Casey Hoyt - Chief Executive Officer Todd Zehnder - Chief Strategy Officer Greg Crawford - Chief Operating Officer Al Wallander - Chief Financial Officer

Doug Cooper - Beacon Securities

Thank you for joining us on the call. My name is Casey Hoyt and I'm the Chief Executive Officer of Patient Home Monitoring.

Joining me on the call today will be Todd Zehnder, Chief Strategy Officer. Also participating with us to represent the future of Apparo divisions are Greg Crawford, Chief Operating Officer; and Al Wallander, Chief Financial Officer.

Thank you for being with us today as we report another quarter of solid and improving financial results as we continue to build on our efficiencies as two separate divisions. I’d like to start once again by recognizing our entire team at both Viemed and Apparo for their continued dedication to our patients, as well as our stakeholders.

By first focusing on patient care we are then able to drive efficiencies in our profits higher. Our patient centric company is one that is bettering lives in the homes of the aging population and we continue to earn the respect of our referral sources and our competitors.

For those of you who are new to our story, Patient Home Monitoring is a company that specializes in the treatment of an aging Baby Boomer population suffering with chronic diseases. The company was previously roll-up story through 2015 and since then we have spent much of our time integrating our acquired companies, as well as streamlining our delivery of service and products.

We came to realize that ultimately we have a company with two different growth strategies and markets. And have therefore decided to split the company into two separate companies.

As a result of that, we operate in two divisions, Viemed and Apparo; both with different growth strategies and operating teams. As we have previously discussed, we are currently in the middle of a corporate spin-out where the two divisions will be legally split into two separate companies.

Myself and Todd will primarily focus our comments on the Viemed division today. Well Craig and Al will primarily talk about the Apparo division.

Al will also provide a review of our consolidated PHM financials. At Viemed we are once again seeing an increase in the active patient count since our last call.

Our estimate of patient growth is approximately 10% during the most recent quarter, which is a continuation of the back half of 2016 growth. We have now made up and exceeded the revenue from the 35% rate cut of January 2016.

We are forecasting further growth for the next quarter and see that trend continuing for the quarters to come. During April, we trained additional members of our sales force and therapy team.

This will add eight new territories to our coverage area. Of those, four are in areas that already have a presence, will count for more market penetration, justifying an additional risk.

We have already exceeded our goal being in seven new areas during fiscal year of 2017. We continue to look for opportunistic ways to grow our business through more strategic methods and our other product lines that are complementary to our existing business.

Over our history, we have assembled nothing short of a world class sales organization. This sales infrastructure is attracted to many manufacturers of home medical equipment.

We continue to analyze opportunistic ways of growing our business, due to successful launch of new technology and complementary products. Now with that said, we have a team primarily focused on what has gotten us here.

And that is swift, nimble cost efficient organic growth. As we’ve continued to grow, we’ve expanded our cost structure in a very reasonable way to make sure that our business continues to push as much money to the bottom line as possible.

With that said, I like to turn over to Greg to talk about what he has been working on Apparo. Greg?

Thank you, Casey. As Casey mentioned, I operate the Apparo side of our business, which is really the integration of all companies PHM acquired with the exception of Viemed.

It has been about 10 months since I was appointed COO and took over the integration process. My singular goal during the past three quarters, since June of last year, was to ensure that we can maintain and even slightly increase our revenues from these acquisitions, while cost cuts aggressively and delivering profits and cash flow.

As an expert in business integration, this is the key to successful acquisitions. I want to give some specifics on the steps me and my team have completed in the last few quarters to fully integrate our businesses.

First, we have completed our workforce rationalization, cutting labor cost without sacrificing quality or revenues resulting in an increase in overall profitability. Next, we worked hard to improve our billing processes and collection rates resulting in a 400 basis point improvement over our 2016 average, all fall into the bottom line.

Additionally, we focused on consolidating purchasing efforts, which resulted in gross margin improvements both this quarter and last quarter. Finally, we continue to consolidate our lucrative sleep apnea device supply business nationally resulting in both increasing revenues and lower cost.

In this quarter, before Apparo was a standalone business, I am working to expand product categories at our business units to become fully diversified product offering at all business units. We have begun the process of expanding our sales and marketing efforts with the goal of achieving higher rates of referrals.

We have recently expanded our sales force by 15% and we continue to identify other opportunities for growth, including small acquisition targets that can be acquired for well less than one times revenue that I believe I can integrate quickly and easily into our operational platform.

Thanks Greg. Once again our combined numbers now showed two strong and viable companies.

This is the reason why we are continuing down the path of executing this proposed split in the two companies. Our attention to detail on each division is now showing up in the way of profitability across both segments.

During the last quarter, we made significant progress due to regulatory approval process for the proposed split and we feel that we should be in a position to call for a shareholder meeting very soon. We will give shareholders a 45 day notice at the meeting, so our expectation is to have that vote occur sometime during the summer.

But we are still waiting on final approvals. We want to make a point that while this process has taken longer than we all wanted and planned, does not stop the progress of each of the divisions and a continued improvement in the financial results of both Viemed and Apparo.

Once we are two completely separate companies then we are really going to be able to dedicate all of our respective resources both capital and labor into our own different growth strategies and that’s when I believe we’ll start to see significant revenue growth for each of the companies. With that said, I’d like to turn it over to Al to provide a financial overview of PHM.

Thanks Casey. In reviewing all the financial results, all figures are in Canadian dollars and full results are available on CEDAR.

I will start with some quarterly numbers for consolidated PHM. We generated revenue of $32 million, as compared to the second quarter 2016 revenues of $34 million.

However, our gross profit percentages drastically increased to 81%, as compared to 69% during last year's second quarter. This once again is showing that the shuttering of unprofitable product lines and businesses might hurt the topline revenue, but in the door long run it is accretive to the bottom line.

Along those lines, our absolute gross margin was approximately $2.6 million higher than the second quarter of 2016 and shows that we have grown in the right areas and manage our cost of goods sales appropriately. As we have mentioned previously our base business is getting stronger every quarter and we are setup to grow in the right areas.

Adjusted EBITDA, which excludes depreciation, amortization, stock-based compensation, and changes in financial derivatives, totaled $6.3 million for the quarter, and we grew our cash balance 51% organically this quarter, which marks two quarters in a row of organic cash growth. We have continued the reversal of the trend of depleting the cash balance when we feel that we are well on our way to continued financial success.

Our balance sheet is liquid with approximately $12 million in cash at quarter-end, approximately $23 million of clean AR, $44 million of current assets, and $26 million in short-term liabilities. We have managed our recent growth with utilizing capital leases where available, as well as our vendors who have been partnering with our growth.

Our long-term debt, which is primarily made up of these leases is very manageable and being serviced with operating cash flow. As of now, our total debt picture is made up of these capital leases and the public debentures due at the end of 2019.

Our job of turning the financial picture of the company around is never done, but we are clearly excited about the turnaround that we have completed thus far, specifically with the improvement in our liquidity picture. Moving onto the third quarter, we have provided revenue guidance in the $32.5 million to $33.5 million range and feel that our adjusted EBITDA will be roughly 20% to 23%.

This will continue the trend of improving financial results on a quarterly basis. Next, I’d like to provide some financial highlights for Apparo.

As a result of the improvement in gross margins in collection rates that Greg referred to, our Q2 2017 EBITDA margins increased by 13 percentage points over Q2 2016. As a result, we have shown positive and increasing EBITDA for two consecutive quarters.

Going forward, we will improve our EBITDA margins through topline revenue growth continued emphasis on improving our collection rates and a persistent focus on cost containment. Our balance sheet continues to be strong; our receivables are clean and valued conservatively.

Finally, similar to Viemed we have been financing our growth in rental equipment through favorable vendor financing allowing us to preserve cash. At this time, I’d like to turn the call over to Todd to say a few more things about Viemed.

Alright thanks Al. Moving specifically in into Viemed, as Casey mentioned earlier, we have continued the healthy growth rates of our active patients over the last quarter.

With that growth, our equipment purchases have trended higher during the current year as compared to last year. We’ve been financing this growth through additional finance leases, as well as using some of our organic cash flow to pay off some of these invoices.

Our efficiencies of building and cash collections are as great as ever and we will remain focused on the bottom line of the Viemed division. With our recent growth in the sales force and introducing new areas we expect our G&A to slightly increase, but the power of our lean deployment model will be evident with our continued expansion of our bottom-line margins.

We remain excited about the coming months and years as we prepare to tell the story of our Viemed division and plan to do so as soon as possible after of our upcoming corporate split. With that I’d like to turn the call back over to Casey to wrap things up.

Thank you, Todd. We are pleased to conclude another great quarter.

I expect our current quarter will be more impressive than the last. And again the real potential for our divisions comes when we are separated and able to concentrate 100% of our respected efforts, capital and labor on our own distinctive growth strategies and markets.

And that point it will be very exciting to see these companies get to the next level. Our vision from about a year ago is becoming a reality and we are excited and energized to keep the current momentum going into the future.

This concludes our prepared remarks for today, and we will now open for further questions. Thank you.

Hi good afternoon guys and congratulations on a great quarter. Just wanted to start with sort of growth prospects, I know you touched on a little bit, but maybe I could get just a little deeper on the Viemed side and the Apparo side, so maybe start on the Viemed side, Casey can you just expand a little bit and how many regions you are actually in, maybe how many active patients you have versus how many COPD patients there are?

I am just trying to get an idea of market share potentially sort of a nationally in what that means for growth potential for you?

Yes, no problem. We roughly have about 3,600 active patients right now that we call an active patient, a patient that is on billing that is not a number of the amount of lives that we touch and serve.

I would say that number is probably in the 6,000 range ballpark Doug, and we are currently in about 35 markets right now, and we were able to add 12, 13 new ones here just in the first four months of the year. So, we are going to continue down that path of growing the business organically through finding the right folks and inspiring them and training them to kind of walk and talk the way that we do here at Viemed.

In terms of COPD, I would say COPD patients represent roughly about 80% of our patient demographic or diagnosis. We do service a lot of muscular patients that would probably make up the bulk of the remaining 20%, basically anything to do with leading two chronic respiratory failure, which is six lungs [ph] until a lifetime it is a muscular disease causing or it could be the most common COPD.

COPD is the third largest killer in the country behind cancer and CHF, the market is growing, I don't know the numbers right at the top of my head, but I think it’s going to be in the last [indiscernible] in the 60 million patients that are out there. So I can confirm that with you later, but that’s about the ballpark of the amount of patient in the market.

I guess, just to understand, 3600 active patients out of obviously hundreds of thousands of minimums sort of people who could be able to use your - the respirator, the ventilator at the end of the day right, I mean, I guess I'm just trying to get out that there’s lot of room for growth - there is 35 markets, I mean that is not states, that is actually markets I am assuming?

That's correct. Hi Doug, this is Todd.

That is city, so we are active in 23 states and about 35 different markets within those states. And just I mean for frame of reference we feel like the market penetration for non-invasive ventilation is less than probably 5% of potential patients out there and that potential is growing with every day with ageing, ageing population and more potential patients that could benefit from this therapy.

So clearly, we are only scratching the surface of, first of all the number of events out there. We have a small percentage of the market share and then the potential for additional patients is enormous.

And Greg, maybe just moving over to the Apparo side of the business, you know, year-over-year obviously sales dropped but that was because of cutting I guess some product lines, shutting down Logimedix, are you through the integration now and looking to grow the business, I think the industry is growing 6%, 7% organically, is that a number that you think you can match or potentially beat in terms of organic growth?

Absolutely. We’re finished with the integration process and we feel very confident that we can grow at the industry if not succeed the industry standard there.

Okay, perfect.

We have really just started the process of increasing organic sales over the past couple of months.

Yes, you said you added, or was it here, how many sales you are eligible at, 15% increase in the sales force?

Yes.

When did those people start?

They hit the ground in April.

April, so obviously we didn’t see any of that in this quarter?

Absolutely, no.

Okay. Just on the financial side, obviously there continues to be some great operating leverage, EBITDA margins grew from 14.9 I think in Q1 to 20% in Q2 and you are targeting 20% to 23%, I was just assuming for a second that the company doesn't split, which is obviously as planned, but on a consolidated basis what could EBITDA margins get to, you think?

Well, not having guidance out there it’s hard for us to answer that question as to what they could get to, but clearly right now we are growing, both divisions are growing revenue without growing SG&A cost associated. So most of our growth is in the right areas for both divisions, it is high product margins, the ability for us to continue to get favorable equipment purchases and leasing terms is clearly going to be another driver of EBITDA and then lastly we are incurring less, but still incurring some costs related to this transaction.

So when you normalize all of those items we do see the ability to push this upwards. While we can get it to consolidate at upper 20s - mid to upper 20s, maybe even 30% that would be a sort of a stretch goal for a consolidated look at it I think, but clearly we are on the right track quarter-after-quarter.

Okay, great. And final one from me, I guess it would be a miss, if I didn't ask about reimbursement risk anything that’s happening on the regulatory front that could either cause issues or opportunities, maybe just touch on that with the potential new billing passing congress and so forth.

On the Viemed side, we have been trying to get the breath act push through, which is a bill that prevents Medicare from cutting us by more than 2% and on a - also spells out of a couple of formulary rule changes that are going to be in our favor. That remains on the Hill, looks, I'm going to give it a 50-50 shot [indiscernible] and Doug in reference to your question about the risk of reimbursement that’s always the risk in this business is that Medicare can change a ruler or do a cut on it, but we remain I think Greg will echo this statement, pretty confident that, what we're seeing is a relief in the industry.

We are seeing competitive bidding rates get refunded. We are beginning the squeaky wheel if you will on the hill with this breadth act and the breath act stands to give us a raise on our reimbursement.

So, if anything we think is the worst is behind this and we have - we might even have some opportunity for some further relief down ahead of us

Also, I will add, is that the most recent round of competitive bidding registration has been delayed, so that’s a good sign. We don't have any other further information except for the registrations delayed and that’s really a good sign for us.

Okay, that’s it from me. Thanks very much gentlemen.

Alright, thank you.

Thank you, Doug.

Operator, are there any other questions?

Alright, I'm just going to bring up one that we have gotten several times over the last couple of days, and it is a question as to what’s taking so long with the spinout and what’s the update on that? As Casey mentioned in the prepared remarks the process has taken longer than we expected.

It is a complicated transaction and while we’ve gotten several regulatory approvals, we are still waiting on one or two specifically with Canadian and US tax companies and so forth we’re getting close we can't give an exact date of where we can call for the shareholder vote, but we feel like it is getting very close and as Casey also mentioned, the company, it’s not slowing down the progress of what we're doing, it is just we can't give an exact time, but we do feel like a summertime, date is still good and we will continue to work with the proper authorities to get that vote called for. With that said, if there is no other questions, operator that will conclude today's call.