Casey Hoyt : Yes. I mean I guess the theme is that everyone is trying to figure out what the effects are going to be on their business. I mean it’s interesting that ResMed seems to be conducting their own studies. And I like the sound of that. The fact that you have folks with a BMI, Body Mass Index of 32, 35 that are not going into the primary care system but hey, if you want a GLP-1 drug, you’re going to have to go see your doctor. And so sure, GLP-1 might be a part of it, but I guarantee you sleep apnea is going to be needed as well. So their theory is that if we get more patients going to see the doctor that might grow the sleep apnea business because we don’t see this as a cure to sleep apnea. It could be something that’s helpful in the treatment of the overall patient experience.
But it’s not going to cure sleep apnea. And so — that’s an interesting thought. But again, these are all just ideas at this point from folks trying to communicate what might be ahead for the business and I support what ResMed’s stand right there.
Todd Zehnder : I am just going to reiterate what we said in our prepared remarks and maybe what we apply the crux on is that, I think the GLP has been around for probably 1.5, 2 years in kind of wide mass. And we have grown our sleep business, not even including HMP. We have grown our sleep business every quarter from that point to now. And really, the growth, I’m not sure has ever been as high as it was 3Q over 2Q, which was 11%. So kind of at the height of the scare of the sleep business going away, our sleep business is growing as much as it ever has. So we’re not exactly sure what ResMed is saying is that more people are going to the physician, and this is a potential treatment. But whatever is happening, we’re not seeing a decline in this business. That is just a fact.
Doug Cooper : Can I just focus for the next comment — question just on the resupply business. So I think, Casey, you mentioned that sleep is 17% of business of overall revenue and the resupply, 45% of that 17% is a resupply business. What can we expect from that resupply business? In other words, as you grow your patient count, what can the resupply business grow to? And I’m assuming that’s a pretty profitable business because there’s no real G&A associated with this essentially a reorder business and fairly high gross margin business. So is that one of the keys as well that we saw in your EBITDA margin expansion from 22% last quarter, 19% a year ago to the 24.5% this quarter.
Casey Hoyt : Yes. I’m going to try to unpack most of that, Doug. It’s 47% of current year — current quarter sleep revenue was driven by resupply, and our margins are somewhere in the mid-40s on that piece of the business. As you’ll remember, going back to our kind of national rollout of sleep over the last few years, it is clearly the piece of the business that you want to get to the rental part of it. You can make money off of, but you got to get them complying, you got to get the resupply order to come in, and then it becomes more of your annuity, kind of low G&A, more technology and drop shipping. What we would say is every month that we stack on another set of active patients in PAP and we’re doing that every month going forward, it’s only going to grow the future resupply market.
And therefore, unless we just wildly accelerate our rental patients, the percentage of revenue coming from resupply ought to just keep growing quarter after quarter. I don’t know what kind of that expansion helped along with pretty aggressive cost management that we’ve been doing around the country and just scaling of the business, bringing in HMP was obviously helpful to margins as we’ve centralized some of their processes and got the economies of scale of Viemed within that organization, we’ve been able to drive their EBITDA margin, which is impacting. So a lot of different things. But clearly, our focus on resupply in the sleep business and bringing in HMP’s resupply has been very beneficial to our bottom line.
Doug Cooper : Excellent. And then just my last question, just around the core vent business, 12% year-over-year growth in patient count, which is solid. But it seems to me that given you’re a major player in this in the U.S., a top five player — the market seems still a little slow to be taken off to what we may expect, given the efficacy of the therapy. So what is the bottleneck in terms of the physicians looking to prescribe the therapy?
Casey Hoyt : Yes. I don’t think it’s — I mean, look, it’s still going back to research and data, which has always been something that I’ve harped on, Doug. It’s amazing when we go into new areas, how we’re still educating pulmonologists on the fact that the available — that this ventilation service is available in the home for these patients. And so that tells us that we’ve got to embrace the research in the studies that we have certainly put out. The other thing that you’re seeing, which we consider a green pasture here is that Medicare Advantage is increasing, okay? And while they only make up — I think they are increasing with us too, so we went from 11% to 12% this quarter on the payer mix. But they are growing, they are representing 50% of Medicare right now.
That’s why we are so fed up about the 2024 rule because right now, they tend to deny expensive care just without clinical reason. And so they can — we’ve gone through some denials with those guys on — shoot, ALS patients, for example, that are on their deathbed, and they had a vent, and we go in for prior auth and a Medicare Advantage plan will deny the real. And so that’s a sad situation, but that’s one that is broken and the opportunity to fix it remains a great opportunity — a great challenge and opportunity for us as well to grow in the coming years. So as that — the way that rule works is in 2024, Medicare Advantage has to follow Medicare clinical guidelines. And so if they’re not, we’ll now have a forum to be transparent with Medicare on who the bad actors are out there that are denying this life-saving care.
And so those are — I’m being very blunt about it. Those are some of the struggles that we deal with on a day-to-day basis, but it’s very — it’s a big opportunity for growth for us once we get those guys lined up with us. And I think it will happen.
Operator: Our next question comes from the line Michael Freeman with Raymond James.
Michael Freeman : Hey Casey and Todd. Congrats on the quarter and the smooth integration of HMP. Just one quick one for me today and it leads off of the last question very nicely. How — I’m looking at your diverse payer base, and this is strong in itself. And I’m looking — I’m wondering how you might optimize this payer mix moving forward? Which of these payers is most accretive to Viemed and like how do you see this moving in the future?
Casey Hoyt : I mean you’ve heard me talk about Humana and United in the past, Michael, those guys are not in network with us. I mean some of that is our choice over there just — with United its rate driven and it doesn’t make sense for us to do it at the rates that they pitch. And with Humana, they’ve made a decision to try to go with a national sole provider with Rotech and Apria. We’re pretty bullish and confident that we’re going to have to wait and see how successful that is to support the Humana network. We predict there’s going to be patient access to care issues, but we’ll have to wait and see there. And so those are the two biggest payers that we would love to be in network with. We’d love to be taking care of those folks.
