Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 27, 2020 | Jun. 30, 2019 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | ZYNEX INC | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 291.7 | ||
Entity Common Stock, Shares Outstanding | 32,811,832 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000846475 | ||
Amendment Flag | false | ||
Trading Symbol | ZYXI |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 14,040,000 | $ 10,128,000 |
Accounts receivable | 5,833,000 | 2,791,000 |
Inventory, net | 2,378,000 | 837,000 |
Prepaid expenses and other | 315,000 | 568,000 |
Total current assets | 22,566,000 | 14,324,000 |
Property and equipment, net | 858,000 | 819,000 |
Operating lease asset | 3,831,000 | 3,050,000 |
Finance lease asset | 180,000 | 19,000 |
Deposits | 329,000 | 314,000 |
Long term deferred income taxes | 513,000 | 725,000 |
Total assets | 28,277,000 | 19,251,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,133,000 | 1,552,000 |
Lease liability - operating leases | 1,211,000 | 671,000 |
Lease liability - finance leases | 45,000 | 14,000 |
Income taxes payable | 52,000 | 688,000 |
Dividends payable | 8,000 | 2,270,000 |
Accrued payroll and related taxes | 1,748,000 | 908,000 |
Deferred insurance reimbursement | 0 | 880,000 |
Total current liabilities | 5,197,000 | 6,983,000 |
Long-term liabilities: | ||
Lease liability - operating leases | 3,282,000 | 2,967,000 |
Lease liability - finance leases | 145,000 | 10,000 |
Total liabilities | 8,624,000 | 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 December 31, 2019 and December 31, 2018 | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized; 33,862,885 issued and 32,791,665 outstanding as of December 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 | 9,198,000 | 8,157,000 |
Treasury stock 1,071,220 and 1,019,220 shares, at December 31, 2019 and December 31, 2018, respectively, at cost | (3,846,000) | (3,675,000) |
Retained earnings | 14,356,000 | 4,864,000 |
Total Zynex, Inc. stockholders' equity | 19,742,000 | 9,380,000 |
Non-controlling interest | (89,000) | (89,000) |
Total stockholders' equity | 19,653,000 | 9,291,000 |
Total liabilities and stockholders' equity | $ 28,277,000 | $ 19,251,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 33,862,885 | 33,290,587 |
Common Stock, Shares, Outstanding | 32,791,665 | 32,271,367 |
Treasury Stock, Shares | 1,071,220 | 1,019,220 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
NET REVENUE | ||
Total net revenue | $ 45,472 | $ 31,917 |
COSTS OF REVENUE AND OPERATING EXPENSES | ||
Costs of revenue - devices and supplies | 8,814 | 6,038 |
Sales and marketing | 14,016 | 6,503 |
General and administrative | 11,576 | 9,006 |
Total costs of revenue and operating expenses | 34,406 | 21,547 |
Income from operations | 11,066 | 10,370 |
Other income/(expense) | ||
Deferred insurance reimbursement | 880 | |
Interest income/(expense) | (5) | (154) |
Other income/(expense), net | 875 | (154) |
Income from operations before income taxes | 11,941 | 10,216 |
Income tax expense | 2,449 | 664 |
Net income | $ 9,492 | $ 9,552 |
Net income per share: | ||
Basic | $ 0.29 | $ 0.29 |
Diluted | $ 0.28 | $ 0.28 |
Weighted average basic shares outstanding | 32,439 | 32,503 |
Weighted average diluted shares outstanding | 33,963 | 34,043 |
Devices [Member] | ||
NET REVENUE | ||
Total net revenue | $ 10,713 | $ 6,822 |
Supplies [Member] | ||
NET REVENUE | ||
Total net revenue | $ 34,759 | $ 25,095 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 9,492 | $ 9,552 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 778 | 448 |
Deferred insurance reimbursement | (880) | |
Inventory reserve | 185 | |
Lease incentive received | 214 | |
Amortization of debt issuance costs | 153 | |
Stock-based compensation | 820 | 370 |
Gain on disposal of property and equipment | 3 | |
Provision for deferred income taxes | 212 | (725) |
Change in operating assets and liabilities: | ||
Accounts receivable | (3,042) | (660) |
Prepaid and other assets | 255 | (372) |
Accounts payable and other accrued liabilities | 785 | 409 |
Inventory | (2,360) | (414) |
Deposits | (15) | 55 |
Other long-term obligations | 73 | 375 |
Net cash provided by operating activities | 6,303 | 9,408 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (160) | (1,082) |
Net cash used in investing activities | (160) | (1,082) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on subordinated debt | (384) | |
Payments on finance lease obligations | (19) | (123) |
Common stock cash dividends | (2,262) | |
Purchase of treasury stock | (171) | (3,432) |
Proceeds from the issuance of common stock | 221 | 176 |
Net cash used in financing activities | (2,231) | (3,763) |
Net increase in cash and cash equivalents | 3,912 | 4,563 |
Cash and cash equivalents at beginning of period | 10,128 | 5,565 |
Cash and cash equivalents at end of period | 14,040 | 10,128 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | (2,873) | (772) |
Cash paid for interest | (5) | (12) |
Cash paid for rent | (956) | (394) |
Supplemental disclosure of non-cash investing and financing activities: | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,605 | 3,642 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 186 | |
Inventory transferred to property and equipment under lease | $ 652 | |
Lease incentive received | 213 | |
Common stock dividend declared and unpaid | $ 2,270 |
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 (in shares) at Dec. 31, 2017 | 32,778,040 | |||||
Opening balance adjustment - ASC 842 | (7) | (7) | ||||
Exercised and vested stock-based awards | $ 1 | 175 | 176 | |||
Exercised and vested stock-based awards (in shares) | 425,710 | |||||
Stock-based compensation expense | 370 | 370 | ||||
Treasury stock | (3,432) | (3,432) | ||||
Treasury stock (in shares) | (932,383) | |||||
Common stock dividends declared | (2,270) | (2,270) | ||||
Net income | 9,552 | 9,552 | ||||
Balance at Dec. 31, 2018 | $ 34 | 8,157 | (3,675) | 4,864 | (89) | 9,291 |
Balance (in shares) at Dec. 31, 2018 | 32,271,367 | |||||
Exercised and vested stock-based awards | 221 | 221 | ||||
Exercised and vested stock-based awards (in shares) | 531,940 | |||||
Warrant exercises (in shares) | 40,366 | |||||
Stock-based compensation expense | 820 | 820 | ||||
Treasury stock | (171) | (171) | ||||
Treasury stock (in shares) | (52,000) | |||||
Other (in shares) | (8) | |||||
Net income | 9,492 | 9,492 | ||||
Balance at Dec. 31, 2019 | $ 34 | $ 9,198 | $ (3,846) | $ 14,356 | $ (89) | $ 19,653 |
Balance (in shares) at Dec. 31, 2019 | 32,791,665 |
ORGANIZATION, NATURE OF BUSINES
ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT'S PLANS | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT'S PLANS | |
ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT'S PLANS | (1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS Organization Zynex, Inc. (a Nevada corporation) has its headquarters in Englewood, Colorado. We operate in one primary business segment, medical devices which include electrotherapy and pain management products. As of December 31, 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 years ended December 31, 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 is awaiting approval by the U.S. Food and Drug Administration (“FDA”) as well as CE Marking in Europe; therefore, ZMS has achieved no revenues to date. Its inactive subsidiaries include Zynex NeuroDiagnostics, Inc. (“ZND,” a wholly-owned Colorado corporation), Zynex Billing and Consulting, LLC (“ZBC,” an 80% owned Colorado limited liability company) and Pharmazy, Inc. (“Pharmazy”), which was incorporated in June 2015 as a wholly-owned Colorado corporation. The Company’s compound pharmacy operated as a division of ZMI dba as Pharmazy through January 2016. 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 medications 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”). All our medical devices are designed to be patient friendly and designed for home use. Our devices are small, portable, battery operated and include an electrical pulse generator which is connected to the body via electrodes. All of 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. The NexWave 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 years ended December 31, 2019 and 2018, the Company generated substantially all of its revenue (99.99%) in North America from sales and supplies of its devices to patients and health care providers. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | (2) SIGNIFICANT ACCOUNTING POLICIES 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 a decrease in shareholders’ equity. Non-controlling interest represents the 20% ownership in the Company’s majority-owned inactive subsidiary, 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 year ended December 31, 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, inventory reserves, the life of its leased devices, stock-based compensation, and valuation of long-lived assets and realizability of deferred tax assets. 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. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Short-term investments include investments with maturities greater than three months, but not exceeding 12 months, or highly liquid investments with maturities greater than 12 months that the Company intends to liquidate during the next 12 months for working capital needs. Inventory Inventories are stated at the lower of cost and net realizable value. Cost is computed using standard costs, which approximates actual costs on an average cost basis. Following are the components of inventory as of December 31, 2019 and 2018 (in thousands): December 31, 2019 December 31, 2018 Raw Materials $ 953 $ 454 Work-in-process 200 55 Finished Goods 1,640 576 $ 2,793 1,085 Less: reserve (415) (248) $ 2,378 $ 837 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 equal to the difference between the costs of inventories on hand and the estimated market value based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory write-downs may be required. Property and Equipment Property and equipment is recorded at cost. Repairs and maintenance expenditures are charged to expense as incurred. We compute depreciation expense on a straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Useful Life Office furniture and equipment 5 to 7 years Assembly equipment 7 years Vehicles 5 years Leasehold improvements Term of lease Leased devices 9 months Leases The Company determines if an arrangement is a lease at inception or modification of a contract. The Company recognizes finance and operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the lease payments over the lease term. For our finance leases, the Company uses the implicit rate to determine the present value of future lease payments. For our operating leases that do not provide an implicit rate, the Company uses incremental borrowing rates to determine the present value of future lease payments. The Company includes options to extend or terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on our Consolidated Balance Sheets. For additional information on our leases where the Company is the lessee, see Note 9- Leases. A significant portion of our device revenue is derived from patients who obtain our devices under month-to-month lease arrangements. Revenue related to devices on lease is recognized in accordance with ASC 842, Leases. Using the guidance in ASC 842, we concluded our transactions should be accounted for as operating leases based on the following criteria below: 1. The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term. 2. The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. 3. 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. 4. 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 5. The underlying asset is expected to have alternative uses to the lessor at the end of the lease term. Lease commencement occurs upon delivery of the device to the patient. 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 recognized monthly for the duration of the period in which the patient retains the device. Revenue Recognition, Accounts Receivable, Allowance for Billing Adjustments and Collectability Revenue is derived from sales and leases of our electrotherapy devices and sales of related supplies and complimentary products. The Company recognizes revenue when control of the product has been transferred to the patient, in the amount that reflects the consideration to which the Company expects to receive. In general, revenue from sales of our devices and supplies is recognized once the product is delivered to the patient, which is when control is deemed to have transferred to our patient. Sales of our devices and supplies are primarily made with, and shipped directly to the patient with a small amount of revenue generated from sales to distributors. In the healthcare industry there is often a third party involved that will pay on the patients’ 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 payers, 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. There are no substantial costs incurred through support or warranty obligations. The following table provides a breakdown of net revenue related to devices accounted for as purchases subject to ASC 606 and leases subject to ASC 842 (in thousands): For the Year Ended December 31, 2019 2018 Device revenue Purchased $ 4,035 $ 1,950 Leased 6,678 4,872 Total Device revenue 10,713 6,822 Primarily all of the Company’s receivables are due from patients with commercial or government health plans and workers compensation claims with a small portion related to private pay individuals, attorney and auto claims. Revenues are estimated using the portfolio approach by third party payer type based upon historical rates of collection, aging of receivables, trends in historical reimbursement rates by third-party payer types, and current relationships and experience with the third-party payers, which includes estimated constraints for third-party payer refund requests, deductions and adjustments. 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 payer billing arrangements and the uncertainty of reimbursement amounts for certain products from third-party payers 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 payer reimbursement, 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 and actual collectability are reflected in the period in which received. Historically these differences have been immaterial and the Company has not had to go back and reassess the adjustments of future periods for past billing adjustments. A change in the way estimates are determined can result from a number of factors, including changes in the reimbursement policies or practices of third-party payers, or changes in industry rates of reimbursement. The Company monitors the variability and uncertain timing over third-party payer types in our portfolios. If there is a change in our third-party payer 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 payer type. However, changes to constraints for billing adjustments have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year to year. 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. Earnings Per Share We calculate basic earnings per share on the basis of the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated using the weighted-average number of shares of common stock outstanding for the period plus the effect of potential dilutive common shares during the period using the treasury stock method. Potential shares of common stock outstanding include unvested restricted stock awards, vested and unvested stock options and common stock purchase warrants. Advertising The Company expenses advertising costs as they are incurred. Advertising expense for each of the years ended December 31, 2019 and 2018 was approximately $0.3 million and $0.1 million, respectively. Research and Development Research and development costs are expensed when incurred. Research and development expense for the years ended December 31, 2019 and 2018 was approximately $0.6 million and $0.2 million, respectively. Research and development which includes salaries related to research and development and raw materials are included in general and administrative expenses on the consolidated statement of comprehensive income. 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. The Company is subject to the provisions of the Financial Accounting Standards Board (“FASB”) ASC 740‑10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. Due to the complexities involved in accounting for the recently enacted Tax Act, the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 118 allows a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The company has finalized its analysis of tax impacts as of December 31, 2018 and has recorded no material adjustments. 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 finance 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 difference between the additional lease assets and liabilities was primarily due to lease incentives with the remaining difference of $7,000 recorded as an adjustment to the opening balance of 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 9, below, for further discussion regarding the Company’s operating and finance leases. Recently Issued Accounting Pronouncements 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, 2022, and interim periods therein for smaller reporting companies. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Corporation is currently evaluating the impact that the adoption of ASU 2016-13 will have on our financial condition, results of operations and cash flows. In December 2019, FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The amendments simplify the accounting for income taxes by removing certain exceptions to the general principals of Topic 740, “Income Taxes” and also improve consistent application by clarifying and amending existing guidance. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Corporation is currently evaluating the impact of adoption this guidance. 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 | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | (3) PROPERTY AND EQUIPMENT The components of property and equipment are as follows (in thousands): December 31,2019 December 31,2018 Property and equipment Office furniture and equipment $ 1,178 $ 1,172 Assembly equipment 128 128 Vehicles 181 184 Leasehold improvements 500 480 Leased devices 934 317 $ 2,921 2,281 Less accumulated depreciation (2,063) (1,462) $ 858 $ 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 purchased property and equipment was $0.3 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively. Total depreciation expense related to devices out on lease was $0.5 million and $0.3 million for the years ended December 31, 2019 and 2018, respectively. Depreciation on leased units is reflected on the income statement as cost of revenue. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | (4) EARNINGS PER SHARE The calculation of basic and diluted earnings per share for the years ended December 31, 2019 and 2018 are as follows (in thousands, except per share amounts): For the Years Ended December 31, 2019 2018 Basic earnings per share Net income available to common stockholders $ 9,492 $ 9,552 Basic weighted-average shares outstanding 32,439 32,503 Basic earnings per share $ 0.29 $ 0.29 Diluted earnings per share Net income available to common stockholders $ 9,492 $ 9,552 Weighted-average shares outstanding 32,439 32,503 Effect of dilutive securities - options and restricted stock 1,524 1,540 Diluted weighted-average shares outstanding 33,963 34,043 Diluted earnings per share $ 0.28 $ 0.28 For the years ended December 31, 2019 and 2018, 0.3 million and 0.4 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 | 12 Months Ended |
Dec. 31, 2019 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | (5) STOCK-BASED COMPENSATION PLANS The Company’s 2017 Stock Incentive Plan (the “2017 Stock Plan”) is the Company’s equity compensation plan and provides for grants of stock-based awards to employees, directors and other individuals providing services to the Company. The 2017 Stock Plan authorizes the Company to award stock options and restricted stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. The 2017 Stock Plan mandates a maximum award term of 10 years and stipulates that stock options be granted with prices not less than fair market value on the date of grant. Stock option awards generally vest over four years. Restricted stock awards typically vest quarterly over three years for grants issued to members of our Board of Directors and quarterly or annually over four years for grants issued to employees. All awards granted under the 2017 Stock Plan are stock-settled with common stock issued upon the exercise of stock options or the vesting of restricted stock awards. At December 31, 2019, there were 1.2 million stock options and 0.1 million unvested restricted stock awards outstanding, and 3.7 million shares available for future grants under the 2017 Stock Plan. The Company previously reserved 3,000,000 shares of common stock for issuance under its 2005 Stock Option Plan (the “2005 Stock Plan”). The 2005 Stock Plan expired as of December 31, 2014. Vesting provisions of the expired plan were to be determined by the Board of Directors. All stock options under the 2005 Stock Plan expire no later than ten years from the date of grant. Options granted in 2015, 2016 and through May 2017 prior to the approval of the 2017 Stock Incentive Plan were approved and certified by the board of directors on September 6, 2017 under the existing 2005 stock option plan. At December 31, 2019, 0.7 million options remain outstanding under the 2005 stock option plan. The Company estimates the grant-date fair value of stock option awards using the Black-Scholes option pricing model and restricted stock awards at intrinsic value on the date of grant. The following assumptions were used in estimating the grant date fair value of stock options granted during the years ended December 31, 2019 and 2018: 2019 2018 Weighted average expected term 6.25 years 6.25 years Weighted average volatility 122 % 123 % Weighted average risk-free interest rate 2.30 % 3.00 % Dividend yield 0 % 0 % The weighted average expected term of stock options represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends. The weighted average expected volatility is based on the historical price volatility of the Company’s common stock. The weighted average risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the Company’s anticipated cash dividend over the expected term of the stock options. Forfeitures are accounted for as they occur. The following table summarizes stock-based compensation expenses recorded in the condensed consolidated statements of operations (in thousands): For the Years Ended December 31, 2019 2018 Costs of revenue - devices and supplies $ 21 $ 33 Sales and marketing expense 205 127 General, and administrative 594 210 Total stock based compensation expense $ 820 $ 370 The excess tax benefit associated with our stock-based compensation plans for the years ended December 31, 2019 and 2018, was approximately $0.8 million and $0.3 million, respectively. A combined summary of stock option activity for the 2017 Stock Plan and the 2005 Stock Plan for the years ended December 31, 2019 and 2018 is presented below: Weighted Weighted Average Aggregate Average Remaining Intrinsic Number of Shares Strike Contractual Value (in thousands) Price Life (Years) (in thousands) Outstanding at December 31, 2017 2,142 $ 0.56 Granted 215 $ 2.99 Exercised (357) $ 0.44 Forfeited (115) $ 1.48 Outstanding at December 31, 2018 1,885 $ 0.80 6.32 $ 4,085 Outstanding at December 31, 2018 1,885 $ 0.80 Granted 653 $ 5.81 Exercised (503) $ 0.44 Expired (6) $ 1.00 Forfeited (174) $ 2.64 Outstanding at December 31, 2019 1,855 $ 2.48 6.42 $ 10,032 Exercisable at December 31, 2019 965 $ 0.60 $ 7,022 Outstanding Weighted average Number of Remaining Weighted Average Options Contractual Weighted Average Exercisable Number of Remaining Exercisable Exercisable Range (in thousands) Life (years) Strike Price Options (in thousands) Contractual Life (years) Strike Price $0 to $2.00 1,040 $ 0.42 889 3.80 $ 0.41 $2.01 to $4.00 367 $ 3.11 76 8.26 $ 2.78 $4.01 to $6.00 210 $ 5.35 — — $ — $6.01 to $8.00 $ — — $ — $8.01 to $10.00 38 $ 8.96 — — $ — 1,855 $ 2.48 965 4.15 $ 0.60 A summary of our unvested stock options as of December 31, 2019 and 2018 and related activity is presented below: Non-vested Shares Weighted Under Average Option Grant Date (in thousands) Fair Value Non-vested at December 31, 2017 658 $ 0.81 Granted 215 $ 2.65 Vested (256) $ 0.72 Forfeited (48) $ 1.98 Non-vested at December 31, 2018 569 $ 1.44 Non-vested at December 31, 2018 569 $ 1.44 Granted 653 $ 5.12 Vested (169) $ 1.24 Forfeited (163) $ 2.44 Non-vested at December 31, 2019 890 $ 4.03 A summary of restricted stock award activity under the 2017 Stock Plan for the years ended December 2019 and 2018 are presented below: Number of Shares Weighted Average (in thousands) Grant Date Fair Value Outstanding at December 31, 2017 15 $ 1.10 Granted 80 $ 3.56 Vested (19) $ 3.09 Outstanding at December 31, 2018 76 $ 3.19 Outstanding at December 31, 2018 76 $ 3.19 Granted 55 $ 8.10 Vested (29) $ 3.24 Outstanding at December 31, 2019 102 $ 5.81 As of December 31, 2019, there was approximately $3.5 million of total unrecognized compensation costs related to unvested stock options and restricted stock. These costs are expected to be recognized over a weighted average period of 2.9 years. The total intrinsic value of stock option exercises for the years ended December 31, 2019 and 2018 was $4.4 million and $1.1 million, respectively. The total fair value of restricted stock awards vested during the years ended December 31, 2019, and 2018 was $0.1 million and $0.2 million, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | (6) 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. Any determination to declare a future quarterly dividend, as well as the amount of any cash dividend which may be declared, will be based on our financial position, earnings, earnings outlook and other relevant factors at that time. 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 repurchase 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. From the inception of the plan through May 13, 2019, the Company purchased 576,129 shares of our common stock for $1.8 million or an average price of $3.20 per share. As of December 31, 2019 the Company had no outstanding stock repurchase programs. Warrants In October 2017, 150,000 common stock warrants were issued in exchange for professional services. In connection with the agreement entered into on March 28, 2016, with Triumph Bank, we issued a common stock warrant to purchase 50,000 shares of the Company’s common stock. A summary of stock warrant activity for the years ended December 31, 2019 and 2018 are presented below: Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Warrants Exercise Contractual Value (in thousands) Price Life (Years) (in thousands) Outstanding at December 31, 2017 200 $ 1.86 Granted — — Exercised (50) $ 0.20 Forfeited — $ — Outstanding and Exercisable at December 31, 2018 150 $ 2.42 5.77 $ 79 Outstanding at December 31, 2018 150 $ 2.42 5.77 $ 79 Granted — — Exercised (40) $ 2.00 Forfeited (1) (10) $ 2.00 Outstanding and Exercisable at December 31, 2019 100 $ 2.63 $ 525 (1) Warrants were exercised under a net exercise provision in the warrant agreement. As a result, approximately 10,000 warrants were forfeited in lieu of cash payment for shares. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | (7) INCOME TAXES The pre-tax income from continuing operations on which the provision for income taxes was computed is as follows (in thousands): 2019 2018 United States $ 11,964 $ 10,237 Foreign (23) (21) Total 11,941 10,216 Income tax expense consists of the following for the years ended December 31, 2019 and 2018 (in thousands): 2019 2018 Current tax expense: Federal $ 1,865 $ 1,080 State 372 309 Total tax expense: 2,237 1,389 Deferred tax expense/(benefit): Federal 120 (462) State 92 (263) Total deferred tax expense/(benefit): $ 212 $ (725) Total $ 2,449 $ 664 A reconciliation of income tax computed at the U.S. statutory rate of 21% to the effective income tax rate is as follows: 2019 2018 Statutory rate 21 % 21 % State taxes 3 4 Permanent differences and other — 1 Change in valuation allowance (1) (16) Stock based compensation (4) (3) Other (true – up) 1 — Effective rate 20 % 7 % The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2019 and 2018 are as follows (in thousands): 2019 2018 Deferred tax assets: Accrued expenses $ 34 $ 37 Lease liability 1,109 217 Accounts receivable 19 18 Inventory 232 117 Stock-based compensation 145 138 Tax Credits and NOL Carryforward 110 354 Other 1 150 Property and equipment — — Amortization 50 57 1,700 1,088 Less: Valuation allowance — (172) Deferred tax assets $ 1,700 $ 916 Deferred tax liabilities: Property and equipment $ (192) $ (176) Finance lease (45) — Right-of-use asset (946) — Prepaid expenses (4) (15) Deferred tax liabilities $ (1,187) $ (191) Net deferred tax assets $ 513 $ 725 For federal tax purposes, the Company completely utilized its remaining $2.7 million in NOL carryforwards as of December 31, 2018. As of December 31, 2019, the Company has NOL carryforwards in various states, which expire at various dates ranging from five to seven years. As of December 31, 2019 the Company had no recorded valuation allowance. As of December 31, 2018 the Company had a valuation allowance of $0.2 million. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers past history, the scheduled reversal of deferred tax liabilities, available taxes in carryback periods, projected future taxable income projections and tax planning strategies in making this assessment. During 2019, Management determined that no valuation is necessary and released the remaining valuation allowance. The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. The accounting standard requires that the tax effects of a position be recognized only if it is "more-likely-than-not" to be sustained by the taxing authority as of the reporting date. If a tax position is not considered "more-likely-than-not" to be sustained, then no benefits of the position are to be recognized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. This standard also provides guidance on the presentation of tax matters and the recognition of potential IRS interest and penalties. As of December 31, 2019 and 2018, the Company does not have an unrecognized tax liability. The Company does not classify penalty and interest expense related to income tax liabilities as an income tax expense. Penalties and interest are included within general and administrative expenses on the consolidated statements of operations. The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitations for taxing authorities to audit our tax returns from 2014 through the current period. |
DEFERRED INSURANCE REIMBURSEMEN
DEFERRED INSURANCE REIMBURSEMENT | 12 Months Ended |
Dec. 31, 2019 | |
DEFERRED INSURANCE REIMBURSEMENT | |
DEFERRED INSURANCE REIMBURSEMENT | (8) 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 years ended December 31, 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 | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | (9) LEASES The Company has three operating leases pertaining to its corporate headquarters located in Englewood, CO. Details of each lease are as follows: 1. The Company entered into a sublease agreement on October 20, 2017 with CSG Systems Inc. for approximately 41,715 square feet. 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. Upon lease commencement, the Company recorded an operating lease liability of $3.9 million and a corresponding right-of-use asset for $3.6 million. 2. The Company entered into an amendment to its sublease agreement, above, on March 11, 2019 for an additional 21,420 square feet of office space. The term of the 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. 3. Subsequent to December 31, 2019, the Company entered into an amendment to its sublease agreement, above, on January 3, 2020 for an additional 22,546 square feet of office space. The term of the sublease will begin once certain expansion work is completed and will run through June 30, 2025. From the commencement date through October 31, 2020, the rent per square foot is $13.00, increasing to $21.75 per square foot from November 1, 2020 through October 31, 2021. The price per square foot increases by an additional $1 annually beginning November 1, 2021. The Company estimates that it will record a right-of-use asset and liability of $1.4 million each upon lease commencement. The Company has one finance lease for office equipment as follows: 4. 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 finance 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 finance lease liability. The remaining lease term was 3.5 years for the Company’s operating leases and 4.8 years for its finance leases. The table below reconciles the undiscounted future minimum lease payments under the Company’s operating and finance leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of December 31, 2019 (in thousands): Operating lease liabilities Finance lease liabilities 2020 $ 1,344 $ 57 2021 1,408 45 2022 1,473 45 2023 763 45 2024 — 34 Total undiscounted future minimum lease payments 4,988 226 Less: Difference between undiscounted lease payments and discounted lease liabilities: (495) (36) Total lease liabilities $ 4,493 $ 190 Operating and finance lease costs were $1.2 million and $0.9 million for years ended December 31, 2019 and 2018, which were included in the consolidated statement of operations under the following headings (in thousands): For the years ended December 31, Operating Lease expense 2019 2018 Costs of revenue - devices and supplies $ 121 $ 142 Sales and marketing expense 170 114 General and administrative 859 670 Total operating lease expense $ 1,150 $ 926 Finance Lease expense Amortization of right-of-use asset: Costs of revenue - devices and supplies $ 2 $ — Sales and marketing expense 4 — General and administrative 13 10 Total amortization of right-of-use asset 19 10 Interest expense and other 5 2 Total finance lease expense $ 24 $ 12 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | (10) COMMITMENTS AND CONTINGENCIES See Note 9 for details regarding commitments under the Company’s long-term leases. 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 provide for them if losses are determined to be both probable and estimable. The Company is currently not a party to any material pending legal proceedings. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2019 | |
CONCENTRATIONS | |
CONCENTRATIONS | (11) CONCENTRATIONS The Company is exposed to concentration of credit risk related primarily to its cash balances. The Company maintains its cash at major financial institutions. The Company has not experienced any realized losses in such accounts and believes it is not exposed to any significant credit risk related to its cash. The Company had one major vendor from which is sourced approximately 49% of supplies for its electrotherapy products for the years ended December 31, 2019 and 2018. Management believes that its relationships with its suppliers are good. If the relationships were to be replaced, there may be a short-term disruption for a period of time in which products may not be available and additional expenses may be incurred as the Company locates additional or replacement suppliers. The Company had receivables from two third-party payers at December 31, 2019, which made up approximately 39% of the accounts receivable balance. The Company had receivables from a third-party payer at December 31, 2018, which made up approximately 23% of the accounts receivable balance. |
RETIREMENT PLAN
RETIREMENT PLAN | 12 Months Ended |
Dec. 31, 2019 | |
RETIREMENT PLAN | |
RETIREMENT PLAN | (12) RETIREMENT PLAN In 2012, the Company established a defined contribution retirement plan for its employees under section 401(k) of the Internal Revenue Code (the “401(k) Plan”) that is available to all employees 18 years of age or older with three months of service. All employee contributions are fully vested immediately and employer contributions vest over a period of four years. The Company has a discretionary employee match program and currently matches 35% of first 6% of an employee’s contributions. During each of 2019 and 2018, The Company recorded an expense of $0.1 million under the aforementioned plan, related to the Company match. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | (13) RELATED PARTY TRANSACTIONS In 2015, the Company entered into a three-year employment agreement totaling $0.1 million with Mr. Joachim Sandgaard, Mr. Sandgaard’s son. This arrangement concluded at the end of 2018. No further payments were made in 2019. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | (14) QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial information is as follows (in thousands, except per share data): 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenue $ 6,876 $ 7,573 $ 8,131 $ 9,337 Less: cost of revenue and operating expenses 4,921 4,858 5,312 6,457 Income from operations 1,955 2,715 2,819 2,880 Income before income taxes 1,840 2,678 2,818 2,880 Net income $ 1,921 $ 2,418 $ 2,591 $ 2,622 Net income per common share: Basic income per share - net income $ 0.06 $ 0.07 $ 0.08 $ 0.08 Diluted income per share - net income $ 0.06 $ 0.07 $ 0.07 $ 0.08 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenue $ 9,196 $ 10,297 $ 11,817 $ 14,162 Less: cost of revenue and operating expenses 6,940 7,713 9,322 10,431 Income from operations 2,256 2,584 2,495 3,731 Income before income taxes 3,136 2,584 2,496 3,725 Net income $ 2,350 $ 2,162 $ 2,033 $ 2,947 Net income per common share: Basic income per share - net income $ 0.07 $ 0.07 $ 0.06 $ 0.09 Diluted income per share - net income $ 0.07 $ 0.06 $ 0.06 $ 0.09 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | (15) SUBSEQUENT EVENTS See Note 9 – Leases above for a discussion regarding the lease agreement entered into in January 2020. On February 25, 2020 the Company announced the FDA granted 510(k) clearance for sale in the U.S. for the CM-1500 Blood Volume Monitor. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
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 a decrease in shareholders’ equity. Non-controlling interest represents the 20% ownership in the Company’s majority-owned inactive subsidiary, 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 year ended December 31, 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, inventory reserves, the life of its leased devices, stock-based compensation, and valuation of long-lived assets and realizability of deferred tax assets. |
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. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Short-term investments include investments with maturities greater than three months, but not exceeding 12 months, or highly liquid investments with maturities greater than 12 months that the Company intends to liquidate during the next 12 months for working capital needs. |
Inventory | Inventory Inventories are stated at the lower of cost and net realizable value. Cost is computed using standard costs, which approximates actual costs on an average cost basis. Following are the components of inventory as of December 31, 2019 and 2018 (in thousands): December 31, 2019 December 31, 2018 Raw Materials $ 953 $ 454 Work-in-process 200 55 Finished Goods 1,640 576 $ 2,793 1,085 Less: reserve (415) (248) $ 2,378 $ 837 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 equal to the difference between the costs of inventories on hand and the estimated market value based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory write-downs may be required. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost. Repairs and maintenance expenditures are charged to expense as incurred. We compute depreciation expense on a straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Useful Life Office furniture and equipment 5 to 7 years Assembly equipment 7 years Vehicles 5 years Leasehold improvements Term of lease Leased devices 9 months |
Leases | Leases The Company determines if an arrangement is a lease at inception or modification of a contract. The Company recognizes finance and operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the lease payments over the lease term. For our finance leases, the Company uses the implicit rate to determine the present value of future lease payments. For our operating leases that do not provide an implicit rate, the Company uses incremental borrowing rates to determine the present value of future lease payments. The Company includes options to extend or terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on our Consolidated Balance Sheets. For additional information on our leases where the Company is the lessee, see Note 9- Leases. A significant portion of our device revenue is derived from patients who obtain our devices under month-to-month lease arrangements. Revenue related to devices on lease is recognized in accordance with ASC 842, Leases. Using the guidance in ASC 842, we concluded our transactions should be accounted for as operating leases based on the following criteria below: 1. The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term. 2. The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. 3. 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. 4. 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 5. The underlying asset is expected to have alternative uses to the lessor at the end of the lease term. Lease commencement occurs upon delivery of the device to the patient. 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 recognized monthly for the duration of the period in which the patient retains the device. |
Revenue Recognition, Accounts Receivable, Allowance for Billing Adjustments and Collectability | Revenue Recognition, Accounts Receivable, Allowance for Billing Adjustments and Collectability Revenue is derived from sales and leases of our electrotherapy devices and sales of related supplies and complimentary products. The Company recognizes revenue when control of the product has been transferred to the patient, in the amount that reflects the consideration to which the Company expects to receive. In general, revenue from sales of our devices and supplies is recognized once the product is delivered to the patient, which is when control is deemed to have transferred to our patient. Sales of our devices and supplies are primarily made with, and shipped directly to the patient with a small amount of revenue generated from sales to distributors. In the healthcare industry there is often a third party involved that will pay on the patients’ 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 payers, 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. There are no substantial costs incurred through support or warranty obligations. The following table provides a breakdown of net revenue related to devices accounted for as purchases subject to ASC 606 and leases subject to ASC 842 (in thousands): For the Year Ended December 31, 2019 2018 Device revenue Purchased $ 4,035 $ 1,950 Leased 6,678 4,872 Total Device revenue 10,713 6,822 Primarily all of the Company’s receivables are due from patients with commercial or government health plans and workers compensation claims with a small portion related to private pay individuals, attorney and auto claims. Revenues are estimated using the portfolio approach by third party payer type based upon historical rates of collection, aging of receivables, trends in historical reimbursement rates by third-party payer types, and current relationships and experience with the third-party payers, which includes estimated constraints for third-party payer refund requests, deductions and adjustments. 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 payer billing arrangements and the uncertainty of reimbursement amounts for certain products from third-party payers 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 payer reimbursement, 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 and actual collectability are reflected in the period in which received. Historically these differences have been immaterial and the Company has not had to go back and reassess the adjustments of future periods for past billing adjustments. A change in the way estimates are determined can result from a number of factors, including changes in the reimbursement policies or practices of third-party payers, or changes in industry rates of reimbursement. The Company monitors the variability and uncertain timing over third-party payer types in our portfolios. If there is a change in our third-party payer 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 payer type. However, changes to constraints for billing adjustments have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year to year. |
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. E |
Earnings Per Share | Earnings Per Share We calculate basic earnings per share on the basis of the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated using the weighted-average number of shares of common stock outstanding for the period plus the effect of potential dilutive common shares during the period using the treasury stock method. Potential shares of common stock outstanding include unvested restricted stock awards, vested and unvested stock options and common stock purchase warrants. |
Advertising | Advertising The Company expenses advertising costs as they are incurred. Advertising expense for each of the years ended December 31, 2019 and 2018 was approximately $0.3 million and $0.1 million, respectively. |
Research and Development | Research and Development Research and development costs are expensed when incurred. Research and development expense for the years ended December 31, 2019 and 2018 was approximately $0.6 million and $0.2 million, respectively. Research and development which includes salaries related to research and development and raw materials are included in general and administrative expenses on the consolidated statement of comprehensive income. |
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. The Company is subject to the provisions of the Financial Accounting Standards Board (“FASB”) ASC 740‑10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. Due to the complexities involved in accounting for the recently enacted Tax Act, the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 118 allows a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The company has finalized its analysis of tax impacts as of December 31, 2018 and has recorded no material adjustments. |
Recently Adopted and Issued 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 finance 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 difference between the additional lease assets and liabilities was primarily due to lease incentives with the remaining difference of $7,000 recorded as an adjustment to the opening balance of 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 9, below, for further discussion regarding the Company’s operating and finance leases. Recently Issued Accounting Pronouncements 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, 2022, and interim periods therein for smaller reporting companies. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Corporation is currently evaluating the impact that the adoption of ASU 2016-13 will have on our financial condition, results of operations and cash flows. In December 2019, FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The amendments simplify the accounting for income taxes by removing certain exceptions to the general principals of Topic 740, “Income Taxes” and also improve consistent application by clarifying and amending existing guidance. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Corporation is currently evaluating the impact of adoption this guidance. 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. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of components of inventory | Following are the components of inventory as of December 31, 2019 and 2018 (in thousands): December 31, 2019 December 31, 2018 Raw Materials $ 953 $ 454 Work-in-process 200 55 Finished Goods 1,640 576 $ 2,793 1,085 Less: reserve (415) (248) $ 2,378 $ 837 |
Schedule of estimated useful lives of the assets | We compute depreciation expense on a straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Useful Life Office furniture and equipment 5 to 7 years Assembly equipment 7 years Vehicles 5 years Leasehold improvements Term of lease Leased devices 9 months |
Schedule of breakdown of net revenue related to devices accounted for as purchases subject to ASC 606 and leases subject to ASC 842 | The following table provides a breakdown of net revenue related to devices accounted for as purchases subject to ASC 606 and leases subject to ASC 842 (in thousands): For the Year Ended December 31, 2019 2018 Device revenue Purchased $ 4,035 $ 1,950 Leased 6,678 4,872 Total Device revenue 10,713 6,822 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of components of property and equipment | The components of property and equipment are as follows (in thousands): December 31,2019 December 31,2018 Property and equipment Office furniture and equipment $ 1,178 $ 1,172 Assembly equipment 128 128 Vehicles 181 184 Leasehold improvements 500 480 Leased devices 934 317 $ 2,921 2,281 Less accumulated depreciation (2,063) (1,462) $ 858 $ 819 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
Schedule of Calculation of Basic and Diluted earnings per share | The calculation of basic and diluted earnings per share for the years ended December 31, 2019 and 2018 are as follows (in thousands, except per share amounts): For the Years Ended December 31, 2019 2018 Basic earnings per share Net income available to common stockholders $ 9,492 $ 9,552 Basic weighted-average shares outstanding 32,439 32,503 Basic earnings per share $ 0.29 $ 0.29 Diluted earnings per share Net income available to common stockholders $ 9,492 $ 9,552 Weighted-average shares outstanding 32,439 32,503 Effect of dilutive securities - options and restricted stock 1,524 1,540 Diluted weighted-average shares outstanding 33,963 34,043 Diluted earnings per share $ 0.28 $ 0.28 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCK-BASED COMPENSATION PLANS | |
Fair Value of Stock Options Grants | The following assumptions were used in estimating the grant date fair value of stock options granted during the years ended December 31, 2019 and 2018: 2019 2018 Weighted average expected term 6.25 years 6.25 years Weighted average volatility 122 % 123 % Weighted average risk-free interest rate 2.30 % 3.00 % Dividend yield 0 % 0 % |
Schedule of share based compensation expenses recorded in the consolidated statement of income | The following table summarizes stock-based compensation expenses recorded in the condensed consolidated statements of operations (in thousands): For the Years Ended December 31, 2019 2018 Costs of revenue - devices and supplies $ 21 $ 33 Sales and marketing expense 205 127 General, and administrative 594 210 Total stock based compensation expense $ 820 $ 370 |
Summary of Stock Option Activity Under the Option Plan | Weighted Weighted Average Aggregate Average Remaining Intrinsic Number of Shares Strike Contractual Value (in thousands) Price Life (Years) (in thousands) Outstanding at December 31, 2017 2,142 $ 0.56 Granted 215 $ 2.99 Exercised (357) $ 0.44 Forfeited (115) $ 1.48 Outstanding at December 31, 2018 1,885 $ 0.80 6.32 $ 4,085 Outstanding at December 31, 2018 1,885 $ 0.80 Granted 653 $ 5.81 Exercised (503) $ 0.44 Expired (6) $ 1.00 Forfeited (174) $ 2.64 Outstanding at December 31, 2019 1,855 $ 2.48 6.42 $ 10,032 Exercisable at December 31, 2019 965 $ 0.60 $ 7,022 |
Summary of Stock Options Outstanding Under The Plans | Outstanding Weighted average Number of Remaining Weighted Average Options Contractual Weighted Average Exercisable Number of Remaining Exercisable Exercisable Range (in thousands) Life (years) Strike Price Options (in thousands) Contractual Life (years) Strike Price $0 to $2.00 1,040 $ 0.42 889 3.80 $ 0.41 $2.01 to $4.00 367 $ 3.11 76 8.26 $ 2.78 $4.01 to $6.00 210 $ 5.35 — — $ — $6.01 to $8.00 $ — — $ — $8.01 to $10.00 38 $ 8.96 — — $ — 1,855 $ 2.48 965 4.15 $ 0.60 |
Restricted Stock Award Activity Under all Equity Compensation Plans | A summary of our unvested stock options as of December 31, 2019 and 2018 and related activity is presented below: Non-vested Shares Weighted Under Average Option Grant Date (in thousands) Fair Value Non-vested at December 31, 2017 658 $ 0.81 Granted 215 $ 2.65 Vested (256) $ 0.72 Forfeited (48) $ 1.98 Non-vested at December 31, 2018 569 $ 1.44 Non-vested at December 31, 2018 569 $ 1.44 Granted 653 $ 5.12 Vested (169) $ 1.24 Forfeited (163) $ 2.44 Non-vested at December 31, 2019 890 $ 4.03 A summary of restricted stock award activity under the 2017 Stock Plan for the years ended December 2019 and 2018 are presented below: Number of Shares Weighted Average (in thousands) Grant Date Fair Value Outstanding at December 31, 2017 15 $ 1.10 Granted 80 $ 3.56 Vested (19) $ 3.09 Outstanding at December 31, 2018 76 $ 3.19 Outstanding at December 31, 2018 76 $ 3.19 Granted 55 $ 8.10 Vested (29) $ 3.24 Outstanding at December 31, 2019 102 $ 5.81 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value of Stock Options Grants | The following assumptions were used in estimating the grant date fair value of stock options granted during the years ended December 31, 2019 and 2018: 2019 2018 Weighted average expected term 6.25 years 6.25 years Weighted average volatility 122 % 123 % Weighted average risk-free interest rate 2.30 % 3.00 % Dividend yield 0 % 0 % |
Warrant [Member] | |
Schedule of stock warrant activity | A summary of stock warrant activity for the years ended December 31, 2019 and 2018 are presented below: Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Warrants Exercise Contractual Value (in thousands) Price Life (Years) (in thousands) Outstanding at December 31, 2017 200 $ 1.86 Granted — — Exercised (50) $ 0.20 Forfeited — $ — Outstanding and Exercisable at December 31, 2018 150 $ 2.42 5.77 $ 79 Outstanding at December 31, 2018 150 $ 2.42 5.77 $ 79 Granted — — Exercised (40) $ 2.00 Forfeited (1) (10) $ 2.00 Outstanding and Exercisable at December 31, 2019 100 $ 2.63 $ 525 (1) Warrants were exercised under a net exercise provision in the warrant agreement. As a result, approximately 10,000 warrants were forfeited in lieu of cash payment for shares. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of pre-tax income from continuing operations on which the provision for income taxes | The pre-tax income from continuing operations on which the provision for income taxes was computed is as follows (in thousands): 2019 2018 United States $ 11,964 $ 10,237 Foreign (23) (21) Total 11,941 10,216 |
Schedule of income tax expense | Income tax expense consists of the following for the years ended December 31, 2019 and 2018 (in thousands): 2019 2018 Current tax expense: Federal $ 1,865 $ 1,080 State 372 309 Total tax expense: 2,237 1,389 Deferred tax expense/(benefit): Federal 120 (462) State 92 (263) Total deferred tax expense/(benefit): $ 212 $ (725) Total $ 2,449 $ 664 |
Schedule of reconciliation of income tax | A reconciliation of income tax computed at the U.S. statutory rate of 21% to the effective income tax rate is as follows: 2019 2018 Statutory rate 21 % 21 % State taxes 3 4 Permanent differences and other — 1 Change in valuation allowance (1) (16) Stock based compensation (4) (3) Other (true – up) 1 — Effective rate 20 % 7 % |
Schedule of tax effects of temporary differences that give rise to deferred tax assets (liabilities) | The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2019 and 2018 are as follows (in thousands): 2019 2018 Deferred tax assets: Accrued expenses $ 34 $ 37 Lease liability 1,109 217 Accounts receivable 19 18 Inventory 232 117 Stock-based compensation 145 138 Tax Credits and NOL Carryforward 110 354 Other 1 150 Property and equipment — — Amortization 50 57 1,700 1,088 Less: Valuation allowance — (172) Deferred tax assets $ 1,700 $ 916 Deferred tax liabilities: Property and equipment $ (192) $ (176) Finance lease (45) — Right-of-use asset (946) — Prepaid expenses (4) (15) Deferred tax liabilities $ (1,187) $ (191) Net deferred tax assets $ 513 $ 725 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 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 finance leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of December 31, 2019 (in thousands): Operating lease liabilities Finance lease liabilities 2020 $ 1,344 $ 57 2021 1,408 45 2022 1,473 45 2023 763 45 2024 — 34 Total undiscounted future minimum lease payments 4,988 226 Less: Difference between undiscounted lease payments and discounted lease liabilities: (495) (36) Total lease liabilities $ 4,493 $ 190 |
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 finance leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of December 31, 2019 (in thousands): Operating lease liabilities Finance lease liabilities 2020 $ 1,344 $ 57 2021 1,408 45 2022 1,473 45 2023 763 45 2024 — 34 Total undiscounted future minimum lease payments 4,988 226 Less: Difference between undiscounted lease payments and discounted lease liabilities: (495) (36) Total lease liabilities $ 4,493 $ 190 |
Schedule of lease cost | For the years ended December 31, Operating Lease expense 2019 2018 Costs of revenue - devices and supplies $ 121 $ 142 Sales and marketing expense 170 114 General and administrative 859 670 Total operating lease expense $ 1,150 $ 926 Finance Lease expense Amortization of right-of-use asset: Costs of revenue - devices and supplies $ 2 $ — Sales and marketing expense 4 — General and administrative 13 10 Total amortization of right-of-use asset 19 10 Interest expense and other 5 2 Total finance lease expense $ 24 $ 12 |
QUARTERLY FINANCIAL INFORMATI_2
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
Schedule of quarterly financial information | Quarterly financial information is as follows (in thousands, except per share data): 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenue $ 6,876 $ 7,573 $ 8,131 $ 9,337 Less: cost of revenue and operating expenses 4,921 4,858 5,312 6,457 Income from operations 1,955 2,715 2,819 2,880 Income before income taxes 1,840 2,678 2,818 2,880 Net income $ 1,921 $ 2,418 $ 2,591 $ 2,622 Net income per common share: Basic income per share - net income $ 0.06 $ 0.07 $ 0.08 $ 0.08 Diluted income per share - net income $ 0.06 $ 0.07 $ 0.07 $ 0.08 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Total Revenue $ 9,196 $ 10,297 $ 11,817 $ 14,162 Less: cost of revenue and operating expenses 6,940 7,713 9,322 10,431 Income from operations 2,256 2,584 2,495 3,731 Income before income taxes 3,136 2,584 2,496 3,725 Net income $ 2,350 $ 2,162 $ 2,033 $ 2,947 Net income per common share: Basic income per share - net income $ 0.07 $ 0.07 $ 0.06 $ 0.09 Diluted income per share - net income $ 0.07 $ 0.06 $ 0.06 $ 0.09 |
ORGANIZATION, NATURE OF BUSIN_2
ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT'S PLANS - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Zynex Billing And Consultancy, LLC [Member] | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Noncontrolling Interest, Ownership Percentage by Parent | 80.00% | |
North America [Member] | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Percentage Of Revenues | 99.99% | 99.99% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Non-controlling Interest (Details) | Dec. 31, 2019 |
Zynex Billing And Consultancy, LLC [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Non-controlling interest (as a percentage) | 20.00% |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Components of inventory | ||
Raw Materials | $ 953 | $ 454 |
Work-in-process | 200 | 55 |
Finished Goods | 1,640 | 576 |
Total | 2,793 | 1,085 |
Less: reserve | (415) | (248) |
Inventory, net | $ 2,378 | $ 837 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Office furniture and equipment | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 5 years |
Office furniture and equipment | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 7 years |
Assembly equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 7 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 5 years |
Leased devices | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 9 months |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true |
Lessee, Operating Lease, Existence of Option to Terminate [true false] | true |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Breakdown of net revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Device revenue | ||||||||||
Total Device revenue | $ 14,162 | $ 11,817 | $ 10,297 | $ 9,196 | $ 9,337 | $ 8,131 | $ 7,573 | $ 6,876 | $ 45,472 | $ 31,917 |
Devices [Member] | ||||||||||
Device revenue | ||||||||||
Purchased | 4,035 | 1,950 | ||||||||
Leased | 6,678 | 4,872 | ||||||||
Total Device revenue | $ 10,713 | $ 6,822 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||
Advertising Expense | $ 300 | $ 100 | |
Research and Development Expense | $ 600 | 200 | |
Cumulative Effect on Retained Earnings, Net of Tax | $ (7) | ||
ASU 2016-02 | |||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||
Lease, Practical Expedients, Package [true false] | true | ||
Lease, Practical Expedient, Use of Hindsight [true false] | true | ||
Net lease assets | $ 3,600 | ||
Net lease liabilities | $ 3,900 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment, Gross | $ 2,921 | $ 2,281 |
Less accumulated depreciation | (2,063) | (1,462) |
Property and Equipment, Net | 858 | 819 |
Office furniture and equipment | ||
Property, Plant and Equipment, Gross | 1,178 | 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 | 500 | 480 |
Leased devices | ||
Property, Plant and Equipment, Gross | $ 934 | $ 317 |
PROPERTY AND EQUIPMENT - Additi
PROPERTY AND EQUIPMENT - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 778 | $ 448 |
Property and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation | 300 | 200 |
Leased Devices [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 500 | $ 300 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Basic earnings per share | ||||||||||
Net income available to common stockholders | $ 2,947 | $ 2,033 | $ 2,162 | $ 2,350 | $ 2,622 | $ 2,591 | $ 2,418 | $ 1,921 | $ 9,492 | $ 9,552 |
Basic weighted-average shares outstanding | 32,439 | 32,503 | ||||||||
Basic earnings per share | $ 0.29 | $ 0.29 | ||||||||
Diluted earnings per share | ||||||||||
Net income available to common stockholders | $ 2,947 | $ 2,033 | $ 2,162 | $ 2,350 | $ 2,622 | $ 2,591 | $ 2,418 | $ 1,921 | $ 9,492 | $ 9,552 |
Weighted-average shares outstanding | 32,439 | 32,503 | ||||||||
Effect of dilutive securities - options and restricted stock | 1,524 | 1,540 | ||||||||
Diluted weighted-average shares outstanding | 33,963 | 34,043 | ||||||||
Diluted earnings per share | $ 0.28 | $ 0.28 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional information (Details) - shares shares in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.3 | 0.4 |
STOCK-BASED COMPENSATION PLAN_2
STOCK-BASED COMPENSATION PLANS - Stock options granted (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair value of stock option grants | ||
Weighted average expected term | 6 years 3 months | 6 years 3 months |
Weighted average risk-free interest rate | 2.30% | 3.00% |
Weighted average volatility | 122.00% | 123.00% |
Dividend yield | 0.00% | 0.00% |
STOCK-BASED COMPENSATION PLAN_3
STOCK-BASED COMPENSATION PLANS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Allocated Share-based Compensation Expense | $ 820 | $ 370 |
Costs of revenue - devices and supplies | ||
Allocated Share-based Compensation Expense | 21 | 33 |
Sales and marketing expense | ||
Allocated Share-based Compensation Expense | 205 | 127 |
General, and administrative | ||
Allocated Share-based Compensation Expense | $ 594 | $ 210 |
STOCK-BASED COMPENSATION PLAN_4
STOCK-BASED COMPENSATION PLANS - Summary of stock option activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of stock option activity under the option Plan | ||
Weighted Average Remaining Contractual Life, Exercisable (Years) | 4 years 1 month 24 days | |
Employee Stock Option [Member] | ||
Summary of stock option activity under the option Plan | ||
Outstanding at beginning | 1,885 | 2,142 |
Number of Shares, Granted | 653 | 215 |
Number of Shares, Expired | (6) | |
Number of Shares, Forfeited | (174) | (115) |
Number of Warrants, Exercised | (503) | (357) |
Outstanding at ending | 1,855 | 1,885 |
Number of Shares, Exercisable | 965 | |
Weighted Average Exercise Price, Outstanding Beginning | $ 0.80 | $ 0.56 |
Weighted Average Exercise Price, Granted | 5.81 | 2.99 |
Weighted Average Exercise Price, Expired | 1 | |
Weighted Average Exercise Price, Exercised | 0.44 | 0.44 |
Weighted Average Exercise Price, Forfeited | 2.64 | 1.48 |
Weighted Average Exercise Price, Outstanding Ending | 2.48 | $ 0.80 |
Weighted Average Exercise Price, Exercisable | $ 0.60 | |
Weighted Average Remaining Contractual Life, Outstanding | 6 years 5 months 1 day | 6 years 3 months 26 days |
Weighted Average Remaining Contractual Life, Exercisable (Years) | 4 years 1 month 24 days | |
Aggregate Intrinsic Value, Outstanding | $ 10,032 | $ 4,085 |
Aggregate Intrinsic Value, Exercisable | $ 7,022 |
STOCK-BASED COMPENSATION PLAN_5
STOCK-BASED COMPENSATION PLANS - Stock Plan (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Outstanding Number of Shares | shares | shares | 1,855 |
WA Remaining Contractual Life (years) | 6 years 5 months 1 day |
WA Outstanding Strike Price | $ 2.48 |
Exercisable Number of Shares | shares | shares | 965 |
Remaining Exercisable Contractual Life (years) | 4 years 1 month 24 days |
WA Exercisable Strike Price | $ 0.60 |
Exercise Price Range One [Member] | |
Exercise Price Minimum | 0 |
Exercise Price Maximum | $ 2 |
Outstanding Number of Shares | shares | shares | 1,040 |
WA Remaining Contractual Life (years) | 4 years 3 months 29 days |
WA Outstanding Strike Price | $ 0.42 |
Exercisable Number of Shares | shares | shares | 889 |
Remaining Exercisable Contractual Life (years) | 3 years 9 months 18 days |
WA Exercisable Strike Price | $ 0.41 |
Exercise Price Range Two [Member] | |
Exercise Price Minimum | 2.01 |
Exercise Price Maximum | $ 4 |
Outstanding Number of Shares | shares | shares | 367 |
WA Remaining Contractual Life (years) | 8 years 8 months 5 days |
WA Outstanding Strike Price | $ 3.11 |
Exercisable Number of Shares | shares | shares | 76 |
Remaining Exercisable Contractual Life (years) | 8 years 3 months 4 days |
WA Exercisable Strike Price | $ 2.78 |
Exercise Price Range Three [Member] | |
Exercise Price Minimum | 4.01 |
Exercise Price Maximum | $ 6 |
Outstanding Number of Shares | shares | shares | 210 |
WA Remaining Contractual Life (years) | 9 years 2 months 5 days |
WA Outstanding Strike Price | $ 5.35 |
Remaining Exercisable Contractual Life (years) | 0 years |
Exercise Price Range Four [Member] | |
Exercise Price Minimum | $ 6.01 |
Exercise Price Maximum | $ 8 |
Outstanding Number of Shares | shares | shares | 200 |
WA Remaining Contractual Life (years) | 9 years 6 months 22 days |
WA Outstanding Strike Price | $ 7.87 |
Remaining Exercisable Contractual Life (years) | 0 years |
Exercise Price Range Five [Member] | |
Exercise Price Minimum | $ 8.01 |
Exercise Price Maximum | $ 10 |
Outstanding Number of Shares | shares | shares | 38 |
WA Remaining Contractual Life (years) | 9 years 10 months 10 days |
WA Outstanding Strike Price | $ 8.96 |
Remaining Exercisable Contractual Life (years) | 0 years |
STOCK-BASED COMPENSATION PLAN_6
STOCK-BASED COMPENSATION PLANS - Summary of our unvested stock options (Details) - Non vested Share Awards [Member] - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Non-vested Shares Under Option, Beginning Balance | 569 | 658 |
Non-vested Shares Under Option, Granted | 653 | 215 |
Non-vested Shares Under Option, Vested | (169) | (256) |
Non-vested Shares Under Option, Forfeited | (163) | (48) |
Non-vested Shares Under Option, Ending Balance | 890 | 569 |
Weighted Average Grant Date Fair Value, Beginning Balance | $ 1.44 | $ 0.81 |
Weighted Average Grant Date Fair Value, Granted | 5.12 | 2.65 |
Weighted Average Grant Date Fair Value, Vested | 1.24 | 0.72 |
Weighted Average Grant Date Fair Value, Forfeited | 2.44 | 1.98 |
Weighted Average Grant Date Fair Value, Ending Balance | $ 4.03 | $ 1.44 |
STOCK-BASED COMPENSATION PLAN_7
STOCK-BASED COMPENSATION PLANS - Summary of restricted stock award activity (Details) - Restricted Stock [Member] - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding at Beginning | 76 | 15 |
Granted | 55 | 80 |
Vested | (29) | (19) |
Outstanding At Ending | 102 | 76 |
Weighted Average Grant Date Fair Value, Beginning Balance | $ 3.19 | $ 1.10 |
Weighted Average Grant Date Fair Value, Granted | 8.10 | 3.56 |
Weighted Average Grant Date Fair Value, Vested | 3.24 | 3.09 |
Weighted Average Grant Date Fair Value, Ending Balance | $ 5.81 | $ 3.19 |
STOCK-BASED COMPENSATION PLAN_8
STOCK-BASED COMPENSATION PLANS - Additional information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Proceeds from Stock Options Exercised | $ 0.8 | $ 0.3 | |
Unrecognized compensation expense related to stock options | $ 3.5 | ||
Weighted-average period of unrecognized compensation expense related to stock options | 2 years 10 months 24 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 4.4 | 1.1 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $ 0.1 | $ 0.2 | |
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, Nonvested, Number | 102,000 | 76,000 | 15,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 55,000 | 80,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 8.10 | $ 3.56 | |
Stock Incentive Plan 2017 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock options remain reserved for issuance | 3,700,000 | ||
Stock Incentive Plan 2017 [Member] | Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||
Stock Incentive Plan 2017 [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, Options, Vested and Expected to Vest, Outstanding, Number | 1,200,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 700,000 | ||
Stock Incentive Plan 2017 [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Employee [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||
Stock Incentive Plan 2017 [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Nonemployee [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||
2005 Stock Option Plan | |||
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 | 3,000,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 700,000 |
STOCKHOLDERS' EQUITY - Warrants
STOCKHOLDERS' EQUITY - Warrants (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted Average Remaining Contractual Life, Exercisable (Years) | 4 years 1 month 24 days | |
Warrant [Member] | ||
Outstanding at beginning | 150 | 200 |
Number of Warrants, Exercised | (40) | (50) |
Number of Warrants, Forfeited | (10) | |
Outstanding at ending | 100 | 150 |
Number of Warrants, Exercisable | 100 | 150 |
Weighted Average Exercise Price, Outstanding Beginning | $ 2.42 | $ 1.86 |
Weighted Average Exercise Price, Exercised | 2 | 0.20 |
Weighted Average Exercise Price, Forfeited | 2 | |
Weighted Average Exercise Price, Outstanding Ending | 2.63 | 2.42 |
Weighted Average Exercise Price, Exercisable | $ 2.63 | $ 2.42 |
Weighted Average Remaining Contractual Life (Years) | 4 years 9 months 7 days | 5 years 9 months 7 days |
Weighted Average Remaining Contractual Life, Exercisable (Years) | 4 years 9 months 7 days | 5 years 9 months 7 days |
Aggregate Intrinsic Value | $ 525 | $ 79 |
Aggregate Intrinsic Value, Exercisable | $ 525 | $ 79 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | |||||
Oct. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2019 | May 13, 2019 | Dec. 31, 2018 | May 14, 2018 | Mar. 06, 2018 | Mar. 28, 2016 | |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Dividends Payable, Amount Per Share | $ 0.07 | $ 0.07 | |||||||
Dividends Payable, Current | $ 2,270 | $ 8 | $ 2,270 | ||||||
Stock Repurchase Program, Authorized Amount | $ 2,000 | ||||||||
Stock Repurchased During Period, Shares | 576,129 | ||||||||
Treasury Stock Acquired, Average Cost Per Share | $ 4.04 | $ 3.20 | |||||||
Stock Repurchase Program Additional Authorized Amount | $ 2,000 | ||||||||
Stock Repurchased During Period, Value | $ 2,000 | $ 171 | $ 1,800 | $ 3,432 | |||||
Common Stock Warrants Issued For Professional Services | 150,000 | ||||||||
Common Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Stock Repurchased During Period, Shares | 495,091 | 52,000 | 932,383 | ||||||
Warrant exercises (in shares) | 40,366 | ||||||||
Triumph Bank [Member] | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of warrants exercised | 50,000 |
INCOME TAXES - Pre-tax income f
INCOME TAXES - Pre-tax income from continuing operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
INCOME TAXES | ||
United States | $ 11,964 | $ 10,237 |
Foreign | (23) | (21) |
Total | $ 11,941 | $ 10,216 |
INCOME TAXES - Income tax expen
INCOME TAXES - Income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current tax expense: | ||
Federal | $ 1,865 | $ 1,080 |
State | 372 | 309 |
Total tax expense: | 2,237 | 1,389 |
Deferred tax expense/(benefit): | ||
Federal | 120 | (462) |
State | 92 | (263) |
Total deferred tax expense/(benefit): | 212 | (725) |
Total | $ 2,449 | $ 664 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of income tax (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Statutory rate | 21.00% | 21.00% |
State taxes | 3.00% | 4.00% |
Permanent differences and other | 1.00% | |
Change in valuation allowance | (1.00%) | (16.00%) |
Stock based compensation | (4.00%) | (3.00%) |
Other (true - up) | 1.00% | |
Effective rate | 20.00% | 7.00% |
INCOME TAXES - Tax effects of t
INCOME TAXES - Tax effects of temporary differences (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Accrued expenses | $ 34 | $ 37 |
Lease liability | 1,109 | 217 |
Accounts receivable | 19 | 18 |
Inventory | 232 | 117 |
Stock-based compensation | 145 | 138 |
Tax Credits and NOL Carryforward | 110 | 354 |
Other | 1 | 150 |
Amortization | 50 | 57 |
Total deferred tax assets | 1,700 | 1,088 |
Less: Valuation allowance | (172) | |
Deferred tax assets | 1,700 | 916 |
Deferred tax liabilities: | ||
Property and equipment | (192) | (176) |
Finance lease | (45) | |
Right-of-use asset | (946) | |
Prepaid expenses | (4) | (15) |
Deferred tax liabilities | (1,187) | (191) |
Net deferred tax assets | $ 513 | $ 725 |
INCOME TAXES - Additional infor
INCOME TAXES - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes [Line Items] | ||
Effective Income Tax Rate Reconciliation, Percent | 20.00% | 7.00% |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% |
Income Tax Expense (Benefit) | $ 2,449 | $ 664 |
Deferred Tax Assets, Valuation Allowance | 172 | |
Net income Loss Carry forward For Income Tax Purpose | $ 2,700 | |
Maximum [Member] | ||
Income Taxes [Line Items] | ||
Net Operating Loss Carry Forwards Expiration Period | 7 years | |
Minimum [Member] | ||
Income Taxes [Line Items] | ||
Net Operating Loss Carry Forwards Expiration Period | 5 years |
DEFERRED INSURANCE REIMBURSEM_2
DEFERRED INSURANCE REIMBURSEMENT (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2016 | |
DEFERRED INSURANCE REIMBURSEMENT | ||||
Liability for Claims and Claims Adjustment Expense, Total | $ 0 | $ 880,000 | $ 880,000 | |
Deferred Insurance Liability | $ 880,000 | |||
Deferred insurance reimbursement | $ 880,000 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | Jan. 03, 2020 | Dec. 31, 2019 | Sep. 20, 2019 | Jun. 01, 2019 | Oct. 20, 2017 |
Operating lease liabilities | |||||
2020 | $ 1,344 | ||||
2021 | 1,408 | ||||
2022 | 1,473 | ||||
2023 | 763 | ||||
Total undiscounted future minimum lease payments | 4,988 | ||||
Less: Difference between undiscounted lease payments and discounted operating lease liabilities: | (495) | ||||
Operating Lease, Liability, Total | $ 1,400 | 4,493 | $ 1,600 | $ 3,900 | |
Finance lease liabilities | |||||
2020 | 57 | ||||
2021 | 45 | ||||
2022 | 45 | ||||
2023 | 45 | ||||
2024 | 34 | ||||
Total undiscounted future minimum lease payments | 226 | ||||
Less: Difference between undiscounted lease payments and discounted lease liabilities: | (36) | ||||
Total lease liabilities | $ 190 | $ 200 |
LEASES - Lease cost (Details)
LEASES - Lease cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases | ||
Total operating lease expense | $ 1,150 | $ 926 |
Total amortization of right-of-use asset | 19 | 10 |
Interest expense and other | 5 | 2 |
Total finance lease expense | 24 | 12 |
Costs of revenue - devices and supplies | ||
Leases | ||
Total operating lease expense | 121 | 142 |
Total amortization of right-of-use asset | 2 | |
Sales and marketing expense | ||
Leases | ||
Total operating lease expense | 170 | 114 |
Total amortization of right-of-use asset | 4 | |
General, and administrative | ||
Leases | ||
Total operating lease expense | 859 | 670 |
Total amortization of right-of-use asset | $ 13 | $ 10 |
LEASES - Additional information
LEASES - Additional information (Details) $ in Thousands | Nov. 01, 2021$ / ft² | Nov. 01, 2020$ / ft² | Sep. 30, 2019$ / ft² | Oct. 31, 2020$ / ft² | Oct. 31, 2020$ / ft² | Dec. 31, 2019USD ($) | Oct. 20, 2019$ / ft² | Oct. 19, 2019$ / ft² | Dec. 31, 2018USD ($) | Oct. 19, 2018$ / ft² | Oct. 31, 2021$ / ft² | Jan. 03, 2020USD ($)a | Sep. 20, 2019USD ($) | Jun. 01, 2019USD ($) | Mar. 11, 2019a | Oct. 20, 2017USD ($)a |
LEASES | ||||||||||||||||
Land Subject to Ground Leases | a | 22,546 | 21,420 | 41,715 | |||||||||||||
Option to extend (in years) | 2 years | 2 years | ||||||||||||||
Rent per square foot | $ / ft² | 10 | 13 | 20.75 | 19.75 | 7.50 | 21.75 | ||||||||||
Additional rent per square foot | $ / ft² | 1 | 1 | 1 | |||||||||||||
Tenant Improvements | $ 200 | |||||||||||||||
Operating lease liabilities | $ 4,493 | $ 1,400 | $ 1,600 | 3,900 | ||||||||||||
Operating lease asset | 3,831 | $ 3,050 | $ 1,400 | $ 1,600 | $ 3,600 | |||||||||||
Finance Lease, Right-of-Use Asset | 180 | 19 | $ 200 | |||||||||||||
Finance Lease, Liability | 190 | $ 200 | ||||||||||||||
Lessee, Operating Lease, Term of Contract | 5 years | |||||||||||||||
Operating and finance lease cost | $ 1,200 | $ 900 | ||||||||||||||
Lessee, Operating Lease, Discount Rate | 4.80% | |||||||||||||||
Lessee, Finance Lease, Discount Rate | 8.30% | |||||||||||||||
Operating Lease, Weighted Average Remaining Lease Term | 3 years 6 months | |||||||||||||||
Finance Lease, Weighted Average Remaining Lease Term | 4 years 9 months 18 days |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - item | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Supplier Concentration Risk [Member] | Cost of Goods, Total [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 49.00% | 49.00% |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 39.00% | 23.00% |
Number of third-party payers | 2 | 1 |
RETIREMENT PLAN - Additional in
RETIREMENT PLAN - Additional information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2012 | |
RETIREMENT PLAN | |||
Defined Contribution Plan Eligibility Age | 18 years | ||
Defined Contribution Plan Period Of Employment For Eligibility | 3 months | ||
Defined Contribution Plan, Cost | $ 0.1 | $ 0.1 | |
Defined Contribution Plan Description of Employer Matching Contribution | The Company has a discretionary employee match program and currently matches 35% of first 6% of an employee's contributions. | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 35.00% | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 6.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Employment Arrangement - Immediate Family Members of Management or Principal Owner $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
RELATED PARTY TRANSACTIONS | |
Lump sum payment | $ 0.1 |
Agreement term | 3 years |
QUARTERLY FINANCIAL INFORMATI_3
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | ||||||||||
Total Revenue | $ 14,162 | $ 11,817 | $ 10,297 | $ 9,196 | $ 9,337 | $ 8,131 | $ 7,573 | $ 6,876 | $ 45,472 | $ 31,917 |
Less: cost of revenue and operating expenses | 10,431 | 9,322 | 7,713 | 6,940 | 6,457 | 5,312 | 4,858 | 4,921 | 34,406 | 21,547 |
Income from operations | 3,731 | 2,495 | 2,584 | 2,256 | 2,880 | 2,819 | 2,715 | 1,955 | 11,066 | 10,370 |
Income before income taxes | 3,725 | 2,496 | 2,584 | 3,136 | 2,880 | 2,818 | 2,678 | 1,840 | ||
Net income | $ 2,947 | $ 2,033 | $ 2,162 | $ 2,350 | $ 2,622 | $ 2,591 | $ 2,418 | $ 1,921 | $ 9,492 | $ 9,552 |
Net income per common share: | ||||||||||
Basic income per share - net income | $ 0.09 | $ 0.06 | $ 0.07 | $ 0.07 | $ 0.08 | $ 0.08 | $ 0.07 | $ 0.06 | ||
Diluted income per share - net income | $ 0.09 | $ 0.06 | $ 0.06 | $ 0.07 | $ 0.08 | $ 0.07 | $ 0.07 | $ 0.06 |