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Zynex Reports Third Quarter 2024 Financial Results

October 24, 2024 | Last Trade: US$8.25 0.15 -1.79

ENGLEWOOD, Colo., Oct. 24, 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 third quarter ended September 30, 2024.

Key Third Quarter Highlights and Business Update

  • Q3 2024 orders increased 13% year-over-year.
  • Q3 2024 net revenue of $50.0 million.
  • Q3 2024 net income of $2.4 million; Diluted EPS $0.07.
  • Q3 2024 cash flow from operations of $7.1 million.
  • Received FDA Clearance for new TensWave device.

Management Commentary 

"In the third quarter of 2024 we continued our steady growth in orders as we positioned the company for long-term profitable growth," said Thomas Sandgaard, President and CEO of Zynex. "Positive cash flow remains strong and both revenue and earnings were within guidance for the third quarter.

"Our Pain Management division delivered a 13% improvement in orders year-over-year. We continue to see success evolving our pain management division to achieve our strategic goal of diversifying revenue streams through increased orders in orthopedic products. Revenue per sales rep increased 25% year-over-year to approximately $530,000 in the third quarter of 2024. We are working to expedite the onboarding of new sales reps while maintaining a high standard for productivity.

"Our focus on FDA approvals of next-generation devices and new therapy products delivered FDA clearance of our new TensWave device during the quarter. FDA clearance for the new TensWave device builds on our strong legacy of innovation in pain management, providing effective pain relief through TENS (Transcutaneous Electrical Nerve Stimulation) therapy, which has been clinically proven to reduce chronic and acute pain without opioids. We recognized a gap in the market for a high-quality TENS device that meets the specific criteria for insurance reimbursement, and TensWave is our answer to that demand. It complements our flagship multi-modality device, the NexWave, where Interferential current is the main modality and driver of obtaining prescriptions. This device broadens our product portfolio with the potential to become an essential tool for patients suffering from chronic pain conditions, offering them a safe, effective, and drug-free alternative to pain management.

"Looking ahead, we will continue to diversify our pain management revenue stream with the introduction of new therapy products. Aggressive promotion of products from our salesforce will ensure sustained profitable growth. In 2025, we should return to our normal top-line growth in our pain management division of approximately 20%. Taken together, we believe our strategy is positioning us to become the world's premier provider of holistic, non-invasive approaches to pain management," concluded Sandgaard.

Third Quarter 2024 Financial Results

Net revenue was $50.0 million for the three months ended September 30, 2024, compared to $49.9 million in the prior year quarter.

Gross profit in the quarter ended September 30, 2024, was $39.8 million, or 80% of revenue, as compared to $40.4 million or 81% of revenue, in 2023.

Sales and marketing expense for the three months ended September 30, 2024, decreased 6% to $20.7 million from $22.1 million for the same period in 2023, primarily due to decreased headcount in the sales force.

General and administrative expenses for the three months ended September 30, 2024, were $15.3 million, versus $12.7 million in the prior year period.

Net income for the three months ended September 30, 2024, totaled $2.4 million, or $0.07 per basic and diluted share, as compared to net income of $3.6 million, or $0.10 per basic and diluted share, in the quarter ended September 30, 2023.

Adjusted EBITDA for the three months ended September 30, 2024, was $5.1 million, as compared to $7.3 million in the quarter ended September 30, 2023.

Cash flows from operations for the three months ended September 30, 2024, was $7.1 million and $10.3 million for the nine months ended September 30, 2024.

As of September 30, 2024, the Company had working capital of $58.5 million. Cash and cash equivalents were $37.6 million at September 30, 2024, up 22% from June 30, 2024.

Fourth Quarter and Full Year 2024 Guidance

Fourth quarter 2024 revenue is estimated to be at least $53.6 million. Fourth quarter Diluted EPS is estimated to be at least $0.09.

The Company expects 2024 net revenue of at least $200 million, a 9% increase from 2023. Diluted EPS is expected to be at least $0.20 per share.

Conference Call and Webcast Details

Thursday, October 24, 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: Q3 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)

        
  

September 30,

 

December 31, 

 
  

2024

 

2023

 

ASSETS

       

Current assets

       

Cash and cash equivalents

 

$

37,630

 

$

44,579

 

Accounts receivable, net

  

21,623

  

26,838

 

Inventory, net

  

15,708

  

13,106

 

Prepaid expenses and other

  

3,389

  

3,332

 

Total current assets

  

78,350

  

87,855

 
        

Property and equipment, net

  

3,169

  

3,114

 

Operating lease asset

  

10,510

  

12,515

 

Finance lease asset

  

1,215

  

587

 

Deposits

  

409

  

409

 

Intangible assets, net of accumulated amortization

  

7,476

  

8,158

 

Goodwill

  

20,401

  

20,401

 

Deferred income taxes

  

4,529

  

3,865

 

Total assets

 

$

126,059

 

$

136,904

 
        

LIABILITIES AND STOCKHOLDERS' EQUITY

       

Current liabilities

       

Accounts payable and accrued expenses

 

$

9,282

 

$

8,433

 

Operating lease liability

  

3,979

  

3,729

 

Finance lease liability

  

284

  

196

 

Income taxes payable

  

390

  

633

 

Accrued payroll and related taxes

  

5,933

  

5,541

 

Total current liabilities

  

19,868

  

18,532

 
        

Convertible senior notes, less issuance costs

  

58,320

  

57,605

 

Operating lease liability

  

11,175

  

14,181

 

Finance lease liability

  

923

  

457

 

Total liabilities

  

90,286

  

90,775

 
        

Stockholders' equity

       

   Common stock

  

32

  

33

 

   Additional paid-in capital

  

92,538

  

90,878

 

   Treasury stock

  

(87,186)

  

(71,562)

 

Retained earnings

  

30,389

  

26,780

 

Total stockholders' equity

  

35,773

  

46,129

 

Total liabilities and stockholders' equity

 

$

126,059

 

$

136,904

 

ZYNEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)

              
  

For the Three Months Ended September 30, 

 

For the Nine Months Ended September 30, 

 
  

2024

 

2023

 

2024

 

2023

 

NET REVENUE

             

Devices

 

$

14,858

 

$

16,855

 

$

44,803

 

$

42,542

 

Supplies

  

35,108

  

33,060

  

101,577

  

94,495

 

Total net revenue

  

49,966

  

49,915

  

146,380

  

137,037

 
              

COSTS OF REVENUE AND
OPERATING EXPENSES

             

Costs of revenue - devices
and supplies

  

10,177

  

9,553

  

29,446

  

28,094

 

Sales and marketing

  

20,713

  

22,146

  

67,319

  

64,982

 

General and administrative

  

15,274

  

12,731

  

43,062

  

35,479

 

Total costs of revenue and
operating expenses

  

46,164

  

44,430

  

139,827

  

128,555

 
              

Income from operations

  

3,802

  

5,485

  

6,553

  

8,482

 
              

Other income (expense)

             

Gain on disposal of assets

  

  

37

  

19

  

39

 

Change in fair value of
contingent consideration

  

  

(245)

  

  

2,855

 

Interest expense, net

  

(625)

  

(327)

  

(1,767)

  

(728)

 

Other income (expense), net

  

(625)

  

(535)

  

(1,748)

  

2,166

 
              

Income from operations before
income taxes

  

3,177

  

4,950

  

4,805

  

10,648

 

Income tax expense

  

795

  

1,356

  

1,196

  

2,131

 

Net income

 

$

2,382

 

$

3,594

 

$

3,609

 

$

8,517

 
              

Net income per share:

             

Basic

 

$

0.07

 

$

0.10

 

$

0.11

 

$

0.24

 

Diluted

 

$

0.07

 

$

0.10

 

$

0.11

 

$

0.23

 
              

Weighted average basic shares
outstanding

  

31,775

  

35,531

  

31,960

  

36,216

 

Weighted average diluted
shares outstanding

  

32,088

  

36,103

  

32,340

  

36,866

 

ZYNEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(unaudited)

        
  

For the Nine Months Ended September 30, 

 
  

2024

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net income

 

$

3,609

 

$

8,517

 

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

       

  Depreciation

  

1,967

  

1,984

 

  Amortization

  

1,402

  

1,078

 

  Non-cash reserve charges

  

  

(91)

 

  Stock-based compensation

  

2,345

  

1,621

 

  Non-cash lease expense

  

(750)

  

568

 

  Benefit for deferred income taxes

  

(664)

  

(1,473)

 

  Change in fair value of contingent consideration

  

  

(2,855)

 

  Gain on disposal of assets

  

(19)

  

(39)

 

Change in operating assets and liabilities:

       

   Short-term investments

  

  

(114)

 

   Accounts receivable

  

5,215

  

1,775

 

   Prepaid and other assets

  

106

  

(826)

 

   Accounts payable and other accrued expenses

  

1,161

  

3,312

 

   Inventory

  

(4,096)

  

(2,071)

 

   Deposits

  

  

182

 

            Net cash provided by operating activities

  

10,276

  

11,568

 
        

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Purchase of property and equipment

  

(362)

  

(630)

 

Purchase of short-term investments

  

  

(9,810)

 

Proceeds on sale of fixed assets

  

  

50

 

            Net cash used in investing activities

  

(362)

  

(10,390)

 
        

CASH FLOWS FROM FINANCING ACTIVITIES:

       

Payments on finance lease obligations

  

(203)

  

(95)

 

Cash dividends paid

  

(9)

  

(1)

 

Purchase of treasury stock

  

(15,625)

  

(24,402)

 

Excise tax payments on net treasury stock purchases

  

(473)

  

 

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

  

  

57,018

 

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

  

13

  

33

 

Principal payments on long-term debt

  

  

(10,667)

 

Taxes withheld and paid on equity awards

  

(566)

  

(691)

 

Net cash (used in) provided by financing activities

  

(16,863)

  

21,195

 
        

Net (decrease) increase in cash

  

(6,949)

  

22,373

 

Cash and cash equivalents at beginning of period

  

44,579

  

20,144

 

Cash and cash equivalents at end of period

 

$

37,630

 

$

42,517

 

ZYNEX, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(AMOUNTS IN THOUSANDS)
(unaudited)

 
 

For the Three Months
Ended September 30,

 

For the Nine Months
Ended September 30,

 

2024

 

2023

 

2024

 

2023

Adjusted EBITDA:

       

Net income

$       2,382

 

$       3,594

 

$       3,609

 

$       8,517

Depreciation and Amortization*

478

 

401

 

1,369

 

1,237

Stock-based compensation expense

770

 

654

 

2,345

 

1,620

Interest expense and other, net

625

 

290

 

1,748

 

689

Change in fair value of contingent
consideration

-

 

245

 

-

 

(2,855)

Non-cash lease expense**

-

 

751

 

-

 

978

Income tax expense

795

 

1,356

 

1,196

 

2,131

Adjusted EBITDA

$       5,050

 

$       7,291

 

$      10,267

 

$      12,317

% of Net Revenue

10 %

 

15 %

 

7 %

 

9 %

 

* 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 in excess of cash payments due to abated rent.

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