Whatever. Our next presenters, or our next company is VieMed Healthcare, NASDAQ: VMD. VieMed is a $260 million market cap national leader of in-home clinical care provider of respiratory and technology-enabled home medical equipment services, including ventilation, sleep therapy, staffing, and other complementary products. Their objectives are to reduce costs, increase patient satisfaction, and minimize re-hospitalizations. They currently serve over 153,000 patients across all 50 states, providing accessible and high-quality respiratory care across the country. Since going public in 2017, VieMed has achieved a 27% compound annual growth rate.
VieMed recently announced the acquisition of Lehans Medical Equipment as they continue to expand the business. Presenting today are Trae Fitzgerald, CFO, and Todd Zehnder, COO.
Thank you. Thank you, and thanks for you being in here, and those that are listening to the webcast. Jumping right in, we are a, as the intro went, we are a DME company, classified as a DME, but our secret sauce is clinicians in the home. Most of our business, 55% of our business, is non-invasive ventilation. These are kind of the sickest, chronically ill patients, and we service about 12,000 of those patients. We are in all 50 states.
We have patients in all 50 states, but I would say that we're kind of strong in the Southeast and up into the hills of Kentucky and so forth, where we're really active in, call it, 35 states. A lot of geographic diversification, have over 150,000 patients. The clinical married with the technology is a lot of what we do, and I'll go into that, but we employ roughly 400 respiratory therapists around the country that are treating these chronically ill patients. As mentioned in the intro, we have a CAGR of 27%. The vast majority of that is organic. We are an organic growth story. We have bolted on an inorganic strategy and have, as just mentioned, we announced our second acquisition that we hope to close in July
, but our focus going forward is getting these underserved population and organically growing. As I just mentioned that first bullet, we service these patients through really becoming an extension of case management and pulmonary physicians in the hospitals. The vast majority of our ventilation patients are coming from the hospital. They've had an exacerbation. If they are not treated with ventilation, they very likely are going to be a revolving door of readmissions. These patients are chronically ill. They're hypercapnic, meaning they're trapping CO2 in their lungs, and they need some sort of therapy. The easiest, cheapest, and most effective is using a vent in the home.
If not, you'll see some numbers later. They're going to be in and out of the hospital. As I mentioned, inorganic growth is a new piece of what we're doing. We're not your traditional roll-up company. You're not going to see us doing a bunch of acquisitions and just trying to integrate them over time. We're really looking for acquisitions that give us a revenue synergy springboard. The first one we did was in Tennessee, and it's really helped us grow our complex respiratory patient base up there. The Lehans transaction that I'll talk about a little bit later is in the Chicagoland area. Both of those areas that we really weren't that strong ahead of time, so it's a way for VieMed to bring its offering into that.
The regulatory environment has been pretty stable over the last, call it, decade. Probably the most important thing in the vent world is we just got a new NCD that came out on Monday. Really, we've been working with regulators and legislators and everyone in CMS and the CAG group to come up with these rules. For the first time since ventilation was approved, we actually have formulary rules, which is really good because we've had to sort of self-administer who the right patients are. CMS now has told us who those patients are. It's basically the patients we're treating.
What we're very hopeful on is that it will reduce the audits that come after because they're telling us the right patients to treat. Also, there'll be a Medicare Advantage pull-through. The Medicare Advantage plans to this date have really had to make up their own rules on who the right patients are. Now that CMS has come out with formulary rules, we will be able to, I guess, normalize that across all of the MA plans. The vent business is really the core. I think I said it earlier, 55% of our revenue right now is coming from ventilation. We have about 12,000 patients on service, and you can see the growth over time.
Effectively, all of this has been organic. We have built up a pretty good vent patient basis in the H&P area, but most of that has come through us. The vent world is a little different than most other products. It's an uncapped rental. These patients, on average, stay with us for about 17 months. If we keep the patient alive and we keep the patient out of the hospital, we're able to bill for that. It's a bundled rate, meaning the cost of the vent, the cost of the RT. As I mentioned, we have 400 that we employ. All the supplies and all the repairs and maintenance are in this monthly fee.
Our job is fully aligned with the patient and the payer in that if we're keeping them in the home and still alive, then we get paid. If not, if they're in the hospital, then we don't. The vent business has been one that we've, as we mentioned, has just been a real organic growth story. It's also been the funding mechanism to grow the other areas that we'll talk about. You'll look at when Trae comes up, you'll see our balance sheet is pristine. The economics of the vent business and the growth of that business have been able to fund the CPAP, oxygen, percussion vest, and staffing businesses that we have.
There's still a massive need for ventilation. This is some rough estimates of the COPD numbers out there. We think that we have less than a 10% market penetration using CMS data. We should be getting the 2024 numbers here pretty soon, but this has been a very slow-growing adoption. As I mentioned, the real alternative to this therapy is patients having to go in and out of the hospital, probably on average three times a year, a COPD or at the end of life because they're having exacerbations and they have to go in and get the CO2 blown off. We're the third largest in the country, as I mentioned, roughly 12,000, and it's not an extremely fragmented group.
You can see about 2/3 of the total ventilation patients are held by the top 10 providers. It just shows you it's a lifesaving device. You have to have therapists. The vents are expensive. It's not made for most of the mom-and-pops around the country. We like the fact that when we go into an area, we've got the footprint, we've got the scale, we have the experience to go and launch into new areas. The RTs really are probably the biggest advantage we have. We are, I would say, probably the highest clinical touchpoint company in the industry. On average, our RTs are managing about 50-60 patients, and we have married that up with some technology.
We generated it ourselves. We developed it. Effectively, it gives us the opportunity to manage the patient's utilization and how they're doing from a tablet. The tablet will give us the ability to see usage. It also gives the patient the ability to FaceTime their therapist. We never give up on going to the home. We think going to the home is the most effective way to drive compliance and to also just make sure the patient is having the right experience. This gives us the ability to pull data without having to go to the home as if it was a clinical reason. More and more of our patients are getting on products that are connected, and I think home connectivity is definitely a wave of the future.
Obviously, the system needs more patients being treated at home with lesser-cost clinicians versus going into the hospital. We have published three studies. This has been extremely important during the NCD and our discussions with Medicare because we were able to go up probably with the most comprehensive science that is out there. Our Chief Medical Officer, Dr. Bill Fraser, has been the lead on these. There is another one coming out that one of our industry organizations is working on that is going to show very similar results. In effect, what you can see is for every six patients we put on a ventilator, we're effectively saving a life.
We're also keeping them out of the hospital. As I mentioned, we're billing roughly $1,000 a month. If we can stop one of those exacerbations in a year, we're saving money. You can see of the 500,000 patients in the sample, this data was showing that we were saving roughly $5,500 per patient per year. Those numbers are getting bigger. We can already see what the next study is showing. We're saving more money. This, along with making sure that the right patients are being treated, which we had something to say on, this is what we can show to the government why they're putting the formulary rules in, and then ultimately why commercial plans are going to want to pay for this as well.
I've mentioned organic growth a couple of times. Really, how we do things is a lot different than your traditional, "D ME". We don't have brick and mortar all over the country. For us to go into a new area, it really means to go find a clinician that we can really teach on how to sell to physicians and case management and so forth. We'll launch into a city with one employee. They're what we would call a dual role. Effectively, they're selling to the physician, but they're also treating the patients. They really are understanding the business model and what they're going and selling for the rest of their career.
After they get to roughly 20-25 patients, it's time for them to give up the clinical side. We'll hire more therapists. At that point, every time we add another 50 patients or so, we'll add more RT coverage. When we get into a fully adopted area, they can have coverage for each other and so forth. We've traditionally done really well in rural areas. COPD prevalence is higher in rural areas, and I think it just fits our model. We have plenty of big cities that we have a lot of patients in, but we effectively target areas that have high COPD prevalence and have readmission problems. Those generate the opportunity for us to have more and more of these COPDers.
As I mentioned, no stores keeps our costs from that down. We invest that money. We spend our money on the clinicians. I think ultimately, their success with patients and their ability to treat patients better than most other DMEs gives us the ability to have sticky referral relationships. It doesn't take us long to have an RT treating a bunch of physicians' patients, and they realize that we're keeping them in and out. We're keeping them from making phone calls to that physician's office, tying up their nurse, or maybe not having to see them in the hospital three times that year. As I mentioned, the high-service model is really key between that and the technology. It's what really differentiates us from the rest of the other people. We've really changed the business over the last five years.
If you look back in 2019, 87%, so almost 90% of our business was coming from ventilation. While that number continues to grow and the notional amount is much larger today, we've also been able to roll out other products nationally. Around the 2020 time, right after the pandemic, the advent of sleep remote setups became a thing. We can set up sleep apnea patients via a phone call or a FaceTime instead of having to come to a facility. That really fit our model because we do not have facilities all over the country. We rolled that out. On the oxygen side, the advent of the POC, or the portable oxygen concentrator, drove that business opportunity.
We kind of rolled out two other adjacent products around the same time, and you can see that they've just had massive growth, obviously coming from a smaller base, but we've really been able to grow those. The limited inorganic activity that we have done, those tend to come with more sleep apnea patients. The payer mix also is diversified. As you can see, we are a heavy Medicare and Medicare Advantage company. Generally, by the time you have COPD and by the time you need a ventilator, you're in the Medicare population. That's always going to be a big chunk of our business. As we've grown sleep, especially, that has a way higher commercial aspect to it. This just shows how the sleep business has grown from a census standpoint.
I would say that as we sit here today, the sleep business is growing as fast as we ever have. We're building operational efficiencies into the business as we continue to grow. Slight falloff on the resupply side in the first quarter is always a challenging one with change of insurance and deductible resets, but you'll see the second quarter really coming up. Different than the ventilator, a PAP is capped at roughly a year. What happens is if a patient is compliant and they're using their machine and it's helping them sleep and giving them better energy and so forth, they're going to continue to order supplies for the rest of their journey with us. Once again, a younger patient, they'll stay on. The patient lifecycle will be way longer than a ventilator. It could be 5, 10, 15 years.
The resupply business, the new supplies, is the ongoing annuity of the business, if you will. We can use technology and outsource call centers to do the majority of that work. The other product lines that I mentioned, oxygen and percussion vests, those are also call points from the pulmonary doctors. Most of our oxygen patients either are hypercapnic or hypoxic. They're COPDers, but we treat a variety of disease states. Percussion vests are bronchiectasis is our number one disease state on that. Once again, those are also generally due to caps or they're subject to caps, and so they have a sunset on them. I mean, those two products specifically are very strategic in that a pulmonologist can call on one person to do all of their respiratory needs.
If we have a patient base that's bragging about us, we become that sticky referral. The last piece is a healthcare staffing business. We stood this up post-COVID when we were getting leaned on by so many of the hospital systems and government like the VA to look for clinicians. That has somewhat subsided. We're still doing nursing and some locum business, but it's transitioned into serving behavioral health people around the country. We have several states that we're working on hiring behavioral health consultants to help with the growing problem that we have in the country. It is a really good business for us. There is no CapEx associated with it, so it's accretive to cash flow. The other thing is we have a full-blown staffing division that can hire for us.
If we're recruiting in an area, we have the people working for us to go and hire the salespeople, hire the RTs. We're able to, I would say, be more effective and more efficient on how we're hiring people and getting them up to speed. Last thing before I turn it over to Trae, I've talked a little bit about it, but the inorganic side of the business is growing. We've done really one acquisition to date, H&P, but we also did a joint venture for the first time last year, a smaller deal. The latest acquisition, Lehans, we're expecting hopefully to close it somewhere in July, maybe July 1. We'll see. I'm waiting on some regulatory things. It's an entry into maternal health. About 25% of their business is sleep.
That's an easy foreman, but they also have maternal health, and that's breast pumps and breast pump resupply. A great business, a great team that we're really excited about forming into VieMed, but really excited that we can take this business model and roll it into contracts in the other 50 states or especially some of our stronger states. We've already been doing the work on the back end through our network development team, making sure that these codes are ready to go bill. Once we close it, the first order of business is to find a couple of states and bring this new product line to existing areas where we have really strong clinicians and strong relationships. It's going to be a good business.
You can see the metrics, a little bit less than $30 million of revenue, but a really strong adjusted EBITDA of $7.5 million. We'll finance it through cash on hand and borrowings on the revolver. We'll continue to have really good debt metrics. That's a good transition to let Trae talk about that.
All right. Thanks, Todd. Yeah, Trae Fitzgerald, Chief Financial Officer for VieMed. I've been the CFO since we went public via a corporate spin-out in late 2017. We've seen a ton of success over that period. It's been a sort of exponential growth for VieMed. As we think about where we were when we initially spun out in 2017, we were likely a little bit less than 200 employees. We were a $40 million top-line business with $11 million of EBITDA. As we crossed the threshold of 2024 last year, we were 1,200 employees, crossed over, I think it was $224 million and over $50 million of EBITDA. Quite substantial growth over that period, over that eight-year period. Notably, most of that is organic. Right, Todd mentioned those two smaller acquisitions, the $30 million acquisition that we did, H&P in 2023, but largely everything else is organic.
Why that's important is what we are proud of is we have posted positive net income since the inception of the business. That's really due to our model, our increasing revenue, doing it organically and doing it the right way, thinking about Todd talking about our lean operating model, no brick and mortars, operating in a remote fashion and sort of being adaptable. Another piece of that operational model that kind of got a little glossed over is because our sales reps are typically clinicians, when we go into an area, we're able to be sort of both the sales rep and the clinician as we start into a new area until it makes sense to have a dedicated respiratory therapist.
All these things allow you to sort of start de novo operations across the country in a very kind of measured approach that tends to lead ourselves to be profitable. We've never issued a share of stock since we've been public. Rather, we have bought back stock twice, 2018 and 2022. On Monday, we announced our latest repurchase program, which will be our third program, where we intend to buy back around 5% of our outstanding shares over the next few months. We ended last year—Todd was talking about our balance sheet—we ended last year with a pristine balance sheet. We're net zero debt. We ended with $17 million of cash on the balance sheet and $55 million of availability under our current credit facility, which also has a $30 million accordion should we need to execute on that.
There is plenty of dry powder to do, not just to buy back, but these strategic opportunities that Todd was talking about with Lehans. Q1 of 2025 was a transition of most of the momentum in 2024 continuing into 2025. We saw a very strong operational quarter. Typically, in our space, in the H&P space, and broader healthcare sector as well, Q1 is your toughest quarter seasonally. New patient deductibles, deductible resets, change of insurance. There is a lot of administrative burden there. Despite that, it was a really strong comparable year-over-year period for us. Just operationally, we still saw vent patients, which is our most important metric that we do disclose. Census was up 13%. We talked a lot about our new patient starts on the sleep apnea side for PAP therapy was up 40% year-over-year.
Really driving those year-over-year comparisons, as you can see here, net revenue growth year-over-year 17%, net income 69%, adjusted EBITDA 26%. Again, we end one Q the same balance sheet position that we had at the end of the year with no debt and all of our credit facility available to us. As we look to the full year of 2025, we took a step forward this year in a change to our guidance cadence. We traditionally have done a quarter-to-quarter just top-line revenue guidance. This year, with the maturation of the business and us feeling confident about where we are operationally, we put out full-year guidance not only for net revenue, but adjusted EBITDA as well. The top of our revenue guidance would represent approximately 18% growth over last year.
We're still striving for closer to 20%, obviously, as it was easier to grow 27% whenever you're a $40 million business in 2017 versus a $225 million business at the end of 2024. We're still seeing sort of industry-leading growth, and we anticipate that to continue into the future, especially as we add other products, sleep apnea and other complex respiratory products. One point to note is we haven't updated guidance yet for the most recent acquisition for Lehans Medical Equipment, which we hope to close in early 3Q. We'll certainly update that on the next reporting cycle for their contribution. Our 1Q update to revenue and EBITDA guidance, we didn't move top end, but we did bump up the lower end of the range for both of those metrics.
That was really on the back of the operational metrics that I was just describing in 1Q. I'll just take for example, when we look at new patient setups for sleep apnea being 40% higher, I don't necessarily see an increase in revenue in 1Q because of that materially. The pull-through effect of that many setups in 1Q really bodes well for stronger resupply in the back half of the year, kind of raising that floor. That is why we lifted the bottom end of our range. Execution. Our plan here going forward, this slide has looked pretty similar for the last eight years. There might be a new bullet point really here when we think about AI and technology.
There are a lot of opportunities right now in rev cycle, remote monitoring of our patients, just all facets of the business right now. There are a lot of new initiatives within the company to utilize technology to our benefit. Largely, our execution strategy is exactly what it was five, six, seven years ago. We're looking for pockets of the country that have underserved populations. We're looking for qualified sales reps in those territories to execute our plan. At the end of the day, we're looking for vent patients, complex respiratory patients, and our whole patient base through our organic growth to continue to feed what we've already created. From a capital allocation standpoint for us, there are three pillars. The first pillar is always organic growth. We are always going to invest the money back into the business. It's the best return of capital.
It's the best return for our shareholders. Secondly, we're going to focus on strategic opportunities in the inorganic space, which we see as a springboard to another organic kind of run with that company. Right? We don't need to acquire to grow. Rather, we acquire to enhance our growth profile. Right? Once those two are taken care of, the third pillar really for us is what we've done in the past and we've done twice and we'll do a third time here is a stock buyback. If we've invested in our organic growth and that's continuing to come to fruition and our strategic opportunities are where they are, we have one or there's some sort of cadence of every other year to do at the right time. We're not a serial acquirer like Todd was saying.
We're going to find really good companies and we're going to do it on our own time in a measured approach to integrate the companies really well. After that, we're going to return value to our shareholders. That is what we intend to do. In any given year, we typically do two of these things at least. Right? We're always growing organically. We acquire a company about every other year at this point. This will be our third buyback. 2025 will probably be our first year we do all three of those. A really successful year for us. We're excited about this year and what it looks like for 2026. With that, I'll open it up for any questions. If not, we're available for breakout. Yeah. Right. I'll repeat the question if you want to take it. Yeah. Okay.
For the benefit of the webcast users, he was asking about compliance for CPAPs and some of these other sort of newer kind of devices out there and if there's a difference in compliance, essentially
. Generally, yeah. Generally, the first thing is 72% of our patients become compliant on CPAP. It's effectively a 90-day test. You have to become compliant for the rental to keep paying and then to get the resupply. The falloff of patients is really all over the board. We have patients that have been on with us for 10 years that they're still ordering supplies. We have patients that get aggravated with it and stop using it, or maybe they lose a bunch of weight and they don't have to use it. Sometimes they come back to us because they need to sleep better again.
The rate of patients that drop off and ultimately go and get an implant is really pretty low. I don't have the stats that say how many of them have gotten that implant, but you have to fail CPAP generally before you get one of those devices implanted in. I would say more of what we lose patients to is just they're tired of the adoption. More and more of these patients, the ones that really get the benefit from it, are going to stay on in perpetuity. Every five years, they actually qualify for a new machine and kind of reinvigorates their use at that point. Yeah. The question is, manufacturers and is there optionality there? There is. ResMed is clearly the dominant force in the CPAP world.
Philips used to be a really large supplier, but their devices have been recalled and they're out of the respiratory game in the United States for the foreseeable future. There is another manufacturer that has come to market kind of right around the pandemic. It's React Health. They have a really good CPAP as well. From the actual devices, there are two main players that we use. We use both of them. We really leave it up to the physician. If a physician likes their patients on a certain device, we're going to do that. We are agnostic if you want to think about it from a manufacturer. We buy and we sell a bunch of both of them. From the interface standpoint, the mask, there's more. Philips is still in that, ResMed, React, and F&P. We spread out.
Once again, that's not as much the physician as much as the patient. What mask can they get comfortable with? You're right, the commercials are a little overstating how uncomfortable it is for some of them. Yeah.
All right. We are available at the breakout if you guys have any other questions. Thank you for attending.