SOURCE: Zynex, Inc.

Zynex,  Inc.

March 27, 2014 08:00 ET

Zynex Announces 2013 Year End Results

LONE TREE, CO--(Marketwired - Mar 27, 2014) - Zynex, Inc. (OTCQB: ZYXI), an innovative medical technology company specializing in the manufacture and sale of non-invasive medical devices for pain management, stroke rehabilitation, neurological diagnostics, and compound pharmacy, announced today its year end 2013 financial results.

President and CEO Commentary:

Thomas Sandgaard, CEO stated: "Health care reform had a major impact on our financial results for 2013, which resulted in a 45% decrease in our net revenue, as compared to 2012, and a net loss. In the face of industry changes, we had to reinvent ourselves by streamlining processes and introducing new products into our existing sales channels. In our Zynex Medical subsidiary, we modified our sales process and introduced new programs, and have already begun to see orders increase for our electrotherapy products. During the latter part of 2013, we commenced operations for a non-sterile compound pharmacy, creating a full service pain management solution for the market; now offering topical and transdermal pain creams in complement with our existing electrotherapy pain management products. We are fully licensed by the State of Colorado and the Drug Enforcement Agency (DEA) and have obtained 25 state pharmacy licenses to date, and are in the process of obtaining licenses for all 50 states."

Mr. Sandgaard continued: "In Zynex NeuroDiagnostics, which are all business to business sales and not dependent on insurance reimbursement, we continue to focus on the sale and distribution of electroencephalography (EEG) devices. In our Zynex Billing and Consulting division we are working to add contracts from medical practitioners to further increase our service based revenue in the year ahead. Our NeuroMove and NexWave products recently received FDA equivalent approval in Russia, and our NeuroMove product recently received SFDA approval in China. We intend to focus on these international markets and have added new international distributors in Russia and China with the hope of increasing sales in 2014. We made the decision to slow the investment in our blood volume monitor project being developed in our Zynex Monitoring Solutions subsidiary, but will continue to evaluate trial results and our proprietary algorithm based on our profitability and cash flow during 2014."

Mr. Sandgaard concluded: "Looking forward to 2014, we believe we have modified our business to compete in this new health care environment and are very excited about the revenue and profit possibilities with our in-house compound pharmacy. We also believe our cost structure is in line with revenue expectations for 2014 and that we will be back to profitability in 2014."

Summary of Financial Results:

The Company's net revenue decreased 45% to $21,684,000 for 2013 from $39,666,000 for 2012. The decline in net revenue for 2013, as compared to 2012, was a direct result of the decline in orders from the Company's Zynex Medical electrotherapy products impacted by health care reform, and coverage and reimbursement changes that negatively affected demand for the Company's electrotherapy products.

The Company reported a gross profit of $13,544,000, or 62% of net revenue for 2013, as compared to a gross profit of $30,896,000, or 78% of net revenue for 2012. The decrease in the Company's gross profit percentage for 2013, as compared to 2012, was primarily a result of lower sales volume for the period, as the Company had less net revenue to cover manufacturing and fixed costs, and also includes incremental expenses incurred because of inventory write-offs due to excess quantities remaining in the field caused by changes in our sales force. 

The Company reported Selling, General and Administrative (SG&A) expenses of $21,144,000, or 98% of net revenue for 2013, as compared to $28,159,000, or 71% of net revenue, for 2012. Decreases in the Company's SG&A expenses during 2013, as compared to 2012, were primarily attributable to lower sales commissions, based on the decrease in orders and net revenue, and a reduction in headcount to adjust fixed expenses to the lower level in revenue.

The Company generated a 2013 loss from operations of $7,600,000, loss before income taxes of $8,130,000, net loss of $7,301,000, and a net loss per share of $0.23, versus a 2012 income from operations of $2,737,000, income before income taxes of $2,336,000, net income of $1,553,000 and a net income per share of $0.05.

The Company's cash balance and outstanding line of credit as of December 31, 2013 was $323,000 and $5,820,000, respectively, as compared to a cash balance and outstanding line of credit as of December 31, 2012 of $823,000 and $5,906,000.

Conference Call and Webcast Information:
Zynex, Inc. will host an earnings conference call and webcast at 9:00 a.m. MT (11:00 a.m. ET) today to discuss its 2013 year end 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=98432
Conference Call Information- 888-359-3627, pass-code 6570138

Highlights from the year ended 2013 consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)

   
  Year Ended
  December 31,
  2013     2012
Net revenue $ 21,684     $ 39,666
             
Gross profit   13,544       30,896
             
(Loss) Income from operations   (7,600 )     2,737
             
(Loss) income before income taxes   (8,130 )     2,336
             
Net (loss) income   (7,301 )     1,553
             
Adjusted EBITDA (1)   (4,846 )     3,597
             
Net (loss) income per share - basic and diluted $ (0.23 )   $ 0.05
             
Weighted average number of common shares outstanding - common   31,152,015       30,062,428
             
Weighted average number of common shares outstanding - diluted   31,152,015       31,222,126
             
(1) Reconciliation of unaudited U.S. Generally Accepted Accounting Principles (GAAP) Net income to Adjusted Earnings Before Interest Taxes Depreciation, and Amortization (Adjusted-EBITDA)
   
     
  Year Ended  
  December 31,  
  2013     2012  
Net income $ (7,301 )   $ 1,553  
Interest expense   607       435  
Income tax (benefit) expense   (790 )     788  
Depreciation and amortization   889       962  
Change in value of contingent consideration   (94 )     (31 )
Goodwill and intangible asset impairment   411       -  
Deferred rent   1,299       (296 )
Stock-based compensation expense   133       186  
               
Adjusted EBITDA $ (4,846 )   $ 3,597  
               

About Zynex

Zynex, founded in 1996, operates under five primary business segments: Zynex Medical, NeuroDiagnostics, Monitoring Solutions, International, and Billing and Consulting. Zynex Medical engineers, manufactures, markets and sells its own design of electrotherapy medical devices used for pain management and rehabilitation and the company's proprietary NeuroMove device designed to help recovery of stroke and spinal cord injury patients. Zynex Medical's product lines are fully developed, FDA-cleared and commercially sold world-wide. Zynex Medical also operates a non-sterile compound pharmacy providing topical and transdermal pain creams. Zynex NeuroDiagnostics sells and distributes EMG, EEG, sleep pattern, auditory and nerve conductivity neurological devices. Zynex Monitoring Solutions, currently in the development stage, was established to develop and market medical devices for non-invasive cardiac monitoring. Zynex International is dedicated to supporting sales and marketing of Zynex products worldwide through a network of medical distributors. Zynex Billing and Consulting division provides medical billing and consulting service for offices and hospitals.

For additional information, please visit: www.ir-site.com/zynex.

Safe Harbor Statement

Certain 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, the success of our compound pharmacy and international expansion efforts, 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, 2012.

 
 
ZYNEX, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
 
  December 31,
2013
    December 31,
2012
ASSETS            
Current Assets:            
  Cash $ 323     $ 823
  Accounts receivable, net   7,033       12,224
  Inventory, net   5,002       6,160
  Prepaid expenses   346       243
  Deferred tax assets, net   72       1,855
  Income tax receivable   893       -
  Other current assets   35       57
    Total current assets   13,704       21,362
Property and equipment, net   2,891       3,705
Deposits   400       171
Deferred financing fees, net   48       98
Intangible assets, net   178       349
Goodwill   --       251
Total assets $ 17,221     $ 25,936
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current Liabilities:            
  Line of credit $ 5,820     $ 5,906
  Current portion of notes payable and other obligations   92       144
  Accounts payable   2,743       2,057
  Income taxes payable   96       1,430
  Accrued payroll and payroll taxes   607       899
  Deferred rent   --       371
  Current portion of contingent consideration   7       21
  Other accrued liabilities   319       1,265
    Total current liabilities   9,684       12,093
Notes payable and other obligations, less current portion   150       114
Deferred rent   2,454       785
Deferred tax liabilities, net   72       786
Warranty liability   13       20
Contingent consideration, less current portion   --       83
    Total liabilities   12,373       13,881
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, 31,171,234 (2013) and 31,148,234 (2012) shares issued and outstanding   31       31
  Paid-in capital   5,586       5,453
  Retained (deficit) earnings   (735 )     6,566
Total Zynex, Inc. stockholders' equity   4,882       12,050
Noncontrolling interest   (34 )     5
Total Stockholders' equity   4,848       12,055
  $
17,221
    $ 25,936
 
 
 
ZYNEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
YEARS ENDED DECEMBER 31,
 
  2013     2012  
Net revenue:              
  Rental $ 5,270     $ 8,917  
  Sales   16,414       30,749  
    21,684       39,666  
Cost of revenue:              
  Rental   1,373       1,283  
  Sales   6,767       7,487  
    8,140       8,770  
Gross profit   13,544       30,896  
Selling, general and administrative expense   21,144       28,159  
(Loss) income from operations   (7,600 )     2,737  
Other income (expense):              
  Interest expense   (607 )     (435 )
  Other income   77       34  
    (530 )     (401 )
(Loss) income before income taxes   (8,130 )     2,336  
Income tax benefit (expense)   790       (788)  
Net (loss) income   (7,340 )     1,548  
  Plus: Net loss - noncontrolling interest   39       5  
Net (loss) income - attributable to Zynex, Inc. $ (7,301 )   $ 1,553  
Net (loss) income per share - attributable to Zynex, Inc.:              
  Basic $ (0.23 )   $ 0.05  
  Diluted $ (0.23 )   $ 0.05  
Weighted average number of common shares outstanding:              
  Basic   31,152,015       31,062,428  
  Diluted   31,152,015       31,222,126  
 
 
 
ZYNEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
YEARS ENDED DECEMBER 31,
 
  2013     2012  
Cash flows from operating activities:              
  Net (loss) income $ (7,340 )   $ 1,548  
Adjustments to reconcile net (loss) income to net cash used in operating activities:              
Depreciation expense   708       831  
Change in the value of contingent consideration   (94 )     (31 )
Provision for losses on accounts receivable   469       485  
Amortization of intangible assets   131       81  
Impairment of intangible assets   160       --  
Impairment of goodwill   251       --  
Amortization of financing fees   50       50  
Issuance of common stock for services   --       20  
Provision for obsolete inventory   97       573  
Write-off of field inventory   1,340       -  
Deferred rent   1,299       (296 )
Employee stock-based compensation expense   133       166  
Deferred tax expense (benefit)   1,069       (168 )
Changes in operating assets and liabilities, net of business acquisitions (2012):              
  Accounts receivable   4,722       (1,725 )
  Inventory   (279)       (2,070 )
  Prepaid expenses   (103 )     50  
  Income tax receivable   (893)       -  
  Deposits and other current assets   (207 )     (12 )
  Accounts payable   686       (132 )
  Accrued liabilities   (1,247 )     (112 )
  Income taxes payable   (1,334 )     (137 )
Net cash used in operating activities   (382 )     (879 )
Cash flows from investing activities:              
  Purchases of equipment and inventory used for rental   (644 )     (756 )
  Change in inventory used for rental   764       (565 )
  Payments on contingent consideration   (3 )     --  
  Cash paid for domain name   --       (18 )
  Cash paid for acquisition of NeuroDyne   --       (245 )
  Net cash provided by (used in) investing activities   117       (1,584 )
Cash flows from financing activities:              
  Net borrowings on line of credit   (86 )     2,617  
  Deferred financing fees   --       (2 )
  Payments on notes payable and capital lease obligations   (149 )     (131 )
  Issuance of common stock   --       13  
  Net cash (used in) provided by financing activities   (235 )     2,497  
Net (decrease) increase in cash   (500 )     34  
Cash at the beginning of the period   823       789  
Cash at the end of the period $ 323     $ 823  
Supplemental cash flow information:              
Interest paid $ 561     $ 352  
Income taxes paid (including interest and penalties) $ 399     $ 1,127  
Supplemental disclosure of non-cash investing and financing activities:              
Equipment acquired through note payable and capital lease $ 137     $ --  
Common stock issuances for business acquisition $ --     $ 158  
Increase in contingent consideration for business acquisition $ --     $ 135  
Contribution of property and equipment by noncontrolling interest $ --     $ 10  
               

Contact Information

  • Contact:
    Zynex, Inc.
    303-703-4906