SOURCE: Zynex, Inc.

Zynex,  Inc.

August 07, 2012 08:00 ET

Zynex Announces Second Quarter 2012 Financial Results

LONE TREE, CO--(Marketwire - Aug 7, 2012) - Zynex, Inc. (OTCBB: ZYXI), a provider and developer of non-invasive medical devices for electrotherapy and stroke rehabilitation, neurological diagnosis and cardiac monitoring, announces its second quarter 2012 unaudited financial results. 

The Company's total net revenue increased 19% to $10,026,000 for the three months ended June 30, 2012 from $8,395,000 for the three months ended June 30, 2011. Year to date net revenue of $18,970,000 increased 26% over the prior year to date net revenue. The Company's revenue increase for the second quarter and year to date 2012 was primarily driven by its Zynex Medical subsidiary, in which strong demand continues from its products, and a small amount of revenue was derived from its Zynex NeuroDiagnostics subsidiary. The Company generated net income of $473,000, or $0.02 per share in the second quarter of 2012 and net income of $793,000, or $0.03 per share for the first six months of 2012, versus a net income of $484,000, or $0.02 per share in the second quarter of 2011 and net income of $374,000, or $0.01 per share for the first six months of 2011.

The Company reported a gross profit of $8,240,000, or 82% of net revenue, for the second quarter of 2012, and $15,371,000, or 81% of net revenue, for the first six months of 2012, as compared to a gross profit of $6,668,000, or 79% of net revenue, for the second quarter of 2011 and $11,857,000, or 79% of net revenue, for the first six months of 2011.

The Company reported Selling, General and Administrative (SG&A) expenses of $7,308,000, or 73% of net revenue, for the three months ended June 30, 2012, and $13,953,000, or 74% of net revenue, for the six months ended June 30, 2012, as compared to $5,769,000, or 69% of net revenue, for the three months ended June 30, 2011 and $11,097,000, or 74% of net revenue for the six months ended June 30, 2011. Increases in the Company's SG&A expenses during the first three and six months of 2012 were primarily attributable to sales and marketing, specifically for sales commissions (based on the 19% and 26% increase in net revenue) and investments made to expand the Company's Zynex Medical field sales force.

The Company generated a second quarter 2012 income from operations of $932,000, income before income taxes of $844,000 and net income of $473,000, or $0.02 per share, versus a second quarter of 2011 income from operations of $899,000, income before income taxes of $822,000 and net income of $484,000, or $0.02 per share. The Company generated a 2012 year to date income from operations of $1,418,000, income before income taxes of $1,237,000 and net income of $793,000, or $0.03 per share, versus a 2011 year to date income from operations of $760,000, income before income taxes of $625,000 and net income of $374,000, or $0.01 per share.

Thomas Sandgaard, CEO stated: "We were pleased with our second quarter 2012 financial results, which were in line with our strong second quarter of the previous year. Our net revenue increased 19% and 26% during the three and six month periods of 2012, as compared to prior year, and increased 13% quarter over quarter, which is indicative of the demand for our Zynex Medical electrotherapy products and volume of orders our sales team continues to generate. Our Zynex Medical subsidiary still represents the majority of our revenue, but we are encouraged to see a contribution from our Zynex NeuroDiagnostics subsidiary, which includes the first quarter 2012 asset acquisition of NeuroDyne Medical. We continued to invest in our Zynex Medical and Zynex NeuroDiagnostics sales teams, through the addition of field sales representatives, which allowed us to expand our reach and penetration in key geographic markets. Our Zynex Monitoring Solutions subsidiary continues to make progress. We are currently participating in clinical trials expected to run through the remainder of 2012."

Outlook:
The Company confirms its initial guidance of anticipated total net revenue of between $38 million and $40 million for 2012 and net income per diluted share of between $0.06 and $0.08 for 2012.

Conference Call and Webcast Information:
Zynex, Inc. will host an earnings conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today to discuss its second quarter 2012 financial 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=88637

Conference Call Information- 888-221-9541, pass-code 9400881

Highlights from the second quarter ended June 30, 2012 consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)

    Three months ended   Six months ended
    June 30, 2012   June 30, 2011   June 30, 2012   June 30, 2011
                         
Net revenue   $ 10,026   $ 8,395   $ 18,970   $ 15,028
                         
Gross profit     8,240     6,668     15,371     11,857
                         
Income from operations     932     899     1,418     760
                         
Income before income tax     844     822     1,237     625
                         
Net income     473     484     793     374
                         
Adjusted EBITDA (1)     1,151     1,148     1,833     1,253
                         
Net income per share - diluted   $ 0.02   $ 0.02   $ 0.03   $ 0.01
                         
Weighted-average number of common shares outstanding -diluted     31,249,107     31,025,478     31,142,876     30,957,206
                         

(1) Reconciliation of unaudited U.S. Generally Accepted Accounting Principles (GAAP) Net income (loss) to Adjusted Earnings Before Interest Taxes Depreciation, and Amortization (Adjusted-EBITDA)

    Three months ended     Six months ended  
    June 30, 2012     June 30, 2011     June 30, 2012     June 30, 2011  
Net income   $ 473     $ 484     $ 793     $ 374  
Interest expense net and loss on extinguishment of debt     87       79       180       137  
Income taxes     371       338       444       251  
Depreciation and amortization     249       209       474       412  
Deferred rent     (73 )     (56 )     (148 )     (111 )
Stock-based expense     44       94       90       190  
Adjusted EBITDA   $ 1,151     $ 1,148     $ 1,833     $ 1,253  
                                 

About Zynex

Zynex (founded in 1996), operates under three primary business segments; Zynex Medical, Zynex NeuroDiagnostics and Zynex Monitoring Solutions. Zynex Medical engineers, manufactures, markets and sells its own design of electrotherapy medical devices for electrotherapy, used for pain management and rehabilitation. Zynex Medical's product lines are fully developed, FDA-cleared and commercially sold world-wide. Zynex NeuroDiagnostics, sells the company's proprietary NeuroMove device designed to help stroke and spinal cord injury patients and is currently expanding into markets for EMG, EEG, sleep pattern, auditory and nerve conductivity neurological diagnosis devices through product development and acquisitions. Zynex Monitoring Solutions, currently in the development stage, has been established to develop and market medical devices for non-invasive cardiac monitoring.
For additional information, please visit: http://www.ir-site.com/zynex/default.asp.

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, 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, 2011.

 
ZYNEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF SHARES)
 
    June 30,   December 31,
    2012   2011
    (UNAUDITED)    
ASSETS            
Current Assets:            
Cash   $ 623   $ 789
Accounts receivable, net     12,143     10,984
Inventory     6,554     4,556
Prepaid expenses     202     293
Deferred tax assets     1,469     1,384
Other current assets     44     42
             
    Total current assets     21,035     18,048
             
Property and equipment, net     3,684     3,422
Deposits     168     170
Deferred financing fees, net     123     145
Intangible assets, net     233     -
Goodwill     251     -
             
  Total assets   $ 25,494   $ 21,785
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current Liabilities:            
Line of credit   $ 5,201   $ 3,289
Current portion of notes payable and other obligations     139     131
Accounts payable     2,705     2,189
Income taxes payable     1,739     1,567
Accrued payroll and payroll taxes     980     702
Deferred rent     334     296
Current portion of contingent consideration     21     -
Other accrued liabilities     1,376     1,574
             
    Total current liabilities     12,495     9,748
             
Notes payable and other obligations, less current portion     187     258
Deferred rent     970     1,156
Deferred tax liabilities     511     483
Warranty liability     20     -
Contingent consideration, less current portion     120     -
             
    Total liabilities     14,303     11,645
             
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, 31,108,109 and 30,816,631 shares issued and outstanding at June 30, 2012, and December 31, 2011, respectively.    
31
   
31
Paid-in capital     5,354     5,096
Retained earnings     5,806     5,013
             
    Total stockholders' equity     11,191     10,140
             
  Total liabilities and stockholders' equity   $ 25,494   $ 21,785
   
   
ZYNEX, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Net revenue:                                
Rental   $ 2,437     $ 2,447     $ 4,499     $ 4,895  
Sales     7,589       5,948       14,471       10,133  
      10,026       8,395       18,970       15,028  
                                 
Cost of revenue:                                
Rental     273       392       531       726  
Sales     1,513       1,335       3,068       2,445  
      1,786       1,727       3,599       3,171  
                                 
Gross profit     8,240       6,668       15,371       11,857  
                                 
                                 
Selling, general and administrative expense     7,308       5,769       13,953       11,097  
                                 
Income from operations     932       899       1,418       760  
                                 
Other income (expense):                                
Interest income     -       1       -       1  
Interest expense     (81 )     (80 )     (174 )     (138 )
Other income (expense)     (7 )     2       (7 )     2  
      (88 )     (77 )     (181 )     (135 )
                                 
Income before income tax     844       822       1,237       625  
                                 
Income tax expense     371       338       444       251  
                                 
Net income   $ 473     $ 484     $ 793     $ 374  
                                 
                                 
Net income per share:                                
Basic   $ 0.02     $ 0.02     $ 0.03     $ 0.01  
                                 
Diluted   $ 0.02     $ 0.02     $ 0.03     $ 0.01  
                                 
                                 
Weighted average number of common shares outstanding:                                
Basic     31,091,900       30,756,717       30,986,478       30,694,216  
                                 
Diluted     31,249,107       31,025,478       31,142,876       30,957,206  
   
   
ZYNEX, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(UNAUDITED, AMOUNTS IN THOUSANDS)  
   
    Six Months Ended  
    June 30,  
    2012     2011  
Cash flows from operating activities:                
Net income   $ 793     $ 374  
Adjustments to reconcile net income to net cash used in operating activities:                
Depreciation expense     432       389  
Accretion of contingent consideration     6       -  
Provision for losses on uncollectible accounts receivable     158       630  
Amortization of intangible assets     18       -  
Amortization of financing fees     24       23  
Issuance of common stock for services     -       44  
Provision for obsolete inventory     190       -  
Deferred rent     (148 )     (111 )
Employee stock-based compensation expense     90       146  
Deferred tax benefit     (57 )     (81 )
Changes in operating assets and liabilities net of business acquisition (Note 3):                
    Accounts receivable     (1,317 )     (2,834 )
    Inventory     (2,093 )     (93 )
    Prepaid expenses     91       9  
    Deposit and other current assets     3       (49 )
    Accounts payable     516       145  
    Accrued liabilities     80       609  
    Income taxes payable     172       (192 )
                 
Net cash used in operating activities     (1,042 )     (991 )
                 
Cash flows from investing activities:                
  Purchases of equipment and inventory used for rental     (718 )     (739 )
  Cash paid for domain name     (18 )     -  
  Cash paid for acquisition     (245 )     -  
                 
Net cash used in investing activities     (981 )     (739 )
                 
Cash flows from financing activities:                
  Net borrowings from line of credit     1,912       1,934  
  Issuance of common stock     10       48  
  Deferred financing fees     (2 )     (25 )
  Payments on capital lease obligations     (63 )     (46 )
                 
Net cash provided by financing activities     1,857       1,911  
                 
                 
Net increase in cash     (166 )     181  
Cash at beginning of period     789       602  
Cash at end of period   $ 623     $ 783  
                 
Supplemental cash flow information:                
Interest paid   $ 152     $ 102  
Income taxes paid   $ 365     $ 525  
                 
Supplemental disclosure of non-cash investing and financing activities:                
Common stock issuances for business acquisition   $ 158     $ -  
Increase in contingent consideration for business acquisition   $ 141     $ -  

Contact Information

  • Contact:
    Zynex, Inc.
    Anthony Scalese
    CFO
    303-703-4906