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Edited Transcript of VMD.TO earnings conference call or presentation 9-Aug-19 3:00pm GMT

Q2 2019 Viemed Healthcare Inc Earnings Call

Sep 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Viemed Healthcare Inc earnings conference call or presentation Friday, August 9, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Casey Hoyt

Viemed Healthcare, Inc. - CEO & Director

* W. Todd Zehnder

Viemed Healthcare, Inc. - COO & Director

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Conference Call Participants

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* Brooks Gregory O'Neil

Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst

* Doug Cooper

Beacon Securities Limited, Research Division - MD and Head of Research

* Sarah Elizabeth James

Piper Jaffray Companies, Research Division - Senior Research Analyst

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Viemed Second Quarter 2019 Earnings Call. Today's call is being recorded. And at this time, I'd like to turn the conference over to Todd Zehnder, Chief Operating Officer. Please go ahead.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [2]

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All right. Thank you, Vicky. Good morning, everyone. Please note that remarks in this conference call regarding our expectations, future plans and intentions may constitute forward-looking statements as such term is defined in U.S. Federal Securities Laws of forward-looking information as such term is defined in applicable Canadian securities legislation, which we collectively referred to, in this conference call, as forward-looking statements.

All statements other than statements of historical facts may be forward-looking statements. Such statements reflect the company's current views and intentions, with respect to future events and current information available to the company and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements, that may we expressed or implied by such forward-looking information, to vary from those described herein should one or more of the risks or uncertainties materialize. Examples of such risk factors are discussed or referred to in the company's disclosure documents filed with the U.S. Securities and Exchange Commission and are available on the SEC's website at www.sec.gov, or filed with the security regulatory authorities in certain provinces of Canada and that are available at www.sedar.com. Should any factor affect the company in an unexpected manner or should assumptions underlying the forward-looking statements prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking statements are expressly qualified in their entirety by this cautionary statement.

Moreover, the company does not assume responsibility for the accuracy or completeness of such forward-looking information statements. The forward-looking statements made in this conference call or made as of the date hereof, and the company undertakes no obligation to publicly update or revise any forward-looking statements, other than as required by applicable law.

The second quarter financial news and results, including the related financial statements, are available on the SEC's website.

Now I'll turn it over to Casey to get things started.

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Casey Hoyt, Viemed Healthcare, Inc. - CEO & Director [3]

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All right. Thanks, Todd. Good morning, everyone. And thank you for joining our call today. Before I begin with an update on the second quarter, I want to take a moment to thank our Viemed team members for their commitment target. We've all experienced a lot of evolvement over the past 13 years and our group of dedicated health care professionals have done a fabulous job, maintaining our clinical excellence and unique culture in the midst of a fast-paced growth environment. The foundation for our success comes from their dedication to the patients and the families that we serve across are now 49 states.

I'll begin my comments for the quarter on the fabulous work that our compliance department has been doing executing on our geographical expansion. We finished the quarter licensed to do business in 44 states, Medicare approved in 38 states and conducting business in 29 states. We're now doing business in Florida, which was a bit of a regulatory process and a fine example of the quality execution coming out of the compliance department. We've set our goal to be in the lower 48 over the course of the next year or so.

Our sales managers and recruiters have been actively recruiting throughout our existing coverage area in our newly licensed states. We hired another 10 reps in the second quarter, bringing our year-to-date total to 24 reps. We've also started a new customer service representative, or inside sales program, to help cultivate more business from our established areas. The new CSRs are being trained to help analyze industry and competitive data to regularly support our sales reps. They're expected to create more prospecting time for our salespeople and some of their daily tasks will include scheduling appointments and in services, processing daily paperwork, reviewing progress, notes and charts, et cetera. The development of the CSR program, alongside our regular recruiting, hiring and training of new sales reps, remains at the top of our organic growth priorities.

Second on the priority list has been to bring our patients further clinical value to the offering of additional home-based medical products while under our care. Our patients are continuing to benefit from our percussion vest product line, with the vest representing 11% of a new patient growth. I'm also pleased to announce the move from our 20,000 square-foot facility into our new 77,000 square-foot building that will serve as our corporate headquarters.

This new move will allow us to help the back office infrastructure used to support many factors of our expanding business. One example is how we now have space to house our growing billing and intake department to accommodate our new oxygen business. We were able to move from 5 beta test markets and release the oxygen business model to the rest of our salespeople across the country. Our sales force is extremely pumped about the opportunity to now offer oxygen to our patients, which was expected to openly drive more bid orders. The second quarter, I've also provided another example of how we continue to pursue growth by finding under-penetrated markets for products that require clinical service.

We began beta testing another lymphedema product in 5 new areas for compression therapy patients, and we've experienced a high success rate. Compression therapy is used for patient suffering with chronic swelling. We've estimated to have 5 million patients inside of the U.S. The addressable U.S. market over is estimated to be over $4 billion and is less than 20% penetrated. Our attraction for the business is that a therapist who's best used to qualify and treat the patient in the home.

Our recently hired network of registered nurses has proven to be a nice bid to conduct the sales process for these patients. The same call points we used for our delivered business are the call points for monthly payment. So the 2 could be sold at the same time. We're looking forward to growing lymphedema beyond the 5 areas in the near future.

Our efforts to treat chronic respiratory failure patients inside of the VA or ongoing, and we believe we've just begun to tap it to its potential. The most recent exciting news about the VA is that we've signed an agreement to begin a study with the VA on trading COPD patients with noninvasive ventilation. While this study will take time to complete, we believe this is the best way to the VA to complete the study and show similar results to the KPMG and PRECISION studies, which is expected to eventually lead then to adopting NIB as a standard for all care for veterans struggling with COPD. Speaking of the PRECISION study, Dr. Frazier has been chosen to present the data at the American College of Chest Physicians, ACCP, annual meeting in New Orleans on October 22.

This is the largest pulmonary disease meeting in the world, and the first of many shows where doc will be presenting to the physician community. We have regularly stated that the true competition in our business is for the physicians that are not educated on the benefits of NIB. The published PRECISION study will be the tool we plan to use to increase penetration in our industry and finally get the solution for the 95% of patients who have struggled to receive our care.

Q2 was a strong quarter for the network development department, with the additional 39 new clients. Our dedicated experienced team has been participating with 450 pairs and plans. 392 bills have been closed in the last 20 months.

Looking ahead, we're excited to grow our market by making our service accessible to an ever-increasing number of payer and members. We will also we reinvesting a new payer mix diversification priorities, such as quarterly meetings, renegotiations, preferred partnerships and value-based contracts.

There has been no change on the regulatory front as far as competitive bidding is concerned. Our executive staff has been actively analyzing data to help us grow wisely in areas that buyback will be needed around the country. Bids are due to be submitted in September, and we are ahead of schedule on our preparations to submit. Todd and I have been really speaking with many different financial institutions and analysts in preparation for a U.S. listing. After much work, our CFO, Trae Fitzgerald, and his the entire accounting team, I'm pleased to announce that today is the first date that we are duly listed on both the Toronto Stock exchange and now the NASDAQ. This is a big steppingstone in accomplishment for our business. Tod and I had a busy schedule throughout the back half of the year, speaking at conferences and getting our investment drafts to the many institutions that have been waiting for us to be listed in the U.S. before being able to invest in our company.

At this point in time, I'll turn the call over to Todd to provide the financial results for the quarter and provide more color on U.S. listings.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [4]

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All right. Thank you, Casey. In reviewing the financial results, all figures are in U.S. dollars and the full results have been made available on SEC website as well as SEDAR.

We generated a revenue of $22.5 million during the second quarter of 2019 as compared to revenues of $15.5 million in the second quarter of 2018, which equates to a 45% increase. Our revenues came in right at the midpoint of our previously guided range for second quarter revenues. We, once again, saw a rapid growth of our new vet patients, and we exited the quarter with 7,130 active vet patients, which is up 12% sequentially. Additionally, our gross margin percentage was slightly higher, increasing to 75% from 73% in the prior year's second quarter.

Adjusted EBITDA totaled $4.6 million for the quarter, which is a 20% margin. We, once again, had slightly lower adjusted EBITDA margin than the last few quarters as a result of variable compensation tied to our stock as well as our continued investment into future growth plans, such as the U.S. listing, our technology investments as well as our marketing investments. Additionally, we have invested into our workforce to support our expanding programs, including new employees for the VA, our pediatric division as well as our new infrastructure to support our oxygen business and the newly rolled out compression therapy.

Our annual adjusted EBITDA percentage should remain relatively flat with prior years as we continue to organically grow our top line and are able to absorb some of the infrastructure investments that we have made during the first half of the year.

We, once again, redeployed the adjusted EBITDA during the current quarter as our medical CapEx totaled $5.2 million for the second quarter of 2019, primarily driven by new vet purchases to support our growing patient base as well as stocking up on the new products that we have begun to sell in higher quantities.

Additionally, we incurred roughly $5.7 million of CapEx for our new headquarters, of which we used approximately $1 million of cash and used a new term loan for the balance of the purchase price.

our SG&A totaled approximately $13.2 million as compared to $7.9 million in the prior year. As I just mentioned, some of the variable comp is tied to our stock price, and we had a very active quarter in the new investments area related to our NASDAQ listing, technology, marketing and other product lines that I just discussed. We believe in our future growth initiatives that are expected to help with our product and payer diversification efforts. And we expect to continue to be able to fund our organic growth that we have on the horizon.

With all that said, we will continue to expect revenue and gross margin to increase at a higher pace than SG&A expenses as these investments begin to normalize. Our balance sheet remains strong as we ended with approximately $7.7 million in cash at quarter end, $12.8 million of AR and an overall working capital balance of roughly $1 million. Our AR was, once again, higher than year-end as our revenues are increasing dramatically every month, and we are now 7 months into our new workflow and billing software implementation.

Cash collections were higher in July than any other month this year, and it appears that our staff has made significant improvement in the new system, which should improve our efficiency as we continue to expand around the country. Our long-term debt is approximately $5.8 million and being serviced with operating cash flow. The majority of this new balance is due to the aforementioned headquarters purchase, and we will opportunistically use vendor financing from time to time to manage our cash flows for user equipment purchases. From an ongoing capital perspective, we will continue to use our internally-generated cash flow and capital leases with our major vendors, and we believe that we will be able to fund our future growth using the same financial instruments. With all of that said, we saw the fully undrawn $10 million line of credit that we have available.

Moving on to the third quarter, we've provided revenue guidance in the $23.7 million to $24.5 million range and feel that our adjusted EBITDA percentages will be slightly higher than the first 2 quarters, more in line with prior year margins. We, once again, expect all of this growth to be organic, and we are very excited to see multiple product lines contribute to the significant growth that we're experiencing. As we released last night, we're extremely pleased to say that we are now officially trading on the NASDAQ. I want to thank all of our staff for the hard work to accomplish this corporate goal. We're excited to continue to build our U.S. shareholder base, and Casey and I will spend time marketing the U.S. investors, sell-side analysts and investment and banking advisors. We are proud to say that in only 20 months after spinning out of the TSX venture company, we are now listed on one of the most prominent exchanges in the world. We feel that our growth and profitability will line up well with many U.S. firms, and we are excited to get out and meet or reunite with them over the coming months.

At this time, I'll turn the call back over to Casey to wrap things up.

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Casey Hoyt, Viemed Healthcare, Inc. - CEO & Director [5]

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Thanks, Todd. Running this business with these fine people was an absolute blast. Viemed has many incremental growth opportunities on the horizon with very limited headroom. We're supporting an industry being flooded with patient volumes, driven by an aging population inside of the U.S. We believe Viemed solution for CMS and all payers of life to treat patients more efficiently and effectively in the home. Our government relations department continues to constructive conversations with the government, and it's viewed as a thought leader in our space. We are beginning to see signs of the system shipping from more value-based reimbursement models, which plays to our value proposition. Our investment today into technology, pediatrics, the VAs, oxygen, compression therapy, direct-to-consumer sleep solution have all been made and are expected to present continued upside opportunity for the future.

In closing, I'd like to thank our shareholders for their continued support and trust of our very important mission to generate positive financial results all in the name of improving quality of life. This concludes our prepared remarks. We'll now open the floor up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question today from Sarah James with Piper Jaffray.

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Sarah Elizabeth James, Piper Jaffray Companies, Research Division - Senior Research Analyst [2]

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Congrats on the quarter. I wanted to talk a little bit about the expansion plans. I know you guys have been working on Florida for a while so that's very exciting. Can you talk about what the next wave might look like? What states you might -- you're targeting for the next year or 2? I know it's not just about getting a new states, but it's also going deeper into existing states. So can you help frame up expansion in those terms, whether it's counties or just adding RTs? Just give us a little flavor of how you are planning to get more density in existing states?

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Casey Hoyt, Viemed Healthcare, Inc. - CEO & Director [3]

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Sure. So you hit the nail in the head. When it's -- it really is less about space when you think about organic expansion. And it's more about finding good people, 60 miles down the road inside of our coverage area. When you think of a geographical expansion, the reason that's important to us this year, and as it was less important really last year, is we're preparing ourselves to have our coverage area ready for the competitive bidding zones that will hit us in 2021. So that's the rush from our compliance department right there, that's why we're licensed to be visiting 44 states and getting our Medicare approval swiftly to be ready for that.

Now, the things that we're focused on to really helped drive growth, it's -- to drive vet growth we can probably achieve a 20% just through the offering of the oxygen business. So competitive bidding also freed up -- Viemed is not going to hit us till 2021. It also allowed us to get out there and start offering the oxygen business and to kind of play around and see if we're going to receive that bump. We've already experienced some positive results in our 5 new beta areas, and really just a few weeks ago we released it to the entire country. So we're -- still a little early to tell what that bump's going to be, but we're hoping that it's going to be similar to the 5 beta areas, which is about 20% for them. So the game for us there is really just hiring and finding more RTs and RNs with these clinicians, feature them how to walk and talk the Viemed way, growing 60 miles down the road and trying to get to those 95% of folks who are qualified out there for our therapy that can't get to us.

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Sarah Elizabeth James, Piper Jaffray Companies, Research Division - Senior Research Analyst [4]

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That's very helpful. And to follow up with that, you guys talked about having one half SG&A headwinds because you are investing in this group. But it also sounds like that's really going to be part of the story for at least the near-term geographic expansion and end-market expansion investing in the staff and technology. So can you help us frame up, what part of the one half investments might not repeat, might fall off versus the ones that are going to be part of the business model near term? And then, I don't know if you guys talk about SG&A leverage and any type of framework of fixed versus variable cost or for a certain amount of revenue growth there is a certain amount of SG&A leverage. But anything that you can give us to help quantify what that change in the business model might look like as Viemed grows, would be helpful.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [5]

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Yes, Sarah, I'll take that one. The easy part that we can say that had more of a one-time impact that will not be repeating is the lifting cost to get on the NASDAQ, at least a portion of them and some of the technology investments that we've made because it's very -- at the point of the processes that we're in, we incurred a higher cost in the first half of the year than we will going forward. With that said, there will be lingering costs related to both of those as well as our marketing as well as the new product rollout. The most important thing is that while we've incurred these costs, and begun to incur these costs, the revenue leverage really hasn't hit from any of that. And the NASDAQ won't bring us any more revenue, but everything else will: technology, marketing, O2, VA, pediatrics, all these things, we've made the cost investment and really haven't starting seeing any significant revenue impact. We know that we're going to grow into that. We're seeing the beginning parts of that. So while we're not embarrassed about having a 20% EBITDA margin by any means, we have clearly made a strategic decision not to sit around and just be a one-week, 2-week vet company. We are on our way to being the premier healthcare technology business in this country, in our opinion.

On the fixed versus variable, it's tough to say exactly on a quarter-to-quarter basis because it really is driven by new patient growth that has the variable impact because our commission structure is variable. And then the other piece of variable is our Phantom Plan. We've been pretty clear, up to this point, being only a Canadian listed company. We didn't want to have 375 employees having to trade the Canadian stocks. So we aired towards the Phantom, which has a mark-to-market components. so those are the 2 largest pieces of the variable piece of it.

The exact percentage of our SG&A, I really don't have a good number, I'd be guessing at it, right now. We can follow up later on to see if we could do some work on it. But the lion's share of our G&A would be a fixed component. And the most important thing is, we do have operating leverage coming to us. We have 100% made a decision to reinvest aggressively for our G&A items. And we and the board and management team fully support it because the diversification of the products and the diversification of the payers is the most important things for the sustainability of this business going forward.

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Sarah Elizabeth James, Piper Jaffray Companies, Research Division - Senior Research Analyst [6]

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That's great. And congrats on the listing.

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Operator [7]

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We'll take the next question from Brooks O'Neil with Lake Street Capital Markets.

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Brooks Gregory O'Neil, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [8]

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Let me be the first to say, welcome to America. So, obviously, we are excited about all the investments you're making in the new areas. I was hoping you could just give us some feel, I'm not asking for specifics, but some feel for sort of the economics around, for example, the oxygen business, the compression business, the pediatrics business, in terms of the margins profile, it was really what I'm trying to understand.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [9]

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Okay, yes. I'll address it in that order. The oxygen business, I mean you've probably seen, it doesn't have to say margin profile that our are other products do. I mean, it probably is a little item and over the lifecycle, it's probably a 20% type margin business plus or minus. As Casey mentioned, the #1 reason we're offering O2 around the country right now is to support our vent business. As you know, almost 100% or probably 100% of our vent patients are on oxygen. So to be able to offer the full gamut of products around the country, especially during this time frame where competitive bidding is off the table, it was important to us. And so this was our ability to go ahead and test that by saying hey guys, you can offer O2 along with our vents. We clearly want the O2 business to be a support system for the vent business, it's what we do, we're -- vent businesses are our bread and butter. And so that's the main reason we're in it.

The compression therapy business is more of a sale type item. It's not a rental business. We're seeing gross margin there, there's a few different types of pumps. We're seeing gross margins in the 70% range, and once again, it's a one-time purchase. I think Casey touched on it in his prepared remarks, it's just a great product line to complement all the referral sources that we call often, the cardiologist. And we have these nurses who are really good at selling these, and we have our therapist around the country that can also. So as we've discussed in the past, we're not looking to offer every product in the world, we get pitched a lot of the things. We want to offer products that are complementary to our referring physicians and complementary to what we do in the home, treating our patients. The other one that we asked about was -- I was just going to comment that as far -- and it dovetails into our technology investment, Brooks. We're piloting our remote patient monitoring platform right now. And we -- having the ability to measure the O2 saturation is a very important piece of the puzzle as well. As we talk about really moving outcomes -- generating positive outcomes for the payer, which is the Phase II of this technology push, that's an important piece. So a lot of these products have make sure -- just really good clinical sense to take better care of the patient in the home, we're going to latch on to them, sooner rather than later, so that we can capture that data and generate those positive outcomes through our technology platform.

And then the other piece that you asked about, specifically, Brooks, would be pediatrics. So that's -- the pediatrics business was originally offered as -- we really weren't to be a vent pediatric company. And you've probably heard Casey or I talk about it before, this is a different type of patient. Children are a much different patient for us, but we want to be the premier vent company in this country. And so the first way was noninvasive, then we started taking caring of invasive, and we need to be a pediatric vent company. So we've gotten around -- we're going around the country, I think we're operating in 5 areas. The margin profile of that is very similar to our noninvasive. The difference is, it typically comes with a much more severe patient that has other products necessary and we offer those, whether it's an O2 or the various complementary products that the children need.

The goal of the pediatric business is to: a, become the most recognized vent company in the country; b, to get children and keep them on service for much longer than our 17-month for the sake of these children can live for a long period of time. And then lastly and most important is, to get our name out there with the networks around the country that we'll take care of any patient you have that needs a vent. So once again, strategic reasons for doing everything along with our corporate mission.

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Brooks Gregory O'Neil, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [10]

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That's great. Let me ask you one or 2 more quick ones. So we've always believed the VA was a huge opportunity and you're clearly making inroads there. Can you just give us a little color about sort of how you see this opportunity unfolding, as you look forward? I know -- I'm not asking for a prediction, I'm just asking for your general sense for how you think you can penetrate the VA?

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Casey Hoyt, Viemed Healthcare, Inc. - CEO & Director [11]

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Yes. I mean, we were excited to announce the pilot study. Anytime you have -- anyone willing to do a study and, frankly, the VA is going to be paying for this study, whereas in the past, we have had to pay for the PRECISION and the KPMG study. That's a positive thing, we'll be funded by those guys, it's is a great way of getting patients along the way while also providing more data for the industry to have and hold and ultimately, have the VA adopt it as the standard of care. The way that I see it, and that's more of a long-term thing. I mean, it might take us a couple of years to really execute the final study with the VA. They move a little bit slower than the rest of the country. But that being said, it doesn't really stop us from doing our thing, Brooks. We've got our salespeople trained to -- they're treating all the VA hospitals right now, just like it's any other facility. So we go in there, we know how to walk and talk, we're certified, we got all the certifications that we need to be able to need to build the products. It is a little bit more of a process than our normal sales process just because we have to navigate through many departments inside of the VA system, but those onesie, twosie types of sales are very important to us to get these many facilities around the country to adopt the standard of care to our -- ultimately, they will write a contract to request for -- it is in contract, where it's an area that we can service a number of different facilities across 2, 3, 4 state quarters depending on how the business is broking up. So that's a -- and we can experience that before all the -- before the study is even finished. So that's the way I see it unfolding right now.

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Brooks Gregory O'Neil, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [12]

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Makes a lot of sense. Let me ask you just one more. So I'm excited about the new building and getting everybody under one roof, and expanding in various areas you are. The $4.7 million of debt, is it essentially a mortgage? Or is it something different? Just help me understand sort of how you think about that?

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [13]

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It's effectively a mortgage. I mean, it's structured as a term loan that has a low amortization schedule with a balloon at the end. We could have used more cash but we're funding so many other things that we're going into right now, that we decided only to build a 77,000 square-foot building is -- that's about as good as that you can have. So it's a pretty -- I think it has a 3-years balloon -- I mean, it's a 5-years balloon. So we will have a nominal mortgage payment until then, and then we can pay it all off at that point or we can decide what we want to do with it.

And now we have a conference room to host, if you come to visit us.

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Operator [14]

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(Operator Instructions) And we'll take our next question from Doug Cooper from Beacon Securities.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [15]

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Just as we start off on the income statement and financials. Todd, looks like bad debt of division revenue dropped to 7.7% in the quarter from 10.4% in the first quarter. Is this sort of the lower than what you would have anticipated? Or how should we think about that?

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [16]

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Yes, it was a little bit lower than historical numbers. And we have invested quite a bit of money into our billing and collections team. I mean, that's another back-office cost that we don't necessarily talk about all the time. Bad debt is just like growth, ebbs and flows, and we have a pretty standard procedure. So I'd still say that we're going to be a 9% to 13% bad debt company, just -- and we're going to always strive to be lower than that, but we just seem to find ourselves in that range on a -- at least on an annualized basis.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [17]

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Okay. You said that -- in your prepared remarks, if I can find it somewhere in my notes, adjusted EBITDA in the back half of the year higher than the first 2 quarters. Is that starting in Q3? And when we think about that comment, first quarter was 23.7%, this quarter 20.5%, so for the first 6 months 22%. So when you talk about higher in Q3 and Q4, higher than the 23.7%. Is that how we should be thinking about that?

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [18]

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Yes. I think that -- I mean, look, there's a lot of variability within all of the investments and the stock price that are driving it, but we think that going back to more prior year margins in the back half of the year seems more reasonable. Obviously, the stock almost doubled in the first half. So we had a big impact on that. If the stock doubles, again, in the back half may be margins are compressed, so -- but I figure it'd be a good problem, but last year...

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [19]

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The last year, it was -- 26% leverage in the back half.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [20]

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Yes. We hung in that mid-to-high '20s last year. That's our goal. We want to get back up to that, but it's not just the stock, I want to be very clear about that. We -- may be within answer to Sarah's question, we sacrificed a little bit of margin because we have so aggressively invested into these future growth initiatives. I see that normalizing and as we continue to grow revenue organically, 2% to 3% a month like we always say we want to do, those investments aren't going to keep up with the revenue growth, therefore, we still have margin expansion in the back half.

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Casey Hoyt, Viemed Healthcare, Inc. - CEO & Director [21]

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And I would say that the volatility, just launching new products right now, the position that we're in, kind of keeps us conservative. It's hard to tell how fast O2 is going to grow or lymphedema is going to come out of the gate but it will be a conservative expansion.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [22]

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Yes. So just as a point of reference, you mentioned employee cost, so I was -- what was like the difference in employee cost, say, between Q1 and Q2 or year-over-year? Just as a point of reference. The headcount.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [23]

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Well, I mean, the total G&A -- oh, the headcount.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [24]

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Headcount.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [25]

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We ended the quarter -- I believe we ended the quarter at 375 and we started right around 300. So we hire about 30% of our workforce in the first 6 months of this year.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [26]

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375 at end of June, and 300 at the end of December, is that what it was?

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [27]

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Yes. I don't remember the exact number in December, but it was 375 at the end of June. And then if you look back to last June, where our quarter-over-quarter comparables are, my guess is we're probably in the 250 to 275 range.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [28]

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Okay. Moving on just on the PRECISION study. I'd say, I think, important, I think, Casey, from my perspective, you hit it on the head. And you're educating the physicians who are ultimately driving your patient growth. What's the major difference, say, between the KPMG study and the PRECISION study? And the audience that you will see at the Chest, I guess, conference, how does that compare to the exposure you're getting through the KPMG study?

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [29]

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It's -- the best way to frame it up, Doug, is that-- very similar results. We've seen some preliminary data through the KPMG findings, however, doctors, when you're out there educating physicians, they dig deeper than just what numbers show from a poor accounting firms. They dig into other diagnosis code that are driving cost beyond chronic respiratory failure and COPD, beyond ALS and what else do these patients struggle with that might be driving cost. And did you look at those diagnosis. So Dr. Frazier is very versed in what we need to do and has always been pushing for a clinical PRECISION study. I mean this has been about a year ongoing that we've been in this process. So it's one of the -- it's the study that we need that will be publishable in the clinical community. And when you have a publishable, life saver type of study, that's when you can get on stage with the -- and go the ACCP show like he's doing and go to the Thoracic Society and the COPD Foundation and it really start beating on your chest a whole lot louder and prouder as a clinician versus just an accounting, if you will, with KPMG. And the difference is, you have our Chief Medical Officer standing on stage in front of a collective group of his peers talking about a study. It just has a lot of clout versus any of the huge audience versus our one by one salespeople around the country, which is very effective, but this just opens up a huge audience of a new potential referral sources.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [30]

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So I guess, I mean, the 45% year-over-year growth is incredibly impressive, and aided, in part, I'm assuming by the KPMG study. Could -- if this PRECISION study from Dr. Fraser, does that carry more weight within the referral community, could you see actually growth accelerate? Is that possible? I mean...

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [31]

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Yes. We expect it to.

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Operator [32]

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And there are no other questions, so gentlemen, I'll turn the call back to you for any additional or closing remarks.

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W. Todd Zehnder, Viemed Healthcare, Inc. - COO & Director [33]

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All right. Well, we're going to thank everybody for tuning in today. We're extremely proud of what we've accomplished this quarter and with out NASDAQ listing, I want to echo Casey's comments -- and thank you all of our employees and look forward to meeting a bunch of new shareholders down here, south of the border. And that's it.

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Operator [34]

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Thank you very much, that does concludes our conference for today. I'd like to thank everyone for your participation, and you may now disconnect.