Full Press Release Details
Zynex Announces Third Quarter 2012 Financial Results
LONE TREE, Colo. November 7, 2012 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 third quarter 2012 unaudited financial results.
The Company s total net revenue increased 7% to $10,102,000 for the three months ended September 30, 2012 compared to $9,427,000 for the three months ended September 30, 2011. Year to date
net revenue of $29,072,000 increased 19% over the prior year to date net revenue of $24,455,000. The Company s revenue increase for the third quarter and year to date 2012 was primarily driven by its Zynex Medical subsidiary, in which demand
continues for its products, and a small amount of revenue was derived from its Zynex NeuroDiagnostics subsidiary.
The Company reported a
gross profit of $7,886,000, or 78% of net revenue, for the third quarter of 2012, and $23,257,000, or 80% of net revenue, for the first nine months of 2012, as compared to a gross profit of $7,492,000, or 79% of net revenue, for the third quarter of
2011 and $19,349,000, or 79% of net revenue, for the first nine months of 2011.
The Company reported Selling, General and Administrative
(SG&A) expenses of $7,174,000, or 71% of net revenue, for the three months ended September 30, 2012, and $21,127,000, or 73% of net revenue, for the nine months ended September 30, 2012, as compared to $6,389,000, or 68% of net
revenue, for the three months ended September 30, 2011 and $17,486,000, or 72% of net revenue for the nine months ended September 30, 2011. Increases in the Company s SG&A expenses during the first three and nine months of 2012
were primarily attributable to sales and marketing, specifically for sales commissions (based on the 7% and 19% increase in net revenue), expansion of the Company s Zynex Medical direct field sales force and investments made in the
Company s Zynex Neurodiagnostics and Zynex Monitoring Solutions subsidiaries.
The Company generated a third quarter 2012 income from
operations of $712,000, income before income taxes of $587,000 and net income of $358,000, or $0.01 per share, versus a third quarter 2011 income from operations of $1,103,000, income before income taxes of $1,016,000 and net income of $591,000, or
$0.02 per share. The Company generated a 2012 year to date income from operations of $2,130,000, income before income taxes of $1,824,000 and net income of $1,151,000, or $0.04 per share, versus a 2011 year to date income from operations of
$1,863,000, income before income taxes of $1,641,000 and net income of $965,000, or $0.03 per share.
Thomas Sandgaard, CEO stated: We
were pleased with our third quarter and year to date 2012 financial results. Our net revenue increased 7% and 19% during the three and nine month periods of 2012, respectively, as compared to the prior year. Our Zynex Medical subsidiary still
represents the majority of our revenue; however, we are encouraged to see a growing contribution from our Zynex NeuroDiagnostics subsidiary. We continue to invest in our Zynex Medical and Zynex NeuroDiagnostics sales teams, through the addition of
industry-experienced sales representatives, which allows us to serve new geographic markets and provide greater awareness of our product solutions to end users and physicians. Our Zynex Monitoring Solutions subsidiary is progressing with clinical
trials for our proprietary blood volume monitoring device expected to run through the remainder of 2012.
The Company has refined its prior guidance by narrowing anticipated annual net revenue guidance to between $39 million and $40 million and narrowing the
range of its net income per diluted share guidance to between $0.06 and $0.07 for 2012.
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 third quarter 2012
financial 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=90447
Conference Call Information- 888-539-3678, pass-code 1580294
Highlights from the third quarter ended September 30, 2012 consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||
| Net revenue | $ | 10,102 | $ | 9,427 | $ | 29,072 | $ | 24,455 | ||||||||
| Gross profit | 7,886 | 7,492 | 23,257 | 19,349 | ||||||||||||
| Income from operations | 712 | 1,103 | 2,130 | 1,863 | ||||||||||||
| Income before income tax | 587 | 1,016 | 1,824 | 1,641 | ||||||||||||
| Net income | 358 | 591 | 1,151 | 965 | ||||||||||||
| Adjusted EBITDA (1) | 934 | 1,345 | 2,761 | 2,598 | ||||||||||||
| Net income per share diluted | $ | 0.01 | $ | 0.02 | $ | 0.04 | $ | 0.03 | ||||||||
| Weighted-average number of common shares outstanding diluted | 31,316,836 | 31,013,012 | 31,202,842 | 30,977,933 |
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||
| Net income | $ | 358 | $ | 591 | $ | 1,151 | $ | 965 | ||||||||
| Interest expense | 119 | 87 | 293 | 224 | ||||||||||||
| Income taxes | 229 | 425 | 673 | 676 | ||||||||||||
| Depreciation and amortization | 242 | 219 | 716 | 631 | ||||||||||||
| Deferred rent | (74 | ) | (55 | ) | (222 | ) | (166 | ) | ||||||||
| Stock-based expense | 60 | 78 | 150 | 268 | ||||||||||||
| Adjusted EBITDA | $ | 934 | $ | 1,345 | $ | 2,761 | $ | 2,598 |
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, 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
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, 2011.
Contact: Zynex, Inc. Anthony Scalese, CFO, 303-703-4906
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 843 | $ | 789 | ||||
| Accounts receivable, net | 12,252 | 10,984 | ||||||
| Inventory | 6,731 | 4,556 | ||||||
| Prepaid expenses | 210 | 293 | ||||||
| Deferred tax assets | 1,489 | 1,384 | ||||||
| Other current assets | 6 | 42 | ||||||
| Total current assets | 21,531 | 18,048 | ||||||
| Property and equipment, net | 3,914 | 3,422 | ||||||
| Deposits | 169 | 170 | ||||||
| Deferred financing fees, net | 110 | 145 | ||||||
| Intangible assets, net | 218 | |||||||
| Goodwill | 251 | |||||||
| Total assets | $ | 26,193 | $ | 21,785 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Line of credit | $ | 6,077 | $ | 3,289 | ||||
| Current portion of notes payable and other obligations | 143 | 131 | ||||||
| Accounts payable | 2,453 | 2,189 | ||||||
| Income taxes payable | 1,308 | 1,567 | ||||||
| Accrued payroll and payroll taxes | 1,301 | 702 | ||||||
| Deferred rent | 352 | 296 | ||||||
| Current portion of contingent consideration | 21 | |||||||
| Other accrued liabilities | 1,197 | 1,574 | ||||||
| Total current liabilities | 12,852 | 9,748 | ||||||
| Notes payable and other obligations, less current portion | 149 | 258 | ||||||
| Deferred rent | 877 | 1,156 | ||||||
| Deferred tax liabilities | 538 | 483 | ||||||
| Warranty liability | 20 | |||||||
| Contingent consideration, less current portion | 128 | |||||||
| Total liabilities | $ | 14,564 | $ | 11,645 | ||||
| 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, 31,138,734 and 30,816,631 shares issued and outstanding at September 30, 2012, and December 31, 2011, respectively. | 31 | 31 | ||||||
| Paid-in capital | 5,434 | 5,096 | ||||||
| Retained earnings | 6,164 | 5,013 | ||||||
| Total stockholders equity | 11,629 | 10,140 | ||||||
| Total liabilities and stockholders equity | $ | 26,193 | $ | 21,785 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, AMOUNTS IN
THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net revenue: | ||||||||||||||||
| Rental | $ | 2,281 | $ | 2,482 | $ | 6,780 | $ | 7,377 | ||||||||
| Sales | 7,821 | 6,945 | 22,292 | 17,078 | ||||||||||||
| 10,102 | 9,427 | 29,072 | 24,455 | |||||||||||||
| Cost of revenue: | ||||||||||||||||
| Rental | 279 | 465 | 810 | 1,191 | ||||||||||||
| Sales | 1,937 | 1,470 | 5,005 | 3,915 | ||||||||||||
| 2,216 | 1,935 | 5,815 | 5,106 | |||||||||||||
| Gross profit | 7,886 | 7,492 | 23,257 | 19,349 | ||||||||||||
| Selling, general and administrative expense | 7,174 | 6,389 | 21,127 | 17,486 | ||||||||||||
| Income from operations | 712 | 1,103 | 2,130 | 1,863 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 1 | |||||||||||||||
| Interest expense | (119 | ) | (87 | ) | (293 | ) | (225 | ) | ||||||||
| Other income (expense) | (6 | ) | (13 | ) | 2 | |||||||||||
| (125 | ) | (87 | ) | (306 | ) | (222 | ) | |||||||||
| Income before income tax | 587 | 1,016 | 1,824 | 1,641 | ||||||||||||
| Income tax expense | (229 | ) | (425 | ) | (673 | ) | (676 | ) | ||||||||
| Net income | $ | 358 | $ | 591 | $ | 1,151 | $ | 965 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.01 | $ | 0.02 | $ | 0.04 | $ | 0.03 | ||||||||
| Diluted | $ | 0.01 | $ | 0.02 | $ | 0.04 | $ | 0.03 | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 31,130,908 | 30,794,268 | 31,034,972 | 30,727,720 | ||||||||||||
| Diluted | 31,316,836 | 31,013,012 | 31,202,842 | 30,977,933 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN
| Nine months ended September 30, | ||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 1,151 | $ | 965 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation expense | 647 | 594 | ||||||
| Accretion of contingent consideration | 14 | |||||||
| Provision for losses on uncollectible accounts receivable | 325 | 1,190 | ||||||
| Amortization of intangible assets | 33 | |||||||
| Amortization of financing fees | 37 | 36 | ||||||
| Issuance of common stock for services | 20 | 61 | ||||||
| Provision for obsolete inventory | 228 | 134 | ||||||
| Deferred rent | (222 | ) | (166 | ) | ||||
| Employee stock-based compensation expense | 150 | 207 | ||||||
| Deferred tax benefit | (50 | ) | (216 | ) | ||||
| Changes in operating assets and liabilities, net of business acquisition (Note 3): | ||||||||
| Accounts receivable | (1,593 | ) | (4,637 | ) | ||||
| Inventory | (2,291 | ) | (791 | ) | ||||
| Prepaid expenses | 83 | (1 | ) | |||||
| Deposit and other current assets | 41 | (47 | ) | |||||
| Accounts payable | 264 | 848 | ||||||
| Accrued liabilities | 222 | 906 | ||||||
| Income taxes payable | (259 | ) | 142 | |||||
| Net cash used in operating activities | (1,200 | ) | (775 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of inventory used for rental and equipment | (1,182 | ) | (1,123 | ) | ||||
| Cash paid for domain name | (18 | ) | ||||||
| Cash paid for acquisition | (245 | ) | ||||||
| Net cash used in investing activities | (1,445 | ) | (1,123 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net borrowings from line of credit | 2,788 | 2,110 | ||||||
| Issuance of common stock | 10 | 49 | ||||||
| Deferred financing fees | (2 | ) | (25 | ) | ||||
| Payments on capital lease obligations | (97 | ) | (77 | ) | ||||
| Net cash provided by financing activities | 2,699 | 2,057 | ||||||
| Net increase in cash | 54 | 159 | ||||||
| Cash at beginning of period | 789 | 602 | ||||||
| Cash at end of period | $ | 843 | $ | 761 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | 259 | $ | 175 | ||||
| Income taxes paid | $ | 1,016 | $ | 750 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Equipment acquired through capital lease | $ | $ | 77 | |||||
| Common stock issuances for business acquisition | $ | 158 | $ | |||||
| Increase in contingent consideration for business acquisition | $ | 135 | $ |