Zynex Reports First Quarter 2024 Financial Results

Rhea-AI Summary

Zynex, Inc. (NASDAQ: ZYXI) reported Q1 2024 revenue of $46.5 million, a 10% increase. Despite revenue underperformance due to delayed payments from insurers post a cyber incident, Zynex remains confident in its full-year revenue forecast. The company saw a net income of $10,000 and repurchased $13.4 million of common stock. New FDA approvals, product launches, and revenue diversification through therapy products show promising growth prospects for Zynex in 2024.

Positive

• Q1 2024 revenue increased by 10% year-over-year to $46.5 million.

• Q1 2024 orders saw a 23% increase, the highest in Company history for the eighth consecutive quarter.

• Introduced new FDA-approved therapy products, expanding revenue streams.

• Repurchased $13.4 million of common stock in Q1 2024 and $78.5 million over the last twenty-four months.

• Net revenue expected to increase by approximately 23% in 2024 compared to 2023.

Negative

• Q1 2024 revenue underperformed guidance due to delayed payments from insurers post a cyber incident.

• Net income for Q1 2024 was only $10,000, a decrease from $1.6 million in the prior year.

• Adjusted EBITDA for Q1 2024 was $1.7 million compared to $1.0 million in Q1 2023.

• General and administrative expenses increased to $13.3 million in Q1 2024 from $11.4 million in the prior year period.

• Cash flow from operations for Q1 2024 was $2.1 million, showing a slight increase from the prior year.

Insights

Financial Analyst

Zynex's reported quarterly revenue of $46.5 million represents a 10% increase from the previous year, a modest growth that signals the company's expansion despite underperforming their own revenue guidance by $1 million. The company's net income of $10,000 for the quarter, translating to a diluted EPS of $0.00, is notably lower than the $1.6 million, or $0.04 per basic and diluted share reported in the prior year's quarter. This warrants attention as it suggests tightened profit margins or increased expenses, which were indeed seen in higher sales, marketing and general administrative costs.

The increase in orders by 23% is a strong indicator of demand for Zynex's products and may lead to future revenue growth. Their cash and cash equivalents position at $32.9 million and an operational cash flow of $2.1 million suggest a stable financial standing. Additionally, the stock repurchase of $13.4 million indicates confidence by management in the intrinsic value of the company, which can be seen as a positive signal to investors.

Looking forward, the company's guidance for a 23% increase in net revenue and an 85% increase in diluted EPS for the full year 2024 shows optimism in their operational strategy, despite the recent cyber incident affecting payment processes. This proactive outlook, combined with recent FDA approvals, could be pivotal in maintaining investor confidence.

Medical Technology Market Analyst

The FDA's clearance for Zynex's next-generation NMES device and the launch of new therapy products such as Zynex Pro Hybrid LSO and Zynex DynaComp Cold Compression could play a important role in diversifying and strengthening the company's market position. By entering the cold compression and bracing markets, Zynex is directly competing with established industry players, revealing an aggressive growth strategy that could leverage its sales force productively.

With a focus on launching innovative products and expanding their footprint in the medical technology market, the future revenue stream diversification is strategic. Particularly important is the pipeline of pre-revenue hospital monitoring products, which includes advanced devices like a laser-based pulse oximeter and a non-invasive monitor for early sepsis detection. The progress towards FDA 510(k) submission for the NiCO device is a key milestone to watch as it will determine the potential for revenue from these new products.

The impact of these developments on the stock value will largely depend on the successful deployment and market adoption of these new products. Investors would do well to monitor the progress of the FDA approval process and market reception of the newly launched devices, as these could be significant drivers of future growth.

Q1 2024 Revenue Increased 10% to $46.5 Million

ENGLEWOOD, Colo., April 30, 2024 /PRNewswire/ -- 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 first quarter ended March 31, 2024.

Key First Quarter Highlights and Business Update

• Q1 2024 revenue increased 10% year-over-year to $46.5 million; Q1 2024 revenue underperformed guidance of $47.5 million due to payments from a number of insurers being delayed due to a cyber incident which impacted industry-wide payers. Zynex expects the revenue for the full year to remain as originally forecasted and recognize delayed revenue over the remainder of the year.
• Q1 2024 net income of $10,000; Diluted EPS $0.00.
• Q1 2024 orders increased 23% year-over-year, the highest number of orders in Company history for the eighth consecutive quarter.
• Q1 2024 cash flow from operations of $2.1 million, a 7% year-over-year increase.
• Repurchased $13.4 million of the Company's common stock in Q1 2024.

Management Commentary

"During the first quarter of 2024, we continued our focus on order growth, FDA approvals of next-generation devices, and new therapy products," said Thomas Sandgaard, President and CEO of Zynex. "Approximately $1.0 million in revenue for the quarter was impacted by payments from a large number of insurers being delayed due to a cyber incident which impacted payers industry-wide. We expect to recognize that revenue over the remainder of the year and reaffirm 2024 guidance of at least $227 million. In the first quarter, increasing sales and profitable growth for our pain management division delivered a 23% improvement in orders year-over-year. We continued our share repurchase plan and repurchased $13.4 million of our common stock in Q1 2024 and $78.5 million over the last twenty-four months.

"During the quarter, the pain management division received clearance from to the U.S. Food and Drug Administration ("FDA") for the next-generation M-Wave Neuromuscular Electrical Stimulation ("NMES") device. NMES treatments have several uses, including aiding recovery from surgery, managing chronic conditions, and enhancing exercise performance in healthy individuals. The M-Wave introduces the next evolution in NMES devices, allowing for more customizable treatments within clinical and home settings.

"We continued to diversify our pain management revenue stream with the introduction of two new therapy products: the Zynex Pro Hybrid LSO, a versatile 3-in-1 spinal orthosis, and the Zynex DynaComp Cold Compression, which combines cold therapy and compression to accelerate recovery. These products allow our salespeople to compete effectively against other industry leaders in the cold compression and bracing markets and complement our other products in low-back support, bracing, cervical traction, cold/hot therapy equipment, and compression.

"We have four pre-revenue hospital monitoring products in the pipeline, including a laser-based pulse oximeter, NiCO™; a monitor for noninvasive detection of blood and fluid loss; a monitor for early detection of sepsis; and a noninvasive, laser-based monitor of total hemoglobin levels, HemeOx™. For NiCO, the FDA 510(k) submission is now tracking to the second half of 2024.

"We expect 2024 net revenue to increase approximately 23% compared to 2023. Innovative new products and aggressive promotion from an expanding direct salesforce are diversifying revenue streams and ensuring sustained growth. We look forward to additional updates in the months to come as we work to build long-term value for our shareholders," concluded Sandgaard.

First Quarter 2024 Financial Results

Net revenue was $46.5 million for the three months ended March 31, 2024, compared to $42.2 million in the prior year quarter. Net revenue was affected by payments from a number of insurers being delayed due to a cyber incident which impacted healthcare payers industry-wide.

Gross profit in the quarter ended March 31, 2024, was $37.2 million, or 80% of revenue, as compared to $32.9 million or 78% of revenue, in 2023.

Sales and marketing expenses were $23.4 million for the three months ended March 31, 2024, compared to $21.2 million in the prior year period.

General and administrative expenses for the three months ended March 31, 2024, were $13.3 million, versus $11.4 million in the prior year period.

Net income for the three months ended March 31, 2024, totaled $10,000, or $0.00 per basic and diluted share, as compared to net income of $1.6 million, or $0.04 per basic and diluted share, in the quarter ended March 31, 2023.

Adjusted EBITDA for the three months ended March 31, 2024, was $1.7 million, as compared to $1.0 million in the quarter ended March 31, 2023.

As of March 31, 2024, the Company had working capital of $56.2 million. Cash and cash equivalents were $32.9 million at March 31, 2024. Cash flow from operations for the three months ended March 31, 2024, was $2.1 million compared to $1.9 million in the three months ended March 31, 2023.

The Company continued its latest stock buyback by repurchasing $13.4 million of its common stock during the first quarter.

Second Quarter and Full Year 2024 Guidance

Second quarter 2024 revenue is estimated to be at least $52.0 million, an increase of approximately 16% from Q2 2023. Second quarter Diluted EPS is estimated to be at least $0.08.

The Company expects 2024 net revenue of at least $227 million, a 23% increase from 2023. Diluted EPS is expected to be at least $0.50 per share, an 85% increase compared to 2023.

Conference Call and Webcast Details

Tuesday, April 30, 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: Q1 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.

About Zynex, Inc.

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
ZYXI@mzgroup.us
+949 694 9594

ZYNEX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS) (unaudited)
		March 31,			December 31,
		2024			2023
ASSETS
Current assets:
Cash and cash equivalents		$	32,861		$	44,579
Accounts receivable, net			25,439			26,838
Inventory, net			15,476			13,106
Prepaid expenses and other			4,213			3,332
Total current assets			77,989			87,855
Property and equipment, net			3,234			3,114
Operating lease asset			11,857			12,515
Finance lease asset			537			587
Deposits			409			409
Intangible assets, net of accumulated amortization			7,932			8,158
Goodwill			20,401			20,401
Deferred income taxes			3,866			3,865
Total assets		$	126,225		$	136,904
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses			10,325			8,433
Operating lease liability			3,881			3,729
Finance lease liability			183			196
Income taxes payable			637			633
Accrued payroll and related taxes			6,729			5,541
Total current liabilities			21,755			18,532
Long-term liabilities:
Convertible senior notes, less issuance costs			57,839			57,605
Operating lease liability			13,184			14,181
Finance lease liability			347			457
Total liabilities			93,125			90,775
Stockholders' equity:
Common stock			32			33
Additional paid-in capital			91,259			90,878
Treasury stock, at cost			(84,981)			(71,562)
Retained earnings			26,790			26,780
Total stockholders' equity			33,100			46,129
Total liabilities and stockholders' equity		$	126,225		$	136,904

 

ZYNEX, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited)
		For the Three Months Ended March 31,
		2024			2023
NET REVENUE
Devices		$	14,025		$	11,944
Supplies			32,506			30,226
Total net revenue			46,531			42,170
COSTS OF REVENUE AND OPERATING EXPENSES
Costs of revenue - devices and supplies			9,298			9,269
Sales and marketing			23,380			21,227
General and administrative			13,328			11,390
Total costs of revenue and operating expenses			46,006			41,886
Income from operations			525			284
Other income (expense)
Gain on sale of fixed assets			—			2
Gain on change in fair value of contingent consideration			—			1,400
Interest expense, net			(512)			(84)
Other income (expense), net			(512)			1,318
Income from operations before income taxes			13			1,602
Income tax expense			3			33
Net income		$	10		$	1,569
Net income per share:
Basic		$	0.00		$	0.04
Diluted		$	0.00		$	0.04
Weighted average basic shares outstanding			32,344			36,694
Weighted average diluted shares outstanding			32,827			37,442

 

ZYNEX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (unaudited)
		For the Three Months Ended March 31,
		2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	10		$	1,569
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			638			615
Amortization			461			229
Non-cash reserve charges			—			408
Stock-based compensation			734			307
Non-cash lease expense			(187)			(272)
Benefit for deferred income taxes			(1)			8
Gain on change in fair value of contingent consideration			—			(1,400)
Gain on sale of fixed assets			—			(2)
Change in operating assets and liabilities:
Accounts receivable			1,399			2,596
Prepaid and other assets			(813)			(1,262)
Accounts payable and other accrued expenses			2,709			369
Inventory			(2,882)			(1,139)
Deposits			—			(92)
Net cash provided by operating activities			2,068			1,934
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(153)			(184)
Proceeds on sale of fixed assets			—			10
Net cash used in investing activities			(153)			(174)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on finance lease obligations			(123)			(31)
Cash dividends paid			(3)			—
Purchase of treasury stock			(13,280)			(3,353)
Proceeds from the issuance of common stock on stock-based awards			13			27
Principal payments on long-term debt			—			(1,333)
Taxes withheld and paid on employees' equity awards			(240)			(422)
Net cash used in financing activities			(13,633)			(5,112)
Net decrease in cash			(11,718)			(3,352)
Cash at beginning of period			44,579			20,144
Cash at end of period		$	32,861		$	16,792

 

ZYNEX, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (AMOUNTS IN THOUSANDS) (unaudited)
		For the Three Months Ended March 31,
		2024			2023
Adjusted EBITDA:
Net income		$	10		$	1,569
Depreciation and Amortization*			426			423
Stock-based compensation expense			734			307
Interest expense and other, net			512			82
Change in value of contingent consideration			—			(1,400)
Income tax expense			3			33
Adjusted EBITDA		$	1,685		$	1,014
% of Net Revenue			4	%		2	%

* Depreciation does not include amounts related to units on lease to third parties which are depreciated and included in cost of goods sold.

 

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SOURCE Zynex

FAQ

What was Zynex's Q1 2024 revenue and how did it perform?

Zynex reported a Q1 2024 revenue of $46.5 million, showing a 10% increase year-over-year. However, the revenue underperformed guidance due to delayed payments from insurers post a cyber incident.

What was Zynex's net income for Q1 2024?

Zynex reported a net income of $10,000 for Q1 2024.

How much common stock did Zynex repurchase in Q1 2024?

Zynex repurchased $13.4 million of common stock in Q1 2024.

What are Zynex's revenue expectations for 2024?

Zynex expects a 23% increase in net revenue for 2024 compared to 2023.

What new therapy products did Zynex introduce in Q1 2024?

Zynex introduced the Zynex Pro Hybrid LSO and the Zynex DynaComp Cold Compression in Q1 2024.