I'll take this. This is Trae. Well, we don't disclose revenue just for the sleep side of the business. You're probably looking at the other sales, which does include some other products. So keep that in mind. But just in general, thinking about the evolution of the sleep business and going from -- you can see the metric for the first time this period where resupply overtook our therapy patients. They have a slightly different -- they have a slightly different revenue profile, right? One, the therapy patient is on the rental side, that's separate. And then the resupply side is going to be in sales. And so that -- the actual realizations on the sleep side are extremely stable. If you think about a resupply patient, it's 2 orders per year, $200 an order, roughly 50% gross margin. And that's been stable from when this business was, 5% of our business up to 20% of our business as it stands now.

Okay. This is helpful. And you've mentioned the planned investments in technological development. So I'm just wondering what do you see as the priority areas of these advancements in midterm? Where do you plan to focus your investment there?

Right now, what we're doing -- I mean, the single largest one that we're making is like we've mentioned in the intake division because it's very manual and you're dealing with fax machines and so forth. So we're doing a lot in that, and it's live in at least the sleep division nationwide, and we're going to push it into our other products. We're not exactly sure what the next process that we're going to try to use AI in, but we have an entire team that is meeting regularly to see which processes could benefit the most. And at the same time, our technology team is out there scouring the tools that are available. And so ultimately, we're not exactly sure what the next one is, but I can promise you there will be more AI/machine learning to help with the operational lift of our company over the next quarter, year, 2 years because they are coming at us very quickly, and it's all upside to our scalability, efficiencies and operational acumen.

And there are no further questions at this time. So I'll hand the floor back to management for closing remarks.

All right. Well, we want to thank everybody for listening in. If there's follow-up questions, please reach out to us, and have a good day.

Thank you. This concludes today's call. All parties may disconnect.