Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 08, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | VIEMED HEALTHCARE, INC. | |
Entity Central Index Key | 0001729149 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 37,735,785 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 7,691 | $ 10,413 |
Accounts receivable, net of allowance for doubtful accounts of $6,874 and $4,266 at June 30, 2019 and December 31, 2018, respectively | 12,797 | 8,839 |
Inventory, net | 3,712 | 2,887 |
Prepaid expenses and other assets | 861 | 824 |
Total current assets | 25,061 | 22,963 |
Long-term assets | ||
Property and equipment | 45,803 | 30,562 |
Other assets | 22 | 0 |
Total long-term assets | 45,825 | 30,562 |
TOTAL ASSETS | 70,886 | 53,525 |
Current liabilities | ||
Trade payables | 7,818 | 5,884 |
Income taxes payable | 0 | 152 |
Accrued liabilities | 6,950 | 7,551 |
Current portion of lease liabilities | 8,410 | 3,031 |
Current portion of long-term debt | 133 | 0 |
Warrant conversion liability | 800 | 363 |
Total current liabilities | 24,111 | 16,981 |
Long-term liabilities | ||
Accrued liabilities | 1,685 | 1,117 |
Long-term lease liabilities | 1,098 | 394 |
Long-term debt | 4,703 | 0 |
Total long-term liabilities | 7,486 | 1,511 |
TOTAL LIABILITIES | 31,597 | 18,492 |
Commitments and Contingencies (Note 8) | 0 | 0 |
SHAREHOLDERS' EQUITY | ||
Common stock - No par value: unlimited authorized; 37,697,535 and 37,500,815 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 2,350 | 71 |
Additional paid-in capital | 5,063 | 5,390 |
Accumulated other comprehensive loss | (148) | 0 |
Retained earnings | 32,024 | 29,572 |
TOTAL SHAREHOLDERS' EQUITY | 39,289 | 35,033 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 70,886 | $ 53,525 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 6,874 | $ 4,266 |
Issued (in shares) | 37,697,535 | 37,500,815 |
Outstanding (in shares) | 37,697,535 | 37,500,815 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 22,547 | $ 15,508 | $ 42,990 | $ 29,619 |
Cost of revenue | 5,686 | 4,185 | 10,727 | 7,744 |
Gross profit | 16,861 | 11,323 | 32,263 | 21,875 |
Operating Expenses | ||||
Selling, general and administrative | 13,244 | 7,919 | 24,836 | 15,208 |
Research and development | 203 | 0 | 437 | 0 |
Stock-based compensation | 1,034 | 665 | 1,914 | 1,226 |
Depreciation | 138 | 124 | 267 | 330 |
Loss on disposal of property and equipment | 85 | 52 | 141 | 88 |
Other expense | 25 | 7 | 49 | 7 |
Income from operations | 2,132 | 2,556 | 4,619 | 5,016 |
Non-operating expenses | ||||
Unrealized loss on warrant conversion liability | 268 | 123 | 437 | 195 |
Interest expense, net of interest income | 20 | 67 | 46 | 114 |
Net income before taxes | 1,844 | 2,366 | 4,136 | 4,707 |
Provision for income taxes | 24 | 0 | 162 | 0 |
Net income | 1,820 | 2,366 | 3,974 | 4,707 |
Other Comprehensive Income | ||||
Change in unrealized loss on derivative instruments, net of tax | (148) | (148) | ||
Change in unrealized loss on derivative instruments, net of tax | 0 | 0 | ||
Other Comprehensive Loss | (148) | 0 | (148) | 0 |
Comprehensive Income | $ 1,672 | $ 2,366 | $ 3,826 | $ 4,707 |
Net income per share | ||||
Basic (in dollars per share) | $ 0.05 | $ 0.06 | $ 0.10 | $ 0.12 |
Diluted (in dollars per share) | $ 0.05 | $ 0.06 | $ 0.10 | $ 0.12 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 37,686,763 | 37,909,628 | 38,165,274 | 37,909,628 |
Diluted (in shares) | 39,975,307 | 39,335,011 | 40,166,855 | 39,099,186 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings |
Shareholders' equity, beginning balance (in shares) at Dec. 31, 2017 | 37,909,628 | ||||
Shareholders' equity, beginning balance at Dec. 31, 2017 | $ 23,744 | $ 67 | $ 2,688 | $ 0 | $ 20,989 |
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation - options | 145 | 145 | |||
Stock-based compensation - restricted stock | 416 | 416 | |||
Net Income | 2,341 | 2,341 | |||
Shareholders' equity, ending balance (in shares) at Mar. 31, 2018 | 37,909,628 | ||||
Shareholders' equity, ending balance at Mar. 31, 2018 | 26,646 | $ 67 | 3,249 | 0 | 23,330 |
Shareholders' equity, beginning balance (in shares) at Dec. 31, 2017 | 37,909,628 | ||||
Shareholders' equity, beginning balance at Dec. 31, 2017 | 23,744 | $ 67 | 2,688 | 0 | 20,989 |
Increase (Decrease) in Stockholders' Equity | |||||
Net Income | 4,707 | ||||
Shareholders' equity, ending balance (in shares) at Jun. 30, 2018 | 37,909,628 | ||||
Shareholders' equity, ending balance at Jun. 30, 2018 | 29,677 | $ 67 | 3,914 | 0 | 25,696 |
Shareholders' equity, beginning balance (in shares) at Mar. 31, 2018 | 37,909,628 | ||||
Shareholders' equity, beginning balance at Mar. 31, 2018 | 26,646 | $ 67 | 3,249 | 0 | 23,330 |
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation - options | 229 | 229 | |||
Stock-based compensation - restricted stock | 436 | 436 | |||
Net Income | 2,366 | 2,366 | |||
Shareholders' equity, ending balance (in shares) at Jun. 30, 2018 | 37,909,628 | ||||
Shareholders' equity, ending balance at Jun. 30, 2018 | $ 29,677 | $ 67 | 3,914 | 0 | 25,696 |
Shareholders' equity, beginning balance (in shares) at Dec. 31, 2018 | 37,500,815 | 37,500,815 | |||
Shareholders' equity, beginning balance at Dec. 31, 2018 | $ 35,033 | $ 71 | 5,390 | 0 | 29,572 |
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation - options | 578 | 578 | |||
Stock-based compensation - restricted stock | 302 | 302 | |||
Exercise of options (in shares) | 2,418 | ||||
Exercise of options | 4 | $ 4 | |||
Shares issued for vesting of restricted stock units (in shares) | 539,965 | ||||
Shares issued for vesting of restricted stock units | 0 | $ 2,202 | (2,202) | ||
Shares repurchased and canceled under the Normal Course Issuer Bid (in shares) | (365,100) | ||||
Shares repurchased and canceled under the Normal Course Issuer Bid | (1,522) | (1,522) | |||
Net Income | 2,154 | 2,154 | |||
Shareholders' equity, ending balance (in shares) at Mar. 31, 2019 | 37,678,098 | ||||
Shareholders' equity, ending balance at Mar. 31, 2019 | $ 36,549 | $ 2,277 | 4,068 | 0 | 30,204 |
Shareholders' equity, beginning balance (in shares) at Dec. 31, 2018 | 37,500,815 | 37,500,815 | |||
Shareholders' equity, beginning balance at Dec. 31, 2018 | $ 35,033 | $ 71 | 5,390 | 0 | 29,572 |
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of options (in shares) | 7,000 | ||||
Change in unrealized loss on derivative instruments | $ (148) | ||||
Shares repurchased and canceled under the Normal Course Issuer Bid (in shares) | (365,100) | ||||
Shares repurchased and canceled under the Normal Course Issuer Bid | $ (1,522) | ||||
Net Income | $ 3,974 | ||||
Shareholders' equity, ending balance (in shares) at Jun. 30, 2019 | 37,697,535 | 37,697,535 | |||
Shareholders' equity, ending balance at Jun. 30, 2019 | $ 39,289 | $ 2,350 | 5,063 | (148) | 32,024 |
Shareholders' equity, beginning balance (in shares) at Mar. 31, 2019 | 37,678,098 | ||||
Shareholders' equity, beginning balance at Mar. 31, 2019 | 36,549 | $ 2,277 | 4,068 | 0 | 30,204 |
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation - options | 705 | 705 | |||
Stock-based compensation - restricted stock | $ 329 | 329 | |||
Exercise of warrants (in shares) | 8,280 | 8,280 | |||
Exercise of warrants | $ 16 | $ 16 | |||
Exercise of options (in shares) | 4,725 | ||||
Exercise of options | 18 | $ 18 | |||
Shares issued for vesting of restricted stock units (in shares) | 6,432 | ||||
Shares issued for vesting of restricted stock units | 0 | $ 39 | (39) | ||
Change in unrealized loss on derivative instruments | (148) | (148) | |||
Net Income | $ 1,820 | 1,820 | |||
Shareholders' equity, ending balance (in shares) at Jun. 30, 2019 | 37,697,535 | 37,697,535 | |||
Shareholders' equity, ending balance at Jun. 30, 2019 | $ 39,289 | $ 2,350 | $ 5,063 | $ (148) | $ 32,024 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities | ||
Net Income | $ 3,974 | $ 4,707 |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ||
Depreciation | 2,739 | 1,634 |
Bad debt expense | 3,859 | 2,685 |
Share-based compensation | 1,914 | 1,226 |
Unrealized loss on warrant conversion liability | 437 | 195 |
Unrealized loss on warrant conversion liability | 0 | |
Loss on disposal of property and equipment | 141 | 88 |
Net change in working capital | ||
Increase in accounts receivable | (7,818) | (761) |
Increase in inventory | (825) | (302) |
Increase (decrease) in trade payables | 1,934 | (120) |
Decrease in accrued liabilities | (181) | (83) |
Decrease in income tax payable | (153) | (69) |
Increase in prepaid expenses and other current assets | (58) | (2) |
Net cash provided by operating activities | 5,963 | 9,003 |
Cash flows from investing activities | ||
Purchase of property and equipment | (7,700) | (2,057) |
Proceeds from sale of property and equipment | 213 | 277 |
Net cash used in investing activities | (7,487) | (1,780) |
Cash flows from financing activities | ||
Proceeds from exercise of options | 22 | 0 |
Proceeds from exercise of warrants | 16 | 0 |
Proceeds from commercial long-term note for building | 4,837 | 0 |
Shares repurchased and canceled under the Normal Course Issuer Bid | (1,522) | 0 |
Repayments of lease liabilities | (4,551) | (3,770) |
Net cash used in financing activities | (1,198) | (3,770) |
Net (decrease) increase in cash and cash equivalents | (2,722) | 3,453 |
Cash and cash equivalents at beginning of year | 10,413 | 5,098 |
Cash and cash equivalents at end of year | 7,691 | 8,551 |
Supplemental disclosures of cash flow information | ||
Cash paid during the period for interest | 52 | 116 |
Cash paid during the period for income taxes, net of refunds received | 317 | 68 |
Supplemental disclosures of non-cash transactions | ||
Property and equipment financed through capital leases and long-term debt | 9,438 | 4,586 |
Property and equipment financed through leases upon adoption of FASB ASC 842 | 1,919 | 0 |
Change in unrealized loss on derivative instruments, net of tax | $ (148) | |
Change in unrealized loss on derivative instruments, net of tax | $ 0 |
Nature of Business and Operatio
Nature of Business and Operations | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Operations | Nature of Business and Operations On December 21, 2017, Viemed Healthcare, Inc. (the "Company") consumated Asset and Share Purchase Agreements as well as an Arrangement Agreement ("the Arrangement") with Protech Home Medical Corp. ("PHM") (formerly Patient Home Monitoring Corp.) and was spun-out as a separate public company that owns a 100% interest in Home Sleep Delivered, L.L.C. ("HSD") and Sleep Management, L.L.C. dba Viemed ("Viemed") through the U.S. holding company Viemed Inc. Effective as of the spin-out date, the consolidated financial statements include all of the above referenced entities. The spin-out transaction was treated as a common control transaction and all assets and liabilities of the spun out business were transferred at the prior carrying values. The Company, through its subsidiaries, provides in-home durable medical equipment ("DME") and health care solutions to patients across over 29 states in the United States. Viemed offers customers requiring respiratory services and related equipment an appropriate selection of home medical products including non-invasive ventilators, positive airway pressure (“PAP”) machines and oxygen units, as well as the services of experienced respiratory therapists. HSD provides in-home sleep apnea testing, allowing a patient to determine the existence of sleep apnea at home at a fraction of the cost of the traditional sleep lab environment. The Company was incorporated under the Business Corporations Act (British Columbia) on December 14, 2016. The Company's registered and records office is located at Suite 2800, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2Z7 and its corporate office is located at 202 N. Luke Street, Lafayette, Louisiana 70506. The Company qualifies as a "foreign private issuer," as defined in Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), for the purposes of the informational requirements of the Exchange Act. Although, as a foreign private issuer, the Company would not be required to do so, the Company will file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the Securities and Exchange Commission (the "SEC"), instead of filing the reporting forms available to foreign private issuers. The Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"), and as such, has elected to comply with certain reduced U.S. public company reporting requirements. The Company’s shares are traded in Canada on the Toronto Stock Exchange under the symbol VMD.TO, and as of August 9, 2019, in the U.S. on the Nasdaq Capital Market under the symbol VMD. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly our consolidated balance sheets, consolidated statements of income and comprehensive income, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows for the periods and as of the dates presented. Our fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2018 was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. These condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto. The nature of our business is such that the results of any interim period may not be indicative of the results to be expected for the entire year. Reporting currency All values are in U.S. dollars ($ or "USD") unless specifically indicated otherwise. Canadian dollars are indicated as CAD$. Functional currency Management has exercised judgment in selecting the functional currency of each of the entities that it combines based on the primary economic environment in which the entity operates and in reference to the various indicators including the currency that primarily influences or determines the selling prices of goods and services and the cost of those services, including labor, material and other costs and the currency whose competitive forces and regulations mainly determine selling prices. The Company's functional currency was determined to be the U.S. dollar, which was determined using management’s assumption that the primary economic environment which it will derive its revenue and expenses incurred to generate those revenues is the United States. Basis of consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition, inventory, accounts receivable allowances for bad debts, stock compensation expense, depreciation and amortization, legal provisions, income tax provisions, and fair value of financial instruments. Actual results could differ from these estimates. Accounts receivable Net accounts receivable aging for each reporting period is as follows: Current 30-60 60-90 Over 90 Total Accounts Receivable, net of Allowance June 30, 2019 $ 6,896 $ 1,816 $ 1,435 $ 2,650 $ 12,797 December 31, 2018 $ 4,857 $ 1,124 $ 668 $ 2,190 $ 8,839 Accounts receivable are regularly reviewed for collectability and an allowance is recorded to cover the estimated bad debts and billing modifications. The accounts receivable are presented on the Condensed Consolidated Balance Sheets net of the allowance for doubtful accounts. It is possible that the estimates of the allowance for doubtful accounts could change, which could have a material impact on our operations and cash flows. The Company writes off receivables when the likelihood for collection is remote, and when the Company believes collection efforts have been fully exhausted and it does not intend to devote additional resources in attempting to collect. The write-offs are charged against the allowance for doubtful accounts. The estimates and write-offs for the allowance for doubtful accounts for each reporting period were as follows: June 30, 2019 June 30, 2018 Balance, beginning of year $ 4,266 $ 3,060 Provision for bad debts 3,859 2,685 Amounts written off (1,251 ) (2,593 ) Balance, end of period $ 6,874 $ 3,152 As of June 30, 2019 and 2018 , no one customer represented more than 10% of outstanding accounts receivable. The Company does have receivables at June 30, 2019 from Medicare and Medicaid, representing 42% and 13% , respectively, and 55% combined, of total outstanding receivables ( December 31, 2018 - 60% ). As these receivables are both from government programs, there is very little credit risk associated with these balances. Revenues from Medicare and Medicaid accounted for 67% and 69% , of the total revenues for the three months ended June 30, 2019 and 2018 , respectively, and 68% and 71% for the six months ended June 30, 2019 and 2018 , respectively. Property and equipment Property and equipment is presented on the consolidated balances sheets at historic cost less accumulated depreciation. Major renewals and improvements that extend the useful life of assets are capitalized to the respective property accounts, while maintenance and repairs, which do not extend the useful life of the respective assets, are expensed as incurred. Management has estimated the useful lives of equipment leased to customers. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Property and equipment are amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the property and equipment are as follows: Description Estimated Useful Lives Medical Equipment 2 - 10 Years Computer Equipment 5 Years Office Furniture & Fixtures 5 - 10 Years Leasehold Improvements Shorter of Useful Life or Lease Vehicles 5 Years Building 15 - 39 Years Land Indefinite Life Depreciation of medical equipment commences at the date of service, which represents the date that the asset has been deployed to a patient’s address and is put in use. Property and equipment and other non-current assets with definite useful lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Revenue recognition Revenue from a customer consists of any combination of the sale and rental of durable medical equipment (“DME”) and/or patient medical services. Revenues are billed to and collections received from Medicare, third-party insurers, co-insurance and patient-pay. Revenue is recognized net of contractual adjustments and bad debt based on contractual arrangements with third-party payors, an evaluation of expected collections resulting from the analysis of current and past due accounts, past collection experience in relation to amounts billed and other relevant information. Contractual adjustments result from the differences between the rates charged for services and reimbursements by government-sponsored healthcare programs and insurance companies for such services. The Company's contracts with customers often include multiple products and services, and the Company evaluates these arrangements to determine the unit of accounting for revenue recognition purposes based on whether the product or service is distinct from other products or services in the arrangement and should be accounted for as separate performance obligation. A product or service is distinct if the customer can benefit from it on its own or together with other readily available resources and the Company's ability to transfer the goods or services is separately identifiable from other promises in the contractual arrangement with the customer (e.g. patient). Revenue is then allocated to each separately identifiable good or service based on standalone price of the items underlying the performance obligations. Most of the Company’s products fall in the Medicare Fee-for-Service (“FFS”) program which is a payment model where services are unbundled and paid for separately. These services are paid based on a Medicare determined price that is publicly available on the website for the Centers for Medicare & Medicaid Services (“CMS”). For commercial payors, DME companies must negotiate in-network pricing separately, though in general, the Company’s payors tend to benchmark their contract rates and coverage policies closely to those of Medicare. The Company considers performance obligations for sales and rentals to be met when the customer receives the equipment, and revenue for rentals is recognized over time, over the respective rental period. For revenue associated with DME rentals, the Company recognizes revenue in accordance with FASB ASC 842, “Leases,” (Topic 842). For any DME sales and services, the Company recognizes revenue under FASB ASU 2014-09, “Revenue from Contracts with Customers,” (Topic 606) and related amendments. The Company recognizes equipment rental revenue over the non-cancelable lease term, which is one month, less estimated adjustments, in accordance with ASC 842—Leases. The Company has separate contracts with each patient that are not subject to a master lease agreement with any third-party payor. The Company would first consider the lease classification issue (sales-type lease or operating lease) and then appropriately recognize or defer rental revenue over the lease term . The revenues from each major source are summarized in the following table: Three Months Ended Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Revenue from rentals under Topic 842 Ventilator rentals, non-invasive and invasive $ 19,461 $ 13,852 $ 37,743 $ 26,676 Other durable medical equipment rentals 1,425 532 2,343 984 Revenue from sales and services under Topic 606 Equipment sales 1,164 895 2,032 1,502 Service revenues 497 229 872 457 Total Revenues $ 22,547 $ 15,508 $ 42,990 $ 29,619 Revenue Accounting under Topic 842 The Company leases durable medical equipment such as non-invasive and invasive ventilators, positive airway pressure ("PAP") machines, percussion vests, oxygen concentrator units and other small respiratory equipment to customers for a fixed monthly amount on a month-to-month basis. The customer generally has the right to cancel the lease at any time during the rental period for a subsequent month’s rental, and payments are generally billed in advance. The Company considers these rentals to be operating leases. Under FASB Accounting Standards Codification Topic 842, “ Leases” , the Company recognizes rental revenue on operating leases on a straight-line basis over the contractual lease term which varies based on the type of equipment rental, but generally ranges from 10 to 36 months. The lease term begins on the date products are delivered to patients, and revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including Medicare, private commercial payors, and Medicaid. Certain customer co-payments are included in revenue when considered probable of payment, which is generally when paid. Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenue and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application or claim denial. There were no material changes in estimates recorded in the three months ended June 30, 2019 , relating to prior periods. Revenue Accounting under Topic 606 The Company sells durable medical equipment, replacement parts and supplies to customers and recognizes revenue at the point in time where control of the good or service is transferred through delivery to the customer. Each piece of equipment, part, or supply is distinct, separately priced, and represents a single performance obligation. The revenue is allocated amongst the performance obligations based upon the relative standalone selling price method, however, items are typically all delivered or supplied together. The customer and, if applicable, the payors are generally charged at the time that the product is sold. The Company also provides sleep study services to customers and recognizes revenue when the results of the sleep study are complete as that is when the performance obligation is met. The transaction price on both equipment sales and sleep studies is the amount that the Company expects to receive in exchange for the goods and services provided. Due to the nature of the durable medical equipment business, gross charges are retail charges and generally do not reflect what the Company is ultimately paid. As such, the transaction price is constrained for the difference between the gross charge and what is estimated to be collected from payors and from patients. The transaction price therefore is predominantly based on contractual payment rates as determined by the payors. The Company does not generally contract with uninsured customers. The payment terms and conditions of customer contracts vary by customer type and the products and services offered. The Company determines its estimates of contractual allowances and discounts based upon contractual agreements, our policies and historical experience. While the rates are fixed for the product or service with the customer and the payors, such amounts typically include co-payments, co-insurance and deductibles, which vary in amounts, and are due from the patient customer. The Company includes in the transaction price only the amount that the Company expects to be entitled, which is substantially all of the payor billings at contractual rates. The transaction price is initially constrained by the amount of customer co-payments, which are included in the transaction price when considered probable of payment and included in revenue if the product or service has already been provided to the customer. Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenue and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application or claim denial. There were no material changes in estimates recorded in the three months ended June 30, 2019 , relating to prior periods. Returns and refunds are not accepted on either equipment sales or sleep study services. The Company does not offer warranties to customers in excess of the manufacturer’s warranty. Any taxes due upon sale of the products or services are not recognized as revenue. The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of June 30, 2019 . Stock-based compensation The Company accounts for its stock-based compensation in accordance with ASC 718 —Compensation—Stock Compensation , which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Stock–based compensation cost for stock options are determined at the grant date using the Black-Scholes option pricing model. Stock-based compensation costs for restricted stock units are determined at the grant date based on the closing stock price. The expense of such stock-based compensation awards is recognized using the graded vesting attribution method over the vesting period and the offsetting credit is recorded as an increase in additional paid-in capital. Forfeitures are recorded as incurred. Any excess tax benefit or deficiency is recognized as a component of income taxes and within operating cash flows upon vesting of the share-based award. Interest Rate Swaps The Company utilizes an interest rate swap contract to reduce exposure to fluctuations in variable interest rates for future interest payments on the Term Note (as defined below). For determining the fair value of the interest rate swap contract, the Company uses significant other observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. These fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves. The Company includes unrealized gains in Other assets, as a component of Long-term Assets, and unrealized losses in Accrued liabilities, as a component of Long-term liabilities on the Condensed Consolidated Balance Sheets. The Company recognizes any differences between the variable interest rate payments and the fixed interest rate settlements from our swap counterparty as an adjustment to interest expense over the life of the swap. If determined to be an effective cash flow hedge, the Company will record the changes in the estimated fair value of the swaps to Accumulated other comprehensive income or loss on the Condensed Consolidated Balance Sheets. To the extent that interest rate swaps are determined to be ineffective, the Company would recognize the changes in the estimated fair value of swaps in Interest and other non-operating expenses, net on our Condensed Consolidated Statements of Income. Net Income per Share Attributable to Common Stockholders The Company uses the two-class method to compute net income per common share attributable to common stockholders because the Company issued securities, other than common stock, that contractually entitled the holders to participate in the dividends and earnings prior to the initial listing after the Arrangement. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Under the two-class method, for periods with net income, basic net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of the current period's earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. See Note 11 for earnings per share computations. Recently adopted accounting pronouncements In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU is effective for annual periods beginning December 31, 2018, and its adoption did not impact these condensed consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-07 “Improvements to Non-employee Share-Based Payment Accounting ,” which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The ASU is effective for interim periods as of January 1, 2019, and its adoption did not have any material impact on our consolidated financial statements. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases ” (Topic 842) (“ASC 842”), which supersedes the existing guidance for lease accounting, “ Leases ” (Topic 840) (“ASC 840”). ASC 842 requires lessees to recognize a lease liability and a right of use asset for all leases that extend beyond one year. This standard was adopted using the modified retrospective transition approach at the adoption date of January 1, 2019. This approach does not require the restatement of previous periods. The Company completed a qualitative and quantitative assessment of its leases from both a lessee and lessor perspective. As part of this process, the Company elected to utilize certain practical expedients that provided transition relief. Accordingly, the Company did not reassess expired or existing contracts, lease classifications or related initial direct costs as part of the assessment process for either lessee or lessor leases. The adoption of this standard, from a lessee perspective, resulted in the recording of Right of Use (“ROU”) operating lease assets as a component of property and equipment, net and liabilities as a component of current and non-current liabilities of approximately $1.5 million on the Condensed Consolidated Balance Sheet as of January 1, 2019, with no impact to retained earnings. In addition, the Company elected as an accounting policy, not to record leases with an initial term of less than 12 months. (See Note 5 – “Debt and lease liabilities” for additional information and required disclosures.) In August 2017, the FASB issued ASU No. 2017-12, " Derivatives and Hedging ", which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The Company adopted this standard on June 1, 2019 and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results. Recently issued accounting pronouncements The Company is an “emerging growth company” as defined by the Jumpstart Our Business Startups (“JOBS”) Act of 2012. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of all accounting standards until those standards would otherwise apply to private companies. The Company has elected this exemption and, as a result, these condensed consolidated financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. To date, however, the Company has not delayed the adoption of any accounting standards. Section 107 of the JOBS Act provides that the Company can elect to opt out of the extended transition period at any time, which election is irrevocable. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments - Credit Losses ,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU will be effective for interim and annual periods beginning January 1, 2020 for issuers and annual periods beginning January 1, 2021 for non-issuers. Therefore, the Company plans to further evaluate the anticipated impact of the adoption of this ASU on the consolidated financial statements in future periods including considering whether to delay adoption of the standard. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment The Company’s fixed assets consist of its medical equipment held for rental, furniture and fixtures, real property and related improvements, and vehicles and other various small equipment. In May 2019, the Company purchased a 77,000 square foot commercial building located in Lafayette, Louisiana that it plans to utilize as its new corporate headquarters. The commercial term note used to finance this purchase is further discussed in Note 5. The following table details the Company’s fixed assets: June 30, 2019 December 31, 2018 Medical equipment $ 45,470 $ 35,541 Furniture and equipment 2,052 1,174 Land 2,138 367 Buildings 5,034 264 Leasehold improvements 301 256 Vehicles 1,768 1,782 Less: Accumulated depreciation (10,960 ) (8,822 ) Property and equipment, net of accumulated depreciation $ 45,803 $ 30,562 Depreciation in the amount of $1,306,000 and $769,000 is included in cost of revenue for the three months ended June 30, 2019 and June 30, 2018 , respectively, and $2,472,000 and $1,304,000 for the six months ended June 30, 2019 and 2018 , respectively. Included in medical equipment above is equipment acquired under capital lease obligations whose cost and accumulated depreciation at June 30, 2019 total $7,872,000 and $1,473,000 , respectively. At December 31, 2018 , cost and accumulated depreciation on equipment acquired under capital lease obligations was $7,943,000 and $1,100,000 , respectively. |
Current Liabilities
Current Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Current Liabilities | Current Liabilities The Company’s short-term accrued liabilities are included within current liabilities and consist of the following: June 30, 2019 December 31, 2018 Accrued trade payables $ 694 $ 960 Accrued commissions payable 425 315 Accrued bonuses payable 2,440 3,788 Accrued vacation and payroll 1,119 1,012 Current portion of phantom share liability 2,272 1,476 Total accrued liabilities $ 6,950 $ 7,551 |
Debt and lease liabilities
Debt and lease liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Debt And Leases [Abstract] | |
Debt and lease liabilities | Debt and lease liabilities Senior Credit Facility On February 20, 2018, we entered into a two year commercial business loan agreement with Hancock Whitney Bank for lines of credit for up to $5.0 million (with a letter of credit sub-limit of $0.5 million ), expiring on February 21, 2020. Any amounts advanced will be secured by substantially all our assets and carry an interest rate of one month ICE libor plus 3.00% , with a 4.00% interest rate floor. Advances of the line of credit initially were subject to a borrowing base as determined in accordance with the loan agreement, which was based on the value of our accounts receivable balance. On March 19, 2019, the Company entered into an amendment to the loan agreement increasing the available line of credit from $5.0 million to $10.0 million and extending the expiration date to March 19, 2021. In addition, the borrowing base restriction was removed from the loan agreement and all current financial covenants were replaced with the following covenants: Financial Covenant Required Ratio Total Debt to Adjusted EBITDA (Quarterly) not more than 1.50:1.00 Minimum Working Capital (Quarterly) (1) at least $2,500,000 Fixed Charge Coverage Ratio (Quarterly) not less than 1.35:1.00 (1) This covenant will be in effect and tested quarterly beginning September 30, 2019. The Company was in compliance with all covenants in effect at June 30, 2019 . There were no borrowings against this facility at June 30, 2019 and December 31, 2018 . Commercial Term Note On May 30, 2019, the Company entered into an amendment to the loan agreement providing for a commercial term note (the “Term Note”) in favor of Hancock Whitney Bank in the principal amount of $4,845,000 . The proceeds of the Term Note were used to purchase a building that the Company plans to utilize as its new corporate headquarters. Beginning July 1, 2019, the Company makes monthly payments towards the outstanding balance. The Term Note matures on May 30, 2026 and is secured by substantially all of the assets of the borrower, including the real property acquired with the proceeds of the Term Note. The Term Note bears interest at a variable rate equal to the one month ICE libor index plus a margin of 2.45% per annum. The Company is required to maintain a loan to value ratio of 85% with respect to the appraised value of the real property. In connection with the Term Note, the Company entered into an interest rate swap transaction (the "Interest Rate Swap Transaction") with Hancock Whitney Bank effectively fixing the interest rate for the Term Note at 4.68% . The Company incurred immaterial deferred financing costs related to the real property acquired with the proceeds of the Term Note. These deferred financing costs are recorded as a reduction to long-term debt in the consolidated balance sheets and will be amortized over the term of the loan. The Company has recorded $0 in amortization of deferred financing costs related to the note for the period ended June 30, 2019 . The Company has recognized the note payable, which has a term greater than twelve months, as follows: June 30, 2019 December 31, 2018 Note payable $ 4,836 $ — Less: Current portion of note payable (133 ) — Net long-term note payable $ 4,703 $ — The table below represents the future minimum principal and interest obligations for the Term Note as of June 30, 2019 : Principal Payments Interest Payments (1) Less than one year (current portion) $ 133 $ 273 Between one and two years 148 226 Between two and five years 491 632 Five years or more 4,064 348 Total $ 4,836 $ 1,479 (1) Interest payments under effective interest rate of 4.68% . Leases The Company has recognized finance lease liabilities for medical equipment and operating leases for land and buildings that have terms greater than twelve months, as follows: June 30, 2019 December 31, 2018 Lease liabilities $ 9,508 $ 3,425 Less: Current portion of lease liabilities (8,410 ) (3,031 ) Net long-term lease liabilities $ 1,098 $ 394 Finance lease liabilities The Company has various finance leases for equipment with an implied interest rate at fixed rates up to 12.85% , secured by equipment, due between 2019 and 2023. The Company's weighted average interest rate was 0.47% and 1.54% for all finance lease liabilities outstanding as of June 30, 2019 and 2018 , respectively. At June 30, 2019 , the weighted average lease term was approximately 0.76 years . Minimum payments and interest for finance lease obligations required over the next five years as of June 30, 2019 , are as follows: Principal Payments Interest Payments Less than one year (current portion) $ 8,173 $ 39 Between one and two years 90 8 Between two and five years 49 2 Total $ 8,312 $ 49 Interest expense related to these finance lease obligations for the three and six months ended June 30, 2019 amounted to $20,000 and $46,000 , respectively. Interest expense related to these finance lease obligations for the three and six months ended June 30, 2018 amounted to $67,000 and $114,000 , respectively. Operating lease liabilities The Company has recognized operating lease liabilities that relate primarily to the lease of land and buildings. These leases contain renewal options that we have not included as part of our assessment of the lease term as it is not reasonably certain that we will exercise these options. These lease liabilities are recorded at present value based on a discount rate of 5.50% , which was based on the Company's incremental borrowing rate at the time of assessment. At June 30, 2019 , the weighted average lease term was approximately 5.51 years . Minimum payments and interest for operating lease liabilities required over the next five years as of June 30, 2019 , are as follows: Principal Payments Interest Payments Less than one year (current portion) $ 237 $ 59 Between one and two years 200 48 Between two and five years 367 65 Five years or more 392 22 Total $ 1,196 $ 194 Included in operating lease liabilities are real property leases for real estate from a related party. Rental payments under these lease agreements are $18,000 per month, plus taxes, utilities and maintenance. Total rental payments for the use of these properties were $61,000 and $121,000 for the three and six months ended June 30, 2019 , respectively, and $56,000 and $114,000 for the three and six months ended June 30, 2018 , respectively. The expense for these related party rents has been included within general and administrative expenses. |
Fair value measurement
Fair value measurement | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement | Fair value measurement Under ASC Topic 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. There are three levels to the hierarchy based on the reliability of inputs, as follows: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active. Level 3 - Unobservable inputs for the asset or liability. The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. The Company’s cash and cash equivalents are measured using level 1 inputs. Warrants Pursuant to the Arrangement with PHM effective December 21, 2017, PHM common share purchase warrant holders each received one tenth (1/10) of one warrant to purchase one Viemed share. The warrants conversion feature is denominated in Canadian dollars which is different from the functional currency of the Company (U.S. dollars). The conversion feature is treated as a derivative financial liability and the fair value movement during the period is recognized in the Consolidated Statement of Income and Comprehensive Income. The change in the value of warrants has been recorded as an unrealized loss on derivative financial liability in the Condensed Consolidated Statements of Income and Comprehensive Income. The warrant derivative financial liability has been valued using level 3 inputs from the fair value hierarchy. Changes to these assumptions could result in a higher or lower fair value measurement. The fair value of the warrants at June 30, 2019 was calculated using the Black-Scholes option pricing model with the following assumptions: Risk-free interest rate 1.52% Expected volatility 48.92% Expected life of warrants 0.17 years Expected dividend yield Nil There were no warrants issued during the three and six month periods ended June 30, 2019 . There were 8,280 warrants exercised during the six months ended June 30, 2019 . Warrant Conversion Liability Balance December 31, 2018 363 Warrants issued — Unrealized loss on warrant conversion liability 437 Balance June 30, 2019 $ 800 Derivative instruments and hedging activities We currently have one interest rate swap contract in place, which became effective on May 31, 2019 and has been designated as a cash flow hedge. This swap contract matures on May 30, 2026. This swap contract converts the variable interest rate to a fixed interest rate on borrowings under the Term Note. As of June 30, 2019 , the notional amount of the interest rate swap was $4.8 million and will be amortized over the term of the swap. The fair value was $0.1 million (determined based on Level 2 inputs) and is included in Accrued liabilities, as a component of Long-term liabilities as of June 30, 2019 . In the first six months of 2019, losses recognized as a result of ineffectiveness were immaterial. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Shareholders' Equity | Shareholders' Equity Authorized share capital The Company’s authorized share capital consists of an unlimited number of common shares . Issued and outstanding share capital The Company has only one class of stock outstanding, common shares. The authorized stock consists of an unlimited number of common shares with no stated par value, of which 37,697,535 and 37,500,815 shares were issued and outstanding as of June 30, 2019 and December 31, 2018 , respectively. For the six months ended June 30, 2019 , the Company re-purchased and canceled 365,100 common shares at a cost of $1,522,000 pursuant to the Normal Course Issuer Bid (the "NCIB") that went into effect on November 29, 2018. Total shares repurchased under the NCIB were 775,803 as of June 30, 2019 . The Company’s retained earnings was reduced by the amount paid for the shares repurchased for cancellation. Warrants Warrants outstanding and exercisable as of June 30, 2019 : Year issued Date of expiry Type Number of warrants (000's) Weighted average exercise price (CAD$) 2017 August 27, 2019 Warrant 169 $ 2.60 Total 169 $ 2.60 The following table summarizes warrant activity for the period ended June 30, 2019 : Number of warrants (000's) Weighted average exercise price (CAD$) Balance December 31, 2018 177 $ 2.60 Issued — $ — Exercised (8 ) $ 2.60 Expired — $ — Balance June 30, 2019 169 $ 2.60 There were no warrants issued and 8,280 warrants exercised during the six months ended June 30, 2019 . Stock-based compensation At the Company's annual and special meeting of shareholders held on July 17, 2018, shareholders of the Company passed a resolution approving the RSU and Option Plans (collectively, the “Plan”). The purpose of the Plan is to provide incentive to employees, directors, officers, management companies, and consultants who provide services to the Company or any of its subsidiaries. The Plan is a “fixed” stock plan, whereby the maximum number of the Company's shares reserved for issuance, combined with any equity securities granted under all other compensation arrangements adopted by the Company, may not exceed 7,582,000 shares (equal to 20% of the issued and outstanding shares of the Company as of the date of the Arrangement). As of June 30, 2019 , the Company had outstanding issuances of options of 2,766,000 and restricted stock units of 1,196,000 under the Plan. The following table summarizes stock-based compensation for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Stock-based compensation - options $ 705 $ 229 $ 1,283 $ 374 Stock-based compensation - restricted stock 329 436 631 852 Total $ 1,034 $ 665 $ 1,914 $ 1,226 At June 30, 2019 , there was approximately $3,496,000 of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized over a weighted-average period of 2.49 years . As of June 30, 2019 , there was approximately $942,000 of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.05 years . Options The following table summarizes stock option activity for the six months ended June 30, 2019 : Number of options (000's) Weighted average exercise price (CAD$) Weighted average remaining contractual life Aggregate Intrinsic Value (1) Balance December 31, 2018 1,545 $ 3.39 5.8 years $ 1,605 Issued 1,236 5.66 Exercised (7 ) 3.99 Expired / Forfeited (8 ) 3.26 Balance June 30, 2019 2,766 4.40 7.2 years $ 6,698 Includes NIL shares netted for tax. (1) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. For the six months ended June 30, 2019 , 7,143 shares of common stock were issued pursuant to the exercise of stock options. At June 30, 2019 , the Company had 1,076,000 exercisable stock options outstanding with a weighted average exercise price of CAD $3.86 and a weighted average remaining contractual life of 3.9 years . At December 31, 2018 , the Company had 851,000 exercisable stock options outstanding with a weighted average exercise price of CAD $4.30 and a weighted average remaining contractual life of 3.2 years . The fair value of the stock options has been charged to the statement of income and comprehensive income and credited to additional paid-in capital over the proper vesting period, using the Black-Scholes option pricing model calculated using the following assumptions for issuances during the six months ended June 30, 2019 : Exercise price ($CAD) $5.49 - $9.26 ($CAD) Risk-free interest rate 1.59 - 1.96% Expected volatility 73 - 81% Expected life of options 10 Years Expected dividend yield Nil Fair value on date of grant ($USD) $3.40 - $5.45 ($USD) Restricted stock units The Company has a restricted stock unit plan, which it uses for grants to directors, officers, and employees. Restricted stock units vest generally over a one or three -year period. The following table summarizes restricted stock unit activity for the six months ended June 30, 2019 : Number of Restricted Stock Units (000's) Weighted average grant price (CAD$) Weighted average remaining contractual life Aggregate Intrinsic Value (1) Balance December 31, 2018 1,715 $ 2.41 1.01 years $6,575 Issued 60 $ 5.49 Vested (546 ) $ 2.25 Expired / Forfeited (33 ) $ 2.25 Balance June 30, 2019 1,196 $ 2.65 1.05 years $8,159 (1) The aggregate intrinsic value of time-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period. Phantom share units The Company has a phantom share unit plan, which it uses for grants to directors, officers, and employees. Phantom share units granted under the plan are non-assignable and are settled in cash at vesting. Phantom share units vest annually over a three -year period. The following table summarizes phantom share unit activity for the six months ended June 30, 2019 : Number of Phantom Share Units (000's) Balance December 31, 2018 1,692 Issued 351 Vested (550 ) Expired / Forfeited (72 ) Balance June 30, 2019 1,421 The change in fair value of the phantom share units has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and recorded as a liability included in accrued liabilities and long-term accrued liabilities, using a valuation method with the following assumptions: June 30, 2019 Share price $ 8.93 (CAD$) Remaining life of phantom share units 0.86 - 2.86 Years Calculated fair value of phantom share units $ 3,809,000 The total liability associated with phantom share units at June 30, 2019 is $3,809,000 , with $1,537,000 of this balance included in long-term accrued liabilities and the remaining portion of $2,272,000 in current accrued liabilities. Accrued liability and related expense is determined at each reporting period based on the stock price at period end. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Retirement Plan The Company maintains a 401(k) retirement plan for employees to which eligible employees can contribute a percentage of their pre-tax compensation. Matching employer contributions to the 401(k) plan totaled $166,000 and $115,000 for the three months ended June 30, 2019 and 2018 , respectively, and $335,000 and $225,000 for the six months ended June 30, 2019 and 2018 , respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes At June 30, 2019 and 2018 , the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months. The Company recognizes interest and penalties related to income tax matters in income tax expense. The Company is subject to U.S. federal income tax as well as income tax in various states. The Company is generally not subject to examination by taxing authorities for years prior to 2015 . Our annual estimated effective tax rate for 2019 is 1.53% , consistent with the effective tax rate for the year ended December 31, 2018 . The primary component of the annual effective tax rate relates to the Company's current state income taxes, as the Company continues to generate taxable losses for U.S. federal income tax purposes. |
Financial Risk Factors
Financial Risk Factors | 6 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Financial Risk Factors | Financial Risk Factors Risk management In the normal course of business, the Company is exposed to a number of risks that can affect its operating performance. ASC 820—Fair Value Measurements and Disclosures creates a single definition of fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement is to estimate the price at which an orderly transaction to sell an asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. Assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Credit Risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk are primarily cash and accounts receivable . Each subsidiary places its cash with one major financial institution . At times , the cash in the financial institution is temporarily in excess of the amount insured by the Federal Deposit Insurance Corporation. Substantially all accounts receivable are due under fee - for - service contracts from third party payors , such as insurance companies and government - sponsored healthcare programs , directly from patients or for rebates due from manufacturers. Receivables generally are collected within industry norms for third - party payors and from manufacturers. The Company continuously monitors collections from its clients and maintains an allowance for bad debts based upon lifetime expected credit losses. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due . The Company’s approach in managing liquidity is to ensure , to the extent possible , that it will have sufficient liquidity to meet its liabilities when due by continuously monitoring actual and budgeted cash flows, and monitoring financial market conditions for signs of weakness. As of June 30, 2019 , the Company faced no material liquidity risk and is able to meet all of its current financial obligations as they become due and payable. The Company had $24,111,000 and $16,981,000 of current liabilities that are due within one year as of June 30, 2019 and December 31, 2018 , respectively. The Company had $25,061,000 and $22,963,000 of current assets as of June 30, 2019 and December 31, 2018 , respectively in addition to positive cash flow from operations. The Company utilizes short term leases with a major supplier that could be extended over a longer term if there was a need for additional liquidity. Additionally, the Company maintains a $10.0 million line of credit with Hancock Whitney Bank which was fully available as of June 30, 2019 , subject to compliance with certain covenants. Interest rate risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates . Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with registered US financial institutions . The Company considers this risk to be immaterial. The interest on finance leases is not subject to cash flow interest rate risk as these instruments bear interest at fixed rates . In connection with the Term Note, the Company entered into an Interest Rate Swap Transaction with Hancock Whitney Bank for a fixed rate of 4.68% , thereby transforming the variable interest rate exposure into a fixed rate obligation. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Income per common share is calculated using the combined earnings for the year divided by the weighted average number of shares outstanding during the year . Diluted income per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares by assuming the proceeds received from the exercise of stock options and warrants are used to purchase common shares at the prevailing market rate. The following reflects the earnings and share data used in the basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Numerator - basic and diluted: Net income attributable to shareholders $ 1,820 $ 2,366 $ 3,974 $ 4,707 Denominator: Basic weighted-average number of common shares 37,686,763 37,909,628 38,165,274 37,909,628 Diluted weighted-average number of shares 39,975,307 39,335,011 40,166,855 39,099,186 Basic earnings per share $0.05 $0.06 $0.10 $0.12 Diluted earnings per share $0.05 $0.06 $0.10 $0.12 Denominator calculation from basic to diluted: Basic weighted-average number of common shares 37,686,763 37,909,628 38,165,274 37,909,628 Stock options and other dilutive securities 2,288,544 1,425,383 2,001,581 1,189,558 Diluted weighted-average number of shares 39,975,307 39,335,011 40,166,855 39,099,186 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Conversion of Accounts Payable into Short-term Capital Lease Subsequent to June 30, 2019 , the Company entered into a capital lease agreement with a third party and as a result $1,563,000 of accounts payable was converted to a short-term lease payable. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Presentation | Principles of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly our consolidated balance sheets, consolidated statements of income and comprehensive income, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows for the periods and as of the dates presented. Our fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2018 was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. These condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto. The nature of our business is such that the results of any interim period may not be indicative of the results to be expected for the entire year. |
Functional Currency | Functional currency Management has exercised judgment in selecting the functional currency of each of the entities that it combines based on the primary economic environment in which the entity operates and in reference to the various indicators including the currency that primarily influences or determines the selling prices of goods and services and the cost of those services, including labor, material and other costs and the currency whose competitive forces and regulations mainly determine selling prices. The Company's functional currency was determined to be the U.S. dollar, which was determined using management’s assumption that the primary economic environment which it will derive its revenue and expenses incurred to generate those revenues is the United States. |
Basis of consolidation | Basis of consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition, inventory, accounts receivable allowances for bad debts, stock compensation expense, depreciation and amortization, legal provisions, income tax provisions, and fair value of financial instruments. Actual results could differ from these estimates. |
Accounts receivable | Accounts receivable are regularly reviewed for collectability and an allowance is recorded to cover the estimated bad debts and billing modifications. The accounts receivable are presented on the Condensed Consolidated Balance Sheets net of the allowance for doubtful accounts. It is possible that the estimates of the allowance for doubtful accounts could change, which could have a material impact on our operations and cash flows. The Company writes off receivables when the likelihood for collection is remote, and when the Company believes collection efforts have been fully exhausted and it does not intend to devote additional resources in attempting to collect. The write-offs are charged against the allowance for doubtful accounts. |
Property and equipment | Depreciation of medical equipment commences at the date of service, which represents the date that the asset has been deployed to a patient’s address and is put in use. Property and equipment and other non-current assets with definite useful lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Property and equipment Property and equipment is presented on the consolidated balances sheets at historic cost less accumulated depreciation. Major renewals and improvements that extend the useful life of assets are capitalized to the respective property accounts, while maintenance and repairs, which do not extend the useful life of the respective assets, are expensed as incurred. Management has estimated the useful lives of equipment leased to customers. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Property and equipment are amortized on a straight-line basis over their estimated useful lives. |
Revenue recognition | Revenue recognition Revenue from a customer consists of any combination of the sale and rental of durable medical equipment (“DME”) and/or patient medical services. Revenues are billed to and collections received from Medicare, third-party insurers, co-insurance and patient-pay. Revenue is recognized net of contractual adjustments and bad debt based on contractual arrangements with third-party payors, an evaluation of expected collections resulting from the analysis of current and past due accounts, past collection experience in relation to amounts billed and other relevant information. Contractual adjustments result from the differences between the rates charged for services and reimbursements by government-sponsored healthcare programs and insurance companies for such services. The Company's contracts with customers often include multiple products and services, and the Company evaluates these arrangements to determine the unit of accounting for revenue recognition purposes based on whether the product or service is distinct from other products or services in the arrangement and should be accounted for as separate performance obligation. A product or service is distinct if the customer can benefit from it on its own or together with other readily available resources and the Company's ability to transfer the goods or services is separately identifiable from other promises in the contractual arrangement with the customer (e.g. patient). Revenue is then allocated to each separately identifiable good or service based on standalone price of the items underlying the performance obligations. Most of the Company’s products fall in the Medicare Fee-for-Service (“FFS”) program which is a payment model where services are unbundled and paid for separately. These services are paid based on a Medicare determined price that is publicly available on the website for the Centers for Medicare & Medicaid Services (“CMS”). For commercial payors, DME companies must negotiate in-network pricing separately, though in general, the Company’s payors tend to benchmark their contract rates and coverage policies closely to those of Medicare. The Company considers performance obligations for sales and rentals to be met when the customer receives the equipment, and revenue for rentals is recognized over time, over the respective rental period. For revenue associated with DME rentals, the Company recognizes revenue in accordance with FASB ASC 842, “Leases,” (Topic 842). For any DME sales and services, the Company recognizes revenue under FASB ASU 2014-09, “Revenue from Contracts with Customers,” (Topic 606) and related amendments. The Company recognizes equipment rental revenue over the non-cancelable lease term, which is one month, less estimated adjustments, in accordance with ASC 842—Leases. The Company has separate contracts with each patient that are not subject to a master lease agreement with any third-party payor. The Company would first consider the lease classification issue (sales-type lease or operating lease) and then appropriately recognize or defer rental revenue over the lease term . |
Revenue Accounting under Topic 842 | Revenue Accounting under Topic 842 The Company leases durable medical equipment such as non-invasive and invasive ventilators, positive airway pressure ("PAP") machines, percussion vests, oxygen concentrator units and other small respiratory equipment to customers for a fixed monthly amount on a month-to-month basis. The customer generally has the right to cancel the lease at any time during the rental period for a subsequent month’s rental, and payments are generally billed in advance. The Company considers these rentals to be operating leases. Under FASB Accounting Standards Codification Topic 842, “ Leases” , the Company recognizes rental revenue on operating leases on a straight-line basis over the contractual lease term which varies based on the type of equipment rental, but generally ranges from 10 to 36 months. The lease term begins on the date products are delivered to patients, and revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including Medicare, private commercial payors, and Medicaid. Certain customer co-payments are included in revenue when considered probable of payment, which is generally when paid. Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenue and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application or claim denial. There were no material changes in estimates recorded in the three months ended June 30, 2019 , relating to prior periods. |
Revenue Accounting under Topic 606 | Revenue Accounting under Topic 606 The Company sells durable medical equipment, replacement parts and supplies to customers and recognizes revenue at the point in time where control of the good or service is transferred through delivery to the customer. Each piece of equipment, part, or supply is distinct, separately priced, and represents a single performance obligation. The revenue is allocated amongst the performance obligations based upon the relative standalone selling price method, however, items are typically all delivered or supplied together. The customer and, if applicable, the payors are generally charged at the time that the product is sold. The Company also provides sleep study services to customers and recognizes revenue when the results of the sleep study are complete as that is when the performance obligation is met. The transaction price on both equipment sales and sleep studies is the amount that the Company expects to receive in exchange for the goods and services provided. Due to the nature of the durable medical equipment business, gross charges are retail charges and generally do not reflect what the Company is ultimately paid. As such, the transaction price is constrained for the difference between the gross charge and what is estimated to be collected from payors and from patients. The transaction price therefore is predominantly based on contractual payment rates as determined by the payors. The Company does not generally contract with uninsured customers. The payment terms and conditions of customer contracts vary by customer type and the products and services offered. The Company determines its estimates of contractual allowances and discounts based upon contractual agreements, our policies and historical experience. While the rates are fixed for the product or service with the customer and the payors, such amounts typically include co-payments, co-insurance and deductibles, which vary in amounts, and are due from the patient customer. The Company includes in the transaction price only the amount that the Company expects to be entitled, which is substantially all of the payor billings at contractual rates. The transaction price is initially constrained by the amount of customer co-payments, which are included in the transaction price when considered probable of payment and included in revenue if the product or service has already been provided to the customer. Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenue and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application or claim denial. There were no material changes in estimates recorded in the three months ended June 30, 2019 , relating to prior periods. Returns and refunds are not accepted on either equipment sales or sleep study services. The Company does not offer warranties to customers in excess of the manufacturer’s warranty. Any taxes due upon sale of the products or services are not recognized as revenue. The Company does not have any partially or unfilled performance obligations related to contracts with customers and as such, the Company has no contract liabilities as of June 30, 2019 . |
Stock-based compensation | Stock-based compensation The Company accounts for its stock-based compensation in accordance with ASC 718 —Compensation—Stock Compensation , which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Stock–based compensation cost for stock options are determined at the grant date using the Black-Scholes option pricing model. Stock-based compensation costs for restricted stock units are determined at the grant date based on the closing stock price. The expense of such stock-based compensation awards is recognized using the graded vesting attribution method over the vesting period and the offsetting credit is recorded as an increase in additional paid-in capital. Forfeitures are recorded as incurred. Any excess tax benefit or deficiency is recognized as a component of income taxes and within operating cash flows upon vesting of the share-based award. |
Interest Rate Swaps | Interest Rate Swaps The Company utilizes an interest rate swap contract to reduce exposure to fluctuations in variable interest rates for future interest payments on the Term Note (as defined below). For determining the fair value of the interest rate swap contract, the Company uses significant other observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. These fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves. The Company includes unrealized gains in Other assets, as a component of Long-term Assets, and unrealized losses in Accrued liabilities, as a component of Long-term liabilities on the Condensed Consolidated Balance Sheets. The Company recognizes any differences between the variable interest rate payments and the fixed interest rate settlements from our swap counterparty as an adjustment to interest expense over the life of the swap. If determined to be an effective cash flow hedge, the Company will record the changes in the estimated fair value of the swaps to Accumulated other comprehensive income or loss on the Condensed Consolidated Balance Sheets. To the extent that interest rate swaps are determined to be ineffective, the Company would recognize the changes in the estimated fair value of swaps in Interest and other non-operating expenses, net on our Condensed Consolidated Statements of Income. |
Net Income per Share Attributable to Common Stockholders | Net Income per Share Attributable to Common Stockholders The Company uses the two-class method to compute net income per common share attributable to common stockholders because the Company issued securities, other than common stock, that contractually entitled the holders to participate in the dividends and earnings prior to the initial listing after the Arrangement. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Under the two-class method, for periods with net income, basic net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of the current period's earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. |
Recently adopted accounting pronouncements and Recently issued accounting pronouncements | Recently adopted accounting pronouncements In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU is effective for annual periods beginning December 31, 2018, and its adoption did not impact these condensed consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-07 “Improvements to Non-employee Share-Based Payment Accounting ,” which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The ASU is effective for interim periods as of January 1, 2019, and its adoption did not have any material impact on our consolidated financial statements. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases ” (Topic 842) (“ASC 842”), which supersedes the existing guidance for lease accounting, “ Leases ” (Topic 840) (“ASC 840”). ASC 842 requires lessees to recognize a lease liability and a right of use asset for all leases that extend beyond one year. This standard was adopted using the modified retrospective transition approach at the adoption date of January 1, 2019. This approach does not require the restatement of previous periods. The Company completed a qualitative and quantitative assessment of its leases from both a lessee and lessor perspective. As part of this process, the Company elected to utilize certain practical expedients that provided transition relief. Accordingly, the Company did not reassess expired or existing contracts, lease classifications or related initial direct costs as part of the assessment process for either lessee or lessor leases. The adoption of this standard, from a lessee perspective, resulted in the recording of Right of Use (“ROU”) operating lease assets as a component of property and equipment, net and liabilities as a component of current and non-current liabilities of approximately $1.5 million on the Condensed Consolidated Balance Sheet as of January 1, 2019, with no impact to retained earnings. In addition, the Company elected as an accounting policy, not to record leases with an initial term of less than 12 months. (See Note 5 – “Debt and lease liabilities” for additional information and required disclosures.) In August 2017, the FASB issued ASU No. 2017-12, " Derivatives and Hedging ", which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The Company adopted this standard on June 1, 2019 and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results. Recently issued accounting pronouncements The Company is an “emerging growth company” as defined by the Jumpstart Our Business Startups (“JOBS”) Act of 2012. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of all accounting standards until those standards would otherwise apply to private companies. The Company has elected this exemption and, as a result, these condensed consolidated financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. To date, however, the Company has not delayed the adoption of any accounting standards. Section 107 of the JOBS Act provides that the Company can elect to opt out of the extended transition period at any time, which election is irrevocable. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments - Credit Losses ,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU will be effective for interim and annual periods beginning January 1, 2020 for issuers and annual periods beginning January 1, 2021 for non-issuers. Therefore, the Company plans to further evaluate the anticipated impact of the adoption of this ASU on the consolidated financial statements in future periods including considering whether to delay adoption of the standard. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Receivable, Past Due | Net accounts receivable aging for each reporting period is as follows: Current 30-60 60-90 Over 90 Total Accounts Receivable, net of Allowance June 30, 2019 $ 6,896 $ 1,816 $ 1,435 $ 2,650 $ 12,797 December 31, 2018 $ 4,857 $ 1,124 $ 668 $ 2,190 $ 8,839 |
Accounts Receivable, Allowance for Doubtful Accounts | The estimates and write-offs for the allowance for doubtful accounts for each reporting period were as follows: June 30, 2019 June 30, 2018 Balance, beginning of year $ 4,266 $ 3,060 Provision for bad debts 3,859 2,685 Amounts written off (1,251 ) (2,593 ) Balance, end of period $ 6,874 $ 3,152 |
Schedule of Estimated Useful Lives | The estimated useful lives of the property and equipment are as follows: Description Estimated Useful Lives Medical Equipment 2 - 10 Years Computer Equipment 5 Years Office Furniture & Fixtures 5 - 10 Years Leasehold Improvements Shorter of Useful Life or Lease Vehicles 5 Years Building 15 - 39 Years Land Indefinite Life The following table details the Company’s fixed assets: June 30, 2019 December 31, 2018 Medical equipment $ 45,470 $ 35,541 Furniture and equipment 2,052 1,174 Land 2,138 367 Buildings 5,034 264 Leasehold improvements 301 256 Vehicles 1,768 1,782 Less: Accumulated depreciation (10,960 ) (8,822 ) Property and equipment, net of accumulated depreciation $ 45,803 $ 30,562 |
Schedule of Revenue by Source | The revenues from each major source are summarized in the following table: Three Months Ended Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Revenue from rentals under Topic 842 Ventilator rentals, non-invasive and invasive $ 19,461 $ 13,852 $ 37,743 $ 26,676 Other durable medical equipment rentals 1,425 532 2,343 984 Revenue from sales and services under Topic 606 Equipment sales 1,164 895 2,032 1,502 Service revenues 497 229 872 457 Total Revenues $ 22,547 $ 15,508 $ 42,990 $ 29,619 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The estimated useful lives of the property and equipment are as follows: Description Estimated Useful Lives Medical Equipment 2 - 10 Years Computer Equipment 5 Years Office Furniture & Fixtures 5 - 10 Years Leasehold Improvements Shorter of Useful Life or Lease Vehicles 5 Years Building 15 - 39 Years Land Indefinite Life The following table details the Company’s fixed assets: June 30, 2019 December 31, 2018 Medical equipment $ 45,470 $ 35,541 Furniture and equipment 2,052 1,174 Land 2,138 367 Buildings 5,034 264 Leasehold improvements 301 256 Vehicles 1,768 1,782 Less: Accumulated depreciation (10,960 ) (8,822 ) Property and equipment, net of accumulated depreciation $ 45,803 $ 30,562 |
Current Liabilities (Tables)
Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Current Liabilities | The Company’s short-term accrued liabilities are included within current liabilities and consist of the following: June 30, 2019 December 31, 2018 Accrued trade payables $ 694 $ 960 Accrued commissions payable 425 315 Accrued bonuses payable 2,440 3,788 Accrued vacation and payroll 1,119 1,012 Current portion of phantom share liability 2,272 1,476 Total accrued liabilities $ 6,950 $ 7,551 |
Debt and lease liabilities (Tab
Debt and lease liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt And Leases [Abstract] | |
Schedule of Covenants | In addition, the borrowing base restriction was removed from the loan agreement and all current financial covenants were replaced with the following covenants: Financial Covenant Required Ratio Total Debt to Adjusted EBITDA (Quarterly) not more than 1.50:1.00 Minimum Working Capital (Quarterly) (1) at least $2,500,000 Fixed Charge Coverage Ratio (Quarterly) not less than 1.35:1.00 (1) This covenant will be in effect and tested quarterly beginning September 30, 2019. |
Schedule of Notes Payable | The Company has recognized the note payable, which has a term greater than twelve months, as follows: June 30, 2019 December 31, 2018 Note payable $ 4,836 $ — Less: Current portion of note payable (133 ) — Net long-term note payable $ 4,703 $ — |
Schedule of Future Minimum Principal Obligations and Interest | The table below represents the future minimum principal and interest obligations for the Term Note as of June 30, 2019 : Principal Payments Interest Payments (1) Less than one year (current portion) $ 133 $ 273 Between one and two years 148 226 Between two and five years 491 632 Five years or more 4,064 348 Total $ 4,836 $ 1,479 (1) Interest payments under effective interest rate of 4.68% . |
Schedule of Lease Liabilities | The Company has recognized finance lease liabilities for medical equipment and operating leases for land and buildings that have terms greater than twelve months, as follows: June 30, 2019 December 31, 2018 Lease liabilities $ 9,508 $ 3,425 Less: Current portion of lease liabilities (8,410 ) (3,031 ) Net long-term lease liabilities $ 1,098 $ 394 |
Schedule of Finance Lease Liabilities | Minimum payments and interest for finance lease obligations required over the next five years as of June 30, 2019 , are as follows: Principal Payments Interest Payments Less than one year (current portion) $ 8,173 $ 39 Between one and two years 90 8 Between two and five years 49 2 Total $ 8,312 $ 49 |
Schedule of Operating Lease Liabilities | Minimum payments and interest for operating lease liabilities required over the next five years as of June 30, 2019 , are as follows: Principal Payments Interest Payments Less than one year (current portion) $ 237 $ 59 Between one and two years 200 48 Between two and five years 367 65 Five years or more 392 22 Total $ 1,196 $ 194 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Assumptions | The fair value of the warrants at June 30, 2019 was calculated using the Black-Scholes option pricing model with the following assumptions: Risk-free interest rate 1.52% Expected volatility 48.92% Expected life of warrants 0.17 years Expected dividend yield Nil |
Schedule of Warrants | . There were 8,280 warrants exercised during the six months ended June 30, 2019 . Warrant Conversion Liability Balance December 31, 2018 363 Warrants issued — Unrealized loss on warrant conversion liability 437 Balance June 30, 2019 $ 800 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Warrants | Warrants outstanding and exercisable as of June 30, 2019 : Year issued Date of expiry Type Number of warrants (000's) Weighted average exercise price (CAD$) 2017 August 27, 2019 Warrant 169 $ 2.60 Total 169 $ 2.60 The following table summarizes warrant activity for the period ended June 30, 2019 : Number of warrants (000's) Weighted average exercise price (CAD$) Balance December 31, 2018 177 $ 2.60 Issued — $ — Exercised (8 ) $ 2.60 Expired — $ — Balance June 30, 2019 169 $ 2.60 |
Schedule of Stock-based Compensation Expense | The following table summarizes stock-based compensation for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Stock-based compensation - options $ 705 $ 229 $ 1,283 $ 374 Stock-based compensation - restricted stock 329 436 631 852 Total $ 1,034 $ 665 $ 1,914 $ 1,226 |
Schedule of Option Activity | The following table summarizes stock option activity for the six months ended June 30, 2019 : Number of options (000's) Weighted average exercise price (CAD$) Weighted average remaining contractual life Aggregate Intrinsic Value (1) Balance December 31, 2018 1,545 $ 3.39 5.8 years $ 1,605 Issued 1,236 5.66 Exercised (7 ) 3.99 Expired / Forfeited (8 ) 3.26 Balance June 30, 2019 2,766 4.40 7.2 years $ 6,698 Includes NIL shares netted for tax. (1) The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. |
Schedule of Stock Options, Valuation Assumptions | The fair value of the stock options has been charged to the statement of income and comprehensive income and credited to additional paid-in capital over the proper vesting period, using the Black-Scholes option pricing model calculated using the following assumptions for issuances during the six months ended June 30, 2019 : Exercise price ($CAD) $5.49 - $9.26 ($CAD) Risk-free interest rate 1.59 - 1.96% Expected volatility 73 - 81% Expected life of options 10 Years Expected dividend yield Nil Fair value on date of grant ($USD) $3.40 - $5.45 ($USD) |
Schedule of Restricted Stock Units | The following table summarizes restricted stock unit activity for the six months ended June 30, 2019 : Number of Restricted Stock Units (000's) Weighted average grant price (CAD$) Weighted average remaining contractual life Aggregate Intrinsic Value (1) Balance December 31, 2018 1,715 $ 2.41 1.01 years $6,575 Issued 60 $ 5.49 Vested (546 ) $ 2.25 Expired / Forfeited (33 ) $ 2.25 Balance June 30, 2019 1,196 $ 2.65 1.05 years $8,159 (1) The aggregate intrinsic value of time-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period |
Schedule of Phantom Share Units | The following table summarizes phantom share unit activity for the six months ended June 30, 2019 : Number of Phantom Share Units (000's) Balance December 31, 2018 1,692 Issued 351 Vested (550 ) Expired / Forfeited (72 ) Balance June 30, 2019 1,421 The change in fair value of the phantom share units has been charged to the Condensed Consolidated Statements of Income and Comprehensive Income and recorded as a liability included in accrued liabilities and long-term accrued liabilities, using a valuation method with the following assumptions: June 30, 2019 Share price $ 8.93 (CAD$) Remaining life of phantom share units 0.86 - 2.86 Years Calculated fair value of phantom share units $ 3,809,000 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The following reflects the earnings and share data used in the basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Numerator - basic and diluted: Net income attributable to shareholders $ 1,820 $ 2,366 $ 3,974 $ 4,707 Denominator: Basic weighted-average number of common shares 37,686,763 37,909,628 38,165,274 37,909,628 Diluted weighted-average number of shares 39,975,307 39,335,011 40,166,855 39,099,186 Basic earnings per share $0.05 $0.06 $0.10 $0.12 Diluted earnings per share $0.05 $0.06 $0.10 $0.12 Denominator calculation from basic to diluted: Basic weighted-average number of common shares 37,686,763 37,909,628 38,165,274 37,909,628 Stock options and other dilutive securities 2,288,544 1,425,383 2,001,581 1,189,558 Diluted weighted-average number of shares 39,975,307 39,335,011 40,166,855 39,099,186 |
Nature of Business and Operat_2
Nature of Business and Operations (Details) - state | Jun. 30, 2019 | Dec. 21, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of States in which entity provides DME and health care solutions | 29 | |
PHM | HSD and Viemed | ||
Noncontrolling Interest [Line Items] | ||
Ownership percentage | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Accounts Receivable, Aging) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Financing Receivable, Past Due [Line Items] | ||
Total Accounts Receivable, net of Allowance | $ 12,797 | $ 8,839 |
Current | ||
Financing Receivable, Past Due [Line Items] | ||
Total Accounts Receivable, net of Allowance | 6,896 | 4,857 |
30-60 | ||
Financing Receivable, Past Due [Line Items] | ||
Total Accounts Receivable, net of Allowance | 1,816 | 1,124 |
60-90 | ||
Financing Receivable, Past Due [Line Items] | ||
Total Accounts Receivable, net of Allowance | 1,435 | 668 |
Over 90 | ||
Financing Receivable, Past Due [Line Items] | ||
Total Accounts Receivable, net of Allowance | $ 2,650 | $ 2,190 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Accounts Receivable, Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Allowance for Doubtful Accounts | ||
Balance, beginning of year | $ 4,266 | $ 3,060 |
Provision for bad debts | 3,859 | 2,685 |
Amounts written off | (1,251) | (2,593) |
Balance, end of period | $ 6,874 | $ 3,152 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Accounts Receivable, Narrative) (Details) - Customer Concentration | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Medicare and Medicaid | Accounts Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 55.00% | 60.00% | |||
Medicare and Medicaid | Revenue | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 67.00% | 69.00% | 68.00% | 71.00% | |
Medicare | Accounts Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 42.00% | ||||
Medicaid | Accounts Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 13.00% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Property and Equipment) (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Medical equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 2 years |
Medical equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Computer Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Office Furniture & Fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Office Furniture & Fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Building | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 15 years |
Building | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 39 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Revenue Recognition) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Recognition period | 1 month | 1 month | ||
Revenue | $ 22,547 | $ 15,508 | $ 42,990 | $ 29,619 |
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized period (in months) | 10 | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized period (in months) | 36 | |||
Ventilator rentals, non-invasive and invasive | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from rentals under Topic 842 | 19,461 | 13,852 | $ 37,743 | 26,676 |
Other durable medical equipment rentals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from rentals under Topic 842 | 1,425 | 532 | 2,343 | 984 |
Equipment sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from sales and services under Topic 606 | 1,164 | 895 | 2,032 | 1,502 |
Service revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from sales and services under Topic 606 | $ 497 | $ 229 | $ 872 | $ 457 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Recently Adopted Accounting Pronouncements) (Details) - ASU 2016-02 $ in Millions | Jan. 01, 2019USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Operating lease, ROU asset | $ 1.5 |
Operating lease, liabilities | $ 1.5 |
Property and Equipment (Narrati
Property and Equipment (Narrative) (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | May 31, 2019ft² | Dec. 31, 2018USD ($) | |
Property, Plant and Equipment [Line Items] | ||||||
Depreciation | $ 1,306 | $ 769 | $ 2,472 | $ 1,304 | ||
Accumulated depreciation | 10,960 | 10,960 | $ 8,822 | |||
Building | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | 5,034 | 5,034 | 264 | |||
Capital lease | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | 7,872 | 7,872 | 7,943 | |||
Accumulated depreciation | $ 1,473 | $ 1,473 | $ 1,100 | |||
Lafayette, Louisiana | Building | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Area of commercial building (in square feet) | ft² | 77 |
Property and Equipment (Schedul
Property and Equipment (Schedule of Fixed Assets) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Less: Accumulated depreciation | $ (10,960) | $ (8,822) |
Property and equipment, net of accumulated depreciation | 45,803 | 30,562 |
Medical equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 45,470 | 35,541 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,052 | 1,174 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,138 | 367 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,034 | 264 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 301 | 256 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,768 | $ 1,782 |
Current Liabilities (Details)
Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued trade payables | $ 694 | $ 960 |
Accrued commissions payable | 425 | 315 |
Accrued bonuses payable | 2,440 | 3,788 |
Accrued vacation and payroll | 1,119 | 1,012 |
Current portion of phantom share liability | 2,272 | 1,476 |
Total accrued liabilities | $ 6,950 | $ 7,551 |
Debt and lease liabilities (Sen
Debt and lease liabilities (Senior Credit Facility) (Details) | Feb. 20, 2018USD ($) | Jun. 30, 2019USD ($) | Mar. 19, 2019USD ($) | Dec. 31, 2018USD ($) |
Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Debt term | 2 years | |||
Maximum borrowing capacity | $ 5,000,000 | $ 10,000,000 | $ 10,000,000 | |
Floor rate | 4.00% | |||
Borrowings against facility | $ 0 | $ 0 | ||
Total Debt to Adjusted EBITDA (Quarterly) | 1.50 | |||
Minimum Working Capital (Quarterly) | $ 2,500,000 | |||
Fixed Charge Coverage Ratio (Quarterly) | 1.35 | |||
Line of Credit | ICE LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 3.00% | |||
Letter of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 500,000 |
Debt and lease liabilities (Com
Debt and lease liabilities (Commercial Term Note Narrative) (Details) - Commercial Term Note - Notes Payable - USD ($) | May 30, 2019 | Jun. 30, 2019 |
Debt Instrument [Line Items] | ||
Principal amount | $ 4,845,000 | |
Required loan to value ratio | 85.00% | |
Amortization of deferred financing costs | $ 0 | |
Interest Rate | ||
Debt Instrument [Line Items] | ||
Fixed interest rate | 4.68% | 4.68% |
ICE LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.45% |
Debt and lease liabilities (Sch
Debt and lease liabilities (Schedule of Notes Payable) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Current portion of note payable | $ (133) | $ 0 |
Net long-term note payable | 4,703 | 0 |
Notes Payable | ||
Debt Instrument [Line Items] | ||
Note payable | 4,836 | 0 |
Current portion of note payable | (133) | 0 |
Net long-term note payable | $ 4,703 | $ 0 |
Debt and lease liabilities (Fut
Debt and lease liabilities (Future Minimum Principal Obligations and Interest) (Details) - Notes Payable - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Principal Payments | ||
Less than one year (current portion) | $ 133 | |
Between one and two years | 148 | |
Between two and five years | 491 | |
Five years or more | 4,064 | |
Note payable | 4,836 | $ 0 |
Interest Payments | ||
Less than one year (current portion) | 273 | |
Between one and two years | 226 | |
Between two and five years | 632 | |
Five years or more | 348 | |
Total | $ 1,479 | |
Effective percentage | 4.68% |
Debt and lease liabilities (Lea
Debt and lease liabilities (Lease Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Debt And Leases [Abstract] | ||
Lease liabilities | $ 9,508 | $ 3,425 |
Current portion of lease liabilities | (8,410) | (3,031) |
Net long-term lease liabilities | $ 1,098 | $ 394 |
Debt and lease liabilities (Fin
Debt and lease liabilities (Finance Lease Liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Lessee, Lease, Description [Line Items] | ||||
Interest rate | 12.85% | 12.85% | ||
Weighted average interest rate | 0.47% | 1.54% | 0.47% | 1.54% |
Weighted average lease term | 9 months 3 days | 9 months 3 days | ||
Minimum payments and interest for finance lease obligations: | ||||
Interest expense | $ 20 | $ 67 | $ 46 | $ 114 |
Principal Payments | ||||
Minimum payments and interest for finance lease obligations: | ||||
Less than one year (current portion) | 8,173 | 8,173 | ||
Between one and two years | 90 | 90 | ||
Between two and five years | 49 | 49 | ||
Total | 8,312 | 8,312 | ||
Interest Payments | ||||
Minimum payments and interest for finance lease obligations: | ||||
Less than one year (current portion) | 39 | 39 | ||
Between one and two years | 8 | 8 | ||
Between two and five years | 2 | 2 | ||
Total | $ 49 | $ 49 |
Debt and lease liabilities (Ope
Debt and lease liabilities (Operating Lease Liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Lessee, Lease, Description [Line Items] | ||||
Discount rate | 5.50% | 5.50% | ||
Weighted average lease term | 5 years 6 months 3 days | 5 years 6 months 3 days | ||
Monthly Rental Payments | Related Party | ||||
Minimum payments and interest for operating lease liabilities: | ||||
Rental payments | $ 18 | |||
Total rental payments | $ 61 | $ 56 | 121 | $ 114 |
Principal Payments | ||||
Minimum payments and interest for operating lease liabilities: | ||||
Less than one year (current portion) | 237 | 237 | ||
Between one and two years | 200 | 200 | ||
Between two and five years | 367 | 367 | ||
Five years or more | 392 | 392 | ||
Total | 1,196 | 1,196 | ||
Interest Payments | ||||
Minimum payments and interest for operating lease liabilities: | ||||
Less than one year (current portion) | 59 | 59 | ||
Between one and two years | 48 | 48 | ||
Between two and five years | 65 | 65 | ||
Five years or more | 22 | 22 | ||
Total | $ 194 | $ 194 |
Fair value measurement (Narrati
Fair value measurement (Narrative) (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019USD ($)swapshares | Jun. 30, 2019USD ($)swap | Dec. 21, 2017shares | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Number of shares called by each warrant (in shares) | shares | 0.10 | ||
Exercise of warrants (in shares) | shares | 8,280 | ||
Interest Rate | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Number of interest rate swaps | swap | 1 | 1 | |
Notional amount | $ 4,800,000 | $ 4,800,000 | |
Fair value | 100,000 | 100,000 | |
Warrant | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants issued | $ 0 | $ 0 |
Fair value measurement (Fair Va
Fair value measurement (Fair Value Assumptions) (Details) - Level 3 | Jun. 30, 2019 |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.0152 |
Expected volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.4892 |
Expected life of warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Expected life of warrants | 2 months 1 day |
Fair value measurement (Warrant
Fair value measurement (Warrant Conversion Liability) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Warrant Conversion Liability | ||||
Unrealized loss on warrant conversion liability | $ 268,000 | $ 123,000 | $ 437,000 | $ 195,000 |
Warrant | ||||
Warrant Conversion Liability | ||||
December 31, 2018 | 363,000 | |||
Warrants issued | 0 | 0 | ||
Unrealized loss on warrant conversion liability | 437,000 | |||
Balance June 30, 2019 | $ 800,000 | $ 800,000 |
Shareholders' Equity (Issued an
Shareholders' Equity (Issued and Outstanding Share Capital) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 7 Months Ended | ||||
Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | |||||||
Shares outstanding (in shares) | 37,697,535 | 37,697,535 | 37,500,815 | ||||
Shares repurchased and canceled under the Normal Course Issuer Bid (in shares) | 365,100 | ||||||
Shares repurchased and canceled under the Normal Course Issuer Bid | $ 1,522 | $ 1,522 | |||||
NCIB | |||||||
Class of Stock [Line Items] | |||||||
Shares repurchased under the Normal Course Issuer Bid (in shares) | 775,803 | ||||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Shares outstanding (in shares) | 37,678,098 | 37,697,535 | 37,697,535 | 37,500,815 | 37,909,628 | 37,909,628 | 37,909,628 |
Shares repurchased and canceled under the Normal Course Issuer Bid (in shares) | 365,100 |
Shareholders' Equity (Warrants)
Shareholders' Equity (Warrants) (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019USD ($)shares | Jun. 30, 2019USD ($)shares | Jun. 30, 2019$ / shares | |
Number of warrants (000's) | |||
Balance December 31, 2018 (in shares) | 177,000 | ||
Issued (in shares) | 0 | ||
Exercised (in shares) | (8,000) | ||
Expired (in shares) | 0 | ||
Balance June 30, 2019 (in shares) | 169,000 | 169,000 | |
Weighted average exercise price (CAD$) | |||
Balance December 31, 2018 (CAD per share) | $ / shares | $ 2.60 | ||
Issued (CAD per share) | $ / shares | 0 | ||
Exercised (CAD per share) | $ / shares | 2.60 | ||
Expired (CAD per share) | $ / shares | 0 | ||
Balance June 30, 2019 (CAD per share) | $ / shares | 2.60 | ||
Exercise of warrants (in shares) | 8,280 | ||
Warrant | |||
Weighted average exercise price (CAD$) | |||
Warrants issued | $ | $ 0 | $ 0 | |
2017 Warrant | |||
Number of warrants (000's) | |||
Balance June 30, 2019 (in shares) | 169,000 | 169,000 | |
Weighted average exercise price (CAD$) | |||
Balance June 30, 2019 (CAD per share) | $ / shares | $ 2.60 |
Shareholders' Equity (Stock-bas
Shareholders' Equity (Stock-based Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Maximum shares in Plan (in shares) | 7,582,000 | 7,582,000 | |||
Percent of issued and outstanding shares | 20.00% | ||||
Options outstanding (in shares) | 2,766,126 | 2,766,126 | 1,545,000 | ||
Stock-based compensation, expense | $ 1,034 | $ 665 | $ 1,914 | $ 1,226 | |
Unrecognized pre-tax stock option expense | 3,496 | $ 3,496 | |||
Weighted-average period of recognition | 2 years 5 months 26 days | ||||
Options | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Stock-based compensation, expense | $ 705 | 229 | $ 1,283 | 374 | |
Restricted Stock Units | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
RSUs outstanding (in shares) | 1,196,017 | 1,196,017 | 1,715,000 | ||
Stock-based compensation, expense | $ 329 | $ 436 | $ 631 | $ 852 | |
Unrecognized pre-tax compensation expense, restricted stock units | $ 942 | $ 942 | |||
Weighted-average period of recognition | 1 year 18 days |
Shareholders' Equity (Options,
Shareholders' Equity (Options, Stock Option Activity) (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Number of options (000's) | ||
Balance December 31, 2018 (in shares) | shares | 1,545,000 | |
Issued (in shares) | shares | 1,236,000 | |
Exercised (in shares) | shares | (7,000) | |
Expired / Forfeited (in shares) | shares | (8,000) | |
Balance June 30, 2019 (in shares) | shares | 2,766,126 | 1,545,000 |
Weighted average exercise price (CAD$) | ||
Balance December 31, 2018 (CAD per share) | $ / shares | $ 3.39 | |
Issued (CAD per share) | $ / shares | 5.66 | |
Exercised (CAD per share) | $ / shares | 3.99 | |
Expired / Forfeited (CAD per share) | $ / shares | 3.26 | |
Balance June 30, 2019 (CAD per share) | $ / shares | $ 4.40 | $ 3.39 |
Weighted average remaining contractual life | ||
Weighted average remaining contractual life | 7 years 2 months 12 days | 5 years 9 months 18 days |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ | $ 6,698 | $ 1,605 |
Shareholders' Equity (Options_2
Shareholders' Equity (Options, Narrative) (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock issued pursuant to stock options (in shares) | 7,000 | |
Exercisable (in shares) | 1,076,000 | 851,000 |
Weighted average exercise price (CAD per share) | $ 3.86 | $ 4.30 |
Weighted average remaining contractual term | 3 years 10 months 24 days | 3 years 2 months 12 days |
Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock issued pursuant to stock options (in shares) | 7,143 |
Shareholders' Equity (Options_3
Shareholders' Equity (Options, Fair Value Assumptions) (Details) - 6 months ended Jun. 30, 2019 - Options | $ / shares | $ / shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate, minimum | 1.59% | |
Risk-free interest rate, maximum | 1.96% | |
Expected volatility, minimum | 73.00% | |
Expected volatility, maximum | 81.00% | |
Expected life of options | 10 years | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price (CAD per share) | $ 5.49 | |
Fair value on date of grant | $ 3.40 | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price (CAD per share) | $ 9.26 | |
Fair value on date of grant | $ 5.45 |
Shareholders' Equity (Restricte
Shareholders' Equity (Restricted Stock Units) (Details) - Restricted Stock Units $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Number of Restricted Stock Units (000's) | ||
Balance December 31, 2018 (in shares) | shares | 1,715,000 | |
Issued (in shares) | shares | 60,494 | |
Vested (in shares) | shares | (546,397) | |
Expired / Forfeited (in shares) | shares | (33,080) | |
Balance June 30, 2019 (in shares) | shares | 1,196,017 | 1,715,000 |
Weighted average grant price (CAD$) | ||
Balance December 31, 2018 (CAD per share) | $ / shares | $ 2.41 | |
Issued (CAD per share) | $ / shares | 5.49 | |
Vested (CAD per share) | $ / shares | 2.25 | |
Expired / Forfeited (CAD per share) | $ / shares | 2.25 | |
Balance June 30, 2019 (CAD per share) | $ / shares | $ 2.65 | $ 2.41 |
Weighted average remaining contractual life | ||
Weighted average remaining contractual life | 1 year 18 days | 1 year 3 days |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ | $ 8,159 | $ 6,575 |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years |
Shareholders' Equity (Phantom S
Shareholders' Equity (Phantom Share Units) (Details) shares in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019USD ($)shares | Jun. 30, 2019$ / shares | Dec. 31, 2018USD ($) | |
Fair Value Assumptions | |||
Current accrued liabilities | $ | $ 2,272 | $ 1,476 | |
Phantom Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Number of Phantom Share Units (000's) | |||
Balance December 31, 2018 (in shares) | shares | 1,692 | ||
Issued (in shares) | shares | 351 | ||
Vested (in shares) | shares | (550) | ||
Expired / Forfeited (in shares) | shares | (72) | ||
Balance June 30, 2019 (in shares) | shares | 1,421 | ||
Fair Value Assumptions | |||
Share price (USD per share) | $ / shares | $ 8.93 | ||
Calculated fair value of phantom share units | $ | $ 3,809 | ||
Total liability | $ | 3,809 | ||
Long-term accrued liabilities | $ | 1,537 | ||
Current accrued liabilities | $ | $ 2,272 | ||
Phantom Share Units | Minimum | |||
Fair Value Assumptions | |||
Remaining life of phantom share units | 10 months 9 days | ||
Phantom Share Units | Maximum | |||
Fair Value Assumptions | |||
Remaining life of phantom share units | 2 years 10 months 9 days |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Compensation Related Costs [Abstract] | ||||
Matching employer contributions | $ 166 | $ 115 | $ 335 | $ 225 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Effective tax rate | 1.53% |
Financial Risk Factors (Details
Financial Risk Factors (Details) - USD ($) | Jun. 30, 2019 | May 30, 2019 | Mar. 19, 2019 | Dec. 31, 2018 | Feb. 20, 2018 |
Risks and Uncertainties [Abstract] | |||||
Current liabilities | $ 24,111,000 | $ 16,981,000 | |||
Current assets | 25,061,000 | $ 22,963,000 | |||
Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 10,000,000 | $ 10,000,000 | $ 5,000,000 | ||
Notes Payable | Interest Rate | Commercial Term Note | |||||
Debt Instrument [Line Items] | |||||
Fixed interest rate | 4.68% | 4.68% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||||
Net income attributable to shareholders | $ 1,820 | $ 2,154 | $ 2,366 | $ 2,341 | $ 3,974 | $ 4,707 |
Denominator: | ||||||
Basic weighted-average number of common shares (in shares) | 37,686,763 | 37,909,628 | 38,165,274 | 37,909,628 | ||
Diluted weighted-average number of shares (in shares) | 39,975,307 | 39,335,011 | 40,166,855 | 39,099,186 | ||
Basic earnings per share (in dollars per share) | $ 0.05 | $ 0.06 | $ 0.10 | $ 0.12 | ||
Diluted earnings per share (in dollars per share) | $ 0.05 | $ 0.06 | $ 0.10 | $ 0.12 | ||
Denominator calculation from basic to diluted: | ||||||
Basic weighted-average number of common shares (in shares) | 37,686,763 | 37,909,628 | 38,165,274 | 37,909,628 | ||
Stock options and other dilutive securities (in shares) | 2,288,544 | 1,425,383 | 2,001,581 | 1,189,558 | ||
Diluted weighted-average number of shares (in shares) | 39,975,307 | 39,335,011 | 40,166,855 | 39,099,186 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Aug. 09, 2019USD ($) |
Subsequent Event | |
Subsequent Event [Line Items] | |
Conversion of accounts payable into short-term capital lease | $ 1,563 |