Full Press Release Details
Zynex Announces 2022 Third Quarter Earnings
Englewood, CO, October 27,
2022 -- 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
financial results for the third quarter ended September 30, 2022.
Third Quarter 2022 Highlights:
| o | Increased revenue 19% year-over-year to $41.5 million | |
| o | Reported net income of $4.9 million; Diluted EPS of $0.13; Adjusted EBITDA of $8.1 million | |
| o | Recorded cash from operations of $7.4 million for the third quarter | |
| o | Completed the second of two $10 million share buybacks | |
| o | Achieved highest number of orders in Company history for the 2 nd consecutive quarter |
Third Quarter 2022 Financial Results Summary:
For the third quarter, the Company reported net revenue of $41.5 million,
a 19% increase over the third quarter of 2021. Gross margins were 80% and net income was $4.9 million, a 46% increase from the second
As of September 30, 2022, the Company had working capital of $47.6
million. Cash on hand was $23.5 million at the end of the third quarter.
President and CEO Commentary:
"The third quarter of 2022 was another record-breaking period
of order growth, with order numbers increasing 34% year-over-year," said Thomas Sandgaard, President and CEO. "In addition
to increased orders, revenue, and profitability, we recorded the second-best period for operating cash flows in the Company's history
at $7.4 million in the third quarter. Our strong cash flow allowed us to complete another $10 million stock buyback, totaling $20 million
year-to-date, a reflection of our confidence in the Company's future performance. I am thrilled with our team's ability to
efficiently execute on our top line goals while maintaining financial health and sustained profitability, and I look forward to continued
Fourth Quarter and Full Year 2022 Guidance:
The estimated range for fourth quarter 2022 revenue is between $48-$51
million, an increase of approximately 23% from Q4 2021. Adjusted EBITDA for the fourth quarter 2022 is estimated to range between $10-$12
Based on the fourth quarter estimates, the full year 2022 revenue estimate
now ranges between $157.4-$160.4 million and Adjusted EBITDA between $26.7-$28.7 million.
Conference Call and Webcast Details:
Thursday, October 27, 2022, at 2:15 p.m. MT / 4:15
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: https://app.webinar.net/PxEgJzg8540
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.
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, forecasts, 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 goods 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, 2021 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
650 Fifth Ave., Suite 2720
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 23,532 | $ | 42,612 | ||||
| Accounts receivable, net | 28,350 | 28,632 | ||||||
| Inventory, net | 14,366 | 10,756 | ||||||
| Prepaid expenses and other | 1,134 | 689 | ||||||
| Total current assets | 67,382 | 82,689 | ||||||
| Property and equipment, net | 2,199 | 2,186 | ||||||
| Operating lease asset | 13,783 | 16,338 | ||||||
| Finance lease asset | 300 | 389 | ||||||
| Deposits | 591 | 585 | ||||||
| Intangible assets, net of accumulated amortization | 9,296 | 9,975 | ||||||
| Goodwill | 20,401 | 20,401 | ||||||
| Deferred income taxes | 1,483 | 711 | ||||||
| Total assets | $ | 115,435 | $ | 133,274 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | 5,139 | 4,739 | ||||||
| Cash dividends payable | 16 | 3,629 | ||||||
| Operating lease liability | 2,943 | 2,859 | ||||||
| Finance lease liability | 126 | 118 | ||||||
| Income taxes payable | 916 | 2,296 | ||||||
| Current portion of debt | 5,333 | 5,333 | ||||||
| Accrued payroll and related taxes | 5,297 | 3,897 | ||||||
| Total current liabilities | 19,770 | 22,871 | ||||||
| Long-term liabilities: | ||||||||
| Long-term portion of debt, less issuance costs | 6,621 | 10,605 | ||||||
| Contingent consideration | 9,700 | 9,700 | ||||||
| Operating lease liability | 13,936 | 15,856 | ||||||
| Finance lease liability | 221 | 317 | ||||||
| Total liabilities | 50,248 | 59,349 | ||||||
| Stockholders' equity: | ||||||||
| Common Stock | 39 | 41 | ||||||
| Additional paid-in capital | 81,873 | 80,397 | ||||||
| Treasury stock | (26,321 | ) | (6,513 | ) | ||||
| Retained earnings | 9,596 | - | ||||||
| Total stockholders' equity | 65,187 | 73,925 | ||||||
| Total liabilities and stockholders' equity | $ | 115,435 | $ | 133,274 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| NET REVENUE | ||||||||||||||||
| Devices | $ | 11,349 | $ | 9,071 | $ | 27,579 | $ | 23,264 | ||||||||
| Supplies | 30,171 | 25,715 | 81,783 | 66,671 | ||||||||||||
| Total net revenue | 41,520 | 34,786 | 109,362 | 89,935 | ||||||||||||
| COSTS OF REVENUE AND OPERATING EXPENSES | ||||||||||||||||
| Costs of revenue - devices and supplies | 8,391 | 6,837 | 22,617 | 19,990 | ||||||||||||
| Sales and marketing | 17,212 | 13,083 | 47,950 | 40,662 | ||||||||||||
| General and administrative | 9,359 | 6,820 | 25,967 | 18,503 | ||||||||||||
| Total costs of revenue and operating expenses | 34,962 | 26,740 | 96,534 | 79,155 | ||||||||||||
| Income from operations | 6,558 | 8,046 | 12,828 | 10,780 | ||||||||||||
| Other (expense) | ||||||||||||||||
| Loss on change in fair value of contingent consideration | (100 | ) | - | - | - | |||||||||||
| Interest expense | (106 | ) | (18 | ) | (345 | ) | (72 | ) | ||||||||
| Other (expense) net | (206 | ) | (18 | ) | (345 | ) | (72 | ) | ||||||||
| Income from operations before income taxes | 6,352 | 8,028 | 12,483 | 10,708 | ||||||||||||
| Income tax expense | 1,479 | 1,921 | 2,887 | 2,499 | ||||||||||||
| Net income | $ | 4,873 | $ | 6,107 | $ | 9,596 | $ | 8,209 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.13 | $ | 0.16 | $ | 0.25 | $ | 0.21 | ||||||||
| Diluted | $ | 0.13 | $ | 0.16 | $ | 0.24 | $ | 0.21 | ||||||||
| Weighted average basic shares outstanding | 38,046 | 38,245 | 38,881 | 38,286 | ||||||||||||
| Weighted average diluted shares outstanding | 38,865 | 39,043 | 39,729 | 39,142 |
Reconciliation of GAAP to Non-GAAP Measures
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income | $ | 4,873 | $ | 6,107 | $ | 9,596 | $ | 8,209 | ||||||||
| Depreciation and Amortization* | 418 | 201 | 1,225 | 711 | ||||||||||||
| Stock-based compensation expense | 578 | 532 | 1,702 | 1,041 | ||||||||||||
| Restructuring/severance** | - | - | - | 318 | ||||||||||||
| Interest expense and other, net | 206 | 18 | 345 | 72 | ||||||||||||
| Non-cash lease expense *** | 572 | 553 | 982 | 856 | ||||||||||||
| Income tax expense | 1,479 | 1,921 | 2,887 | 2,499 | ||||||||||||
| Adjusted EBITDA | $ | 8,126 | $ | 9,332 | $ | 16,737 | $ | 13,706 | ||||||||
| % of Net Revenue | 20 | % | 27 | % | 15 | % | 15 | % |
* Depreciation does not include amounts related to units on lease to third parties which are depreciated and included in cost of goods sold.
** Severance of former COO Giusseppe Papandrea which was fully expensed in Q1 2021
*** Amount expensed on new company headquarters in excess of cash payments due to abated rent