Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 29, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity Registrant Name | ZYNEX INC | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 32,743,250 | |
Trading Symbol | ZYXI | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000846475 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 11,934,000 | $ 10,128,000 |
Accounts receivable, net | 4,254,000 | 2,791,000 |
Inventory, net | 2,129,000 | 837,000 |
Prepaid expenses and other | 321,000 | 568,000 |
Total current assets | 18,638,000 | 14,324,000 |
Property and equipment, net | 780,000 | 819,000 |
Operating lease asset | 4,078,000 | 3,050,000 |
Financing lease asset | 195,000 | 19,000 |
Deposits | 317,000 | 314,000 |
Long term deferred income taxes | 716,000 | 725,000 |
Total assets | 24,724,000 | 19,251,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,945,000 | 1,552,000 |
Lease liability - operating leases | 1,045,000 | 671,000 |
Lease liability - financing leases | 45,000 | 14,000 |
Income taxes payable | 132,000 | 688,000 |
Dividends payable | 8,000 | 2,270,000 |
Accrued payroll and related taxes | 1,344,000 | 908,000 |
Deferred insurance reimbursement | 0 | 880,000 |
Total current liabilities | 4,519,000 | 6,983,000 |
Long-term liabilities: | ||
Lease liability - operating leases | 3,659,000 | 2,967,000 |
Lease liability - financing leases | 154,000 | 10,000 |
Total liabilities | 8,332,000 | 9,960,000 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2019 and December 31, 2018 | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,604,817 issued and 32,533,597 outstanding as of September 30, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 | 34,000 | 34,000 |
Additional paid-in capital | 8,884,000 | 8,157,000 |
Treasury stock 1,071,220 and 1,019,220 shares, at September 30, 2019 and December 31, 2018, respectively, at cost | (3,846,000) | (3,675,000) |
Accumulated earnings | 11,409,000 | 4,864,000 |
Total Zynex, Inc. stockholders' equity | 16,481,000 | 9,380,000 |
Non-controlling interest | (89,000) | (89,000) |
Total stockholders' equity | 16,392,000 | 9,291,000 |
Total liabilities and stockholders' equity | $ 24,724,000 | $ 19,251,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | |||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 33,604,817 | 33,312,411 | 33,290,587 |
Common Stock, Shares, Outstanding | 32,533,597 | 32,241,191 | 32,271,367 |
Treasury Stock, Shares | 1,071,220 | 1,071,220 | 1,019,220 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
NET REVENUE | ||||
Total net revenue | $ 11,817 | $ 8,131 | $ 31,310 | $ 22,580 |
COSTS OF REVENUE AND OPERATING EXPENSES | ||||
Costs of revenue - rental, product & supply | 2,261 | 1,641 | 5,993 | 4,207 |
Sales and marketing | 3,946 | 1,591 | 9,500 | 4,355 |
General and administrative | 3,115 | 2,079 | 8,482 | 6,528 |
Total costs of revenue and operating expenses | 9,322 | 5,311 | 23,975 | 15,090 |
Income from operations | 2,495 | 2,820 | 7,335 | 7,490 |
Other income (expense) | ||||
Deferred insurance reimbursement | 0 | 0 | 880 | 0 |
Interest income/(expense) | 1 | (1) | 1 | (153) |
Other income (expense), net | 1 | (1) | 881 | (153) |
Income from operations before income taxes | 2,496 | 2,819 | 8,216 | 7,337 |
Income tax expense | 463 | 228 | 1,671 | 407 |
Net Income | $ 2,033 | $ 2,591 | $ 6,545 | $ 6,930 |
Net income per share.: | ||||
Basic | $ 0.06 | $ 0.08 | $ 0.20 | $ 0.21 |
Diluted | $ 0.06 | $ 0.08 | $ 0.19 | $ 0.20 |
Weighted average basic shares outstanding | 32,490 | 32,521 | 32,350 | 32,580 |
Weighted average diluted shares outstanding | 34,076 | 33,931 | 33,917 | 34,171 |
Devices [Member] | ||||
NET REVENUE | ||||
Total net revenue | $ 2,661 | $ 1,811 | $ 6,924 | $ 5,072 |
Supplies [Member] | ||||
NET REVENUE | ||||
Total net revenue | $ 9,156 | $ 6,320 | $ 24,386 | $ 17,508 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash provided by operating activities | $ 4,205 | $ 6,767 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of Property and Equipment | (132) | (891) |
Net cash used in investing activities | (132) | (891) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on subordinated debt | 0 | (385) |
Payments on financing lease obligations | (4) | (89) |
Common stock cash dividends | (2,262) | 0 |
Purchase of treasury stock | (171) | (3,045) |
Proceeds from the issuance of stock | 170 | 174 |
Net cash used in financing activities | (2,267) | (3,345) |
Net decrease in cash and cash equivalents | 1,806 | 2,531 |
Cash and cash equivalents at beginning of period | 10,128 | 5,565 |
Cash and cash equivalents at end of period | 11,934 | 8,096 |
Supplemental disclosure of cash and non-cash activities: | ||
Income taxes paid | (2,218) | (228) |
Interest paid | 0 | (12) |
Lease incentive received | 0 | 213 |
Rent paid | $ (689) | $ (394) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Non-Controlling Interest | Total |
Balance at Dec. 31, 2017 | $ 33 | $ 7,612 | $ (243) | $ (2,411) | $ (89) | $ 4,902 |
Balance, shares at Dec. 31, 2017 | 32,778,040 | |||||
Adjustment for ASC 842 Adoption at Dec. 31, 2017 | (6) | (6) | ||||
Stock option exercises | 86 | 86 | ||||
Stock option exercises, shares | 236,957 | |||||
Stock-based compensation expense | 63 | 63 | ||||
Treasury stock | (1,757) | (1,757) | ||||
Treasury stock, shares | (408,254) | |||||
Net income | 1,920 | 1,920 | ||||
Balance at Mar. 31, 2018 | $ 33 | 7,761 | (2,000) | (497) | (89) | 5,208 |
Balance, shares at Mar. 31, 2018 | 32,606,743 | |||||
Balance at Dec. 31, 2017 | $ 33 | 7,612 | (243) | (2,411) | (89) | 4,902 |
Balance, shares at Dec. 31, 2017 | 32,778,040 | |||||
Adjusted Balance, shares | 32,271,367 | |||||
Adjustment for ASC 842 Adoption at Dec. 31, 2017 | (6) | (6) | ||||
Balance at Dec. 31, 2018 | 9,291 | |||||
Balance at Mar. 31, 2018 | $ 33 | 7,761 | (2,000) | (497) | (89) | 5,208 |
Balance, shares at Mar. 31, 2018 | 32,606,743 | |||||
Stock option exercises | 67 | 67 | ||||
Stock option exercises, shares | 130,000 | |||||
Stock-based compensation expense | 53 | 53 | ||||
Treasury stock | (211) | (211) | ||||
Treasury stock, shares | (66,513) | |||||
Net income | 2,418 | 2,418 | ||||
Balance at Jun. 30, 2018 | $ 33 | 7,881 | (2,211) | 1,921 | (89) | 7,535 |
Balance, shares at Jun. 30, 2018 | 32,670,230 | |||||
Stock option exercises | $ 1 | 21 | 22 | |||
Stock option exercises, shares | 49,782 | |||||
Stock-based compensation expense | 76 | 76 | ||||
Treasury stock | (1,078) | (1,078) | ||||
Treasury stock, shares | (334,414) | |||||
Net income | 2,591 | 2,591 | ||||
Balance at Sep. 30, 2018 | $ 34 | 7,978 | (3,289) | 4,512 | (89) | 9,146 |
Balance, shares at Sep. 30, 2018 | 32,385,598 | |||||
Adjusted Balance | $ 34 | 8,157 | (3,675) | 4,864 | (89) | 9,291 |
Balance at Dec. 31, 2018 | 9,291 | |||||
Stock option exercises | 8 | 8 | ||||
Stock option exercises, shares | 21,832 | |||||
Stock-based compensation expense | 140 | 140 | ||||
Treasury stock | (171) | (171) | ||||
Treasury stock, shares | (52,000) | |||||
Other | (8) | |||||
Net income | 2,350 | 2,350 | ||||
Balance at Mar. 31, 2019 | $ 34 | 8,305 | (3,846) | 7,214 | (89) | 11,618 |
Balance, shares at Mar. 31, 2019 | 32,241,191 | |||||
Balance at Dec. 31, 2018 | 9,291 | |||||
Warrant exercises (in shares) | 40,366 | |||||
Treasury stock, shares | (52,000) | |||||
Balance at Sep. 30, 2019 | $ 34 | 8,884 | (3,846) | 11,409 | (89) | 16,392 |
Balance, shares at Sep. 30, 2019 | 32,533,597 | |||||
Balance at Mar. 31, 2019 | $ 34 | 8,305 | (3,846) | 7,214 | (89) | 11,618 |
Balance, shares at Mar. 31, 2019 | 32,241,191 | |||||
Stock option exercises | 129 | 129 | ||||
Stock option exercises, shares | 166,623 | |||||
Warrant exercises (in shares) | 40,366 | |||||
Stock-based compensation expense | 158 | 158 | ||||
Net income | 2,162 | 2,162 | ||||
Balance at Jun. 30, 2019 | $ 34 | 8,592 | (3,846) | 9,376 | (89) | 14,067 |
Balance, shares at Jun. 30, 2019 | 32,448,180 | |||||
Stock option exercises | 34 | 34 | ||||
Stock option exercises, shares | 85,417 | |||||
Stock-based compensation expense | 258 | 258 | ||||
Net income | 2,033 | 2,033 | ||||
Balance at Sep. 30, 2019 | $ 34 | $ 8,884 | $ (3,846) | $ 11,409 | $ (89) | $ 16,392 |
Balance, shares at Sep. 30, 2019 | 32,533,597 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | (1) BASIS OF PRESENTATION Organization Zynex, Inc. (a Nevada corporation) has its headquarters in Englewood, Colorado. We operate one primary business segment, medical devices which include Electrotherapy and Pain Management Products. As of September 30, 2019, the Company’s only active subsidiary is Zynex Medical, Inc. (“ZMI,” a wholly-owned Colorado corporation) through which the Company conducts most of its operations. One other subsidiary, Zynex Europe, ApS (“ZEU,” a wholly-owned Denmark corporation), did not generate material revenues during the three and nine months ended September 30, 2019 and 2018 from international sales and marketing. Zynex Monitoring Solutions, Inc. (“ZMS,” a wholly-owned Colorado corporation) has developed a blood volume monitoring device, but it is awaiting approval by the U.S. Food and Drug Administration (“FDA”) as well as Certificate European (“CE”) Marking in Europe, therefore, ZMS has achieved no revenues to date. The term “the Company” refers to Zynex, Inc. and its active and inactive subsidiaries. Nature of Business The Company designs, manufactures and markets medical devices that treat chronic and acute pain, as well as activate and exercise muscles for rehabilitative purposes with electrical stimulation. The Company’s devices are intended for pain management to reduce reliance on drugs and provide rehabilitation and increased mobility through the utilization of non-invasive muscle stimulation, electromyography technology, interferential current (“IFC”), neuromuscular electrical stimulation (“NMES”) and transcutaneous electrical nerve stimulation (“TENS”). Our medical devices are designed for home use and to be patient friendly. Our devices are small, portable, battery-operated and include an electrical pulse generator which is connected to the body via electrodes. Our medical devices are marketed in the U.S. and are subject to FDA regulation and approval. Our products require a physician’s prescription before they can be dispensed in the U.S. Our primary product is the NexWave device, which is marketed to physicians and therapists by our field sales representatives. The NexWave requires consumable supplies, such as electrodes and batteries, which are shipped to patients on a recurring monthly basis, as needed. During the three and nine months ended September 30, 2019 and 2018, the Company generated substantially all of its revenue (99.99%) in North America from sales of its devices and related supplies to patients and health care providers. Unaudited Consolidated Financial Statements The unaudited consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. A description of the Company’s accounting policies and other financial information is included in the audited consolidated financial statements as filed with the SEC in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018. Amounts as of December 31, 2018, are derived from those audited consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited financial statements, accounting policies and notes thereto, included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018, which has previously been filed with the SEC. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2019 and the results of its operations and its cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be achieved for a full fiscal year and cannot be used to indicate financial performance for the entire year. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Zynex, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Non-controlling Interest Non-controlling interest in the equity of a subsidiary is accounted for and reported as stockholders’ equity. Non-controlling interest represents the 20% ownership in the Company’s majority-owned (but currently inactive) subsidiary, Zynex Billing and Consulting, LLC (“ZBC”). Reclassifications During 2019, the Company began reporting costs related to its selling and marketing activities separate from its general and administrative costs. As a result, reclassifications between selling and marketing costs and general and administrative costs have been made to the results of operations for the three and nine month periods ending September 30, 2018 to conform to the consolidated 2019 financial statement presentation. These reclassifications had no effect on net earnings, retained earnings or cash flows as previously reported. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying consolidated financial statements are associated with the allowance for billing adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, stock-based compensation, and valuation of long-lived assets and realizability of deferred tax assets. Revenue Recognition, Allowance for Billing Adjustments and Collectability On January 1, 2018 the Company adopted the new accounting standard on revenue recognition issued by the Financial Accounting Standards Board (“FASB”). Pursuant to the revenue from contracts with customers standard the Company recognizes revenue when it transfers promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled, known as the transaction price. Revenue is generated primarily from sales in the United States of our electrotherapy devices and associated supplies. Sales are primarily made with, and shipped, directly to the patient with a small amount of revenue generated from sales to distributors. Device sales can be in the form of a purchase or a lease. Revenue related to purchased devices are recognized in accordance with ASU No. 2014‑09—“Revenue from Contracts with Customers” (ASC 606) and is recognized when the device, which has been prescribed by a doctor, is delivered to the patient which is when control is deemed to have transferred to the customer. Revenue related to devices out on lease is recognized in accordance with ASC 842 (as defined below). These leases are accounted for as operating leases based on the following criteria below: · The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term. · The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. · The lease term is month to month, which does not meet the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease. · There is no residual value guaranteed and the present value of the sum of the lease payments does not equal or exceed substantially all of the fair value of the underlying asset. · The underlying asset is expected to have alternative uses to the lessor at the end of the lease term. Leased units still require a doctor’s prescription and the lease inception is dependent upon delivery. The Company retains title to the leased device and those devices are classified as property and equipment on the balance sheet. Since our leases are month-to-month and can be returned by the patient at any time, revenue is typically recognized monthly until the customer returns the unit. Device sales between purchased, subject to ASC 606, and leased, subject to ASC 842, are broken down as following (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 DEVICE REVENUE Purchased $ 939 $ 547 $ 2,249 $ 1,260 Leased 1,722 1,264 4,675 3,812 Total Device revenue 2,661 1,811 6,924 5,072 Supplies revenue is recognized once delivered to the patient, which is when control is deemed to have transferred to the customer. Supplies needed for the device can be set up as a recurring shipment, ordered through the customer support team or our online store as needed. In the healthcare industry there is often a third party involved that will pay on the patient’s behalf for purchased or leased devices and supplies. The terms of the separate arrangement impact certain aspects of the contracts, with patients covered by Third-party Payors (as defined below), such as contract type, performance obligations and transaction price, but for purposes of revenue recognition the contract with the customer refers to the arrangement between the Company and the patient. The Company does not have any material deferred revenue in the normal course of business as each performance obligation is met upon delivery of goods to the patient. The Company had deferred revenue of $0.9 million as of December 31, 2018 related to an insurance reimbursement claim that was de-recognized during the nine months ended September 30, 2019. For additional detail, see description below in Note 7. There are no substantial costs incurred through support or warranty obligations. Primarily all of the Company’s revenues are derived, and the related receivables are due, from patients with private health insurance carriers and workers compensation claims (collectively “Third-party Payors”), with a small portion related to private pay individuals, attorney and auto claims. The transaction price is estimated with variable consideration using the most likely amount technique for Third-party Payors reimbursement deductions, known throughout the health care industry as “billing adjustments” whereby the Third-party Payors unilaterally reduce the amount they reimburse for the Company’s products, refund requests, and for the timing and values of amounts to be billed. Inherent in these estimates is the risk that they will have to be revised as additional information becomes available and constraints are released. Specifically, the complexity of Third-party Payor billing arrangements and the uncertainty of reimbursement amounts for certain products from Third-party Payors or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing changes in the health care industry and Third-party Payor reimbursements, as well as changes in our billing practices to increase cash collections, it is possible our forecasting model to estimate collections could change, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final determinations are reflected as an increase or a reduction to revenue in the period when such final determinations are known. Historically these differences have been immaterial and the Company has not had to go back and reassess the adjustments in future periods for past billing adjustments. The basis of estimates includes historical rates of collection, the aging of the receivables, trends in the historical reimbursement rates by Third-party Payors, determined using the portfolio approach, and current relationships and experience with the Third-party Payors. A change in the way estimates are determined can result from a number of factors, including experience and training of billing personnel, changes in the reimbursement policies or practices of Third-party Payors, or changes in industry rates of reimbursement. The Company monitors the variability and uncertain timing over Third-party Payor groups in our portfolios. If there is a change in our Third-party Payor mix over time, it could affect our net revenue and related receivables. We believe we have a sufficient history of collection experience to estimate the net collectible amounts by Third-party Payors. However, changes to the allowance for billing adjustments, which are recorded as a reduction of transaction price, have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year to year. Billing and reimbursement disputes are very common in the Company’s industry. The Company frequently receives refund requests from Third-party Payors relating to specific patients and dates of service. These requests are sometimes related to a limited number of patients or products; at other times, they include a significant number of refund claims in a single request. The Company reviews and evaluates these requests and determines if any refund request is appropriate. The Company also reviews these refund claims when it is rebilling or pursuing reimbursement from Third-party Payors. The Company frequently has significant offsets against such refund requests, and sometimes amounts are due to the Company in excess of the amounts of refunds requested by the Third-party Payors. Therefore, at the time of receipt of such refund requests, the Company is generally unable to determine if a refund request is valid and should be accrued. Such refunds are recorded when the amount is fixed and determinable. However, management maintains an allowance for estimated future refunds which we believe is sufficient to cover future claims in connection with its estimates of variable consideration recorded at the time sales are recorded. As of September 30, 2019, the Company believes its accounts receivable is reasonably stated at its net collectible value and has an adequate allowance for billing adjustments relating to all known Third-party Payor disputes, adjustments and refund requests. Stock-based Compensation The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during the period. The stock-based compensation expenses are recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For awards subject to the achievement of performance metrics, stock-based compensation expense is recognized when it becomes probable that the performance conditions will be achieved over the respective performance period. Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable, and accrued liabilities, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments also include capitalized leases, the carrying value of which approximates fair value because the interest rates on the outstanding borrowings are at rates that approximate market rates for borrowings with similar terms and average maturities. Inventory Inventory, which primarily represents devices, parts and supplies, are valued at the lower of cost (average) or net realizable value. The Company monitors inventory for turnover and obsolescence and records losses for excess and obsolete inventory, as appropriate. The Company provides reserves for estimated excess and obsolete inventories based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory reserves or write-downs may be required. Inventories, net of reserve, at September 30, 2019 were $2.1 million which was comprised of finished goods, work in progress, and parts and supplies as compared to December 31, 2018 of $0.8 million. Segment Information We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We have identified our Chief Executive Officer and Chief Financial Officer as our chief operating decision-makers (“CODM”). We currently operate our business as one operating segment which includes two revenue types: Devices and Supplies. Income Taxes We record deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. We reduce deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that these benefits will not be realized. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. On December 22, 2017, the U.S. government enacted comprehensive tax legislation (the “Tax Act”), which significantly revises the ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35% to 21%, implementing a territorial tax system, imposing a one-time tax on foreign unremitted earnings and setting limitations on deductibility of certain costs, among other things. Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018‑07, Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-based Payments. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The effective date for the standard is for interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The new guidance is required to be applied retrospectively with the cumulative effect recognized at the date of initial application. The Company determined that adoption did not have a material impact on its consolidated financial statements. In February 2018, the FASB issued ASU 2018‑02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018‑02”), which allows companies to reclassify stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act (the Tax Act), from accumulated other comprehensive income to retained earnings. The new standard is effective for us beginning January 1, 2019, with early adoption permitted. The Company determined that the adoption did not have a material impact on its consolidated financial statements. The Company adopted ASU 2016‑02, Leases (Topic 842), as of January 1, 2019, with an effective date of January 1, 2018, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standards, which among other things, allowed us to carry forward the historical lease classification. We also elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the lengthening of the lease term related to one of our financing leases. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $3.6 million and $3.9 million, respectively, as of January 1, 2018. The Company also recorded an adjustment to the opening balance of retained earnings of $6,000 on January 1, 2018. The difference between the additional lease assets and lease liabilities, net of our previously recorded deferred rent liability, was recorded as an adjustment to retained earnings. The standard did not have a material impact on our consolidated statement of operations and had no impact on our statement of cash flows. See Note 8, below, for further discussion regarding the Company’s operating and financing leases. Effect of ASC 842 Adoption on the Company’s Consolidated Balance Sheets (in thousands, except share amounts) December 31, Effect of the Adoption of December 31, 2018 ASC 842 2018 (as previously (as adjusted) reported) ASSETS Current assets: Cash $ 10,128 $ — $ 10,128 Accounts receivable, net 2,791 — 2,791 Inventory, net 837 — 837 Prepaid expenses and other 570 (2) (a) 568 Total current assets 14,326 (2) 14,324 Property and equipment, net 819 — 819 Operating lease asset — 3,050 (b) 3,050 Financing lease asset — 19 (c) 19 Deposits 314 — 314 Long term deferred income taxes 725 — 725 Total assets $ 16,184 $ 3,067 $ 19,251 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses 1,552 — 1,552 Operating lease liability — 671 (b) 671 Financing lease liability — 14 (c) 14 Deferred rent 57 (57) (b) — Income taxes payable 688 — 688 Dividends payable 2,270 — 2,270 Accrued payroll and related taxes 908 — 908 Deferred insurance reimbursement 880 — 880 Total current liabilities 6,355 628 6,983 Long-term liabilities: Deferred rent 531 (531) (b) — Operating lease liability — 2,967 (b) 2,967 Financing lease liability — 10 (c) 10 Total liabilities 6,886 3,074 9,960 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018 — — — Common stock, $0.001 par value; 100,000,000 shares authorized; 33,312,411 issued and 32,241,191 outstanding as of March 31, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 34 — 34 Additional paid-in capital 8,157 — 8,157 Treasury stock 1,071,220 and 1,019,220 shares, at March 31, 2019 and December 31, 2018, respectively, at cost (3,675) — (3,675) Accumulated earnings 4,871 (7) (d) 4,864 Total Zynex, Inc. stockholders’ equity 9,387 (7) 9,380 Non-controlling interest (89) — (89) Total stockholders’ equity 9,298 (7) 9,291 Total liabilities and stockholders’ equity $ 16,184 $ 3,067 19,251 a) Represents prepaid rent reclassified to financing lease assets b) Represents capitalization of operating lease assets, recognition of operating lease liabilities and reclassification of tenant incentives and deferred rent balances c) Represents impact of changes in finance lease terms under the hindsight practical expedient d) Represents the impact of changes in financing lease terms for certain leases due to the application of the hindsight practical expedient Recent Accounting Pronouncements In August 2017, the FASB issued ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017‑12”), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. ASU 2017‑12 is effective for us in the first quarter of fiscal 2020, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017‑12 on our consolidated financial statements. In June 2016, FASB issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016‑13"), Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact that the adoption of ASU 2016‑13 will have on our financial condition, results of operations and cash flows. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s consolidated financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2019 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | (2) PROPERTY AND EQUIPMENT The components of property and equipment are as follows (in thousands): September 30, 2019 December 31, 2018 Property and equipment Office furniture and equipment $ 1,139 $ 1,172 Assembly equipment 128 128 Vehicles 181 184 Leasehold improvements 501 480 Leased devices 697 317 $ 2,646 2,281 Less accumulated depreciation (1,866) (1,462) $ 780 $ 819 The Company monitors devices out on lease for potential loss and places an estimated reserve on the net book value based on historical loss rates. Total depreciation expense related to our property and equipment was $0.1 million for both the three months ended September 30, 2019 and 2018. Depreciation expense for the nine-month periods ended September 30, 2019 and 2018 was $0.2 million and $0.1 million, respectively. Total depreciation expense related to devices out on lease was $0.1 million for both the three months ended September 30, 2019 and 2018. Depreciation expense related to devices out on lease was $0.4 million and $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. Depreciation on leased units is reflected on the income statement as cost of revenue. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | (3) EARNINGS PER SHARE Basic earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding and the number of dilutive potential common share equivalents during the period, calculated using the treasury-stock method for outstanding stock options. The calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 are as follows (in thousands, except per share data): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 Basic earnings per share Net income available to common stockholders $ 2,033 $ 2,591 $ 6,545 $ 6,930 Basic weighted-average shares outstanding 32,490 32,521 32,350 32,580 Basic earnings per share $ 0.06 $ 0.08 $ 0.20 $ 0.21 Diluted earnings per share Net income available to common stockholders $ 2,033 $ 2,591 $ 6,545 $ 6,930 Weighted-average shares outstanding 32,490 32,521 32,350 32,580 Effect of dilutive securities - options and restricted stock 1,586 1,410 1,567 1,591 Diluted weighted-average shares outstanding 34,076 33,931 33,917 34,171 Diluted earnings per share $ 0.06 $ 0.08 $ 0.19 $ 0.20 For both the three and nine months ended September 30, 2019, options to purchase 0.4 million shares of common stock were excluded from the dilutive stock calculation because their effect would have been anti-dilutive. For both the three and nine months ended September 30, 2018, options to purchase 0.3 million shares of common stock were excluded from the dilutive stock calculation because their effect would have been anti-dilutive. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2019 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | (4) STOCK-BASED COMPENSATION PLANS In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5,000,000 shares reserved for issuance. Awards permitted under the 2017 Stock Plan include: Stock Options and Restricted Stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. As applicable, awards are granted with an exercise price equal to the closing price of our common stock on the date of grant and generally vest over four years. Restricted Stock Awards are issued to the recipient upon vesting and are not included in outstanding shares until such vesting and issuance occurs. During the three and nine months ended September 30, 2019, 0.2 million and 0.6 million stock option awards were granted under the 2017 Stock Plan, respectively. During the three and nine months ended September 30, 2018, 0.1 million stock option awards were granted under the 2017 Stock Plan. At September 30, 2019,there were 2.1 million stock option awards issued and 1.2 million stock option awards exercisable under all plans. As of September 30, 2019, 3.7 million stock options remain reserved for issuance under the 2017 Stock Plan. During the three and nine months ended September 30, 2019, 35,000 and 45,000 shares of restricted stock were granted to management under the 2017 Stock Plan, respectively. The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on the date of grant. The vesting of the Restricted Stock Awards typically occur quarterly over three years for the Board of Directors and quarterly over four years for management. The following summarizes stock-based compensation expenses recorded in the consolidated statements of operations: During the three and nine months ended September 30, 2019, the Company recorded compensation expense related to stock options and restricted stock of approximately $0.3 million and $0.6 million, respectively. During the three and nine months ended September 30, 2018, the Company recorded compensation expense of approximately $0.1 million and $0.2 million, respectively. The Company includes stock-based compensation expense in its in general and administrative expense on the accompanying consolidated statements of operations. The Company received proceeds of approximately $34,000 and $0.2 million related to option exercises during three and nine months ended September 30, 2019, respectively. The Company received proceeds of approximately $21,000 and $0.2 million related to option exercises during the three and nine months ended September 30, 2018, respectively. The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions for the three and nine months ended September 30, 2019 and 2018. For the Three Months For the Nine Months Ended September 30, Ended September 30, 2019 2018 2019 2018 Expected term (years) 6.25 6.25 6.25 6.25 Risk-free interest rate 1.83 % 2.78 % 2.34 % 2.78 % Expected volatility 121.58 % 123.05 % 121.83 % 123.05 % Expected dividend yield — % — % — % — % A summary of stock option activity under all equity compensation plans for the nine months ended September 30, 2019, is presented below: Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Term Value (in thousands) Price (Years) (in thousands) Outstanding at December 31, 2018 1,885 $ 0.80 6.3 $ 4,085 Granted 616 $ 5.62 Expired (7) 1.00 Forfeited (115) $ 2.47 Exercised (253) $ 0.68 Outstanding at September 30, 2019 2,126 $ 2.12 6.6 $ 15,720 Exercisable at September 30, 2019 1,171 $ 0.43 4.7 $ 10,626 A summary of restricted stock award activity under all equity compensation plans for the nine months ended September 30, 2019, is presented below: Number of Shares (in thousands) Granted but not vested at December 31, 2018 76 Granted 45 Forfeited — Vested (21) Granted but not vested at September 30, 2019 100 As of September 30, 2019, the Company had approximately $3.6 million of unrecognized compensation expense related to stock options and restricted stock awards that will be recognized over a weighted average period of approximately 3.0 years. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | (5) STOCKHOLDERS’ EQUITY Common Stock Dividend Our Board of Directors declared a cash dividend of $0.07 per share on November 6, 2018. The dividend of $2.3 million was paid on January 18, 2019 to stockholders of record as of January 2, 2019. Treasury Stock From December 6, 2017 through March 6, 2018, we had the ability through our stock purchase program to re-purchase our common stock at prevailing market prices either in the open market or through privately negotiated transactions up to $2.0 million. On March 6, 2018, we reached the limit of $2.0 million and share re-purchases were ceased. From the inception of the plan through March 6, 2018, we purchased 495,091 shares of our common stock for $2.0 million or an average price of $4.04 per share. From May 14, 2018 through May 13, 2019, we had the ability through our stock purchase program to re-purchase our common stock at prevailing market rates either in the open market or through privately negotiated transactions up to $2.0 million. For the nine months ending September 30, 2019, the Company purchased 52,000 shares of our common stock for $0.2 million for an average price of $3.29 per share, related to the new program. From May 14, 2018 through May 13, 2019, the Company purchased 576,129 shares of our common stock for $1.8 million or an average price $3.20 per share. Warrants During the nine months ended September 30, 2019, 50,000 warrants were exercised. These warrants were issued during October 2017 as payment for professional services. The exercise was done pursuant to a net exercise provision and, as a result, 9,634 shares of common stock were withheld to facilitate the payment of the exercise price which resulted in the issuance of 40,366 shares of common stock. A summary of stock warrant activity for the nine months ended September 30, 2019 is presented below (in thousands): Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Warrants Exercise Term Value (in thousands) Price (Years) (in thousands) Outstanding at December 31, 2018 150 $ 2.42 5.8 $ 79 Granted — $ — Exercised (40) $ 2.00 Forfeited (10) $ 2.00 Outstanding at September 30, 2019 100 $ 2.63 5.0 $ 689 Exercisable at September 30, 2019 100 $ 2.63 5.0 $ 689 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | (6) INCOME TAXES The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, primarily related to excess tax benefits on stock option exercises. For the three and nine months ended September 30, 2019 discrete items adjusted were $0.2 million and $0.6 million, respectively. At September 30, 2019 the Company is currently estimating an annual effective tax rate of approximately 27%. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to various factors. The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 27% for the nine months ended September 30, 2019. Discrete items recognized during the three months ended September 30, 2019 and 2018, resulted in a tax benefit of approximately $0.2 million and $16,000, respectively. Discrete items recognized during the nine months ended September 30, 2019 and 2018, resulted in a tax benefit of approximately $0.6 million and $0.3 million, respectively. The Company recorded income tax expense of $0.5 million and $1.7 million for the three and nine months ended September 30, 2019, respectively, and income tax expense of $0.2 million and $0.4 million for the three and nine months ended September 30, 2018. Taxes of $2.2 million and $0.2 million were paid during the nine months ended September 30 2019 and 2018, respectively. |
DEFERRED INSURANCE REIMBURSEMEN
DEFERRED INSURANCE REIMBURSEMENT | 9 Months Ended |
Sep. 30, 2019 | |
DEFERRED INSURANCE REIMBURSEMENT | |
DEFERRED INSURANCE REIMBURSEMENT | (7) DEFERRED INSURANCE REIMBURSEMENT During the first quarter of 2016, the Company collected $880,000 from a single insurance company for accounts receivable. The accounts receivable had been previously reduced to zero by the allowance for billing adjustments. Subsequent to March 31, 2016, the insurance company verbally communicated to the Company that this payment was made in error and requested it be refunded to the insurance company. The Company recorded this $880,000 insurance reimbursement as a deferred insurance liability. During the first quarter of 2019, the Company recognized $880,000 as other income and reversed the liability as management’s assessment was that any repayment obligation was deemed remote. The Company has included this amount in other income in order to ensure comparability of the Company’s operating income results for the nine months ended September 30, 2019 and 2018. Management’s legal determination that any refund obligation is remote was based on the facts and circumstances related to the dispute, which included reviewing the legal statutes within the jurisdictions the Company operates. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
LEASES | (8) LEASES The Company’s primary leases are as follows: · The Company entered into a sublease agreement on October 20, 2017 with CSG Systems Inc. for approximately 41,715 square feet at 9555 Maroon Circle, Englewood CO 80112. The term of the sublease runs through June 30, 2023, with an option to extend for an additional two years through June 30, 2025. During the first year of the sublease, the rent per square foot is $7.50, increasing to $19.75 during the second year of the sublease and each year thereafter for the initial term increasing by an additional $1 per square foot. The Company has not yet determined whether it is reasonably certain to exercise its renewal option and has therefore only considered the initial term when determining the lease liability and lease asset. The Company is also obligated to pay its proportionate share of building operating expenses. The sub-landlord agreed to contribute approximately $0.2 million toward tenant improvements which is accounted for as a reduction of the operating lease asset and subsequently treated as a reduction of rent expense over the term of the lease. · The Company entered into an amendment to its sublease agreement on March 11, 2019 with CSG Systems, Inc. for an additional 21,420 square feet of office space at its current headquarters location at Two Maroon Circle, located at 9555 Maroon Circle, Englewood, CO 80112. The term of sublease for the additional space began on June 1, 2019 and runs through June 30, 2023, with an option to extend the term for an additional two years through June 30, 2025. During the first seven months of the Amendment to the Sublease, the rent per square foot is $10.00, increasing to $20.75 from January 1, 2020 through October 31, 2020. For annual periods beginning November 1, 2020, the price per square foot increases by an additional $1 per square foot. The expansion work was completed, and the lease commenced, on June 1, 2019. Upon lease commencement, the Company recorded an operating lease liability and a corresponding right of use asset for $1.6 million each. · The Company entered into an equipment lease on September 20, 2019 with Konica Minolta Premier Finance for a copier/printer and related software located at its corporate offices. The term of the equipment lease agreement is 5 years with the option to purchase the equipment at the end of the lease. The Company does not expect to exercise the option to purchase the equipment and, accordingly, has not considered the effect of the purchase in the evaluation of the lease asset and liability. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a financing lease liability and a corresponding right of use asset for $0.2 million each. The Company’s operating leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company’s incremental borrowing rate was determined to be 4.8% for its operating lease liabilities. The Company’s equipment lease agreement has an implicit rate of 8.3%, which was used to measure its financing lease liability. The remaining lease term was 4.0 years for the Company’s operating leases and 5.0 years for its financing leases. The table below reconciles the undiscounted future minimum lease payments under the Company’s operating and capital leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of September 30, 2019 (in thousands): Operating lease liabilities Financing lease liabilities October 1, 2019 through December 31, 2019 $ 272 $ 25 2020 1,344 45 2021 1,408 45 2022 1,473 45 2023 763 45 2024 — 34 Total undiscounted future minimum lease payments 5,260 241 Less: Difference between undiscounted lease payments and discounted lease liabilities: (556) (42) Total lease liabilities $ 4,704 $ 199 Operating and financing lease costs were $0.4 and $0.8 million for the three and nine months ended September 30, 2019, respectively and $0.2 million and $0.7 million for the same periods in 2018, which were included in general and administrative expenses on the consolidated statement of operations. |
CONCENTRATIONS
CONCENTRATIONS | 9 Months Ended |
Sep. 30, 2019 | |
CONCENTRATIONS | |
CONCENTRATIONS | (9) CONCENTRATIONS For the three months ended September 30, 2019, the Company sourced approximately 49% of the supplies for its electrotherapy products from two significant vendors (defined as supplying at least 10%). For the same period in 2018, the Company sourced approximately 51% of the supplies from three significant vendors. For the nine months ended September 30, 2019, the Company sourced approximately 49% of supplies for its electrotherapy products from one significant vendor. For the same period in 2018 the company sourced approximately 44% of supplies from one significant vendor. Management believes that its relationships with suppliers are good. However, if the relationships were to be replaced, there may be a short-term disruption to operations, a period of time in which products may not be available and additional expenses may be incurred. The Company had receivables from two health insurance carriers at September 30, 2019 that made up approximately 38% of the net accounts receivable balance. The Company had receivables from one health insurance carrier at December 31, 2018, that made up approximately 23%, respectively, of the net accounts receivable balance. |
LITIGATION
LITIGATION | 9 Months Ended |
Sep. 30, 2019 | |
LITIGATION | |
LITIGATION | (10) LITIGATION From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management would accrue the estimated exposure for such events when losses are determined to be both probable and estimable. The Company is currently not a party to any material pending legal proceedings. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | (11) RELATED PARTY TRANSACTIONS As of September 30, 2019, the Company employs Mr. Martin Sandgaard, son of Thomas Sandgaard. Total compensation for Martin Sandgaard was $24,000 and $71,000 for the three and nine months ended September 30, 2019, respectively. Mr. Sandgaard’s compensation for the three and nine months ended September 30, 2018 was $19,000 and $65,000, respectively. To meet Mr. Sandgaard’s obligation to his former wife under a settlement agreement, the Company, during the fourth quarter of 2015, entered into a three-year employment arrangement totaling $100,000 per year with Mr. Joachim Sandgaard. During the three and nine months ended September 30, 2018, total compensation paid to Joachim Sandgaard was $21,000 and $75,000. Joachim Sandgaard’s employment with the Company ceased during December 2018. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Zynex, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Non-controlling Interest | Non-controlling Interest Non-controlling interest in the equity of a subsidiary is accounted for and reported as stockholders’ equity. Non-controlling interest represents the 20% ownership in the Company’s majority-owned (but currently inactive) subsidiary, Zynex Billing and Consulting, LLC (“ZBC”). |
Reclassifications | Reclassifications During 2019, the Company began reporting costs related to its selling and marketing activities separate from its general and administrative costs. As a result, reclassifications between selling and marketing costs and general and administrative costs have been made to the results of operations for the three and nine month periods ending September 30, 2018 to conform to the consolidated 2019 financial statement presentation. These reclassifications had no effect on net earnings, retained earnings or cash flows as previously reported. |
Use of Estimates | Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying consolidated financial statements are associated with the allowance for billing adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, stock-based compensation, and valuation of long-lived assets and realizability of deferred tax assets. |
Revenue Recognition, Allowance for Billing Adjustments and Collectability | Revenue Recognition, Allowance for Billing Adjustments and Collectability On January 1, 2018 the Company adopted the new accounting standard on revenue recognition issued by the Financial Accounting Standards Board (“FASB”). Pursuant to the revenue from contracts with customers standard the Company recognizes revenue when it transfers promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled, known as the transaction price. Revenue is generated primarily from sales in the United States of our electrotherapy devices and associated supplies. Sales are primarily made with, and shipped, directly to the patient with a small amount of revenue generated from sales to distributors. Device sales can be in the form of a purchase or a lease. Revenue related to purchased devices are recognized in accordance with ASU No. 2014‑09—“Revenue from Contracts with Customers” (ASC 606) and is recognized when the device, which has been prescribed by a doctor, is delivered to the patient which is when control is deemed to have transferred to the customer. Revenue related to devices out on lease is recognized in accordance with ASC 842 (as defined below). These leases are accounted for as operating leases based on the following criteria below: · The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term. · The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. · The lease term is month to month, which does not meet the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease. · There is no residual value guaranteed and the present value of the sum of the lease payments does not equal or exceed substantially all of the fair value of the underlying asset. · The underlying asset is expected to have alternative uses to the lessor at the end of the lease term. Leased units still require a doctor’s prescription and the lease inception is dependent upon delivery. The Company retains title to the leased device and those devices are classified as property and equipment on the balance sheet. Since our leases are month-to-month and can be returned by the patient at any time, revenue is typically recognized monthly until the customer returns the unit. Device sales between purchased, subject to ASC 606, and leased, subject to ASC 842, are broken down as following (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 DEVICE REVENUE Purchased $ 939 $ 547 $ 2,249 $ 1,260 Leased 1,722 1,264 4,675 3,812 Total Device revenue 2,661 1,811 6,924 5,072 Supplies revenue is recognized once delivered to the patient, which is when control is deemed to have transferred to the customer. Supplies needed for the device can be set up as a recurring shipment, ordered through the customer support team or our online store as needed. In the healthcare industry there is often a third party involved that will pay on the patient’s behalf for purchased or leased devices and supplies. The terms of the separate arrangement impact certain aspects of the contracts, with patients covered by Third-party Payors (as defined below), such as contract type, performance obligations and transaction price, but for purposes of revenue recognition the contract with the customer refers to the arrangement between the Company and the patient. The Company does not have any material deferred revenue in the normal course of business as each performance obligation is met upon delivery of goods to the patient. The Company had deferred revenue of $0.9 million as of December 31, 2018 related to an insurance reimbursement claim that was de-recognized during the nine months ended September 30, 2019. For additional detail, see description below in Note 7. There are no substantial costs incurred through support or warranty obligations. Primarily all of the Company’s revenues are derived, and the related receivables are due, from patients with private health insurance carriers and workers compensation claims (collectively “Third-party Payors”), with a small portion related to private pay individuals, attorney and auto claims. The transaction price is estimated with variable consideration using the most likely amount technique for Third-party Payors reimbursement deductions, known throughout the health care industry as “billing adjustments” whereby the Third-party Payors unilaterally reduce the amount they reimburse for the Company’s products, refund requests, and for the timing and values of amounts to be billed. Inherent in these estimates is the risk that they will have to be revised as additional information becomes available and constraints are released. Specifically, the complexity of Third-party Payor billing arrangements and the uncertainty of reimbursement amounts for certain products from Third-party Payors or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing changes in the health care industry and Third-party Payor reimbursements, as well as changes in our billing practices to increase cash collections, it is possible our forecasting model to estimate collections could change, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final determinations are reflected as an increase or a reduction to revenue in the period when such final determinations are known. Historically these differences have been immaterial and the Company has not had to go back and reassess the adjustments in future periods for past billing adjustments. The basis of estimates includes historical rates of collection, the aging of the receivables, trends in the historical reimbursement rates by Third-party Payors, determined using the portfolio approach, and current relationships and experience with the Third-party Payors. A change in the way estimates are determined can result from a number of factors, including experience and training of billing personnel, changes in the reimbursement policies or practices of Third-party Payors, or changes in industry rates of reimbursement. The Company monitors the variability and uncertain timing over Third-party Payor groups in our portfolios. If there is a change in our Third-party Payor mix over time, it could affect our net revenue and related receivables. We believe we have a sufficient history of collection experience to estimate the net collectible amounts by Third-party Payors. However, changes to the allowance for billing adjustments, which are recorded as a reduction of transaction price, have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year to year. Billing and reimbursement disputes are very common in the Company’s industry. The Company frequently receives refund requests from Third-party Payors relating to specific patients and dates of service. These requests are sometimes related to a limited number of patients or products; at other times, they include a significant number of refund claims in a single request. The Company reviews and evaluates these requests and determines if any refund request is appropriate. The Company also reviews these refund claims when it is rebilling or pursuing reimbursement from Third-party Payors. The Company frequently has significant offsets against such refund requests, and sometimes amounts are due to the Company in excess of the amounts of refunds requested by the Third-party Payors. Therefore, at the time of receipt of such refund requests, the Company is generally unable to determine if a refund request is valid and should be accrued. Such refunds are recorded when the amount is fixed and determinable. However, management maintains an allowance for estimated future refunds which we believe is sufficient to cover future claims in connection with its estimates of variable consideration recorded at the time sales are recorded. As of September 30, 2019, the Company believes its accounts receivable is reasonably stated at its net collectible value and has an adequate allowance for billing adjustments relating to all known Third-party Payor disputes, adjustments and refund requests. |
Stock-based Compensation | Stock-based Compensation The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during the period. The stock-based compensation expenses are recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For awards subject to the achievement of performance metrics, stock-based compensation expense is recognized when it becomes probable that the performance conditions will be achieved over the respective performance period. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable, and accrued liabilities, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments also include capitalized leases, the carrying value of which approximates fair value because the interest rates on the outstanding borrowings are at rates that approximate market rates for borrowings with similar terms and average maturities. |
Inventory | Inventory Inventory, which primarily represents devices, parts and supplies, are valued at the lower of cost (average) or net realizable value. The Company monitors inventory for turnover and obsolescence and records losses for excess and obsolete inventory, as appropriate. The Company provides reserves for estimated excess and obsolete inventories based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory reserves or write-downs may be required. Inventories, net of reserve, at September 30, 2019 were $2.1 million which was comprised of finished goods, work in progress, and parts and supplies as compared to December 31, 2018 of $0.8 million. |
Segment Information | Segment Information We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We have identified our Chief Executive Officer and Chief Financial Officer as our chief operating decision-makers (“CODM”). We currently operate our business as one operating segment which includes two revenue types: Devices and Supplies. |
Income Taxes | Income Taxes We record deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. We reduce deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that these benefits will not be realized. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. On December 22, 2017, the U.S. government enacted comprehensive tax legislation (the “Tax Act”), which significantly revises the ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35% to 21%, implementing a territorial tax system, imposing a one-time tax on foreign unremitted earnings and setting limitations on deductibility of certain costs, among other things. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018‑07, Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-based Payments. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The effective date for the standard is for interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The new guidance is required to be applied retrospectively with the cumulative effect recognized at the date of initial application. The Company determined that adoption did not have a material impact on its consolidated financial statements. In February 2018, the FASB issued ASU 2018‑02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018‑02”), which allows companies to reclassify stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act (the Tax Act), from accumulated other comprehensive income to retained earnings. The new standard is effective for us beginning January 1, 2019, with early adoption permitted. The Company determined that the adoption did not have a material impact on its consolidated financial statements. The Company adopted ASU 2016‑02, Leases (Topic 842), as of January 1, 2019, with an effective date of January 1, 2018, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standards, which among other things, allowed us to carry forward the historical lease classification. We also elected the hindsight practical expedient to determine the lease term for existing leases. Our election of the hindsight practical expedient resulted in the lengthening of the lease term related to one of our financing leases. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $3.6 million and $3.9 million, respectively, as of January 1, 2018. The Company also recorded an adjustment to the opening balance of retained earnings of $6,000 on January 1, 2018. The difference between the additional lease assets and lease liabilities, net of our previously recorded deferred rent liability, was recorded as an adjustment to retained earnings. The standard did not have a material impact on our consolidated statement of operations and had no impact on our statement of cash flows. See Note 8, below, for further discussion regarding the Company’s operating and financing leases. Effect of ASC 842 Adoption on the Company’s Consolidated Balance Sheets (in thousands, except share amounts) December 31, Effect of the Adoption of December 31, 2018 ASC 842 2018 (as previously (as adjusted) reported) ASSETS Current assets: Cash $ 10,128 $ — $ 10,128 Accounts receivable, net 2,791 — 2,791 Inventory, net 837 — 837 Prepaid expenses and other 570 (2) (a) 568 Total current assets 14,326 (2) 14,324 Property and equipment, net 819 — 819 Operating lease asset — 3,050 (b) 3,050 Financing lease asset — 19 (c) 19 Deposits 314 — 314 Long term deferred income taxes 725 — 725 Total assets $ 16,184 $ 3,067 $ 19,251 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses 1,552 — 1,552 Operating lease liability — 671 (b) 671 Financing lease liability — 14 (c) 14 Deferred rent 57 (57) (b) — Income taxes payable 688 — 688 Dividends payable 2,270 — 2,270 Accrued payroll and related taxes 908 — 908 Deferred insurance reimbursement 880 — 880 Total current liabilities 6,355 628 6,983 Long-term liabilities: Deferred rent 531 (531) (b) — Operating lease liability — 2,967 (b) 2,967 Financing lease liability — 10 (c) 10 Total liabilities 6,886 3,074 9,960 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018 — — — Common stock, $0.001 par value; 100,000,000 shares authorized; 33,312,411 issued and 32,241,191 outstanding as of March 31, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 34 — 34 Additional paid-in capital 8,157 — 8,157 Treasury stock 1,071,220 and 1,019,220 shares, at March 31, 2019 and December 31, 2018, respectively, at cost (3,675) — (3,675) Accumulated earnings 4,871 (7) (d) 4,864 Total Zynex, Inc. stockholders’ equity 9,387 (7) 9,380 Non-controlling interest (89) — (89) Total stockholders’ equity 9,298 (7) 9,291 Total liabilities and stockholders’ equity $ 16,184 $ 3,067 19,251 a) Represents prepaid rent reclassified to financing lease assets b) Represents capitalization of operating lease assets, recognition of operating lease liabilities and reclassification of tenant incentives and deferred rent balances c) Represents impact of changes in finance lease terms under the hindsight practical expedient d) Represents the impact of changes in financing lease terms for certain leases due to the application of the hindsight practical expedient Recent Accounting Pronouncements In August 2017, the FASB issued ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017‑12”), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. ASU 2017‑12 is effective for us in the first quarter of fiscal 2020, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017‑12 on our consolidated financial statements. In June 2016, FASB issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016‑13"), Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact that the adoption of ASU 2016‑13 will have on our financial condition, results of operations and cash flows. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s consolidated financial statements. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PRESENTATION | |
Disaggregation of Revenue | Device sales between purchased, subject to ASC 606, and leased, subject to ASC 842, are broken down as following (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 DEVICE REVENUE Purchased $ 939 $ 547 $ 2,249 $ 1,260 Leased 1,722 1,264 4,675 3,812 Total Device revenue 2,661 1,811 6,924 5,072 |
Consolidated Balance Sheets | Effect of ASC 842 Adoption on the Company’s Consolidated Balance Sheets (in thousands, except share amounts) December 31, Effect of the Adoption of December 31, 2018 ASC 842 2018 (as previously (as adjusted) reported) ASSETS Current assets: Cash $ 10,128 $ — $ 10,128 Accounts receivable, net 2,791 — 2,791 Inventory, net 837 — 837 Prepaid expenses and other 570 (2) (a) 568 Total current assets 14,326 (2) 14,324 Property and equipment, net 819 — 819 Operating lease asset — 3,050 (b) 3,050 Financing lease asset — 19 (c) 19 Deposits 314 — 314 Long term deferred income taxes 725 — 725 Total assets $ 16,184 $ 3,067 $ 19,251 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses 1,552 — 1,552 Operating lease liability — 671 (b) 671 Financing lease liability — 14 (c) 14 Deferred rent 57 (57) (b) — Income taxes payable 688 — 688 Dividends payable 2,270 — 2,270 Accrued payroll and related taxes 908 — 908 Deferred insurance reimbursement 880 — 880 Total current liabilities 6,355 628 6,983 Long-term liabilities: Deferred rent 531 (531) (b) — Operating lease liability — 2,967 (b) 2,967 Financing lease liability — 10 (c) 10 Total liabilities 6,886 3,074 9,960 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018 — — — Common stock, $0.001 par value; 100,000,000 shares authorized; 33,312,411 issued and 32,241,191 outstanding as of March 31, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 34 — 34 Additional paid-in capital 8,157 — 8,157 Treasury stock 1,071,220 and 1,019,220 shares, at March 31, 2019 and December 31, 2018, respectively, at cost (3,675) — (3,675) Accumulated earnings 4,871 (7) (d) 4,864 Total Zynex, Inc. stockholders’ equity 9,387 (7) 9,380 Non-controlling interest (89) — (89) Total stockholders’ equity 9,298 (7) 9,291 Total liabilities and stockholders’ equity $ 16,184 $ 3,067 19,251 a) Represents prepaid rent reclassified to financing lease assets b) Represents capitalization of operating lease assets, recognition of operating lease liabilities and reclassification of tenant incentives and deferred rent balances c) Represents impact of changes in finance lease terms under the hindsight practical expedient d) Represents the impact of changes in financing lease terms for certain leases due to the application of the hindsight practical expedient |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of components of property and equipment | The components of property and equipment are as follows (in thousands): September 30, 2019 December 31, 2018 Property and equipment Office furniture and equipment $ 1,139 $ 1,172 Assembly equipment 128 128 Vehicles 181 184 Leasehold improvements 501 480 Leased devices 697 317 $ 2,646 2,281 Less accumulated depreciation (1,866) (1,462) $ 780 $ 819 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE | |
Calculation of Basic and Diluted Earnings (Loss) Per Share | The calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 are as follows (in thousands, except per share data): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 Basic earnings per share Net income available to common stockholders $ 2,033 $ 2,591 $ 6,545 $ 6,930 Basic weighted-average shares outstanding 32,490 32,521 32,350 32,580 Basic earnings per share $ 0.06 $ 0.08 $ 0.20 $ 0.21 Diluted earnings per share Net income available to common stockholders $ 2,033 $ 2,591 $ 6,545 $ 6,930 Weighted-average shares outstanding 32,490 32,521 32,350 32,580 Effect of dilutive securities - options and restricted stock 1,586 1,410 1,567 1,591 Diluted weighted-average shares outstanding 34,076 33,931 33,917 34,171 Diluted earnings per share $ 0.06 $ 0.08 $ 0.19 $ 0.20 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
STOCK-BASED COMPENSATION PLANS | |
Fair Value of Stock Options Grants | The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions for the three and nine months ended September 30, 2019 and 2018. For the Three Months For the Nine Months Ended September 30, Ended September 30, 2019 2018 2019 2018 Expected term (years) 6.25 6.25 6.25 6.25 Risk-free interest rate 1.83 % 2.78 % 2.34 % 2.78 % Expected volatility 121.58 % 123.05 % 121.83 % 123.05 % Expected dividend yield — % — % — % — % |
Summary of Stock Option Activity Under the Option Plan | A summary of stock option activity under all equity compensation plans for the nine months ended September 30, 2019, is presented below: Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Term Value (in thousands) Price (Years) (in thousands) Outstanding at December 31, 2018 1,885 $ 0.80 6.3 $ 4,085 Granted 616 $ 5.62 Expired (7) 1.00 Forfeited (115) $ 2.47 Exercised (253) $ 0.68 Outstanding at September 30, 2019 2,126 $ 2.12 6.6 $ 15,720 Exercisable at September 30, 2019 1,171 $ 0.43 4.7 $ 10,626 |
Restricted Stock Award Activity Under all Equity Compensation Plans | A summary of restricted stock award activity under all equity compensation plans for the nine months ended September 30, 2019, is presented below: Number of Shares (in thousands) Granted but not vested at December 31, 2018 76 Granted 45 Forfeited — Vested (21) Granted but not vested at September 30, 2019 100 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |
Summary of stock warrant activity | A summary of stock warrant activity for the nine months ended September 30, 2019 is presented below (in thousands): Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Warrants Exercise Term Value (in thousands) Price (Years) (in thousands) Outstanding at December 31, 2018 150 $ 2.42 5.8 $ 79 Granted — $ — Exercised (40) $ 2.00 Forfeited (10) $ 2.00 Outstanding at September 30, 2019 100 $ 2.63 5.0 $ 689 Exercisable at September 30, 2019 100 $ 2.63 5.0 $ 689 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
Schedule of future minimum lease payments under the Company's operating leases | The table below reconciles the undiscounted future minimum lease payments under the Company’s operating and capital leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of September 30, 2019 (in thousands): Operating lease liabilities Financing lease liabilities October 1, 2019 through December 31, 2019 $ 272 $ 25 2020 1,344 45 2021 1,408 45 2022 1,473 45 2023 763 45 2024 — 34 Total undiscounted future minimum lease payments 5,260 241 Less: Difference between undiscounted lease payments and discounted lease liabilities: (556) (42) Total lease liabilities $ 4,704 $ 199 |
Schedule of future minimum lease payments under the Company's financing leases | The table below reconciles the undiscounted future minimum lease payments under the Company’s operating and capital leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of September 30, 2019 (in thousands): Operating lease liabilities Financing lease liabilities October 1, 2019 through December 31, 2019 $ 272 $ 25 2020 1,344 45 2021 1,408 45 2022 1,473 45 2023 763 45 2024 — 34 Total undiscounted future minimum lease payments 5,260 241 Less: Difference between undiscounted lease payments and discounted lease liabilities: (556) (42) Total lease liabilities $ 4,704 $ 199 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
DEVICE REVENUE | |||||
Total revenue | $ 11,817 | $ 8,131 | $ 31,310 | $ 22,580 | |
Deferred Revenue | $ 900 | ||||
Devices [Member] | |||||
DEVICE REVENUE | |||||
Purchased | 939 | 547 | 2,249 | 1,260 | |
Leased | 1,722 | 1,264 | 4,675 | 3,812 | |
Total revenue | $ 2,661 | $ 1,811 | $ 6,924 | $ 5,072 |
BASIS OF PRESENTATION - Effect
BASIS OF PRESENTATION - Effect of ASC 842 adoption (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 | Jun. 01, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2015 | ||
Current assets: | ||||||||||||||
Cash | $ 11,934,000 | $ 10,128,000 | $ 8,096,000 | $ 5,565,000 | ||||||||||
Accounts receivable, net | 4,254,000 | 2,791,000 | ||||||||||||
Inventory, net | 2,129,000 | 837,000 | ||||||||||||
Prepaid expenses and other | 568,000 | |||||||||||||
Total current assets | 18,638,000 | 14,324,000 | ||||||||||||
Property and equipment, net | 780,000 | 819,000 | ||||||||||||
Operating lease asset | 4,078,000 | $ 1,600,000 | 3,050,000 | |||||||||||
Financing lease asset | 195,000 | 19,000 | ||||||||||||
Deposits | 317,000 | 314,000 | ||||||||||||
Long term deferred income taxes | 716,000 | 725,000 | ||||||||||||
Total assets | 24,724,000 | 19,251,000 | ||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | 1,945,000 | 1,552,000 | ||||||||||||
Operating lease liability | 1,045,000 | 671,000 | ||||||||||||
Financing lease liability | 45,000 | 14,000 | ||||||||||||
Deferred rent | 0 | |||||||||||||
Income taxes payable | 132,000 | 688,000 | ||||||||||||
Dividends payable | 8,000 | 2,270,000 | ||||||||||||
Accrued payroll and related taxes | 1,344,000 | 908,000 | ||||||||||||
Deferred insurance reimbursement | 0 | 880,000 | $ 880,000 | $ 0 | ||||||||||
Total current liabilities | 4,519,000 | 6,983,000 | ||||||||||||
Long-term liabilities: | ||||||||||||||
Deferred rent | 0 | |||||||||||||
Operating lease liability | 3,659,000 | 2,967,000 | ||||||||||||
Financing lease liability | 154,000 | 10,000 | ||||||||||||
Total liabilities | 8,332,000 | 9,960,000 | ||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018 | 0 | 0 | ||||||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,312,411 issued and 32,241,191 outstanding as of March 31, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 | 34,000 | 34,000 | ||||||||||||
Additional paid-in capital | 8,884,000 | 8,157,000 | ||||||||||||
Treasury stock 1,071,220 and 1,019,220 shares, at March 31, 2019 and December 31, 2018, respectively, at cost | (3,846,000) | (3,675,000) | ||||||||||||
Accumulated earnings | 11,409,000 | 4,864,000 | $ 6,000,000 | |||||||||||
Total Zynex, Inc. stockholders' equity | 16,481,000 | 9,380,000 | ||||||||||||
Non-controlling interest | (89,000) | (89,000) | ||||||||||||
Total stockholders' equity | 16,392,000 | $ 14,067,000 | $ 11,618,000 | 9,291,000 | $ 9,146,000 | $ 7,535,000 | $ 5,208,000 | $ 4,902,000 | ||||||
Total liabilities and stockholders' equity | $ 24,724,000 | 19,251,000 | ||||||||||||
Effect of the Adoption of ASC 842 [Member] | ||||||||||||||
Current assets: | ||||||||||||||
Cash | 0 | |||||||||||||
Accounts receivable, net | 0 | |||||||||||||
Inventory, net | 0 | |||||||||||||
Prepaid expenses and other | [1] | (2,000) | ||||||||||||
Total current assets | (2,000) | |||||||||||||
Property and equipment, net | 0 | |||||||||||||
Operating lease asset | 3,050,000 | [2] | $ 3,600,000 | |||||||||||
Financing lease asset | [3] | 19,000 | ||||||||||||
Deposits | 0 | |||||||||||||
Long term deferred income taxes | 0 | |||||||||||||
Total assets | 3,067,000 | |||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | 0 | |||||||||||||
Operating lease liability | [2] | 671,000 | ||||||||||||
Financing lease liability | [3] | 14,000 | ||||||||||||
Deferred rent | [2] | (57,000) | ||||||||||||
Income taxes payable | 0 | |||||||||||||
Dividends payable | 0 | |||||||||||||
Accrued payroll and related taxes | 0 | |||||||||||||
Deferred insurance reimbursement | 0 | |||||||||||||
Total current liabilities | 628,000 | |||||||||||||
Long-term liabilities: | ||||||||||||||
Deferred rent | [2] | (531,000) | ||||||||||||
Operating lease liability | [2] | 2,967,000 | ||||||||||||
Financing lease liability | [3] | 10,000 | ||||||||||||
Total liabilities | 3,074,000 | |||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018 | 0 | |||||||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,312,411 issued and 32,241,191 outstanding as of March 31, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 | 0 | |||||||||||||
Additional paid-in capital | 0 | |||||||||||||
Treasury stock 1,071,220 and 1,019,220 shares, at March 31, 2019 and December 31, 2018, respectively, at cost | 0 | |||||||||||||
Accumulated earnings | [4] | (7,000) | ||||||||||||
Total Zynex, Inc. stockholders' equity | (7,000) | |||||||||||||
Non-controlling interest | 0 | |||||||||||||
Total stockholders' equity | (7,000) | |||||||||||||
Total liabilities and stockholders' equity | 3,067,000 | |||||||||||||
Previously Reported [Member] | ||||||||||||||
Current assets: | ||||||||||||||
Cash | 10,128,000 | |||||||||||||
Accounts receivable, net | 2,791,000 | |||||||||||||
Inventory, net | 837,000 | |||||||||||||
Prepaid expenses and other | 570,000 | |||||||||||||
Total current assets | 14,326,000 | |||||||||||||
Property and equipment, net | 819,000 | |||||||||||||
Operating lease asset | 0 | |||||||||||||
Financing lease asset | 0 | |||||||||||||
Deposits | 314,000 | |||||||||||||
Long term deferred income taxes | 725,000 | |||||||||||||
Total assets | 16,184,000 | |||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | 1,552,000 | |||||||||||||
Operating lease liability | 0 | |||||||||||||
Financing lease liability | 0 | |||||||||||||
Deferred rent | 57,000 | |||||||||||||
Income taxes payable | 688,000 | |||||||||||||
Dividends payable | 2,270,000 | |||||||||||||
Accrued payroll and related taxes | 908,000 | |||||||||||||
Deferred insurance reimbursement | 880,000 | |||||||||||||
Total current liabilities | 6,355,000 | |||||||||||||
Long-term liabilities: | ||||||||||||||
Deferred rent | 531,000 | |||||||||||||
Operating lease liability | 0 | |||||||||||||
Financing lease liability | 0 | |||||||||||||
Total liabilities | 6,886,000 | |||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 31, 2018 | 0 | |||||||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,312,411 issued and 32,241,191 outstanding as of March 31, 2019 and 33,290,587 issued and 32,271,367 outstanding as of December 31, 2018 | 34,000 | |||||||||||||
Additional paid-in capital | 8,157,000 | |||||||||||||
Treasury stock 1,071,220 and 1,019,220 shares, at March 31, 2019 and December 31, 2018, respectively, at cost | (3,675,000) | |||||||||||||
Accumulated earnings | 4,871,000 | |||||||||||||
Total Zynex, Inc. stockholders' equity | 9,387,000 | |||||||||||||
Non-controlling interest | (89,000) | |||||||||||||
Total stockholders' equity | 9,298,000 | |||||||||||||
Total liabilities and stockholders' equity | $ 16,184,000 | |||||||||||||
[1] | Represents prepaid rent reclassified to financing lease assets | |||||||||||||
[2] | Represents capitalization of operating lease assets, recognition of operating lease liabilities and reclassification of tenant incentives and deferred rent balances | |||||||||||||
[3] | Represents impact of changes in finance lease terms under the hindsight practical expedient | |||||||||||||
[4] | Represents the impact of changes in financing lease terms for certain leases due to the application of the hindsight practical expedient |
BASIS OF PRESENTATION - Effec_2
BASIS OF PRESENTATION - Effect of ASC 842 adoption (Parenthetical) (Details) - $ / shares | Sep. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
BASIS OF PRESENTATION | |||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 33,604,817 | 33,312,411 | 33,290,587 |
Common Stock, Shares, Outstanding | 32,533,597 | 32,241,191 | 32,271,367 |
Treasury Stock, Shares | 1,071,220 | 1,071,220 | 1,019,220 |
BASIS OF PRESENTATION - Additio
BASIS OF PRESENTATION - Additional information (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 01, 2019 | Jan. 01, 2018 | Mar. 31, 2016 | Dec. 31, 2015 | |||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 27.00% | 35.00% | ||||||||
Inventory, Net | $ 2,129,000 | $ 837,000 | ||||||||
Liability for Claims and Claims Adjustment Expense | $ 0 | 880,000 | $ 880,000 | $ 0 | ||||||
Lease, Practical Expedients, Package [true false] | true | |||||||||
Lease, Practical Expedient, Use of Hindsight [true false] | true | |||||||||
Operating Lease, Right-of-Use Asset | $ 4,078,000 | 3,050,000 | $ 1,600,000 | |||||||
Operating Lease, Liability | 4,704,000 | $ 1,600,000 | ||||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (6,000) | |||||||||
Retained Earnings (Accumulated Deficit) | $ 11,409,000 | 4,864,000 | $ 6,000,000 | |||||||
Effect of the Adoption of ASC 842 [Member] | ||||||||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||||||||||
Inventory, Net | 0 | |||||||||
Liability for Claims and Claims Adjustment Expense | 0 | |||||||||
Operating Lease, Right-of-Use Asset | 3,050,000 | [1] | 3,600,000 | |||||||
Operating Lease, Liability | $ 3,900,000 | |||||||||
Retained Earnings (Accumulated Deficit) | [2] | $ (7,000) | ||||||||
Zynex Billing And Consultancy, LLC [Member] | ||||||||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||||||||||
Non-controlling interest (as a percentage) | 20.00% | |||||||||
Scenario, Plan [Member] | ||||||||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | |||||||||
North America [Member] | ||||||||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||||||||||
Percentage Of Revenues | 99.99% | 99.99% | ||||||||
[1] | Represents capitalization of operating lease assets, recognition of operating lease liabilities and reclassification of tenant incentives and deferred rent balances | |||||||||
[2] | Represents the impact of changes in financing lease terms for certain leases due to the application of the hindsight practical expedient |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment, Gross | $ 2,646 | $ 2,281 |
Less accumulated depreciation | (1,866) | (1,462) |
Property and Equipment, Net | 780 | 819 |
Office furniture and equipment | ||
Property, Plant and Equipment, Gross | 1,139 | 1,172 |
Assembly equipment | ||
Property, Plant and Equipment, Gross | 128 | 128 |
Vehicles | ||
Property, Plant and Equipment, Gross | 181 | 184 |
Leasehold improvements | ||
Property, Plant and Equipment, Gross | 501 | 480 |
Leased Devices [Member] | ||
Property, Plant and Equipment, Gross | $ 697 | $ 317 |
PROPERTY AND EQUIPMENT - Additi
PROPERTY AND EQUIPMENT - Additional information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 15 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | |
Property and Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.1 | |
Leased Devices [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation | $ 0.4 | $ 0.1 | $ 0.1 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic income per share: | ||||
Net income available to common stockholders | $ 2,033 | $ 2,591 | $ 6,545 | $ 6,930 |
Basic weighted average shares outstanding | 32,490 | 32,521 | 32,350 | 32,580 |
Basic income per share: | $ 0.06 | $ 0.08 | $ 0.20 | $ 0.21 |
Diluted income per share: | ||||
Net income available to common stockholders | $ 2,033 | $ 2,591 | $ 6,545 | $ 6,930 |
Weighted average shares outstanding | 32,490 | 32,521 | 32,350 | 32,580 |
Effect of dilutive securities - options and restricted stock | 1,586 | 1,410 | 1,567 | 1,591 |
Diluted weighted average shares outstanding | 34,076 | 33,931 | 33,917 | 34,171 |
Diluted income per share: | $ 0.06 | $ 0.08 | $ 0.19 | $ 0.20 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional information (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Weighted Average Number Diluted Shares Outstanding Adjustment | 1,586 | 1,410 | 1,567 | 1,591 |
Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 400 | 300 | 400 | 300 |
STOCK-BASED COMPENSATION PLAN_2
STOCK-BASED COMPENSATION PLANS (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair value of stock option grants | ||||
Expected term (years) | 6 years 3 months | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Risk-free interest rate | 1.83% | 2.78% | 2.34% | 2.78% |
Expected volatility | 121.58% | 123.05% | 121.83% | 123.05% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
STOCK-BASED COMPENSATION PLAN_3
STOCK-BASED COMPENSATION PLANS - Summary of stock option activity (Details) - Employee Stock Option [Member] $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Summary of stock option activity under the option Plan | ||
Balance Beginning | shares | 1,885 | |
Number of Shares, Granted | shares | 616 | |
Number of Shares, Expired | shares | (7) | |
Number of Shares, Forfeited | shares | (115) | |
Number of Shares, Exercised | shares | (253) | |
Balance Ending | shares | 2,126 | 1,885 |
Number of Shares, Exercisable | shares | 1,171 | |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 0.80 | |
Weighted Average Exercise Price, Granted | $ / shares | 5.62 | |
Weighted Average Exercise Price, Expired | $ / shares | 1 | |
Weighted Average Exercise Price, Exercised | $ / shares | 0.68 | |
Weighted Average Exercise Price, Forfeited | $ / shares | 2.47 | |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | 2.12 | $ 0.80 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.43 | |
Weighted Average Remaining Contractual Life, Outstanding | 6 years 7 months 6 days | 6 years 3 months 18 days |
Weighted Average Remaining Contractual Life Exercisable | 4 years 8 months 12 days | |
Aggregate Intrinsic Value, Outstanding | $ | $ 15,720 | $ 4,085 |
Aggregate Intrinsic Value, Exercisable | $ | $ 10,626 |
STOCK-BASED COMPENSATION PLAN_4
STOCK-BASED COMPENSATION PLANS - Summary of restricted stock award activity (Details) - Restricted Stock [Member] shares in Thousands | 9 Months Ended |
Sep. 30, 2019shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding at Beginning | 76 |
Granted | 45 |
Forfeited | 0 |
Vested | (21) |
Outstanding At Ending | 100 |
STOCK-BASED COMPENSATION PLAN_5
STOCK-BASED COMPENSATION PLANS - Additional information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Proceeds from Stock Options Exercised | $ 34,000 | $ 21,000 | $ 200,000 | $ 200,000 |
Unrecognized compensation expense related to stock options | $ 3,600,000 | $ 3,600,000 | ||
Weighted-average period of unrecognized compensation expense related to stock options | 3 years | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 45,000 | |||
Management [Member] | Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 35,000 | 45,000 | ||
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 300,000 | $ 100,000 | $ 600,000 | $ 200,000 |
Stock Incentive Plan 2017 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,000,000 | 5,000,000 | ||
Shares under option, granted | 200,000 | 100,000 | 600,000 | 100,000 |
Sharebased Compensation Arrangement by Sharebased Payment Award Options remain Issued Number | 2,100,000 | 2,100,000 | ||
Number of Shares, Exercisable | 1,200,000 | 1,200,000 | ||
Stock options remain reserved for issuance | 3,700,000 | 3,700,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Warrant [Member] $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Balance Beginning | shares | 150 | |
Number of Shares, Exercised | shares | (40) | |
Number of Shares, Forfeited | shares | (10) | |
Balance Ending | shares | 100 | 150 |
Number of Shares, Exercisable | shares | 100 | |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 2.42 | |
Weighted Average Exercise Price, Exercised | $ / shares | 2 | |
Weighted Average Exercise Price, Forfeited | $ / shares | 2 | |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | 2.63 | $ 2.42 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.63 | |
Weighted Average Remaining Contractual Life (Years) | 5 years | 5 years 9 months 18 days |
Weighted Average Remaining Contractual Life Exercisable | 5 years | |
Aggregate Intrinsic Value, balance | $ | $ 689 | $ 79 |
Aggregate Intrinsic Value Exercisable Balance | $ | $ 689 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 14 Months Ended | 37 Months Ended | ||||||
Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 06, 2018 | Dec. 31, 2018 | May 14, 2018 | |
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Dividends Payable, Amount Per Share | $ 0.07 | |||||||||
Dividends Payable, Current | $ 8 | $ 2,270 | ||||||||
Stock Repurchase Program, Authorized Amount | $ 2,000 | $ 2,000 | ||||||||
Treasury Stock Acquired, Average Cost Per Share | $ 3.29 | $ 3.20 | $ 4.04 | |||||||
Stock Repurchase Program Additional Authorized Amount | $ 2,000 | |||||||||
Stock Repurchased During Period, Value | $ 171 | $ 1,078 | $ 211 | $ 1,757 | $ 1,800 | $ 2,000 | ||||
Common Stock | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Stock Repurchased During Period, Shares | 52,000 | 334,414 | 66,513 | 408,254 | 52,000 | 576,129 | 495,091 | |||
Number of warrants exercised | 50,000 | |||||||||
Number of warrants withheld | 9,634 | |||||||||
Warrant exercises (in shares) | 40,366 | 40,366 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | |
INCOME TAXES | |||||
Income Tax Credits and Adjustments | $ 200,000 | $ 600,000 | |||
Effective Income Tax Rate Reconciliation, Percent | 27.00% | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 27.00% | 35.00% | |||
Discrete Items Income Tax Benefit | 200,000 | $ 16,000 | $ 600,000 | $ 300,000 | |
Income Tax Expense (Benefit) | $ 463,000 | $ 228,000 | 1,671,000 | 407,000 | |
Income Taxes Paid | $ 2,218,000 | $ 228,000 |
DEFERRED INSURANCE REIMBURSEM_2
DEFERRED INSURANCE REIMBURSEMENT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2016 | Dec. 31, 2015 | |
DEFERRED INSURANCE REIMBURSEMENT | |||||||
Liability for Claims and Claims Adjustment Expense, Total | $ 0 | $ 0 | $ 880,000 | $ 880,000 | $ 0 | ||
Deferred Insurance Liability | $ 880,000 | ||||||
Deferred insurance reimbursement | $ 0 | $ 0 | $ 880,000 | $ 0 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 01, 2019 |
Operating lease liabilities | ||
October 1, 2019 through December 31, 2019 | $ 272 | |
2020 | 1,344 | |
2021 | 1,408 | |
2022 | 1,473 | |
2023 | 763 | |
Total undiscounted future minimum lease payments | 5,260 | |
Less: Difference between undiscounted lease payments and discounted operating lease liabilities: | (556) | |
Operating Lease, Liability, Total | 4,704 | $ 1,600 |
Financing lease liabilities | ||
October 1, 2019 through December 31, 2019 | 25 | |
2020 | 45 | |
2021 | 45 | |
2022 | 45 | |
2023 | 45 | |
2024 | 34 | |
Total undiscounted future minimum lease payments | 241 | |
Less: Difference between undiscounted lease payments and discounted lease liabilities: | (42) | |
Total lease liabilities | $ 199 |
LEASES - Additional information
LEASES - Additional information (Details) $ in Thousands | Nov. 01, 2020$ / ft² | Oct. 20, 2019$ / ft² | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)$ / ft² | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Oct. 31, 2020$ / ft² | Oct. 19, 2019$ / ft² | Oct. 19, 2018$ / ft² | Jun. 01, 2019USD ($) | Mar. 11, 2019a | Dec. 31, 2018USD ($) | Oct. 20, 2017USD ($)a |
Lessee, Lease, Description [Line Items] | ||||||||||||||
Land Subject to Ground Leases | a | 21,420 | 41,715 | ||||||||||||
Option to extend (in years) | 2 years | 2 years | ||||||||||||
Rent per square foot | $ / ft² | 10 | 20.75 | 19.75 | 7.50 | ||||||||||
Additional rent per square foot | $ / ft² | 1 | 1 | ||||||||||||
Tenant Improvements | $ 200 | |||||||||||||
Operating lease liabilities | $ 4,704 | $ 4,704 | $ 4,704 | $ 1,600 | ||||||||||
Operating lease asset | 4,078 | 4,078 | 4,078 | $ 1,600 | $ 3,050 | |||||||||
Finance Lease, Right-of-Use Asset | 195 | 195 | 195 | $ 19 | ||||||||||
Finance Lease, Liability | $ 199 | $ 199 | $ 199 | |||||||||||
Lessee, Operating Lease, Term of Contract | 5 years | 5 years | 5 years | |||||||||||
Lessee, Operating Lease, Discount Rate | 4.80% | 4.80% | 4.80% | |||||||||||
Lessee, Finance Lease, Discount Rate | 8.30% | 8.30% | 8.30% | |||||||||||
Operating Lease, Weighted Average Remaining Lease Term | 4 years | 4 years | 4 years | |||||||||||
Finance Lease, Weighted Average Remaining Lease Term | 5 years | 5 years | 5 years | |||||||||||
General and Administrative Expense [Member] | ||||||||||||||
Lessee, Lease, Description [Line Items] | ||||||||||||||
Operating Lease, Cost | $ 400 | $ 200 | $ 800 | $ 700 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - item | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Supplier Concentration Risk [Member] | Cost of Goods, Total [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 49.00% | 51.00% | 49.00% | 44.00% | |
Accounts Receivable [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 38.00% | 23.00% | |||
Number of Health Insurance carriers | 2 | 1 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2015 | Sep. 30, 2019 | Sep. 30, 2018 | |
Joachim Sandgaard [Member] | |||||
RELATED PARTY TRANSACTIONS | |||||
Compensation paid | $ 21,000 | $ 75,000 | |||
Martin Sandgaard [Member] | |||||
RELATED PARTY TRANSACTIONS | |||||
Compensation paid | $ 24,000 | $ 19,000 | $ 71,000 | $ 65,000 | |
Employment Arrangement | Immediate Family Members of Management or Principal Owner | |||||
RELATED PARTY TRANSACTIONS | |||||
Lump sum payment | $ 100,000 | ||||
Agreement term | 3 years |