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| 8-K - FORM 8-K - ZYNEX INC | d390147d8k.htm |
Exhibit 99.1
Zynex Announces Second Quarter 2012 Financial Results
LONE TREE, Colo. – August 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 |
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| 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 |
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| 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 | ||||||||||||
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| Adjusted EBITDA |
$ | 1,151 | $ | 1,148 | $ | 1,833 | $ | 1,253 | ||||||||
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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.
Contact: Zynex, Inc. Anthony Scalese, CFO, 303-703-4906
ZYNEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF SHARES)
| June 30, 2012 |
December 31, 2011 |
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| (UNAUDITED) | ||||||||
| ASSETS |
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| Current Assets: |
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| 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 | ||||||
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| 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 | — | ||||||
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| Total assets |
$ | 25,494 | $ | 21,785 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current Liabilities: |
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| 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 | ||||||
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| 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 | — | ||||||
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| Total liabilities |
14,303 | 11,645 | ||||||
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| Stockholders’ Equity: |
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| 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 | ||||||
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| Total stockholders’ equity |
11,191 | 10,140 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 25,494 | $ | 21,785 | ||||
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ZYNEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net revenue: |
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| Rental |
$ | 2,437 | $ | 2,447 | $ | 4,499 | $ | 4,895 | ||||||||
| Sales |
7,589 | 5,948 | 14,471 | 10,133 | ||||||||||||
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| 10,026 | 8,395 | 18,970 | 15,028 | |||||||||||||
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| Cost of revenue: |
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| Rental |
273 | 392 | 531 | 726 | ||||||||||||
| Sales |
1,513 | 1,335 | 3,068 | 2,445 | ||||||||||||
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| 1,786 | 1,727 | 3,599 | 3,171 | |||||||||||||
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| Gross profit |
8,240 | 6,668 | 15,371 | 11,857 | ||||||||||||
| Selling, general and administrative expense |
7,308 | 5,769 | 13,953 | 11,097 | ||||||||||||
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| Income from operations |
932 | 899 | 1,418 | 760 | ||||||||||||
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| Other income (expense): |
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| Interest income |
— | 1 | — | 1 | ||||||||||||
| Interest expense |
(81 | ) | (80 | ) | (174 | ) | (138 | ) | ||||||||
| Other income (expense) |
(7 | ) | 2 | (7 | ) | 2 | ||||||||||
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| (88 | ) | (77 | ) | (181 | ) | (135 | ) | |||||||||
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| Income before income tax |
844 | 822 | 1,237 | 625 | ||||||||||||
| Income tax expense |
371 | 338 | 444 | 251 | ||||||||||||
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| Net income |
$ | 473 | $ | 484 | $ | 793 | $ | 374 | ||||||||
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| Net income per share: |
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| Basic |
$ | 0.02 | $ | 0.02 | $ | 0.03 | $ | 0.01 | ||||||||
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| Diluted |
$ | 0.02 | $ | 0.02 | $ | 0.03 | $ | 0.01 | ||||||||
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| Weighted average number of common shares outstanding: |
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| Basic |
31,091,900 | 30,756,717 | 30,986,478 | 30,694,216 | ||||||||||||
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| Diluted |
31,249,107 | 31,025,478 | 31,142,876 | 30,957,206 | ||||||||||||
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ZYNEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN THOUSANDS)
| Six Months Ended June 30, |
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| 2012 | 2011 | |||||||
| Cash flows from operating activities: |
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| Net income |
$ | 793 | $ | 374 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: |
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| 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): |
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| 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 | ) | |||||
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| Net cash used in operating activities |
(1,042 | ) | (991 | ) | ||||
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| Cash flows from investing activities: |
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| Purchases of equipment and inventory used for rental |
(718 | ) | (739 | ) | ||||
| Cash paid for domain name |
(18 | ) | — | |||||
| Cash paid for acquisition |
(245 | ) | — | |||||
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| Net cash used in investing activities |
(981 | ) | (739 | ) | ||||
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| Cash flows from financing activities: |
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| 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 | ) | ||||
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| Net cash provided by financing activities |
1,857 | 1,911 | ||||||
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| Net increase in cash |
(166 | ) | 181 | |||||
| Cash at beginning of period |
789 | 602 | ||||||
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| Cash at end of period |
$ | 623 | $ | 783 | ||||
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| Supplemental cash flow information: |
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| Interest paid |
$ | 152 | $ | 102 | ||||
| Income taxes paid |
$ | 365 | $ | 525 | ||||
| Supplemental disclosure of non-cash investing and financing activities: |
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| Common stock issuances for business acquisition |
$ | 158 | $ | — | ||||
| Increase in contingent consideration for business acquisition |
$ | 141 | $ | — | ||||