Full Press Release Details
Zynex Announces First Quarter 2011 Financial Results
Zynex, Inc. (OTCBB: ZYXI), a provider of non-invasive medical devices for electrotherapy and stroke
rehabilitation, neurological diagnosis and cardiac monitoring, announces its first quarter 2011
The Company s net revenue increased 36% to $6,633,000 for the quarter ended March 31, 2011, as
compared to $4,875,000 for the quarter ended March 31, 2010. During the first quarter of 2011, the
Company continued to aggressively expand its geographic sales reach by adding 18 new domestic sales
representatives. The Company anticipates that it will continue to add sales representatives
throughout the remainder of 2011.
The Company reported a gross profit of $5,189,000 and SG A expenses of $5,328,000 for the first
quarter of 2011, as compared to a gross profit of $3,879,000 and SG A expenses of $3,847,000 for
the comparable period in 2010. The Company s 38% increase in SG A during the first quarter of 2011
as compared to the first quarter of 2010 was a direct result of the Company s specific investments
made, primarily during the later part of 2010, to expand its sales force and improve its billing
and reimbursement departments in preparation for the increasing order intake. During the first
quarter of 2011, SG A also included charges for the retirement of the Vice President of Billing.
The Company reported a first quarter 2011 loss from operations of $139,000, loss before income tax
of $197,000 and net loss of $110,000, versus a first quarter 2010 income from operations of
$32,000, loss before income tax of $64,000 and net loss of $67,000.
Thomas Sandgaard, CEO stated; We were pleased with the 36% increase in reported net revenue for
the first quarter of 2011, compared to the first quarter of 2010, as the first few months of the
calendar year is typically the slowest period for us. Since we primarily deal with health
insurance companies, the beginning of each year represents a reset for most patient insurance
deductibles, which lowers the amount of expected revenue we are able to report. Achieving a 36%
increase in net revenue is representative of the strong demand for our products and volume of
orders we continue to obtain quarter over quarter. During 2010, we built an infrastructure for our
anticipated growth in 2011 and beyond, thus we expected more SG A expenses for the first quarter of
2011. However, we continue to believe we are poised to execute on our strategy and still expect to
hit our originally estimated net revenue number of between $30 million and $32 million and net
income per diluted share of between $0.08 and $0.11 for 2011.
Mr. Sandgaard continued; We have made further progress on our blood volume monitor device,
currently being developed in our Zynex Monitoring Solutions subsidiary and have recently signed an
agreement with OmniVincit, LLC to conduct the first clinical evaluation of our blood monitor
device. We have also been actively evaluating our options within our Zynex NeuroDiagnostics
subsidiary, in which we are studying the identified markets, evaluating our organic product
development options and identifying possible acquisition targets. Our long term goal is to
diversify our revenue base currently being driven by our Zynex Medical, electrotherapy subsidiary,
in which we believe our two new subsidiaries, Zynex Monitoring Solutions and Zynex
NeuroDiagnostics, will allow us to accomplish through access to additional large markets.
The Company confirms its initial guidance of anticipated 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 first quarter 2011 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=79208
Conference Call Information- 866-223-7781, pass-code ZYNEX
Highlights from the first quarter ended 2011 condensed consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Net revenue | $ | 6,633 | $ | 4,875 | ||||
| Gross profit | 5,189 | 3,879 | ||||||
| (Loss) income from operations | (139 | ) | 32 | |||||
| Loss before income tax | (197 | ) | (64 | ) | ||||
| Net loss | (110 | ) | (67 | ) | ||||
| Adjusted EBITDA (1) | 54 | 366 | ||||||
| Net income per share basic and diluted | $ | * | $ | * | ||||
| Weighted-average number of common shares outstanding basic and diluted | 30,631,020 | 30,497,318 | ||||||
| Cash | $ | 646 | $ | 1,064 | ||||
| Total stockholders equity | $ | 8,168 | $ | 7,480 |
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Net loss | $ | (110 | ) | $ | (67 | ) | ||
| Interest expense and loss on extinguishment of debt | 58 | 78 | ||||||
| Taxes | (87 | ) | 3 | |||||
| Depreciation and amortization | 203 | 212 | ||||||
| Deferred rent | (55 | ) | 282 | |||||
| Gain on disposal of equipment | (28 | ) | ||||||
| Stock-based compensation expense | 96 | 61 | ||||||
| Deferred tax benefit | (51 | ) | (175 | ) | ||||
| Adjusted EBITDA | $ | 54 | $ | 366 |
Zynex, Inc. (founded in 1996), operates under three primary business segments; Zynex Medical, Zynex
NeuroDiagnostics and Zynex Monitoring Solutions. Zynex Medical engineers, manufactures, markets
and sells its own design of electrotherapy medical devices for standard digital electrotherapy,
used for pain relief, pain management and stroke and spinal cord injury rehabilitation. Zynex
Medical 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
NeuroDiagnostics, currently in the development stage, has been established to market EMG, EEG,
sleep pattern, auditory and nerve conductivity neurological diagnosis devices through product
development or acquisitions. Zynex Monitoring Solutions, currently in the development stage, has
been established to develop and market medical devices for non-invasive cardiac monitoring.
For additional information please visit: http://www.ir-site.com/zynex/default.asp.
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
Contact: Zynex, Inc. Anthony Scalese, CFO, 303-703-4906
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF SHARES)
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 646 | $ | 602 | ||||
| Accounts receivable, net | 7,939 | 7,309 | ||||||
| Inventory | 3,835 | 3,641 | ||||||
| Prepaid expenses | 128 | 145 | ||||||
| Deferred tax asset | 866 | 794 | ||||||
| Other current assets | 46 | 41 | ||||||
| Total current assets | 13,460 | 12,532 | ||||||
| Property and equipment, net | 3,014 | 2,906 | ||||||
| Deposits | 164 | 174 | ||||||
| Deferred financing fees, net | 104 | 89 | ||||||
| $ | 16,742 | $ | 15,701 | |||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Line of credit | $ | 2,319 | $ | 1,270 | ||||
| Current portion of capital lease obligations | 96 | 93 | ||||||
| Accounts payable | 1,492 | 1,313 | ||||||
| Income taxes payable | 842 | 1,103 | ||||||
| Accrued payroll and payroll taxes | 730 | 572 | ||||||
| Deferred rent | 240 | 221 | ||||||
| Other accrued liabilities | 968 | 980 | ||||||
| Total current liabilities | 6,687 | 5,552 | ||||||
| Capital lease obligations, less current portion | 300 | 327 | ||||||
| Deferred rent | 1,378 | 1,452 | ||||||
| Deferred tax liability | 209 | 188 | ||||||
| Total liabilities | 8,574 | 7,519 | ||||||
| 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, 30,631,946 (March 2011) and 30,604,167 (December 2010) shares issued and outstanding | 31 | 31 | ||||||
| Paid-in capital | 4,798 | 4,702 | ||||||
| Retained earnings | 3,339 | 3,449 | ||||||
| Total stockholders equity | 8,168 | 8,182 | ||||||
| $ | 16,742 | $ | 15,701 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE DATA)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Net revenue: | ||||||||
| Rental | $ | 2,448 | $ | 2,271 | ||||
| Sales | 4,185 | 2,604 | ||||||
| 6,633 | 4,875 | |||||||
| Cost of revenue: | ||||||||
| Rental | 334 | 275 | ||||||
| Sales | 1,110 | 721 | ||||||
| 1,444 | 996 | |||||||
| Gross profit | 5,189 | 3,879 | ||||||
| Selling, general and administrative expense | 5,328 | 3,847 | ||||||
| (Loss) income from operations | (139 | ) | 32 | |||||
| Other income (expense): | ||||||||
| Interest income | 1 | |||||||
| Interest expense and loss on extinguishment of debt | (58 | ) | (79 | ) | ||||
| Other expense | (18 | ) | ||||||
| (58 | ) | (96 | ) | |||||
| Loss before income tax | (197 | ) | (64 | ) | ||||
| Income tax benefit (expense) | 87 | (3 | ) | |||||
| Net loss | $ | (110 | ) | $ | (67 | ) | ||
| Basic and diluted net loss per share | $ | * | $ | * | ||||
| * Less than ($0.01) per share | ||||||||
| Basic and diluted weighted-average number of common shares outstanding | 30,631,020 | 30,497,318 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AMOUNTS IN THOUSANDS)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (110 | ) | $ | (67 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 193 | 201 | ||||||
| Provision for losses on uncollectible accounts receivable | 84 | 36 | ||||||
| Amortization of financing fees | 10 | 11 | ||||||
| Issuance of common stock for services | 18 | |||||||
| Provision for obsolete inventory | 16 | |||||||
| Deferred rent | (55 | ) | 282 | |||||
| Loss on lease termination | 46 | |||||||
| Gain on disposal of equipment | (28 | ) | ||||||
| Employee stock-based compensation expense | 78 | 61 | ||||||
| Deferred tax benefit | (51 | ) | (175 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (714 | ) | (857 | ) | ||||
| Inventory | (185 | ) | (473 | ) | ||||
| Prepaid expenses | 17 | 107 | ||||||
| Other current assets | 5 | (21 | ) | |||||
| Accounts payable | 179 | 6 | ||||||
| Accrued liabilities | 146 | 26 | ||||||
| Income taxes payable | (261 | ) | 178 | |||||
| Net cash used in operating activities | (646 | ) | (651 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds received in lease termination | 108 | |||||||
| Purchases of inventory used for rental and equipment | (310 | ) | (190 | ) | ||||
| Net cash used in investing activities | (310 | ) | (82 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net borrowings from line of credit | 1,049 | 995 | ||||||
| Deferred financing fees | (25 | ) | (55 | ) | ||||
| Payments on capital lease obligations | (24 | ) | (6 | ) | ||||
| Net cash provided by financing activities | 1,000 | 934 | ||||||
| Net increase in cash | 44 | 201 | ||||||
| Cash at beginning of period | 602 | 863 | ||||||
| Cash at end of period | $ | 646 | $ | 1,064 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | 42 | $ | 8 | ||||
| Income taxes paid | $ | 225 | $ | |||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Equipment acquired through capital lease | $ | $ | 227 |