Full Press Release Details
Zynex Announces 2010 Year End Results
Zynex, Inc. (OTCBB: ZYXI), a provider of pain management systems and electrotherapy products
for medical patients with functional disability, announces a record number of orders and billed
patients during 2010, which resulted in $24,085,000 of net revenue for 2010 versus $18,681,000 for
2009. Thomas Sandgaard, CEO, stated We are pleased with the consistent revenue growth we have
been able to generate over the past several years.
The Company reported a gross profit of $18,883,000 and SG A expenses of $17,322,000 for 2010, as
compared to a gross profit of $14,888,000 and SG A expenses of $11,074,000 for 2009. During 2010,
the Company made specific investments in its infrastructure to expand its domestic and
international sales force, improve its billing and reimbursement department and relocate its
headquarters to accommodate the significant increase in orders generated by the growing Zynex sales
organization. The Company believes that, although these investments increased the 2010 SG A
expenses, they were necessary to yield long-term net revenue and net income growth and to continue
to increase the Company s cash collections. The Company also went through a CFO change in 2010,
in which $200,000 of additional transition-related expense was incurred. The Company generated 2010
income from operations of $1,561,000, income before income taxes of $1,335,000 and net income of
$350,000, versus income from operations of $3,814,000, income before income taxes of $3,823,000 and
net income of $2,382,000 for 2009. The Company s income tax expense for 2010 reflects a 74%
effective tax rate due in part to assessed income tax penalties and interest. The Company is
working with the respective taxing authorities to mitigate and abate these penalties and interest
and hopes to avoid payment of the full amount of these penalties. The Company does not expect to
incur tax penalties and interest at these amounts in future periods.
The Company s continued focus on strengthening its balance sheet resulted in strong cash
collections from customers, which resulted in a cash position of $602,000 as of December 31, 2010
and a revolving line of credit balance of $1,270,000.
Thomas Sandgaard, CEO stated: 2010 was a transformative year for us. The investments made in our
sales team has paid off; as we have expanded our geographic reach and have increased the number of
orders we are receiving on a monthly basis (as exhibited by our 29% increase in net revenue for
2010). Because of the demand for our products, we had to incur necessary expenses in our
infrastructure to continue growth at our historical rates. Our primary expenditures were to sales
and marketing and reimbursement and billing. We expect investing in these departments will result
in continued sales growth and increased cash collections and will provide us with a long-term
infrastructure to support increased sales. We also outgrew our primary operating
facility/headquarters and relocated to a larger facility early in 2010. We believe investing in
these SG A expenses in 2010 should result in a revenue growth rate higher than that of our SG A in
future periods. I am pleased that, even with these necessary investments we made during 2010,
our gross margins remained strong and we generated income from operations of $1,561,000, income
before income taxes of $1,335,000 and net income of $350,000.
Mr. Sandgaard continued: Looking ahead, in addition to expanding our geographic reach for our
Zynex Medical, electrotherapy subsidiary, we intend to focus our attention on two new very large
markets, neurodiagnosis and cardiac monitoring, through our new subsidiaries Zynex NeuroDiagnostics
and Zynex Monitoring Solutions. We have already begun executing our business plan for these
subsidiaries and expect to see some results in 2011. We believe the combination of our core
electrotherapy business (Zynex Medical), with the potential of our new subsidiaries (Zynex
NeuroDiagnostics and Zynex Monitoring Solutions) should provide a significant platform for future
The Company anticipates net revenues of between $30 million and $32 million for 2011 and net income
per diluted share of between $0.08 and $0.11 for 2011.
Conference Call and Webcast Information:
Zynex, Inc. will host an earnings conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST)
today to discuss its 2010 year end results. Please note questions can only be submitted via the
webcast user interface. Parties without access to the internet may join the presentation in listen
only mode by dialing the toll free number provided below.
Webcast Information- http://www.visualwebcaster.com/event.asp?id=77408
Conference Call Information- 888-452-4024, passcode ZYNEX
Highlights from the year ended 2010 condensed consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)
| Year Ended | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Net revenue | $ | 24,085 | $ | 18,681 | ||||
| Gross profit | 18,883 | 14,888 | ||||||
| Income from operations | 1,561 | 3,814 | ||||||
| Income before income taxes | 1,335 | 3,823 | ||||||
| Net income | 350 | 2,382 | ||||||
| Adjusted EBITDA (1) | 3,519 | 4,595 | ||||||
| Net income per share diluted | $ | 0.01 | $ | 0.08 | ||||
| Weighted average number of common shares outstanding diluted | 30,704,737 | 30,374,360 | ||||||
| Cash | $ | 602 | $ | 863 | ||||
| Total stockholders equity | $ | 8,182 | $ | 7,486 |
| Year Ended | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Net income | $ | 350 | $ | 2,382 | ||||
| Interest and loss on extinguishment of debt | 210 | 161 | ||||||
| Taxes | 985 | 1,441 | ||||||
| Depreciation and amortization | 845 | 738 | ||||||
| Non-cash deferred rent | 1,129 | 44 | ||||||
| Gain on value of derivative liability | (171 | ) | ||||||
| Adjusted EBITDA | $ | 3,519 | $ | 4,595 |
Zynex, Inc. (founded in 1996) engineers, manufactures, markets and sells its own design of
electrotherapy medical devices in two distinct markets: standard digital electrotherapy products
for pain relief and pain management; and the NeuroMove for stroke and spinal cord injury
rehabilitation. Zynex s product lines are fully developed, FDA-cleared, commercially sold, and have
been developed to uphold the Company s mission of improving the quality of life for patients
suffering from impaired mobility due to stroke, spinal cord injury, or debilitating and chronic
pain. Zynex has also announced the development of two new business units, Zynex Monitoring
Solutions and Zynex NeuroDiagnostic.
Safe Harbor Statement
Certain statements in this release are forward-looking and as such are subject to numerous risks
and uncertainties. Actual results may vary significantly from the results expressed or implied in
such statements. Factors that could cause actual results to materially differ from forward-looking
statements include, but are not limited to, the need to obtain additional capital in order to grow
our business, our ability to engage additional sales representatives, the success of such
additional sales representatives, the need to obtain FDA clearance and 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 from
insurance companies for products sold or rented to our customers, acceptance of our products by
health insurance providers, our dependence on third party manufacturers to produce our goods on
time and to our specifications, implementation of our sales strategy including a strong direct
sales force, the uncertain outcome of pending material litigation and other risks described in our
filings with the Securities and Exchange Commission including the Risk Factors section of our
Annual Report on Form 10-K for the year ended December 31, 2009.
Contact: Zynex, Inc. Anthony Scalese, CFO, 303-703-4906
CONSOLIDATED BALANCE SHEETS (unaudited)
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF SHARES)
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 602 | $ | 863 | ||||
| Accounts receivable, net | 7,309 | 5,039 | ||||||
| Inventory | 3,641 | 2,140 | ||||||
| Prepaid expenses | 145 | 139 | ||||||
| Deferred tax asset | 794 | 864 | ||||||
| Other current assets | 41 | 77 | ||||||
| Total current assets | 12,532 | 9,122 | ||||||
| Property and equipment, net | 2,906 | 2,612 | ||||||
| Deposits | 174 | 166 | ||||||
| Deferred financing fees, net | 89 | 30 | ||||||
| $ | 15,701 | $ | 11,930 | |||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Line of credit | $ | 1,270 | $ | |||||
| Current portion of capital lease obligations | 93 | 95 | ||||||
| Accounts payable | 1,313 | 1,127 | ||||||
| Income taxes payable | 1,103 | 905 | ||||||
| Accrued payroll and payroll taxes | 572 | 426 | ||||||
| Deferred rent liability | 221 | |||||||
| Other accrued liabilities | 980 | 788 | ||||||
| Total current liabilities | 5,552 | 3,341 | ||||||
| Capital lease obligations, less current portion | 327 | 20 | ||||||
| Deferred rent liability | 1,452 | 544 | ||||||
| Deferred tax liability | 188 | 539 | ||||||
| Total liabilities | 7,519 | 4,444 | ||||||
| Stockholders Equity: | ||||||||
| Preferred stock; $.001 par value, 10,000,000 shares authorized, no shares issued or outstanding | ||||||||
| Common stock, $.001 par value, 100,000,000 shares authorized, 30,604,167 (2010) and 30,497,318 (2009) shares issued and outstanding | 31 | 30 | ||||||
| Paid-in capital | 4,702 | 4,357 | ||||||
| Retained earnings | 3,449 | 3,099 | ||||||
| Total stockholders equity | 8,182 | 7,486 | ||||||
| $ | 15,701 | $ | 11,930 |
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
YEARS ENDED DECEMBER 31,
| 2010 | 2009 | |||||||
| Net revenue: | ||||||||
| Rental | $ | 8,533 | $ | 10,534 | ||||
| Sales | 15,552 | 8,147 | ||||||
| 24,085 | 18,681 | |||||||
| Cost of revenue: | ||||||||
| Rental | 802 | 1,564 | ||||||
| Sales | 4,400 | 2,229 | ||||||
| 5,202 | 3,793 | |||||||
| Gross profit | 18,883 | 14,888 | ||||||
| Selling, general and administrative expense | 17,322 | 11,074 | ||||||
| Income from operations | 1,561 | 3,814 | ||||||
| Other income (expense): | ||||||||
| Interest income | 5 | 4 | ||||||
| Interest expense and loss on extinguishment of debt | (215 | ) | (165 | ) | ||||
| Other expense | (16 | ) | (1 | ) | ||||
| Gain on value of derivative liability | 171 | |||||||
| (226 | ) | 9 | ||||||
| Income before income taxes | 1,335 | 3,823 | ||||||
| Income tax expense | 985 | 1,441 | ||||||
| Net income | $ | 350 | $ | 2,382 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.01 | $ | 0.08 | ||||
| Diluted | $ | 0.01 | $ | 0.08 | ||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 30,546,070 | 30,122,486 | ||||||
| Diluted | 30,704,737 | 30,374,360 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(AMOUNTS IN THOUSANDS)
YEARS ENDED DECEMBER 31,
| 2010 | 2009 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 350 | $ | 2,382 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation expense | 774 | 677 | ||||||
| Provision for losses in accounts receivable (uncollectibility) | 317 | 149 | ||||||
| Amortization of deferred consulting and financing fees | 71 | 61 | ||||||
| Gain on value of derivative liability | (171 | ) | ||||||
| Issuance of stock for consulting services | 79 | 188 | ||||||
| Provision for obsolete inventory | 23 | 267 | ||||||
| Deferred rent expense | 1,129 | 44 | ||||||
| Loss on disposal of equipment | 18 | |||||||
| Employee stock based compensation expense | 267 | 169 | ||||||
| Deferred tax benefit | (281 | ) | (105 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,586 | ) | 427 | |||||
| Inventory | (1,559 | ) | (91 | ) | ||||
| Prepaid expenses | (6 | ) | (66 | ) | ||||
| Other current assets | 17 | (17 | ) | |||||
| Accounts payable | 186 | 89 | ||||||
| Accrued liabilities | 338 | (590 | ) | |||||
| Income taxes payable | 198 | 235 | ||||||
| Net cash (used in) provided by operating activities | (665 | ) | 3,648 | |||||
| Cash flows from investing activities: | ||||||||
| Proceeds received in lease termination | 108 | |||||||
| Deposits | 11 | |||||||
| Purchases of equipment | (672 | ) | (955 | ) | ||||
| Net cash used in investing activities | (564 | ) | (944 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Decrease in bank overdraft | (113 | ) | ||||||
| Net borrowings from (payments on) line of credit | 1,270 | (1,781 | ) | |||||
| Deferred financing fees | (120 | ) | (30 | ) | ||||
| Payments on notes payable and capital lease obligations | (182 | ) | (37 | ) | ||||
| Repayments of loans from stockholder | (25 | ) | ||||||
| Issuance of common stock | 145 | |||||||
| Net cash provided by (used in) financing activities | 968 | (1,841 | ) | |||||
| Net (decrease) increase in cash | (261 | ) | 863 | |||||
| Cash at the beginning of the period | 863 | |||||||
| Cash at the end of the period | $ | 602 | $ | 863 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | 112 | $ | 103 | ||||
| Income taxes paid (including interest and penalties) | $ | 1,068 | $ | 1,311 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Equipment acquired through capital lease | $ | 441 | $ | |||||
| Increase in deposit and deferred rent | $ | $ | 156 | |||||
| Increase in leasehold improvements and deferred rent | $ | $ | 344 |