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Zynex Reports First Quarter 2024 Financial Results

April 30, 2024 | Last Trade: US$8.00 1.02 -11.31
  • Q1 2024 Revenue Increased 10% to $46.5 Million

ENGLEWOOD, Colo., April 30, 2024 /PRNewswire/ -- Zynex, Inc. (NASDAQ: ZYXI), an innovative medical technology company specializing in the manufacture and sale of non-invasive medical devices for pain management, rehabilitation, and patient monitoring, today reported its financial and operational results for the first quarter ended March 31, 2024.

Key First Quarter Highlights and Business Update

  • Q1 2024 revenue increased 10% year-over-year to $46.5 million; Q1 2024 revenue underperformed guidance of $47.5 million due to payments from a number of insurers being delayed due to a cyber incident which impacted industry-wide payers. Zynex expects the revenue for the full year to remain as originally forecasted and recognize delayed revenue over the remainder of the year.
  • Q1 2024 net income of $10,000; Diluted EPS $0.00.
  • Q1 2024 orders increased 23% year-over-year, the highest number of orders in Company history for the eighth consecutive quarter.
  • Q1 2024 cash flow from operations of $2.1 million, a 7% year-over-year increase.
  • Repurchased $13.4 million of the Company's common stock in Q1 2024.

Management Commentary

"During the first quarter of 2024, we continued our focus on order growth, FDA approvals of next-generation devices, and new therapy products," said Thomas Sandgaard, President and CEO of Zynex. "Approximately $1.0 million in revenue for the quarter was impacted by payments from a large number of insurers being delayed due to a cyber incident which impacted payers industry-wide. We expect to recognize that revenue over the remainder of the year and reaffirm 2024 guidance of at least $227 million. In the first quarter, increasing sales and profitable growth for our pain management division delivered a 23% improvement in orders year-over-year. We continued our share repurchase plan and repurchased $13.4 million of our common stock in Q1 2024 and $78.5 million over the last twenty-four months.

"During the quarter, the pain management division received clearance from to the U.S. Food and Drug Administration ("FDA") for the next-generation M-Wave Neuromuscular Electrical Stimulation ("NMES") device. NMES treatments have several uses, including aiding recovery from surgery, managing chronic conditions, and enhancing exercise performance in healthy individuals. The M-Wave introduces the next evolution in NMES devices, allowing for more customizable treatments within clinical and home settings.

"We continued to diversify our pain management revenue stream with the introduction of two new therapy products: the Zynex Pro Hybrid LSO, a versatile 3-in-1 spinal orthosis, and the Zynex DynaComp Cold Compression, which combines cold therapy and compression to accelerate recovery. These products allow our salespeople to compete effectively against other industry leaders in the cold compression and bracing markets and complement our other products in low-back support, bracing, cervical traction, cold/hot therapy equipment, and compression.

"We have four pre-revenue hospital monitoring products in the pipeline, including a laser-based pulse oximeter, NiCO™; a monitor for noninvasive detection of blood and fluid loss; a monitor for early detection of sepsis; and a noninvasive, laser-based monitor of total hemoglobin levels, HemeOx™. For NiCO, the FDA 510(k) submission is now tracking to the second half of 2024.

"We expect 2024 net revenue to increase approximately 23% compared to 2023. Innovative new products and aggressive promotion from an expanding direct salesforce are diversifying revenue streams and ensuring sustained growth. We look forward to additional updates in the months to come as we work to build long-term value for our shareholders," concluded Sandgaard.

First Quarter 2024 Financial Results

Net revenue was $46.5 million for the three months ended March 31, 2024, compared to $42.2 million in the prior year quarter. Net revenue was affected by payments from a number of insurers being delayed due to a cyber incident which impacted healthcare payers industry-wide.

Gross profit in the quarter ended March 31, 2024, was $37.2 million, or 80% of revenue, as compared to $32.9 million or 78% of revenue, in 2023.

Sales and marketing expenses were $23.4 million for the three months ended March 31, 2024, compared to $21.2 million in the prior year period.

General and administrative expenses for the three months ended March 31, 2024, were $13.3 million, versus $11.4 million in the prior year period.

Net income for the three months ended March 31, 2024, totaled $10,000, or $0.00 per basic and diluted share, as compared to net income of $1.6 million, or $0.04 per basic and diluted share, in the quarter ended March 31, 2023.

Adjusted EBITDA for the three months ended March 31, 2024, was $1.7 million, as compared to $1.0 million in the quarter ended March 31, 2023.

As of March 31, 2024, the Company had working capital of $56.2 million. Cash and cash equivalents were $32.9 million at March 31, 2024. Cash flow from operations for the three months ended March 31, 2024, was $2.1 million compared to $1.9 million in the three months ended March 31, 2023.

The Company continued its latest stock buyback by repurchasing $13.4 million of its common stock during the first quarter.

Second Quarter and Full Year 2024 Guidance

Second quarter 2024 revenue is estimated to be at least $52.0 million, an increase of approximately 16% from Q2 2023. Second quarter Diluted EPS is estimated to be at least $0.08.

The Company expects 2024 net revenue of at least $227 million, a 23% increase from 2023. Diluted EPS is expected to be at least $0.50 per share, an 85% increase compared to 2023.

Conference Call and Webcast Details

Tuesday, April 30, 2024, at 4:15 PM Eastern Time (2:15 PM Mountain Time)

To register and participate in the webcast, interested parties should click on the following link or dial in approximately 10-15 minutes prior to the webcast: Q1 2024 Webcast Link

U.S. & Canada dial-in number: 800-836-8184
International number: 646-357-8785

Non-GAAP Financial Measures

Zynex reports its financial results in accordance with accounting principles generally accepted in the U.S. (GAAP). In addition, the Company is providing in this news release financial information in the form of Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, other income/expense, stock compensation, restructuring, receivables adjustment and non-cash lease charges). Management believes these non-GAAP financial measures are useful to investors and lenders in evaluating the overall financial health of the Company in that they allow for greater transparency of additional financial data routinely used by management to evaluate performance. Adjusted EBITDA can be useful for investors or lenders as an indicator of available earnings. Non-GAAP financial measures should not be considered in isolation from, or as an alternative to, the financial information prepared in accordance with GAAP.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended. our results of operations and the plans, strategies and objectives for future operations; the timing and scope of any potential stock repurchase; and other similar statements.

Words such as "anticipate," "believe," "continue," "could," "designed," "endeavor," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "seek," "should," "target," "preliminary," "will," "would" and similar expressions are intended to identify forward-looking statements. The express or implied forward-looking statements included in this press release are only predictions and are subject to a number of risks, uncertainties and assumptions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The Company makes no express or implied representation or warranty as to the completeness of forward-looking statements or, in the case of projections, as to their attainability or the accuracy and completeness of the assumptions from which they are derived. Factors that could cause actual results to materially differ from forward-looking statements include, but are not limited to, the need to obtain CE marking of new products; the acceptance of new products as well as existing products by doctors and hospitals, larger competitors with greater financial resources; the need to keep pace with technological changes; our dependence on the reimbursement for our products from health insurance companies; our dependence on third party manufacturers to produce our products on time and to our specifications' implementation of our sales strategy including a strong direct sales force, the impact of COVID-19 on the global economy; market conditions; the timing, scope and possibility that the repurchase program may be suspended or discontinued; economic factors, such as interest rate fluctuations; and other risks described in our filings with the Securities and Exchange Commission.

These and other risks are described in our filings with the Securities and Exchange Commission including but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2023 as well as our quarterly reports on Form 10-Q and current reports on Form 8-K. Any forward-looking statements contained in this press release represent Zynex's views only as of today and should not be relied upon as representing its views as of any subsequent date. Zynex explicitly disclaims any obligation to update any forward-looking statements, except to the extent required by law.

About Zynex, Inc.

Zynex, founded in 1996, develops, manufactures, markets, and sells medical devices used for pain management and rehabilitation as well as non-invasive fluid, sepsis, and laser-based pulse oximetry monitoring systems for use in hospitals. For additional information, please visit: www.zynex.com.

Investor Relations Contact:
Quinn Callanan, CFA or Brian Prenoveau, CFA
MZ Group – MZ North America
This email address is being protected from spambots. You need JavaScript enabled to view it.
+949 694 9594

ZYNEX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS)

(unaudited)

       
  

March 31,

 

December 31,

  

2024

 

2023

ASSETS

      

Current assets:

      

Cash and cash equivalents

 

$

32,861

 

$

44,579

Accounts receivable, net

  

25,439

  

26,838

Inventory, net

  

15,476

  

13,106

Prepaid expenses and other

  

4,213

  

3,332

Total current assets

  

77,989

  

87,855

       

Property and equipment, net

  

3,234

  

3,114

Operating lease asset

  

11,857

  

12,515

Finance lease asset

  

537

  

587

Deposits

  

409

  

409

Intangible assets, net of accumulated amortization

  

7,932

  

8,158

Goodwill

  

20,401

  

20,401

Deferred income taxes

  

3,866

  

3,865

Total assets

 

$

126,225

 

$

136,904

       

LIABILITIES AND STOCKHOLDERS' EQUITY

      

Current liabilities:

      

Accounts payable and accrued expenses

  

10,325

  

8,433

Operating lease liability

  

3,881

  

3,729

Finance lease liability

  

183

  

196

Income taxes payable

  

637

  

633

Accrued payroll and related taxes

  

6,729

  

5,541

Total current liabilities

  

21,755

  

18,532

Long-term liabilities:

      

Convertible senior notes, less issuance costs

  

57,839

  

57,605

Operating lease liability

  

13,184

  

14,181

Finance lease liability

  

347

  

457

Total liabilities

  

93,125

  

90,775

       

Stockholders' equity:

      

Common stock

  

32

  

33

Additional paid-in capital

  

91,259

  

90,878

  Treasury stock, at cost

  

(84,981)

  

(71,562)

Retained earnings

  

26,790

  

26,780

Total stockholders' equity

  

33,100

  

46,129

Total liabilities and stockholders' equity

 

$

126,225

 

$

136,904

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(unaudited)

       
  

For the Three Months Ended March 31, 

  

2024

 

2023

NET REVENUE

      

Devices

 

$

14,025

 

$

11,944

Supplies

  

32,506

  

30,226

Total net revenue

  

46,531

  

42,170

       

COSTS OF REVENUE AND OPERATING EXPENSES

      

Costs of revenue - devices and supplies

  

9,298

  

9,269

Sales and marketing

  

23,380

  

21,227

General and administrative

  

13,328

  

11,390

Total costs of revenue and operating expenses

  

46,006

  

41,886

       

Income from operations

  

525

  

284

       

Other income (expense)

      

Gain on sale of fixed assets

  

  

2

Gain on change in fair value of contingent consideration

  

  

1,400

Interest expense, net

  

(512)

  

(84)

Other income (expense), net

  

(512)

  

1,318

       

Income from operations before income taxes

  

13

  

1,602

Income tax expense

  

3

  

33

Net income

 

$

10

 

$

1,569

       

Net income per share:

      

Basic

 

$

0.00

 

$

0.04

Diluted

 

$

0.00

 

$

0.04

       

Weighted average basic shares outstanding

  

32,344

  

36,694

Weighted average diluted shares outstanding

  

32,827

  

37,442

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

(unaudited)

       
  

For the Three Months Ended March 31, 

  

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

      

Net income

 

$

10

 

$

1,569

Adjustments to reconcile net income to net cash provided by operating
activities:

      

Depreciation

  

638

  

615

Amortization

  

461

  

229

Non-cash reserve charges

  

  

408

Stock-based compensation

  

734

  

307

Non-cash lease expense

  

(187)

  

(272)

Benefit for deferred income taxes

  

(1)

  

8

Gain on change in fair value of contingent consideration

  

  

(1,400)

Gain on sale of fixed assets

  

  

(2)

Change in operating assets and liabilities:

      

Accounts receivable

  

1,399

  

2,596

Prepaid and other assets

  

(813)

  

(1,262)

Accounts payable and other accrued expenses

  

2,709

  

369

Inventory

  

(2,882)

  

(1,139)

Deposits

  

  

(92)

Net cash provided by operating activities

  

2,068

  

1,934

       

CASH FLOWS FROM INVESTING ACTIVITIES:

      

Purchase of property and equipment

  

(153)

  

(184)

Proceeds on sale of fixed assets

  

  

10

Net cash used in investing activities

  

(153)

  

(174)

       

CASH FLOWS FROM FINANCING ACTIVITIES:

      

Payments on finance lease obligations

  

(123)

  

(31)

Cash dividends paid

  

(3)

  

Purchase of treasury stock

  

(13,280)

  

(3,353)

Proceeds from the issuance of common stock on stock-based awards

  

13

  

27

Principal payments on long-term debt

  

  

(1,333)

Taxes withheld and paid on employees' equity awards

  

(240)

  

(422)

Net cash used in financing activities

  

(13,633)

  

(5,112)

       

Net decrease in cash

  

(11,718)

  

(3,352)

Cash at beginning of period

  

44,579

  

20,144

Cash at end of period

 

$

32,861

 

$

16,792

ZYNEX, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(AMOUNTS IN THOUSANDS)

(unaudited)

        
  

For the Three Months Ended March 31, 

 
  

2024

 

2023

 

Adjusted EBITDA:

       

Net income

 

$

10

 

$

1,569

 

Depreciation and Amortization*

  

426

  

423

 

Stock-based compensation expense

  

734

  

307

 

Interest expense and other, net

  

512

  

82

 

Change in value of contingent consideration

  

  

(1,400)

 

Income tax expense

  

3

  

33

 

Adjusted EBITDA

 

$

1,685

 

$

1,014

 

% of Net Revenue

  

4

%

 

2

%

        

* Depreciation does not include amounts related to units on lease to third parties which are depreciated and included in cost of goods sold.

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