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Terns Pharmaceuticals
Terns Pharmaceuticals

Zynex Reports Second Quarter 2023 Financial Results

July 27, 2023 | Last Trade: US$8.25 0.15 -1.79
  • Q2 2023 Revenue increased 22% to $45.0 Million; EPS $0.09

ENGLEWOOD, Colo., July 27, 2023 /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, has reported its financial and operational results for the second quarter ended June 30, 2023.

Key Second Quarter and Subsequent 2023 Highlights and Business Update

  • Q2 2023 revenue increased 22% year-over-year to $45.0 million.
  • Net income of $3.4 million; Diluted EPS $0.09.
  • Orders increased 51% year-over-year; highest number of orders in Company history for the 5th consecutive quarter.
  • FDA granted 510(k) market clearance for the Company's CM-1600 blood and fluid volume monitoring device. 
  • Approved a $10.0 million share repurchase program of the Company's common stock.

Management Commentary

"During the second quarter we continued our focus on the profitable growth of our pain management division and developing the next generation of patient monitoring equipment, resulting in our fifth straight quarter of record-high order numbers," said Thomas Sandgaard, President and CEO of Zynex. "Our sales team continued to perform and  posted a 51% improvement in orders year-over-year.

"Turning to our pipeline, recently we were pleased to announce FDA clearance for our second-generation blood and fluid volume monitor, a non-invasive and wireless technology targeted to improve patient outcomes with better fluid management in hospital settings.

"We also have three additional products in the pipeline in our hospital monitoring products division: a laser-based pulse oximeter, NiCO™; a monitor for early detection of sepsis; and a non-invasive, laser-based monitor of total hemoglobin levels, HemeOx™. The monitoring division is pre-revenue and expects to submit an application to the FDA for its laser-based pulse oximeter in the fourth quarter of this year.

"Looking ahead, we are making significant progress as a leader in at-home pain management devices, with a robust and durable business model and high recurring revenue. We are ramping our hospital monitoring division which represents a large and growing market opportunity," concluded Sandgaard.

Second Quarter 2023 Financial Results

Net revenue was $45.0 million for the three months ended June 30, 2023, an increase of 22% from $36.8 million in the prior year quarter. The growth in net revenue is primarily related to a 51% growth in device orders, which resulted from an increased customer base.

Gross profit in the quarter ended June 30, 2023 increased to $35.7 million, or 79% of revenue, as compared to $29.5 million or 80% of revenue, in 2022.

Sales and marketing expenses were $21.6 million for the three months ended June 30, 2023, compared to $16.3 million in the prior year.

General and administrative expenses for the three months ended June 30, 2023 were $11.4 million, versus $8.8 million in the prior year.

Net income for the three months ended June 30, 2023, totaled $3.4 million, or $0.09 per basic and diluted share, as compared to net income of $3.3 million, or $0.09 per basic and $0.08 per diluted share, in the quarter ended June 30, 2022.

Adjusted EBITDA for the three months ended June 30, 2023 was $4.0 million, as compared to $5.5 million in the quarter ended June 30, 2022.

As of June 30, 2023, the Company had working capital of $93.5 million. Cash and cash equivalents was $58.7 million at the end of the second quarter. Cash provided by operations for the six months ended June 30, 2023 was $2.7 million, as compared to $1.6 million in the six months ended June 30, 2022.

The Company continued its latest stock buyback by repurchasing $6.1 million of its common stock during the second quarter and has repurchased $36.1 million during the last fifteen months.

Third Quarter and Full Year 2023 Guidance

2023 estimates are unchanged with revenue of $180-$200 million and Diluted EPS of $0.40-$0.50 per share. The revenue range is based on best estimates of labor market conditions and sales rep productivity. Diluted EPS is impacted by increased operating expenses to support ZMS as the Laser-based Pulse Oximetry products are prepared for FDA submission and the fluid monitor is readied for the market.

Third quarter 2023 revenue is estimated to be $49-$51 million, an increase of approximately 20% from Q3 2022. Third quarter Diluted EPS is estimated to be $0.08-$0.10.

Conference Call and Webcast Details

Thursday, July 27, 2023 at 2:15 p.m. MT / 4:15 p.m. ET

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: Q2 2023 Webcast Link

US Participant Dial In (TOLL FREE): 1-844-825-9790
International Participant Dial In: 1-412-317-5170
Canada Participant Dial In (TOLL FREE): 1-855-669-9657

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 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.

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.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

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 and other risks 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, 2022 as well as our quarterly reports on Form 10-Q and current reports on Form 8-K.

Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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)

    
  

June 30,

 

December 31,

  

2023

 

2022

ASSETS

    

Current assets:

    

Cash

 

$58,749

 

$20,144

Accounts receivable, net

 

32,957

 

35,063

Inventory, net

 

14,325

 

13,484

Prepaid expenses and other

 

1,529

 

868

                                               Total current assets

 

107,560

 

69,559

     

Property and equipment, net

 

2,373

 

2,175

Operating lease asset

 

10,923

 

12,841

Finance lease asset

 

211

 

270

Deposits

 

683

 

591

Intangible assets, net of accumulated amortization

 

8,616

 

9,067

Goodwill

 

20,401

 

20,401

Deferred income taxes

 

1,802

 

1,562

                                               Total assets

 

$152,569

 

$116,466

     

LIABILITIES AND STOCKHOLDERS' EQUITY

    

Current liabilities:

    

Accounts payable and accrued expenses

 

5,930

 

5,601

Cash dividends payable

 

14

 

16

Operating lease liability

 

1,921

 

2,476

Finance lease liability

 

122

 

128

Income taxes payable

 

-

 

1,995

Current portion of debt

 

-

 

5,333

Accrued payroll and related taxes

 

6,108

 

5,537

                                              Total current liabilities

 

14,095

 

21,086

Long-term liabilities:

    

Long-term portion of debt, less issuance costs

 

-

 

5,293

Convertible senior notes, less issuance costs

 

57,155

 

-

Contingent consideration

 

6,900

 

10,000

Operating lease liability

 

12,020

 

13,541

Finance lease liability

 

132

 

188

                                              Total liabilities

 

90,302

 

50,108

     

Stockholders' equity:

    

Common stock

 

36

 

39

Additional paid-in capital

 

82,888

 

82,431

Treasury stock, at cost

 

(42,628)

 

(33,160)

Retained earnings

 

21,971

 

17,048

                                              Total stockholders' equity

 

62,267

 

66,358

                                              Total liabilities and stockholders' equity

 

$152,569

 

$116,466

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(unaudited)

         
  

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

  

2023

 

2022

 

2023

 

2022

NET REVENUE

       

Devices

 

$13,743

 

$9,505

 

$25,687

 

$16,230

Supplies

 

31,209

 

27,254

 

61,435

 

51,612

Total net revenue

44,952

 

36,759

 

87,122

 

67,842

         

COSTS OF REVENUE AND OPERATING EXPENSES

      

Costs of revenue - devices and supplies

 

9,272

 

7,305

 

18,541

 

14,226

Sales and marketing

21,609

 

16,314

 

42,836

 

30,738

General and administrative

11,358

 

8,776

 

22,748

 

16,608

Total costs of revenue and operating expenses

42,239

 

32,395

 

84,125

 

61,572

         

Income from operations

2,713

 

4,364

 

2,997

 

6,270

         

Other income (expense)

      

   Gain on sale of fixed assets

 

-

 

-

 

2

 

-

   Gain (loss) on change in fair value of contingent consideration

1,700

 

(100)

 

3,100

 

100

   Interest expense, net

(317)

 

(115)

 

(401)

 

(239)

Other income (expense), net

1,383

 

(215)

 

2,701

 

(139)

         

Income from operations before income taxes

4,096

 

4,149

 

5,698

 

6,131

  Income tax expense

742

 

803

 

775

 

1,408

Net income

$3,354

 

$3,346

 

$4,923

 

$4,723

         

Net income per share:

       

Basic

 

$0.09

 

$0.09

 

$0.13

 

$0.12

Diluted

 

$0.09

 

$0.08

 

$0.13

 

$0.12

         

Weighted average basic shares outstanding

36,435

 

38,851

 

36,564

 

39,305

Weighted average diluted shares outstanding

37,061

 

39,893

 

37,249

 

40,367

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

(unaudited)

 

For the Six Months Ended June 30,

  

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

 

$4,923

 

$4,723

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

    

Depreciation

 

1,311

 

1,025

Amortization

 

620

 

461

Non-cash reserve charges

 

(91)

 

(9)

Stock-based compensation

 

967

 

1,124

Non-cash lease expense

 

(158)

 

237

Benefit for deferred income taxes

 

(240)

 

(392)

Gain on change in fair value of contingent consideration

 

(3,100)

 

(100)

Gain on sale of fixed assets

 

(2)

 

-

Change in operating assets and liabilities:

    

   Accounts receivable

 

2,106

 

808

   Prepaid and other assets

 

(661)

 

(669)

   Accounts payable and other accrued expenses

 

(1,172)

 

(1,020)

   Inventory

 

(1,736)

 

(4,604)

   Deposits

 

(92)

 

(6)

            Net cash provided by operating activities

 

2,675

 

1,578

     

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchase of property and equipment

 

(394)

 

(212)

Proceeds on sale of fixed assets

 

10

 

-

            Net cash used in investing activities

 

(384)

 

(212)

     

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Payments on finance lease obligations

 

(62)

 

(58)

Cash dividends paid

 

(1)

 

(3,613)

Purchase of treasury stock

 

(9,468)

 

(10,655)

Proceeds from issuance of convertible senior notes, net of issuance costs

 

57,026

 

-

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

 

32

 

14

Principal payments on long-term debt

 

(10,667)

 

(2,667)

Taxes withheld and paid on employees' equity awards

 

(546)

 

(122)

            Net cash provided by (used in) financing activities

 

36,314

 

(17,101)

     

Net increase (decrease) in cash

 

38,605

 

(15,735)

Cash at beginning of period

 

20,144

 

42,612

Cash at end of period

 

$58,749

 

$26,877

ZYNEX, INC.

 Reconciliation of GAAP to Non-GAAP Measures

 (in thousands)

 (unaudited)

        
 

 For the Three Months Ended June 30, 

 

 For the Six Months Ended June 30, 

 

2023

 

2022

 

2023

 

2022

 Adjusted EBITDA:

      

 Net income

$3,354

 

$3,346

 

$4,923

 

$4,723

 Depreciation and Amortization*

412

 

411

 

835

 

807

 Stock-based compensation expense

660

 

535

 

967

 

1,124

    Interest expense and other, net

317

 

115

 

401

 

239

    Change in value of contingent consideration

(1,700)

 

100

 

(3,100)

 

(100)

    Non-cash lease expense **

227

 

227

 

227

 

410

    Income tax expense 

742

 

803

 

775

 

1,408

 Adjusted EBITDA 

$4,012

 

$5,537

 

$5,028

 

$8,611

 % of Net Revenue

9 %

 

15 %

 

6 %

 

13 %

        

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

 ** Amount expensed on new company headquarters in excess of cash payments due to abated rent

  
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