ZYXI - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Zynex’ First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Certain statements in this release are forward-looking and as such are subject to numerous risks and uncertainties. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause actual results to materially differ from forward-looking statements include, but are not limited to: the need to obtain FDA clearance and CE marking of new products; the acceptance of new products as well as existing products by doctors and hospitals; larger competitors with greater financial resources; the need to keep pace with technological changes; our dependence on the reimbursement from insurance companies for products sold or rented to our customers; acceptance of our products by health insurance providers; our dependence on third party manufacturers to produce our goods on time and to our specifications; implementation of our sales strategy, including a strong direct sales force; our ability to up-list to a larger exchange and other risks described in our filings with the Securities and Exchange Commission, including the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2017 as well as Forms 10-Q, 8-K and 8-K/A, press releases and the Company’s website. being event this note recorded. Please like It to the over turn Sandgaard, would President now Thomas and conference Zynex. to CEO of Please ahead. go

Thomas Sandgaard

morning. and first Thomas Zynex. Good first earnings. quarter We is and of great consecutive name of $X.X quarter revenue CEO positive million had Sandgaard, a Welcome seventh XXXX quarter President our with earnings our call. to My with

few continues per to The we've $X.X with in of doubled to year compared the and the get first-line-of-defense months prescription-strength diluted of health $X.XX opioids reported be not million of to we treating slightly to down technology net revenue physicians pain. as insurance last in deductibles on the opioid are and it to same rage sequentially, we Our first year, being the If this epidemic the our patients of serious positive and income the or revenue met last compare issues a seasonality working country, fully in share. our quarter annual increasingly was due first year. use our quarter the quarter in first

aware We no tools continue more make our to has to that technology literally side physicians develop effects. of

strengthen that stock program may value shareholders the quarter, of industry. stock and increased value. pleased still at the is our took place further XX% a the in $X up XX%, the see Our to from also very last I the grew last our XX% reimbursement the effort million a throughout the increased healthy orders substantially gross quarter XXXX, margin buyback that in year grew while indication to electrotherapy end of year-over-year prescription-strength an quarter, an year in the I'm from should year. compared XX% to mentioned also million for future profit and first per viable order in repeat first first $X.X ago of to and industry very

industry. for still the pain management, for NexWave very rehabilitation NeuroMove rehabilitation The puts a our as products for us in InWave in some rehabilitation stroke management of product and in pain markets. position and Our treatment incontinence for standout the best products strong device

progress can on first applications as loss during volume surgery of also blood additional internal monitor, recovery have making the new product our and noninvasive indicate We’re or bleeding during that may well. blood

hoping FDA progress as being announce market some granted patents, of marking seeing time well can We’re one here several through CE for the as soon. some we very European

great management divisions, potential area of volume our as our will for product I blood Moorhead, unmet the potential revenue-generating CFO. our We both Dan continue in our the call for see over monitor. to turn existing pain to as now well huge

Dan Moorhead

Thomas. Thanks,

to a stock calculation quarter income the to Adjusted diluted plus in of in year. of to revenue EBITDA XXX% XXXX. reconciled The compensation a or last $X.XX is share $XXX,XXX, standard release, from $X $X XXX% was exclusion XXX% $X.X to XX% million Here quarter. increased our based from is net the XX% which first to to an revenue XXXX. $XXX,XXX million drove diluted first to Fourth X,XXX% $X.X from compared up million per last XXX% XXXX first from from We to of $X.XX million revenue Net $X.X EBITDA, margins gross quarter revenue increased in up XXXX, cash press or in non-cash QX, Supplies from per year. net $X.X quarter increase is million. operations during share, generated an growth million million Device compared $X.X in our year. increased last million year-over-year in year. in XX% of $X.X increased million overview QX, $X.X income last

On the sheet. balance

million $X.X repurchasing was balance XX, cash our common spent our XXXX, million as $X.X we the stock. compared XX, million quarter, $X.X at XXXX, on first December to March during of As

to Our $X.X of $X.X to working capital million million XXXX. compared grew as December XX,

As our to was payable, notes owed back in they turn April the of paid on the debt With Xst, were on operating date, sheet which outside than us the I'll March balance subordinated with full less and $XX,XXX scheduled XX, leaving Thomas. on obligations. we payment no ordinary now call currently that, over

Thomas Sandgaard

Dan. you, Thank

the in momentum We’re and phase our products. on strong for to capitalize demand current a working growth and

productive to such in force. revenue and will force all earlier $X well per obviously between We we’re existing including estimate million, quarter our XX FDA. to the and as sales that not than expand quarter $X.X force. geographic reps our NeuroMove getting $X EBITDA sales but $X.X second our Other million be they’re around our We’re are and we and a million, added blood reps and million quarter announced as as monitor adding $X.XX expanding the earnings to sales the between in we approvals, our continue more alone, We work our into product share coverage. than reintroducing sales yet, first doing, offerings sales we're for launch, the our ready market government our first share. device volume We

in device on revenue-generating electrode to We patients for supplies patients stroke process the get home deploying model the obtain can at use allowing use a the where the are to for clinics that home. use it and so qualify patient purchasing prescriptions that or a

main in adding significant are clinics at streams sale our goal also for well. empty revenue volume with advantage for share voice My for management previous competitor / activity electrotherapy electrodes DHL mashup very market in to after continue and huge to our our increasing our had take to long-term -- of discounts, market our as the We disappearance competitors. the reactivation of to pain defused prescription, share of our grow and

have three conservative sales seen pain we product This become significant financial and excited in we a orders, and new products have of line about. years in efficient our operations steadily Looking expanded has from more that great back, reimbursement have the treatment. growing resulted only we not our over consistent increase our results past amount I'm reps added have very on and

national getting as getting on company will ability up-listed the in to the people working in improve currently improve are liquidity the in stock stock potentially to ultimately It use the more stock. should currency, to stock also a again our acquisitions We exposed actively our and to the exchange we engage future.

listeners. now will our questions We from answer

Operator

ahead. [Operator Instructions] The go first of Halpern Taglich Please question will from Howard come Brothers.

Howard Halpern

Congratulations. Great start guys. to year, the

Thomas Sandgaard

Thank Appreciated. you.

Howard Halpern

device about I driving long that. XX% terms does supply In is it long the really and forward then we at you've should it into for is how talked that what XX% does so the potent at growth how filter look look take revenue, how to usage guess that into the going how that year?

Thomas Sandgaard

an comes of order lighter place obviously, that. a perhaps, the slow-moving There several of in over long where cash Revenue than in it is companies. generated our train. Well, result is payment years insurance next very is paid and that by, a cycle even a takes fairly and that from the collected most it's as industry

months cases in the it's many those revenue we roll revenue insurance of device the again, in patients the revenue comes called But versus between from monthly as for divided often device the of bill most rental. in terms, when to purchase bill over being split cases, the we use year. company, the and So the many the on insurance the as are split monthly for supplies or long is or that shipped

approves lifetime it’s Sometimes, simply use for patients. that insurance

we revenue the the So is get when spread especially overs out and order. order cash an from an get

spike your a won't That So revenue that example, answers if an immediately because increased we consistently forward. have question. you have the in see revenue spike in as orders, now we as going

Howard Halpern

And is that in Yes. terms supplies consequence going of installed up. Is usage I your the growth? occurring, of growth seen you’re the guess how the is mean supply really the revenue I I base, customer guess revenue

Thomas Sandgaard

is the of Yes, maybe if out industry, pitch result revenues a install can the accumulating somewhat that. simply you than phone an have at more look just base in similar keeps you in, that -- there your as cell Dan it but

else So as say being orders our could our stable revenue the grow, [indiscernible] everything slightly equal, supplies strong fortune stay as will of either you -- or

Howard Halpern

it’s overall penetrated what have I don’t guess would like since they’ve I internal to any you changed of you of the the more gone with have of the the overall a guess a number for general percentage question market? landscape largest competitor about share know if numbers years and the got have you I And landscape industry ago, market

Dan Moorhead

we we that products continue at say it’s biggest had was limited competitor up And covering of number industry. just the Well, revenues and round million, grow recognized who revenue demand developed, market front into area and it’s year. it’s these still is but as to have, this as the never to territory. would grow someone for see, heavy fun part leaves very currently back very in numbers, the way year sales used get a devices before years sales better look that market, being to lot were billion them of more obviously to if the of about on back, and $X.X that prescribe back $X.X with million that in unserved -- a and be force, total you annual And geographic the $X.X Physicians the you in ’XX lifting we a can if market. sales our in fantastic very like to a for of in disappearance a this to a to in by two develop the in it into obviously, is we from it's used us in is of tools far But amount long have be $XX revenue with and that to product business few lot not but trajectory a revenue. best billion well-known our new a of up good generated. and the of $XX positive to billion the annual obviously, problem to to growing that a you a have There’s ’XX, up need

process those front lot sell, obviously of So cells new it's the time. an takes reps in a but of it’s physicians, easy getting a that

Howard Halpern

you How many in XX added we do second enter as quarter quarter? just second sales you the reps. reps as sales start And or the we have

Thomas Sandgaard

in XXX. approximately we are here early today think numbers I round May, Well,

Operator

Our next Ajay SeeThruEquity. is ahead. with from question Please Tandon go

Ajay Tandon

Congrats Thanks quarter. the on great for a question. taking

Thomas Sandgaard

Ajay. Thanks,

Ajay Tandon

force. sales of couple your a on questions Just

long you on how be us can typically helpful. for that person, give new any a the payback sales If would is color

Thomas Sandgaard

and amount positive it that though, the takes months and It's the have in extra for are the map, very months experience so sometime new may definitely we point. even they theoretical good seen It’s X onboard had some all will apt. or a we breakeven the that of a five sales long-term them over reps direct orders medical that to have of we it a from to sales can also in more a significant grew to up there. players when terms contribution sales a past to what be But significant amount our we have not better common, to call here is of brand force. orders. have reps months already ago opt get the when for two than because we got rep three have decade you’ve It pretty in We success be in hired X

we with far reps. So pretty so adding successful didn’t sales

Ajay Tandon

Got it.

that as on still find out of head on given industry, terms about have In any companies color people you forward down? something the there had exited quality you've good it is going

Thomas Sandgaard

four contrast limited primarily of reps they we now base dedicated and some and point prior brand new But two to of most deployed Zynex for them add that. have ways. one mix are as those far a time different reps a ago. hire to as work year they we three trained are reps. right reps used or very of or salary the two to on by and new And a in XXX% at industry had experience to of well that in commission obviously with the continue in get the in somewhat the majority competitor We have These sales experience, but top

years, now most what will why of driving and type that's is for reps, force long kind what's growth really of forward, going that's of sales time a the sales that's continuing to So from several right that development. probably do be we

Operator

B. ahead. [Operator Please Instructions] with FBR. is the Our Rosenberger from next go question Mark Riley

Mark Rosenberger

What XX rented purchased? devices percentage the of are versus

Thomas Sandgaard

it no versus a is the the build and I wouldn’t sometimes to term When it. is use insurance they rent it monthly companies, on you basis, want classify a purchase. patient on there

but the majority So probably it's so end place months basis, on because run perspective. a months, not to it over to from of I are higher go accounting averages but see really we months from they would XX But some think we've rental that. can the using an a all when XX at the it’s monthly anywhere X out it is

Mark Rosenberger

you consumables growth. products the few are that a have For great definitely showing

For some other to from purchased Or those products, do from a be need exclusively risk you? got be those potentially that is source? they there can

Thomas Sandgaard

They something can places are walk a that store that supplies be available. just really They applied are interfaces, into and and probably another like lower-quality Amazon not but can buy. it's web you on

really seen haven’t within people around we for shopping So the that are with electrodes. population the

So, the lesser-quality bodes believe on electrode -- quality gone best of the quality If it best we worldwide or creative together. also maybe treatment. the quality terms It’s made potentially a of continue. is we the the in of could that having open we if for people in trend deteriorate finding will elsewhere, more were that to up electrodes, devices terms utilize -- well and

So we that really any trends in see direction. don’t

Mark Rosenberger

When customers something supplies, looking out have actively build additional and automatically? do for that’s are that they reach is to reorder? Or

Thomas Sandgaard

really insurance It on depends company. the

patient lot Some some to manage enough.” after is we cases, takes years the There continue “Hey, insurance should every has it okay there need to to internally. the to scenarios, element to insurance with say, month, that something this of than and patient from all more be the fact kinds us insurance treating two in obviously then in manpower for where companies are months. now, supply, the a will some three that cases and check of just company is the been every that some In get automatic requires

Mark Rosenberger

to I down say going could to just that kind optimized the was that’s potentially streamlined and something of be road? more

Thomas Sandgaard

the they as opportunities there’s sure that’s terms always as terms making Of patient company what that for this that possible in in but insurance treatment patient. looking of has best help the automating the processes most prescribed doctor their the we as concept well as treatment decision-making, the course, of the for what want obviously need at what for -- the what and weight of they whole better, the for

feel the they they sent based on of the what quantity supplies is is patient necessary. to Sometimes adjust medically that

that And so that's goes a work into that. lot of

Mark Rosenberger

one me. just And more from

to You’ve left by main that come times noted a disappearance two the Have the market now of anyone a into is number of there competitors. exit? your seen such void you attempting their

Thomas Sandgaard

already, been few into the no, for have than attempt players Other there long seen we anyone time small get not that’s a to back the industry.

the it's So, educating obviously something to is way and side any that carry versus effects really yes, so us opioids cetera, far too the load about prescribed physicians, believe et of without like public, benefits we the electrotherapy help often. using

Operator

Alex And Hamilton from CGR. go with our next Please is ahead. question

Alex Hamilton

terms mean, going? a been of Is acceptance to actually what an China it’s going sort about of gain was that's lot is hurdle? education in Can take progress. while? of question That how it my process talk I opioid and the was made of a just you epidemic. just it, you've

Thomas Sandgaard

actually unique will that to that our believe do pretty tools very we not that prescribing could are be. positions. as still aware few find potentially deployed salesforce have would our that they for be there physicians some that's Yes, opioids some be educate are we technology as of We

focus. primary to possibly least term try we great also tools obviously So some general. have And up. at companies our whenever We in to the public short in insurance educate reach try to we coming That's the we tend can.

cetera. in where off of We groups get could to opioids. being more look rehabilitation, We to et also be you be active try people It offer of media. recommending ways where on active are social to

an be prescribed. think our try but will and change active reduction of I to we [Indiscernible] increasing our that focus all activity to -- of opioids physicians primary in in demonstrate our increased kinds opioids, being the make will prescribed a to hopefully in term trying angles, in will devices and short on that So be a

Operator

And Please from Global McDonald Research. Consilium our go next ahead. with question is Don

Don McDonald

blood question quick your volume monitor A on business.

will think going do profit accelerate gross will the and that how how the forward, top line we expect Going you forward? margin we

Thomas Sandgaard

Let's see as will hockey a we how those expensive terms as demand are in fluid sector the of, much switch the it's it’s surgical an we’ve and better honor because accelerated -- be can very centers. expect far flipping in devices we like this very of It's something the stick. huge tell a in is and management for hospital

before on impact get in we don’t U.S., when have we So whether we Europe difficult a the the get know. I our it believe if and I that revenue. ad will approvals

pain mentioned the healthy especially profit with expect amount obviously what also with be marketing probably That terms will developing of take margins, associated a very to margins, first we would I'm our will etera. and consumables sales would to significant. that, the on gross than probably product of preposition. perspective that that profit electrotherapy to revenue of in etc the than actually that it be In the the and the very or management large from pay But we profitability but from very expect have a SG&A other that, be products. could see a in the profit for this partnerships portion the need that launching better significant of SG&A high With our market again I optimistic we financial and margin strategic overall

Don McDonald

Thank you.

Thomas Sandgaard

like was last looks the that question. It

Operator

for back I to to this conference question-and-answer over Thomas Yes, sir, turn like and session. Sandgaard remarks. any would will conclude the our closing

Thomas Sandgaard

great day been I call Thank everyone, in this to for interest and on listening and all. Zynex you, a today’s hope has I informative you. appreciate in the Thank call. and earnings

Operator

Thank you today's has attending The presentation. now for conference concluded.

disconnect. You may now

Zynex (ZYXI) 11 May 182018 Q1 Earnings call transcript