Full Press Release Details
Zynex Announces First Quarter 2013 Financial Results
LONE TREE, Colo. May 8, 2013 Zynex, Inc. (OTCQB: ZYXI), a provider and developer of non-invasive medical devices
for electrotherapy and stroke rehabilitation, neurological diagnosis and cardiac monitoring, announces its first quarter 2013 financial results.
The Company s net revenue decreased 14% to $7,668,000 for the three months ended March 31, 2013 from $8,944,000 for the three months ended March 31, 2012. The Company s first quarter
revenue was driven primarily by its Zynex Medical, electrotherapy subsidiary.
The Company reported a gross profit of $5,477,000, or 71% of
net revenue, for the first three months of 2013, as compared to a gross profit of $7,131,000, or 80% of net revenue, for the first three months of 2012. The decrease in the Company s first quarter 2013 gross profit percentage, as compared to
the comparable period in 2012, was primarily a result of the lower sales volume for the period, as the Company had less net revenue to cover fixed manufacturing costs.
The Company reported Selling, General and Administrative (SG&A) expenses of $5,833,000, or 76% of net revenue for the first quarter of 2013, as compared to $6,645,000, or 74% of net revenue for the
first quarter of 2012. Decreases in the Company s SG&A expenses during the first quarter of 2013 as compared to the comparable period in 2012, were primarily attributable to reductions in sales and marketing expenses (related to lower sales
commissions based on the decrease in net revenue and headcount reductions). The Company reduced SG&A expenses by $1,199,000, or 17% during first quarter of 2013, as compared to the fourth quarter of 2012, as a result of an ongoing effort to
reduce expenses. The Company generated a first quarter 2013 loss from operations of $356,000, loss before income taxes of $492,000 and net loss attributable to Zynex, Inc. of $304,000, or $0.01 net loss per share, versus a first quarter 2012 income
from operations of $486,000, income before income taxes of $393,000 and net income of $320,000, or $0.01 net income per share.
Sandgaard, CEO stated: During the first quarter of 2013, we encountered industry challenges, specifically related to health care reform and business seasonality that affected demand in our core business, Zynex Medical. We believe uncertainty
exists at the medical practitioner level related to changes in health care, which have delayed orders for our Zynex Medical business. In an effort to minimize the impact of these challenges, we made modifications to our direct sales force within our
Zynex Medical business, including reducing the number of non-performing sales employees, modifying sales compensation packages and increasing the level of sales force training as it relates to health care reform. These efforts helped to reduce our
overall selling, general and administrative costs for the first quarter of 2013 (resulting in a $1,199,000 expense savings over the fourth quarter of 2012), but also impacted the amount of orders that were received, contributing to a decrease in net
revenue for the period. The first quarter of every year also presents a high degree of seasonality due to insurance resets of patient deductibles, which tends to slow reimbursement and orders for our Zynex Medical business. We believe
the impact from these changes is short-term and that our overall position in the electrotherapy market remains strong.
Sandgaard, CEO added: We continue investing in our other divisions, which are capital goods and service based where revenues are much less dependent on insurance reimbursement. In Zynex NeuroDiagnostics, we began aggressively expanding our
sales force and recently entered into a sales and marketing agreement with NeuroVirtual, which allows Zynex NeuroDiagnostics to distribute electroencephalography (EEG) and sleep diagnostic products in the US. In the Zynex Monitoring division, our
blood volume monitoring device is making good progress in clinical trials, and pending regulatory approval, a late 2013 release is possible. We are also making investments in the Zynex Billing and Consulting division where we expect incremental
service based revenue going forward. Thus, we believe our investments in these new divisions serve to diversify our product mix and further reduce our dependency on insurance reimbursement, with the end goal of delivering steady revenue
and profit growth for the years ahead.
The Company anticipates net revenues of between $38 million and $42 million for 2013 and net income per diluted share of between $0.04 and $0.08 for 2013.
Conference Call and Webcast Information:
Zynex, Inc. will host a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today to discuss its first quarter 2013 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=93823
Conference Call Information- 888-427-9411, pass-code 7209512
Highlights from the quarter ended March 31, 2013 consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)
| Quarter Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Net revenue | $ | 7,668 | $ | 8,944 | ||||
| Gross profit | 5,477 | 7,131 | ||||||
| (Loss) income from operations | (356 | ) | 486 | |||||
| (Loss) income before income taxes | (492 | ) | 393 | |||||
| Net (loss) income | (310 | ) | 320 | |||||
| Adjusted EBITDA (1) | (168 | ) | 682 | |||||
| Net (loss) income per share diluted | $ | (0.01 | ) | $ | 0.01 | |||
| Weighted average number of common shares outstanding diluted | 31,148,234 | 31,037,417 |
| Quarter Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Net (loss) income attributable to Zynex, Inc. | $ | (304 | ) | $ | 320 | |||
| Interest expense | 130 | 93 | ||||||
| Income tax (benefit) expense | (182 | ) | 73 | |||||
| Depreciation and amortization | 241 | 225 | ||||||
| Change in the value of contingent consideration | 4 | |||||||
| Deferred rent | (93 | ) | (75 | ) | ||||
| Stock-based compensation expense | 36 | 46 | ||||||
| Adjusted EBITDA | $ | (168 | ) | $ | 682 |
Zynex (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 electrotherapy, used for pain management and rehabilitation. Zynex Medical s product lines are fully developed, FDA-cleared and commercially sold world-wide. Zynex NeuroDiagnostics, sells the
company s proprietary NeuroMove device designed to help stroke and spinal cord injury patients and is currently expanding into markets for EMG, EEG, sleep pattern, auditory and nerve conductivity neurological diagnosis devices through product
development and acquisitions. Zynex Monitoring Solutions, currently in the development stage, was 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
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, 2012.
Contact: Zynex, Inc. Anthony Scalese, CFO, 303-703-4906
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
| March 31, 2013 | December 31, 2012 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 681 | $ | 823 | ||||
| Accounts receivable, net | 11,234 | 12,224 | ||||||
| Inventory | 6,324 | 6,160 | ||||||
| Prepaid expenses | 256 | 243 | ||||||
| Deferred tax assets | 1,855 | 1,855 | ||||||
| Other current assets | 228 | 57 | ||||||
| Total current assets | 20,578 | 21,362 | ||||||
| Property and equipment, net | 3,519 | 3,851 | ||||||
| Deposits | 170 | 171 | ||||||
| Deferred financing fees, net | 85 | 98 | ||||||
| Intangible assets, net | 188 | 203 | ||||||
| Goodwill | 251 | 251 | ||||||
| Total assets | $ | 24,791 | $ | 25,936 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Line of credit | $ | 6,602 | $ | 5,906 | ||||
| Current portion of notes payable and other obligations | 151 | 144 | ||||||
| Accounts payable | 1,675 | 2,057 | ||||||
| Income taxes payable | 1,003 | 1,430 | ||||||
| Accrued payroll and payroll taxes | 934 | 899 | ||||||
| Deferred rent | 390 | 371 | ||||||
| Current portion of contingent consideration | 21 | 21 | ||||||
| Other accrued liabilities | 524 | 1,265 | ||||||
| Total current liabilities | 11,300 | 12,093 | ||||||
| Notes payable and other obligations, less current portion | 144 | 114 | ||||||
| Deferred rent | 673 | 785 | ||||||
| Deferred tax liabilities | 786 | 786 | ||||||
| Warranty liability | 20 | 20 | ||||||
| Contingent consideration, less current portion | 87 | 83 | ||||||
| Total liabilities | 13,010 | 13,881 | ||||||
| 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, 31,148,234 shares issued and outstanding at March 31, 2013, and December 31, 2012. | 31 | 31 | ||||||
| Paid-in capital | 5,489 | 5,453 | ||||||
| Retained earnings | 6,262 | 6,566 | ||||||
| Total Zynex, Inc. stockholders equity | 11,782 | 12,050 | ||||||
| Noncontrolling interest | (1 | ) | 5 | |||||
| Total stockholders equity | 11,781 | 12,055 | ||||||
| Total liabilities and stockholders equity | $ | 24,791 | $ | 25,936 |
CONSOLIDATED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE
| Three months ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Net revenue: | ||||||||
| Rental | $ | 1,679 | $ | 2,062 | ||||
| Sales | 5,989 | 6,882 | ||||||
| 7,668 | 8,944 | |||||||
| Cost of revenue: | ||||||||
| Rental | 301 | 258 | ||||||
| Sales | 1,890 | 1,555 | ||||||
| 2,191 | 1,813 | |||||||
| Gross profit | 5,477 | 7,131 | ||||||
| Selling, general and administrative expense | 5,833 | 6,645 | ||||||
| (Loss) income from operations | (356 | ) | 486 | |||||
| Other expense: | ||||||||
| Interest expense | (130 | ) | (93 | ) | ||||
| Other expense | (6 | ) | ||||||
| (136 | ) | (93 | ) | |||||
| (Loss) income before income tax | (492 | ) | 393 | |||||
| Income tax benefit (expense) | 182 | (73 | ) | |||||
| Net (loss) income | (310 | ) | 320 | |||||
| Plus: Net loss noncontrolling interest | 6 | |||||||
| Net (loss) income attributable to Zynex, Inc. | $ | (304 | ) | $ | 320 | |||
| Net (loss) income per share: | ||||||||
| Basic | $ | (0.01 | ) | $ | 0.01 | |||
| Diluted | $ | (0.01 | ) | $ | 0.01 | |||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 31,148,234 | 30,881,770 | ||||||
| Diluted | 31,148,234 | 31,037,417 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
| Three months ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | (310 | ) | $ | 320 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation expense | 213 | 213 | ||||||
| Change in the value of contingent consideration | 4 | |||||||
| Provision for losses on uncollectible accounts receivable | 136 | 63 | ||||||
| Amortization of intangible assets | 15 | |||||||
| Amortization of financing fees | 13 | 12 | ||||||
| Provision for obsolete inventory | 17 | |||||||
| Deferred rent | (93 | ) | (75 | ) | ||||
| Employee stock-based compensation expense | 37 | 46 | ||||||
| Deferred tax expense | 19 | |||||||
| Changes in operating assets and liabilities, net of business acquisition (in 2012): | ||||||||
| Accounts receivable | 854 | (721 | ) | |||||
| Inventory | (181 | ) | (995 | ) | ||||
| Prepaid expenses | (13 | ) | (11 | ) | ||||
| Deposit and other current assets | (170 | ) | 24 | |||||
| Accounts payable | (382 | ) | 335 | |||||
| Accrued liabilities | (706 | ) | (47 | ) | ||||
| Income taxes payable | (427 | ) | 47 | |||||
| Net cash used in operating activities | (993 | ) | (770 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of equipment | (55 | ) | (76 | ) | ||||
| Change in inventory used for rental | 247 | (119 | ) | |||||
| Cash paid for acquisition | (145 | ) | ||||||
| Net cash provided by (used in) investing activities | 192 | (340 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Net borrowings from line of credit | 696 | 1,096 | ||||||
| Deferred financing fees | (2 | ) | ||||||
| Payments on notes payable and capital lease obligations | (37 | ) | (31 | ) | ||||
| Net cash provided by financing activities | 659 | 1,063 | ||||||
| Net decrease in cash | (142 | ) | (47 | ) | ||||
| Cash at beginning of period | 823 | 789 | ||||||
| Cash at end of period | $ | 681 | $ | 742 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | 113 | $ | 62 | ||||
| Income taxes paid (including interest and penalties) | $ | 427 | $ | 65 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Common stock issuances for business acquisition | $ | $ | 158 | |||||
| Increase in accounts payable for business acquisition | $ | $ | 100 | |||||
| Increase in contingent consideration for business acquisition | $ | $ | 135 | |||||
| Equipment acquired through capital lease | $ | 72 | $ |