Exhibit 99.1
Zynex Announces 42% Increase in Third Quarter 2010 Revenue
Zynex, Inc. (OTCBB: ZYXI), a provider of pain management systems and electrotherapy products for medical patients with functional disability, announces a record number of orders and billed patients in the three months ended September 30, 2010. The Company also generated record net revenues of $6,657,000 for the three months ended September 30, 2010, which represents a 42% increase over third quarter 2009 net revenue and a 16% increase sequentially over the second quarter of 2010. Year to date net revenue of $17,274,000 increased 30% over the prior year to date net revenue. Thomas Sandgaard, CEO, stated “We are excited with the continued revenue growth and outlook of the Company. The investment in our sales team continues t o generate a significant increase in orders.”
Zynex’s third quarter 2010 gross profit of $5,231,000 is also a record and reflects a 79% gross profit margin, unchanged from the previous quarter’s gross profit margin. SG&A expenses in the third quarter totaled $4,606,000 compared to $2,906,000 in the third quarter 2009 and increased by 5% in the third quarter of 2010 as compared to $4,390,000 in the second quarter of 2010. SG&A expenses reported in the third quarter of 2010 included expenses of $200,000, related to the transition of the Company’s Chief Financial Officer. The Company reported positive net income for the quarter ended September 30, 2010 of $368,000, which showed significant improvement over the second quarter of 2010, as expenditures made in prior quarters have helped drive further top-line growth. The Company’s continued focus on strengthening its balance sheet resulted in strong cash collections from customers in the quarter, which resulted in a cash position of $593,000 as of September 30, 2010 and a net reduction of the amount outstanding under the Company’s revolving line of credit.
Zynex is providing guidance for the full year of 2010 net revenues of between $24 million and $25 million.
Thomas Sandgaard, CEO, said: "I am happy to announce that our third quarter revenue came in at the high end of our estimated range of $6.2 to $6.8 million. We continued the trend of sequentially growing our top line 16%, significantly more than our selling, general and administrative expenses which only increased 5% between the second and third quarter. Our cash position also improved by $500,000, while at the same time the use of our Line of Credit decreased. We have previously made investments in our infrastructure that we believe put us in a position to finish the year strong and prepare us for continued growth in 2011.”
Highlights from the third quarter 2010 condensed consolidated financial statements:
(unaudited, amounts in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenue | $ | 6,657 | $ | 4,691 | $ | 17,274 | $ | 13,270 | ||||||||
Gross profit | 5,231 | 3,793 | 13,630 | 11,113 | ||||||||||||
Net income | 368 | 459 | 330 | 2,118 | ||||||||||||
Net income per share - diluted | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.07 | ||||||||
Weighted average number of common shares outstanding - diluted | 30,667,064 | 30,282,030 | 30,744,764 | 30,223,547 | ||||||||||||
Cash | $ | 593 | $ | 239 | $ | 593 | $ | 239 | ||||||||
Total stockholders’ equity | 8,080 | 7,053 | 8,080 | 7,053 |
Exhibit 99.1 -- Page 1 of 5
About Zynex
Zynex, Inc. (founded in 1996) engineers, manufactures, markets and sells its own design of electrotherapy medical devices in two distinct markets: standard digital electrotherapy products for pain relief and pain management; and the NeuroMove(TM) for stroke and spinal cord injury rehabilitation. Zynex's product lines are fully developed, FDA-cleared, commercially sold, and have been developed to uphold the Company's mission of improving the quality of life for patients suffering from impaired mobility due to stroke, spinal cord injury, or debilitating and chronic pain. Zynex has also announced the development of two new business units, Zynex Monitoring Solutions and Zynex NeuroDiagnostic.
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, 2009.
Contact: Zynex, Inc. Thomas Sandgaard, CEO, 303-703-4906
Exhibit 99.1 -- Page 2 of 5
ZYNEX, INC. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenue: | ||||||||||||||||
Rental | $ | 2,032 | $ | 2,548 | $ | 6,639 | $ | 7,797 | ||||||||
Sales | 4,625 | 2,143 | 10,635 | 5,473 | ||||||||||||
6,657 | 4,691 | 17,274 | 13,270 | |||||||||||||
Cost of revenue: | ||||||||||||||||
Rental | 169 | 346 | 702 | 967 | ||||||||||||
Sales | 1,257 | 552 | 2,942 | 1,190 | ||||||||||||
1,426 | 898 | 3,644 | 2,157 | |||||||||||||
Gross profit | 5,231 | 3,793 | 13,630 | 11,113 | ||||||||||||
Selling, general and administrative expense | 4,606 | 2,906 | 12,842 | 7,784 | ||||||||||||
Income from operations | 625 | 887 | 788 | 3,329 | ||||||||||||
Other income expense: | ||||||||||||||||
Interest income | 2 | - | 5 | 3 | ||||||||||||
Interest expense and loss on extinguishment | ||||||||||||||||
of debt | (45) | (38) | (177) | (113) | ||||||||||||
Other expense | - | - | (16) | (1) | ||||||||||||
(Loss) gain on value of derivative liability | - | (25) | - | 172 | ||||||||||||
(43) | (63) | (188) | 61 | |||||||||||||
Income before income tax | 582 | 824 | 600 | 3,390 | ||||||||||||
Income tax expense | 214 | 365 | 270 | 1,272 | ||||||||||||
Net income | $ | 368 | $ | 459 | $ | 330 | $ | 2,118 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.07 | ||||||||
Diluted | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.07 | ||||||||
Weighted average number of common | ||||||||||||||||
shares outstanding: | ||||||||||||||||
Basic | 30,569,441 | 30,086,784 | 30,555,778 | 29,997,276 | ||||||||||||
Diluted | 30,667,064 | 30,282,030 | 30,744,764 | 30,223,547 |
Exhibit 99.1 -- Page 3 of 5
ZYNEX, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT NUMBER OF SHARES) | ||||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
(UNAUDITED) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 593 | $ | 863 | ||||
Accounts receivable, net | 6,628 | 5,039 | ||||||
Inventory | 3,425 | 2,034 | ||||||
Prepaid expenses | 39 | 139 | ||||||
Deferred tax asset | 1,248 | 864 | ||||||
Other current assets | 76 | 77 | ||||||
Total current assets | 12,009 | 9,016 | ||||||
Property and equipment, net | 2,654 | 2,718 | ||||||
Deposits | 174 | 166 | ||||||
Deferred financing fees, net | 100 | 30 | ||||||
Total assets | $ | 14,937 | $ | 11,930 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Line of credit | $ | 972 | $ | - | ||||
Current portion of capital leases and other obligations | 71 | 95 | ||||||
Accounts payable | 1,485 | 1,127 | ||||||
Income taxes payable | 541 | 905 | ||||||
Accrued payroll and payroll taxes | 651 | 426 | ||||||
Other accrued liabilities | 894 | 788 | ||||||
Total current liabilities | 4,614 | 3,341 | ||||||
Capital leases and other obligations, less current portion | 261 | 20 | ||||||
Deferred rent liability | 1,390 | 544 | ||||||
Deferred tax liability | 592 | 539 | ||||||
Total liabilities | 6,857 | 4,444 | ||||||
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, | ||||||||
30,569,667 (2010) and 30,497,318 (2009) shares issued and outstanding | 31 | 30 | ||||||
Paid-in capital | 4,620 | 4,357 | ||||||
Retained earnings | 3,429 | 3,099 | ||||||
Total stockholders' equity | 8,080 | 7,486 | ||||||
Total liabilities and stockholders’ equity | $ | 14,937 | $ | 11,930 |
Exhibit 99.1 -- Page 4 of 5
ZYNEX, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(UNAUDITED, AMOUNTS IN THOUSANDS) | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 330 | $ | 2,118 | ||||
Adjustments to reconcile net income to net cash | ||||||||
(used in) provided by operating activities: | ||||||||
Depreciation expense | 591 | 499 | ||||||
Provision for provider discounts | 55,221 | 39,004 | ||||||
Provision for losses in accounts receivable (uncollectibility) | 3,286 | 2,369 | ||||||
Amortization of financing fees | 31 | 21 | ||||||
Gain on value of derivative liability | - | (172 | ) | |||||
Change in reserve for obsolete inventory | (2) | 152 | ||||||
Deferred rent expense | 846 | - | ||||||
Net loss on disposal of equipment | 18 | - | ||||||
Issuance of common stock for consulting services | 61 | 75 | ||||||
Employee stock based compensation expense | 203 | 113 | ||||||
Deferred tax benefit | (331 | ) | (172 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (60,096 | ) | (41,851 | ) | ||||
Inventory | (1,389 | ) | (88 | ) | ||||
Prepaid expenses | 100 | 53 | ||||||
Other current assets | (19 | ) | (108) | ) | ||||
Accounts payable | 358 | (306 | ) | |||||
Accrued liabilities | 331 | (451 | ) | |||||
Income taxes payable | (364 | ) | 506 | |||||
Net cash (used in) provided by operating activities | (825 | ) | 1,762 | |||||
Cash flows from investing activities: | ||||||||
Proceeds received in lease termination | 108 | - | ||||||
Purchases of equipment | (271 | ) | (818 | ) | ||||
Net cash used in investing activities | (163 | ) | (818 | ) | ||||
Cash flows from financing activities: | ||||||||
Decrease in bank overdraft | - | (113 | ) | |||||
Net borrowings from (payments on) line of credit | 972 | (682 | ) | |||||
Deferred financing fees | (90 | ) | - | |||||
Payments on notes payable and capital leases | (164 | ) | (29 | ) | ||||
Repayments of loans from stockholder | - | (25 | ) | |||||
Issuance of common stock | - | 144 | ||||||
Net cash provided by (used in) financing activities | 718 | (705 | ) | |||||
Net (decrease) increase in cash | (270 | ) | 239 | |||||
Cash at beginning of period | 863 | - | ||||||
Cash at end of period | $ | 593 | $ | 239 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 75 | $ | 113 | ||||
Income taxes paid (including interest and penalties) | $ | 955 | $ | 935 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Equipment acquired through capital lease | $ | 334 | $ | - |
Exhibit 99.1 -- Page 5 of 5