Zynex Reports Fourth Quarter and Full Year 2023 Financial Results
- FY 2023 revenue grew by 17% to $184.3 million, with a 43% increase in orders.
- Record cash flow from operations of $17.8 million in FY 2023, a 29% YoY increase.
- Company repurchased $38.4 million of common stock in 2023 and plans an additional $20 million buyback.
- Management expects 2024 revenue to rise by approximately 23% compared to 2023, focusing on new products and revenue streams.
- Q4 2023 revenue decreased by 3% YoY due to a $6.2 million write-off of slow collecting receivables.
- Net income for Q4 2023 was $1.2 million, lower than Q4 2022.
- Adjusted EBITDA for Q4 2023 decreased to $9.9 million from $11.4 million in Q4 2022.
- General and administrative expenses increased in Q4 2023 compared to the prior year.
Insights
The announcement by Zynex, Inc. of a 17% increase in FY 2023 revenue and the initiation of an additional $20 million stock repurchase plan reflects a robust operational performance and a strong commitment to shareholder return. The significant year-over-year growth in orders, particularly a 43% increase in device orders, indicates a solid demand for the company's pain management products. This growth trajectory is further supported by the company's guidance for a 23% increase in net revenue for 2024.
However, investors should note the decrease in Q4 2023 revenue by 3%, primarily due to a non-recurring write-off of slow collecting receivables. This could be indicative of challenges in the revenue collection process or market saturation. The stock repurchase plan is a strategic move that could potentially benefit shareholders by reducing the number of shares outstanding, thereby increasing earnings per share (EPS). However, it is also important to consider the opportunity cost of this capital allocation decision, as these funds could alternatively be invested in R&D or business expansion.
The reported net income of $9.7 million for FY 2023 and a diluted EPS of $0.27 reflects a decrease from the previous year's net income of $17.0 million and EPS of $0.44. This decline in profitability, despite revenue growth, could be a red flag for investors. It may be attributed to the increased sales and marketing and general and administrative expenses, which grew at a faster rate than revenue. The company's cash and cash equivalents of $44.6 million and a cash flow from operations of $17.8 million demonstrate financial stability but also suggest a conservative cash management approach.
For stakeholders, the adjusted EBITDA figures serve as an alternative measure of profitability, which excludes certain non-cash and irregular items. A decrease in adjusted EBITDA from $28.1 million in the prior year to $22.3 million in 2023 could indicate underlying operational challenges that need to be addressed to sustain long-term growth.
Zynex's focus on non-invasive pain management devices is particularly relevant in the current healthcare landscape, which is increasingly favoring non-opioid treatment options. The FDA clearance for the M-Wave NMES device signifies the company's commitment to innovation and could provide a competitive edge. However, the success of new products in the medical device industry hinges on several factors including insurance reimbursement policies, clinical adoption and patient outcomes.
While the record number of orders for the seventh consecutive quarter suggests strong market acceptance, the company's strategy to promote its bracing and other product lines will require effective marketing and a clear value proposition to healthcare providers and patients. The anticipated revenue growth from these initiatives should be monitored closely for execution risks and market reception.
FY 2023 Revenue Increased
Company Announces Additional
Key Fourth Quarter and FY 2023 Highlights and Business Update
- FY 2023 revenue increased
17% year-over-year to$184.3 million 3% year-over-year to$47.3 million $6.2 million - FY 2023 net income of
$9.7 million $0.27 $1.2 million $0.04 - FY 2023 orders increased
43% year-over-year; Q4 orders increased29% year-over-year, the highest number of orders in Company history for the seventh consecutive quarter. - Company record FY 2023 cash flow from operations of
$17.8 million 29% year-over-year increase. - Repurchased
$38.4 million
Management Commentary
"2023 was a year of continued execution for Zynex, underscored by record revenues and order numbers, and exciting new products and technological innovation," said Thomas Sandgaard, President and CEO of Zynex. "A strong cadence of increasing sales and profitable growth for our pain management division delivered a
"During the fourth quarter the pain management division submitted a 510(k) application to the
"Looking ahead into 2024, we continue to focus on new products and building on our holistic, non-invasive approach to pain management. We expect 2024 net revenue to increase approximately
Fourth Quarter 2023 Financial Results
Net revenue was
Gross profit in the quarter ended December 31, 2023, was
Sales and marketing expenses were
General and administrative expenses for the three months ended December 31, 2023, were
Net income for the three months ended December 31, 2023, totaled
Adjusted EBITDA for the three months ended December 31, 2023, was
FY 2023 Financial Results
Net revenue was
Gross profit in the year ended December 31, 2023, increased to
Sales and marketing expenses were
General and administrative expenses for the year ended December 31, 2023, were
Net income for the year ended December 31, 2023, totaled
Adjusted EBITDA for the year ended December 31, 2023, was
As of December 31, 2023, the Company had working capital of
The Company continued its latest stock buyback by repurchasing
The Board of Directors approved an additional
The Company may repurchase stock from time to time in open market and negotiated transactions, effective immediately through the next twelve months. These transactions will be made in compliance with the SEC's Rule 10b-18, subject to market conditions, available liquidity, cash flow, applicable legal requirements, and other factors. The specific prices, numbers of shares, and timing of purchase transactions will be determined by the Company from time to time in its sole discretion. This program does not obligate the Company to acquire any particular amount of common stock, and the program may be suspended or discontinued at any time, including in the event the Company would be deemed to be acquiring its shares under Rule 13e-3 of the Securities Exchange Act of 1934, as amended.
The Company expects to finance the purchases with existing cash balances, which is not expected to have a material impact on capital levels.
Zynex, Inc. had approximately 42.0 million shares issued and 32.2 million shares outstanding as of February 29, 2024.
First Quarter and Full Year 2024 Guidance
First quarter 2024 revenue is estimated to be at least
The Company expects 2024 net revenue of at least
Conference Call and Webcast Details
Thursday, February 29, 2024, at 4:15 PM Eastern Time (1:15 PM Pacific 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: 4Q & Full Year 2023 Webcast Link
International number: 646-357-8785
Non-GAAP Financial Measures
Zynex reports its financial results in accordance with accounting principles generally accepted in the
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) | ||||||
December 31, | December 31, | |||||
2023 | 2022 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash | $ | 44,579 | $ | 20,144 | ||
Accounts receivable, net | 26,838 | 35,063 | ||||
Inventory, net | 13,106 | 13,484 | ||||
Prepaid expenses and other | 3,332 | 868 | ||||
Total current assets | 87,855 | 69,559 | ||||
Property and equipment, net | 3,114 | 2,175 | ||||
Operating lease asset | 12,515 | 12,841 | ||||
Finance lease asset | 587 | 270 | ||||
Deposits | 409 | 591 | ||||
Intangible assets, net of accumulated amortization | 8,158 | 9,067 | ||||
Goodwill | 20,401 | 20,401 | ||||
Deferred income taxes | 3,865 | 1,562 | ||||
Total assets | $ | 136,904 | $ | 116,466 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | 8,433 | 5,617 | ||||
Operating lease liability | 3,729 | 2,476 | ||||
Finance lease liability | 196 | 128 | ||||
Income taxes payable | 633 | 1,995 | ||||
Current portion of debt | — | 5,333 | ||||
Accrued payroll and related taxes | 5,541 | 5,537 | ||||
Total current liabilities | 18,532 | 21,086 | ||||
Long-term liabilities: | ||||||
Long-term portion of debt, less issuance costs | — | 5,293 | ||||
Convertible senior notes, less issuance costs | 57,605 | — | ||||
Contingent consideration | — | 10,000 | ||||
Operating lease liability | 14,181 | 13,541 | ||||
Finance lease liability | 457 | 188 | ||||
Total liabilities | 90,775 | 50,108 | ||||
Stockholders' equity: | ||||||
Common stock | 33 | 39 | ||||
Additional paid-in capital | 90,878 | 82,431 | ||||
Treasury stock, at cost | (71,562) | (33,160) | ||||
Retained earnings | 26,780 | 17,048 | ||||
Total stockholders' equity | 46,129 | 66,358 | ||||
Total liabilities and stockholders' equity | $ | 136,904 | $ | 116,466 | ||
ZYNEX, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) | ||||||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
NET REVENUE | ||||||||||||
Devices | $ | 16,279 | $ | 15,918 | $ | 58,822 | $ | 43,497 | ||||
Supplies | 31,005 | 32,887 | 125,500 | 114,670 | ||||||||
Total net revenue | 47,284 | 48,805 | 184,322 | 158,167 | ||||||||
COSTS OF REVENUE AND | ||||||||||||
Costs of revenue - devices and supplies | 10,271 | 9,388 | 38,366 | 32,005 | ||||||||
Sales and marketing | 21,677 | 19,166 | 86,659 | 67,116 | ||||||||
General and administrative | 13,038 | 10,141 | 48,517 | 36,108 | ||||||||
Total costs of revenue and operating expenses | 44,986 | 38,695 | 173,542 | 135,229 | ||||||||
Income from operations | 2,298 | 10,110 | 10,780 | 22,938 | ||||||||
Other income (expense) | ||||||||||||
Gain on sale of fixed assets | — | — | 39 | — | ||||||||
Gain (loss) on change in fair value of | (1) | (300) | 2,854 | (300) | ||||||||
Interest expense, net | (366) | (95) | (1,094) | (440) | ||||||||
Other income (expense), net | (367) | (395) | 1,799 | (740) | ||||||||
Income from operations before income taxes | 1,931 | 9,715 | 12,579 | 22,198 | ||||||||
Income tax expense | 716 | 2,263 | 2,847 | 5,150 | ||||||||
Net income | $ | 1,215 | $ | 7,452 | $ | 9,732 | $ | 17,048 | ||||
Net income per share: | ||||||||||||
Basic | $ | 0.04 | $ | 0.20 | $ | 0.27 | $ | 0.44 | ||||
Diluted | $ | 0.04 | $ | 0.20 | $ | 0.27 | $ | 0.44 | ||||
Weighted average basic shares outstanding | 33,595 | 37,236 | 35,555 | 38,467 | ||||||||
Weighted average diluted shares outstanding | 34,013 | 37,960 | 36,142 | 39,127 | ||||||||
ZYNEX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (unaudited) | ||||||
For the Year Ended December 31, | ||||||
2023 | 2022 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income | $ | 9,732 | $ | 17,048 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation | 2,684 | 2,197 | ||||
Amortization | 1,536 | 930 | ||||
Non-cash reserve charges | (91) | 82 | ||||
Stock-based compensation | 2,296 | 2,342 | ||||
Non-cash lease expense | 904 | 800 | ||||
Benefit for deferred income taxes | (2,303) | (851) | ||||
Gain on change in fair value of contingent consideration | (2,854) | 300 | ||||
Gain on sale of fixed assets | (39) | — | ||||
Change in operating assets and liabilities: | ||||||
Short-term investments | (190) | — | ||||
Accounts receivable | 8,225 | (6,430) | ||||
Prepaid and other assets | (1,150) | (180) | ||||
Accounts payable and other accrued expenses | 269 | 1,834 | ||||
Inventory | (1,445) | (4,320) | ||||
Deposits | 182 | (6) | ||||
Net cash provided by operating activities | 17,756 | 13,746 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchase of property and equipment | (1,206) | (418) | ||||
Purchase of short-term investments | (9,810) | — | ||||
Maturity of short-term investments | 10,000 | — | ||||
Proceeds on sale of fixed assets | 50 | — | ||||
Net cash used in investing activities | (966) | (418) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Payments on finance lease obligations | (128) | (118) | ||||
Cash dividends paid | (3) | (3,613) | ||||
Purchase of treasury stock | (37,924) | (26,426) | ||||
Proceeds from issuance of convertible senior notes, net of issuance costs | 57,018 | — | ||||
Proceeds from the issuance of common stock on stock-based awards | 86 | 46 | ||||
Principal payments on long-term debt | (10,667) | (5,333) | ||||
Taxes withheld and paid on employees' equity awards | (737) | (352) | ||||
Net cash provided by (used in) financing activities | 7,645 | (35,796) | ||||
Net increase (decrease) in cash | 24,435 | (22,468) | ||||
Cash at beginning of period | 20,144 | 42,612 | ||||
Cash at end of period | $ | 44,579 | $ | 20,144 | ||
ZYNEX, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (AMOUNTS IN THOUSANDS) (unaudited) | |||||||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Adjusted EBITDA: | |||||||||||||
Net income | $ | 1,215 | $ | 7,452 | $ | 9,732 | $ | 17,048 | |||||
Depreciation and Amortization* | 423 | 423 | 1,660 | 1,648 | |||||||||
Stock-based compensation expense | 676 | 640 | 2,296 | 2,342 | |||||||||
Interest expense and other, net | 366 | 95 | 1,055 | 440 | |||||||||
Change in value of contingent consideration | 1 | 300 | (2,854) | 300 | |||||||||
Non-cash lease expense ** | 362 | 183 | 1,340 | 1,165 | |||||||||
Non-cash receivables adjustment *** | 6,183 | — | 6,183 | — | |||||||||
Income tax expense | 716 | 2,263 | 2,847 | 5,150 | |||||||||
Adjusted EBITDA | $ | 9,942 | $ | 11,356 | $ | 22,259 | $ | 28,093 | |||||
% of Net Revenue | 21 % | 23 % | 12 % | 18 % | |||||||||
* 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 under building lease agreements in excess of cash payments due to abated rent. | |||||||||||||
*** Amount of non-recurring reduction in net revenue, related to slow collecting receivables. | |||||||||||||
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SOURCE Zynex
FAQ
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