Zynex Reports Second Quarter 2024 Financial Results
Q2 2024 Revenue Increased 11% to
Key Second Quarter Highlights and Business Update
- Q2 2024 orders increased 20% year-over-year, the highest number of orders in Company history for the ninth consecutive quarter.
- Q2 2024 revenue increased 11% year-over-year to
$49.9 million ; Q2 2024 revenue was lower than previous guidance of$52.0 million primarily related to a reduction in sales representatives and forgoing current sales to focus on profitable growth and rep productivity, and a changing product mix. - Q2 2024 net income of
$1.2 million ; Diluted EPS$0.04 . - Year-to-date cash flow from operations of
$3.2 million , a 20% year-over-year increase. - Repurchased
$2.2 million of the Company's common stock in Q2 2024.
Management Commentary
"The second quarter of 2024 was highlighted by a strong cadence of order growth and revenue as we work toward FDA approvals of next-generation devices and launch of new pain management products," said
"In the second quarter, increasing sales and profitable growth for our pain management division delivered a 20% improvement in orders year-over-year. Revenue during the quarter was impacted by a continued change in product mix, with sales of our private labeled pain management products growing more than anticipated. While this growth diversifies revenue, these product sales are one-time and lack the trailing revenue model present in our electrotherapy products. In addition, as we emphasize profitable growth, we continued our focus on sales rep productivity and separated more underperforming reps than initially anticipated which decreases near-term revenue but leaves us in a stronger position moving forward.
"With the change in product mix and sales force reduction, we are revising guidance down for the year. We now expect 2024 net revenue to increase approximately 9% compared to 2023. Looking ahead, we continue to focus on diversifying revenue streams with innovative new products and ensuring sustained growth as we build on our holistic, non-invasive approach to pain management. In 2025, we should return to our normal top-line growth in our pain management division of approximately 20%. We look forward to additional updates in the months to come as we work to build long-term value for our shareholders," concluded Sandgaard.
Second Quarter 2024 Financial Results
Net revenue was
Gross profit in the quarter ended
Sales and marketing expenses were
General and administrative expenses for the three months ended
Net income for the three months ended
Adjusted EBITDA for the three months ended
As of
The Company continued its latest stock buyback by repurchasing
Third Quarter and Full Year 2024 Guidance
Third quarter 2024 revenue is estimated to be at least
The Company expects 2024 net revenue of at least
Conference Call and Webcast Details
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: Q2 2024 Webcast Link
International number: 646-357-8785
Non-GAAP Financial Measures
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
These and other risks are described in our filings with the
About Zynex, Inc.
Investor Relations Contact:
ZYXI@mzgroup.us
+949 694 9594
CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS) (unaudited) |
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June 30, 2024 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
|
$ |
30,896 |
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$ |
44,579 |
|
Accounts receivable, net |
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|
23,594 |
|
|
26,838 |
|
Inventory, net |
|
|
15,390 |
|
|
13,106 |
|
Prepaid expenses and other |
|
|
4,235 |
|
|
3,332 |
|
Total current assets |
|
|
74,115 |
|
|
87,855 |
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|
|
|
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|
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Property and equipment, net |
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|
3,250 |
|
|
3,114 |
|
Operating lease asset |
|
|
11,189 |
|
|
12,515 |
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Finance lease asset |
|
|
785 |
|
|
587 |
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Deposits |
|
|
409 |
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|
409 |
|
Intangible assets, net of accumulated amortization |
|
|
7,705 |
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|
8,158 |
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20,401 |
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20,401 |
|
Deferred income taxes |
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|
4,061 |
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|
3,865 |
|
Total assets |
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$ |
121,915 |
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$ |
136,904 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
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7,882 |
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8,433 |
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Operating lease liability |
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3,930 |
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|
3,729 |
|
Finance lease liability |
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|
182 |
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|
196 |
|
Income taxes payable |
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— |
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|
633 |
|
Accrued payroll and related taxes |
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|
6,244 |
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|
5,541 |
|
Total current liabilities |
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18,238 |
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18,532 |
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Long-term liabilities: |
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Convertible senior notes, less issuance costs |
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|
58,078 |
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57,605 |
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Operating lease liability |
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12,187 |
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14,181 |
|
Finance lease liability |
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|
596 |
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|
457 |
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Total liabilities |
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89,099 |
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90,775 |
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Commitments and contingencies |
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Stockholders' equity: |
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Preferred stock |
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— |
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— |
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Common stock |
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32 |
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33 |
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Additional paid-in capital |
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91,963 |
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90,878 |
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(87,186) |
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(71,562) |
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Retained earnings |
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28,007 |
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26,780 |
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Total stockholders' equity |
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32,816 |
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46,129 |
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Total liabilities and stockholders' equity |
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$ |
121,915 |
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$ |
136,904 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) |
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For the Three Months Ended |
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For the Six Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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NET REVENUE |
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Devices |
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$ |
15,920 |
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$ |
13,743 |
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$ |
29,945 |
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$ |
25,687 |
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Supplies |
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33,963 |
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31,209 |
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|
66,469 |
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61,435 |
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Total net revenue |
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49,883 |
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44,952 |
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96,414 |
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87,122 |
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COSTS OF REVENUE AND OPERATING EXPENSES |
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Costs of revenue - devices and supplies |
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9,971 |
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9,272 |
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19,269 |
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18,541 |
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Sales and marketing |
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23,226 |
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21,609 |
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46,606 |
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42,836 |
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General and administrative |
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14,460 |
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11,358 |
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27,788 |
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22,748 |
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Total costs of revenue and operating expenses |
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47,657 |
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42,239 |
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|
93,663 |
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|
84,125 |
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Income from operations |
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2,226 |
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2,713 |
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2,751 |
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|
2,997 |
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Other income (expense) |
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Gain on disposal of assets |
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19 |
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— |
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19 |
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2 |
|
Gain on change in fair value of contingent |
|
|
— |
|
|
1,700 |
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|
— |
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|
3,100 |
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Interest expense, net |
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(630) |
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(317) |
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|
(1,142) |
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(401) |
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Other income (expense), net |
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|
(611) |
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|
1,383 |
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(1,123) |
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|
2,701 |
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Income from operations before income taxes |
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|
1,615 |
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|
4,096 |
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|
1,628 |
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|
5,698 |
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Income tax expense |
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|
398 |
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|
742 |
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|
401 |
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|
775 |
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Net income |
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$ |
1,217 |
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$ |
3,354 |
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$ |
1,227 |
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$ |
4,923 |
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Net income per share: |
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Basic |
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$ |
0.04 |
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$ |
0.09 |
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$ |
0.04 |
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$ |
0.13 |
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Diluted |
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$ |
0.04 |
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$ |
0.09 |
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$ |
0.04 |
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$ |
0.13 |
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Weighted average basic shares outstanding |
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31,762 |
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36,435 |
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32,053 |
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36,564 |
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Weighted average diluted shares outstanding |
|
|
32,204 |
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|
37,061 |
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|
32,516 |
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|
37,249 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (unaudited) |
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For the Six Months Ended |
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2024 |
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2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
1,227 |
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$ |
4,923 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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1,329 |
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1,311 |
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Amortization |
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|
928 |
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|
620 |
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Non-cash reserve charges |
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— |
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(91) |
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Stock-based compensation |
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1,575 |
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|
967 |
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Non-cash lease expense |
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|
(467) |
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|
(158) |
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Benefit for deferred income taxes |
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|
(195) |
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(240) |
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Change in fair value of contingent consideration |
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— |
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(3,100) |
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Gain on disposal of fixed assets |
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(19) |
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(2) |
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Change in operating assets and liabilities: |
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Accounts receivable |
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3,244 |
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|
2,106 |
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Prepaid and other assets |
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|
(805) |
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|
(661) |
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Accounts payable and other accrued expenses |
|
|
(288) |
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|
(1,172) |
|
Inventory |
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|
(3,327) |
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|
(1,736) |
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Deposits |
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— |
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|
(92) |
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Net cash provided by operating activities |
|
|
3,202 |
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|
2,675 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of property and equipment |
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(290) |
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(394) |
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Proceeds on sale of fixed assets |
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— |
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|
10 |
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Net cash used in investing activities |
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(290) |
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|
(384) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payments on finance lease obligations |
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(148) |
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(62) |
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Cash dividends paid |
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|
(3) |
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(1) |
|
Purchase of treasury stock |
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|
(15,625) |
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|
(9,468) |
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Excise tax payments on net treasury stock purchases |
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|
(473) |
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|
— |
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Proceeds from issuance of convertible senior notes, net of issuance costs |
|
|
— |
|
|
57,026 |
|
Proceeds from the issuance of common stock on stock-based awards |
|
|
13 |
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|
32 |
|
Principal payments on long-term debt |
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— |
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|
(10,667) |
|
Taxes withheld and paid on employees' equity awards |
|
|
(359) |
|
|
(546) |
|
Net cash (used in) provided by financing activities |
|
|
(16,595) |
|
|
36,314 |
|
Net (decrease) increase in cash |
|
|
(13,683) |
|
|
38,605 |
|
Cash and cash equivalents at beginning of period |
|
|
44,579 |
|
|
20,144 |
|
Cash and cash equivalents at end of period |
|
$ |
30,896 |
|
$ |
58,749 |
|
|
|
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RECONCILIATION OF GAAP TO NON-GAAP MEASURES (AMOUNTS IN THOUSANDS) (unaudited) |
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For the Three Months |
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For the Six Months |
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2024 |
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2023 |
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2024 |
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2023 |
Adjusted EBITDA: |
|
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Net income |
$ 1,217 |
|
$ 3,354 |
|
$ 1,227 |
|
$ 4,923 |
Depreciation and Amortization* |
465 |
|
412 |
|
891 |
|
835 |
Stock-based compensation expense |
841 |
|
660 |
|
1,575 |
|
967 |
Interest expense and other, net |
611 |
|
317 |
|
1,123 |
|
401 |
Change in value of contingent consideration |
— |
|
(1,700) |
|
— |
|
(3,100) |
Non-cash lease expense** |
— |
|
227 |
|
— |
|
227 |
Income tax expense |
398 |
|
742 |
|
401 |
|
775 |
Adjusted EBITDA |
$ 3,532 |
|
$ 4,012 |
|
$ 5,217 |
|
$ 5,028 |
% of Net Revenue |
7 % |
|
9 % |
|
5 % |
|
6 % |
* 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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** Amount expensed on new company headquarters in excess of cash payments due to abated rent. |
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