Full Press Release Details
Zynex Reports Third Quarter 2024 Financial Results
ENGLEWOOD, Colo., October 24, 2024 -- 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 its financial and operational results for the third quarter ended September 30, 2024.
Key Third Quarter Highlights and Business Update
Management Commentary
"In the third quarter of 2024 we continued our steady growth in orders as we positioned the company for long-term profitable growth," said Thomas Sandgaard, President and CEO of Zynex. "Positive cash flow remains strong and both revenue and earnings were within guidance for the third quarter.
"Our Pain Management division delivered a 13% improvement in orders year-over-year. We continue to see success evolving our pain management division to achieve our strategic goal of diversifying revenue streams through increased orders in orthopedic products. Revenue per sales rep increased 25% year-over-year to approximately $530,000 in the third quarter of 2024. We are working to expedite the onboarding of new sales reps while maintaining a high standard for productivity.
"Our focus on FDA approvals of next-generation devices and new therapy products delivered FDA clearance of our new TensWave device during the quarter. FDA clearance for the new TensWave device builds on our strong legacy of innovation in pain management, providing effective pain relief through TENS (Transcutaneous Electrical Nerve Stimulation) therapy, which has been clinically proven to reduce chronic and acute pain without opioids. We recognized a gap in the market for a high-quality TENS device that meets the specific criteria for insurance reimbursement, and TensWave is our answer to that demand. It complements our flagship multi-modality device, the NexWave, where Interferential current is the main modality and driver of obtaining prescriptions. This device broadens our product portfolio with the potential to become an essential tool for patients suffering from chronic pain conditions, offering them a safe, effective, and drug-free alternative to pain management.
"Looking ahead, we will continue to diversify our pain management revenue stream with the introduction of new therapy products. Aggressive promotion of products from our salesforce will ensure sustained profitable growth. In 2025, we should return to our normal top-line growth in our pain management division of approximately 20%. Taken together, we believe our strategy is positioning us to become the world's premier provider of holistic, non-invasive approaches to pain management," concluded Sandgaard.
Third Quarter 2024 Financial Results
Net revenue was $50.0 million for the three months ended September 30, 2024, compared to $49.9 million in the prior year quarter.
Gross profit in the quarter ended September 30, 2024, was $39.8 million, or 80% of revenue, as compared to $40.4 million or 81% of revenue, in 2023.
Sales and marketing expense for the three months ended September 30, 2024, decreased 6% to $20.7 million from $22.1 million for the same period in 2023, primarily due to decreased headcount in the sales force.
General and administrative expenses for the three months ended September 30, 2024, were $15.3 million, versus $12.7 million in the prior year period.
Net income for the three months ended September 30, 2024, totaled $2.4 million, or $0.07 per basic and diluted share, as compared to net income of $3.6 million, or $0.10 per basic and diluted share, in the quarter ended September 30, 2023.
Adjusted EBITDA for the three months ended September 30, 2024, was $5.1 million, as compared to $7.3 million in the quarter ended September 30, 2023.
Cash flows from operations for the three months ended September 30, 2024, was $7.1 million and $10.3 million for the nine months ended September 30, 2024.
As of September 30, 2024, the Company had working capital of $58.5 million. Cash and cash equivalents were $37.6 million at September 30, 2024, up 22% from June 30, 2024.
Fourth Quarter and Full Year 2024 Guidance
Fourth quarter 2024 revenue is estimated to be at least $53.6 million. Fourth quarter Diluted EPS is estimated to be at least $0.09.
The Company expects 2024 net revenue of at least $200 million, a 9% increase from 2023. Diluted EPS is expected to be at least $0.20 per share.
Conference Call and Webcast Details
Thursday, October 24, 2024, at 4:15 PM Eastern Time (2:15 PM Mountain Time)
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: Q3 2024 Webcast Link
U.S. & Canada dial-in number: 800-836-8184
International number: 646-357-8785
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, receivables adjustment 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.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended. our results of operations and the plans, strategies and objectives for future operations; the timing and scope of any potential stock repurchase; and other similar statements.
Words such as "anticipate," "believe," "continue," "could," "designed," "endeavor," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "seek," "should," "target," "preliminary," "will," "would" and similar expressions are intended to identify forward-looking statements. The express or implied forward-looking statements included in this press release are only predictions and are subject to a number of risks, uncertainties and assumptions. 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, 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 products 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; market conditions; the timing, scope and possibility that the repurchase program may be suspended or discontinued; economic factors, such as interest rate fluctuations; and other risks described in our filings with the Securities and Exchange Commission.
These and other risks are 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, 2023 as well as our quarterly reports on Form 10-Q and current reports on Form 8-K. Any forward-looking statements contained in this press release represent Zynex's views only as of today and should not be relied upon as representing its views as of any subsequent date. Zynex explicitly disclaims any obligation to update any forward-looking statements, except to the extent required by law.
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.
Investor Relations Contact:
Quinn Callanan, CFA or Brian Prenoveau, CFA
MZ Group - MZ North America
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
| September 30, | December 31, | |||||
| 2024 | 2023 | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 37,630 | $ | 44,579 | ||
| Accounts receivable, net | 21,623 | 26,838 | ||||
| Inventory, net | 15,708 | 13,106 | ||||
| Prepaid expenses and other | 3,389 | 3,332 | ||||
| Total current assets | 78,350 | 87,855 | ||||
| Property and equipment, net | 3,169 | 3,114 | ||||
| Operating lease asset | 10,510 | 12,515 | ||||
| Finance lease asset | 1,215 | 587 | ||||
| Deposits | 409 | 409 | ||||
| Intangible assets, net of accumulated amortization | 7,476 | 8,158 | ||||
| Goodwill | 20,401 | 20,401 | ||||
| Deferred income taxes | 4,529 | 3,865 | ||||
| Total assets | $ | 126,059 | $ | 136,904 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued expenses | $ | 9,282 | $ | 8,433 | ||
| Operating lease liability | 3,979 | 3,729 | ||||
| Finance lease liability | 284 | 196 | ||||
| Income taxes payable | 390 | 633 | ||||
| Accrued payroll and related taxes | 5,933 | 5,541 | ||||
| Total current liabilities | 19,868 | 18,532 | ||||
| Convertible senior notes, less issuance costs | 58,320 | 57,605 | ||||
| Operating lease liability | 11,175 | 14,181 | ||||
| Finance lease liability | 923 | 457 | ||||
| Total liabilities | 90,286 | 90,775 | ||||
| Stockholders' equity | ||||||
| Common stock | 32 | 33 | ||||
| Additional paid-in capital | 92,538 | 90,878 | ||||
| Treasury stock | (87,186) | (71,562) | ||||
| Retained earnings | 30,389 | 26,780 | ||||
| Total stockholders' equity | 35,773 | 46,129 | ||||
| Total liabilities and stockholders' equity | $ | 126,059 | $ | 136,904 |
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, | |||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| NET REVENUE | ||||||||||||
| Devices | $ | 14,858 | $ | 16,855 | $ | 44,803 | $ | 42,542 | ||||
| Supplies | 35,108 | 33,060 | 101,577 | 94,495 | ||||||||
| Total net revenue | 49,966 | 49,915 | 146,380 | 137,037 | ||||||||
| COSTS OF REVENUE AND OPERATING EXPENSES | ||||||||||||
| Costs of revenue - devices and supplies | 10,177 | 9,553 | 29,446 | 28,094 | ||||||||
| Sales and marketing | 20,713 | 22,146 | 67,319 | 64,982 | ||||||||
| General and administrative | 15,274 | 12,731 | 43,062 | 35,479 | ||||||||
| Total costs of revenue and operating expenses | 46,164 | 44,430 | 139,827 | 128,555 | ||||||||
| Income from operations | 3,802 | 5,485 | 6,553 | 8,482 | ||||||||
| Other income (expense) | ||||||||||||
| Gain on disposal of assets | - | 37 | 19 | 39 | ||||||||
| Change in fair value of contingent consideration | - | (245) | - | 2,855 | ||||||||
| Interest expense, net | (625) | (327) | (1,767) | (728) | ||||||||
| Other income (expense), net | (625) | (535) | (1,748) | 2,166 | ||||||||
| Income from operations before income taxes | 3,177 | 4,950 | 4,805 | 10,648 | ||||||||
| Income tax expense | 795 | 1,356 | 1,196 | 2,131 | ||||||||
| Net income | $ | 2,382 | $ | 3,594 | $ | 3,609 | $ | 8,517 | ||||
| Net income per share: | ||||||||||||
| Basic | $ | 0.07 | $ | 0.10 | $ | 0.11 | $ | 0.24 | ||||
| Diluted | $ | 0.07 | $ | 0.10 | $ | 0.11 | $ | 0.23 | ||||
| Weighted average basic shares outstanding | 31,775 | 35,531 | 31,960 | 36,216 | ||||||||
| Weighted average diluted shares outstanding | 32,088 | 36,103 | 32,340 | 36,866 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
| For the Nine Months Ended September 30, | ||||||
| 2024 | 2023 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 3,609 | $ | 8,517 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation | 1,967 | 1,984 | ||||
| Amortization | 1,402 | 1,078 | ||||
| Non-cash reserve charges | - | (91) | ||||
| Stock-based compensation | 2,345 | 1,621 | ||||
| Non-cash lease expense | (750) | 568 | ||||
| Benefit for deferred income taxes | (664) | (1,473) | ||||
| Change in fair value of contingent consideration | - | (2,855) | ||||
| Gain on disposal of assets | (19) | (39) | ||||
| Change in operating assets and liabilities: | ||||||
| Short-term investments | - | (114) | ||||
| Accounts receivable | 5,215 | 1,775 | ||||
| Prepaid and other assets | 106 | (826) | ||||
| Accounts payable and other accrued expenses | 1,161 | 3,312 | ||||
| Inventory | (4,096) | (2,071) | ||||
| Deposits | - | 182 | ||||
| Net cash provided by operating activities | 10,276 | 11,568 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchase of property and equipment | (362) | (630) | ||||
| Purchase of short-term investments | - | (9,810) | ||||
| Proceeds on sale of fixed assets | - | 50 | ||||
| Net cash used in investing activities | (362) | (10,390) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Payments on finance lease obligations | (203) | (95) | ||||
| Cash dividends paid | (9) | (1) | ||||
| Purchase of treasury stock | (15,625) | (24,402) | ||||
| Excise tax payments on net treasury stock purchases | (473) | - | ||||
| Proceeds from issuance of convertible senior notes, net of issuance costs | - | 57,018 | ||||
| Proceeds from the issuance of common stock on stock-based awards | 13 | 33 | ||||
| Principal payments on long-term debt | - | (10,667) | ||||
| Taxes withheld and paid on equity awards | (566) | (691) | ||||
| Net cash (used in) provided by financing activities | (16,863) | 21,195 | ||||
| Net (decrease) increase in cash | (6,949) | 22,373 | ||||
| Cash and cash equivalents at beginning of period | 44,579 | 20,144 | ||||
| Cash and cash equivalents at end of period | $ | 37,630 | $ | 42,517 |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(AMOUNTS IN THOUSANDS)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||
| Adjusted EBITDA: | |||||||||||||
| Net income | $ | 2,382 | $ | 3,594 | $ | 3,609 | $ | 8,517 | |||||
| Depreciation and Amortization* | 478 | 401 | 1,369 | 1,237 | |||||||||
| Stock-based compensation expense | 770 | 654 | 2,345 | 1,620 | |||||||||
| Interest expense and other, net | 625 | 290 | 1,748 | 689 | |||||||||
| Change in fair value of contingent consideration | - | 245 | - | (2,855) | |||||||||
| Non-cash lease expense** | - | 751 | - | 978 | |||||||||
| Income tax expense | 795 | 1,356 | 1,196 | 2,131 | |||||||||
| Adjusted EBITDA | $ | 5,050 | $ | 7,291 | $ | 10,267 | $ | 12,317 | |||||
| % of Net Revenue | 10 | % | 15 | % | 7 | % | 9 | % |
* Depreciation does not include amounts related to units on lease to third parties which are depreciated and included in cost of goods sold.
** Amount expensed in excess of cash payments due to abated rent.