VieMed Healthcare emphasized the importance of patient satisfaction and the ever-expanding demand for caring for patients in their homes, as the national home medical equipment (HME) and clinical care provider discussed its third-quarter earnings in a Nov. 7 conference call.
The Lafayette, Louisiana-based provider (Nasdaq: VMD) now has more than 1,150 employees, CEO Casey Hoyt noted. “Their dedication to our Live Your Life mission and their relentless focus on patient satisfaction and operational performance will enable a strong finish to 2024,” Hoyt said, in announcing record-breaking net revenue in the third quarter.
And Hoyt made a case for reinstating Medicare’s 75/25 blended relief rate for HME providers, following the expiration of the rate in January.
“I’d also like to highlight that there has been some recent movement on the 75/25 reimbursement relief,” he said. “Recall that this rate adjustment for certain products in certain areas would increase Medicare reimbursements for providers serving those areas. This isn’t dead by any means. It adds positive momentum with some recent legislative support, and it should be back up for consideration at the end of the year.”
Ventilator growth, NIV NCD support
VieMed’s ventilator business continued to grow, “with a 4.3% sequential increase in active vent patients,” Hoyt said. “That sequential growth is usually a leading indicator for future quarters and reinforces the positive outlook we have on the business. The 400-plus increase in vent patients we’ve experienced in both Q2 and Q3 is as good as we produced in a number of years.”
“On the regulatory front, we’re seeing some positive signs of support for the industry,” Hoyt added. “VieMed has been a leading advocate for the reconsideration of NCD [national coverage determination] 280.1, emphasizing objective and comprehensive coverage policies for NIV [noninvasive ventilation] therapy.
“We believe that the request for the NCD is another signal we’ve seen from CMS [Centers for Medicare & Medicaid Services] that they are serious about holding MA [Medicare Advantage] plans accountable for appropriate guidelines to deliver clinical care. The majority of comments submitted on the NCD have been positive, and we think this is a real opportunity for the industry to serve those in need and facilitate continued expansion. The reason we’ve been proactive on the NCD is that establishing clear and consistent guidelines will create a stable business environment for providers and reduce uncertainty for patients.”
In answer to a question later on in the presentation, Hoyt said fine-tuning the NIV NCD is “just good policy to develop clear clinical guidelines. CMS is kind of acknowledging that they’re a little too vague right now, and it’s allowing MA to make up their own rules for lack of a better description. And so they’re honing in on that to where MA follows their clinical guidelines.”
Growth in the sleep segment
As for VieMed’s sleep business, “All I can say is what a difference a quarter makes in terms of the overall narrative around GLP-1 drugs,” Hoyt said, referencing the medications that treat type 2 diabetes and obesity.
“Based on what we’ve seen from ResMed and others so far, we believe it’s pretty conclusive that GLP-1s are not impeding the growth of the sleep business. As we noted before, in fact, it appears to be bringing more patients into treatment for sleep apnea and other disorders as they lose weight. Despite the increasing use of GLP-1 therapies for weight loss, both obesity and sleep apnea rates continue to climb.”
Hoyt added that research has shown that patients who have moderate to severe obesity-related sleep apnea get better results when they combine PAP therapy with weight loss. And VieMed’s experiences support that.
“We’re seeing sequential growth in CPAP units, patients, resupply orders and home sleep tests,” he said. Even though sleep is currently contributing 17% of our total revenue as of Q3, we believe we’ve only scratched the surface of what this business can contribute to our overall growth.”
Financial results show strong organic growth
In discussing Q3 earnings, VieMed COO Todd Zehnder said, “The new company record for revenue this quarter and the 17% increase was driven almost entirely by organic growth with organic or acquired revenue accounting for $1.1 million of that year-over-year increase. Our revenue increased 6% on a sequential basis with inorganic or acquired revenue accounting for only $327,000.”
VieMed’s “core business” of vents accounted for 55% of the quarter’s revenue, Zehnder added, with the sleep business increasing to 17%. “Our oxygen and staffing businesses continue to grow as well, with those each contributing roughly 10% of this quarter’s revenue.”
Upcoming vent sales, the COO will be impacted by several factors. “We expect to sell more vents over the next several quarters, but the pace and amount will be determined by the remediation process established by Philips and the related governmental agencies.
“The tremendous opportunity we have to upgrade our vent fleet through the Philips buyback is enabling us to prioritize investing in our organic growth. The increased liquidity also gives us the flexibility to consider additional M&A in the future that can be complementary to our growth.”
VieMed expects this year’s momentum to continue, Zehnder added. “With the improvement we’ve made every quarter this year from operational and sales efficiencies, driving organic growth, self-funding CapEx through cash flow and improving the balance sheet, it’s critical to maintain that momentum and operational excellence during the fourth quarter,” he said. “We’re confident that we will, which should position us very well for a good year in 2025.”
