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Zynex (ZYXI.OB) Announces 2012 Year End Results


3/15/2013 10:03:35 AM

LONE TREE, CO--(Marketwire - March 14, 2013) -

Zynex, Inc. (OTCQB: ZYXI), a provider and developer of non-invasive medical devices for electrotherapy and stroke rehabilitation, neurological diagnosis and cardiac monitoring, announces its year end 2012 financial results.

The Company's net revenue increased 16% to $39,666,000 for 2012 from $34,148,000 for 2011. The Company's 2012 revenue was driven by its Zynex Medical subsidiary, in which the Company continued to see strong demand for its electrotherapy products. The Company generated 2012 net income of $1,553,000, or $0.05 per share, versus 2011 net income of $1,564,000 or $0.05 per share.

The Company reported a gross profit of $30,896,000, or 78% of net revenue, for 2012, as compared to a gross profit of $26,777,000, or 78% of net revenue, for 2011.

The Company reported Selling, General and Administrative (SG&A) expenses of $28,159,000, or 71% of net revenue, for 2012, as compared to $23,676,000, or 69% of net revenue, for 2011. Increases in the Company's SG&A expenses during 2012 were primarily attributable to sales and marketing (related to sales commissions based on the 16% increase in net revenue and headcount added to expand the Company's direct sales force) and increased investments made in the Company's Zynex NeuroDiagnostics and Zynex Monitoring Solutions subsidiaries.

The Company generated 2012 income from operations of $2,737,000, income before income taxes of $2,336,000 and net income of $1,553,000, versus 2011 income from operations of $3,101,000, income before income taxes of $2,644,000 and net income of $1,564,000. The Company's net revenue was at the top of its outlook for 2012, and net income per diluted share was slightly below the Company's 2012 outlook.

Thomas Sandgaard, CEO stated: "The last several years we focused on building our core Zynex Medical revenue base, through the aggressive addition of a direct and indirect sales force and necessary investments in our billing infrastructure. We believe our revenue has reached a point of critical mass, in which we now expect to improve profitability and free cash flow. We made certain operational improvements during the latter part of 2012, which resulted in fourth quarter selling, general and administrative expenses as a percentage of net revenue of 66%. This compares to our year to date 2012 selling, general and administrative expenses as a percentage of net revenue of 71% and year to date 2011 selling, general and administrative expenses as a percentage of net revenue of 69%. We believe the reductions in our selling, general and administrative expenses will continue into 2013."

Mr. Sandgaard commented further: "Looking forward to 2013, we are evaluating additional products to add to our established distribution channel for both our Zynex Medical and Zynex NeuroDiagnostics subsidiaries and are in the process of expanding our presence in international markets. Our Zynex Monitoring Solutions subsidiary is progressing with clinical trials for our proprietary non-invasive blood volume monitoring device, which will run through most of 2013. We believe the potential end market for our non-invasive blood volume monitoring device could represent a significant opportunity if successful. During the fourth quarter of 2012, we established a new subsidiary, Zynex Billing and Consulting, to engage in medical billing and consulting for private medical practices. We believe our core medical billing knowledge allows us to leverage opportunities in the medical billing and consulting arena."

Outlook:
The Company anticipates net revenues of between $41 million and $44 million for 2013 and net income per diluted share of between $0.06 and $0.09 for 2013.

Conference Call and Webcast Information:
Zynex, Inc. will host an earnings conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today to discuss its 2012 year end results. Please note questions can only be submitted via the webcast user interface. Parties without access to the internet may join the presentation in listen only mode by dialing the toll free number provided below.

Webcast Information- http://www.visualwebcaster.com/event.asp?id=92462

Conference Call Information- 888-395-3227, pass-code 6491239

                                                                            
                                                                            
Highlights from the year ended 2012 consolidated financial statements:      
(unaudited, amounts in thousands, except per share amounts)                 
                                                                            
                                                          Year Ended        
                                                         December 31,       
                                                  --------------------------
                                                      2012          2011    
                                                  ------------  ------------
Net revenue                                       $     39,666  $     34,148
                                                                            
Gross profit                                            30,896        26,777
                                                                            
Income from operations                                   2,737         3,101
                                                                            
Income before income taxes                               2,336         2,644
                                                                            
Net income                                               1,553         1,564
                                                                            
Adjusted EBITDA (1)                                      3,597         4,126
                                                                            
Net income per share - diluted                    $       0.05  $       0.05
                                                                            
Weighted average number of common shares                                    
 outstanding - diluted                              31,222,126    30,978,288
                                                                            
                                                                            

(1) Reconciliation of unaudited U.S. Generally Accepted Accounting Principles (GAAP) Net income to Adjusted Earnings Before Interest Taxes Depreciation, and Amortization (Adjusted-EBITDA)

                                                                            
                                                                            
                                                         Year Ended         
                                                        December 31,        
                                                 -------------------------- 
                                                     2012          2011     
                                                 ------------  ------------ 
Net income                                       $      1,553  $      1,564 
Interest expense and loss on extinguishment of                              
 debt                                                     435           460 
Income taxes                                              788         1,080 
Depreciation and amortization                             962           897 
Change in value of contingent consideration               (31)            - 
Deferred rent                                            (296)         (221)
Stock-based expense                                       186           346 
                                                 ------------  ------------ 
                                                                            
Adjusted EBITDA                                  $      3,597  $      4,126 
                                                 ============  ============ 
                                                                            
                                                                            

About Zynex

Zynex (founded in 1996), operates under three primary business segments; Zynex Medical, Zynex NeuroDiagnostics and Zynex Monitoring Solutions. Zynex Medical engineers, manufactures, markets and sells its own design of electrotherapy medical devices for electrotherapy, used for pain management and rehabilitation. Zynex Medical's product lines are fully developed, FDA-cleared and commercially sold world-wide. Zynex NeuroDiagnostics, sells the company's proprietary NeuroMove device designed to help stroke and spinal cord injury patients and is currently expanding into markets for EMG, EEG, sleep pattern, auditory and nerve conductivity neurological diagnosis devices through product development and acquisitions. Zynex Monitoring Solutions, currently in the development stage, was established to develop and market medical devices for non-invasive cardiac monitoring.
For additional information, please visit: http://www.ir-site.com/zynex/default.asp.

Safe Harbor Statement

Certain statements in this release are "forward-looking" and as such are subject to numerous risks and uncertainties. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause actual results to materially differ from forward-looking statements include, but are not limited to, the need to obtain additional capital in order to grow our business, our ability to engage additional sales representatives, the success of such additional sales representatives, the need to obtain FDA clearance and CE marking of new products, the acceptance of new products as well as existing products by doctors and hospitals, larger competitors with greater financial resources, the need to keep pace with technological changes, our dependence on the reimbursement from insurance companies for products sold or rented to our customers, acceptance of our products by health insurance providers, our dependence on third party manufacturers to produce our goods on time and to our specifications, implementation of our sales strategy including a strong direct sales force, the uncertain outcome of pending material litigation and other risks described in our filings with the Securities and Exchange Commission including the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2011.

                                                                            
                                                                            
                                 ZYNEX, INC.                                
                         CONSOLIDATED BALANCE SHEETS                        
                  (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)                 
                                                                            
                                                  December 31,  December 31,
                                                      2012          2011    
                                                  ------------  ------------
                                                   (unaudited)              
ASSETS                                                                      
Current Assets:                                                             
  Cash                                            $        823  $        789
  Accounts receivable, net                              12,224        10,984
  Inventory                                              6,160         4,556
  Prepaid expenses                                         243           293
  Deferred tax asset                                     1,828         1,384
  Other current assets                                      57            42
                                                  ------------  ------------
                                                                            
    Total current assets                                21,335        18,048
                                                                            
Property and equipment, net                              3,851         3,422
Deposits                                                   171           170
Deferred financing fees, net                                98           145
Intangible assets, net                                     203             -
Goodwill                                                   251             -
                                                  ------------  ------------
                                                                            
Total assets                                      $     25,909  $     21,785
                                                  ============  ============
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current Liabilities:                                                        
  Line of credit                                  $      5,906  $      3,289
  Current portion of notes payable and other                                
   obligations                                             144           131
  Accounts payable                                       2,057         2,189
  Income taxes payable                                   1,430         1,567
  Accrued payroll and payroll taxes                        899           702
  Deferred rent                                            371           296
  Current portion of contingent consideration               21             -
  Other accrued liabilities                              1,265         1,574
                                                  ------------  ------------
                                                                            
    Total current liabilities                           12,093         9,748
                                                                            
Notes payable and other obligations, less current                           
 portion                                                   114           258
Deferred rent                                              785         1,156
Deferred tax liability                                     759           483
Warranty liability                                          20             -
Contingent consideration, less current portion              83             -
                                                  ------------  ------------
                                                                            
    Total liabilities                                   13,854        11,645
                                                  ------------  ------------
                                                                            
Stockholders' Equity:                                                       
  Preferred stock; $.001 par value, 10,000,000                              
   shares authorized, no shares issued or                                   
   outstanding                                               -             -
  Common stock, $.001 par value, 100,000,000                                
   shares authorized, 31,148,234 (2012) and                                 
   30,816,631 (2011) shares issued and                                      
   outstanding                                              31            31
  Paid-in capital                                        5,453         5,096
  Retained earnings                                      6,566         5,013
                                                                            
                                                  ------------  ------------
Total Zynex, Inc. stockholders' equity                  12,050        10,140
Noncontrolling interest                                      5             -
                                                  ------------  ------------
Total stockholders' equity                              12,055        10,140
                                                  ------------  ------------
                                                                            
                                                  $     25,909  $     21,785
                                                  ============  ============
                                                                            
                                                                            
                                                                            
                                                                            
                                ZYNEX, INC.                                 
                    CONSOLIDATED STATEMENT OF OPERATIONS                    
          (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)           
                          YEARS ENDED DECEMBER 31,                          
                                                                            
                                                       2012         2011    
                                                   -----------  ----------- 
                                                   (unaudited)              
Net revenue:                                                                
  Rental                                           $     8,917  $     9,892 
  Sales                                                 30,749       24,256 
                                                   -----------  ----------- 
                                                        39,666       34,148 
                                                   -----------  ----------- 
                                                                            
Cost of revenue:                                                            
  Rental                                                 1,283        1,842 
  Sales                                                  7,487        5,529 
                                                   -----------  ----------- 
                                                         8,770        7,371 
                                                   -----------  ----------- 
                                                                            
Gross profit                                            30,896       26,777 
                                                                            
                                                                            
Selling, general and administrative expense             28,159       23,676 
                                                   -----------  ----------- 
                                                                            
Income from operations                                   2,737        3,101 
                                                   -----------  ----------- 
                                                                            
Other income (expense):                                                     
  Interest income                                            3            1 
  Interest expense and loss on extinguishment of                            
   debt                                                   (435)        (460)
  Other income (expense)                                    31            2 
                                                   -----------  ----------- 
                                                          (401)        (457)
                                                   -----------  ----------- 
                                                                            
Income before income taxes                               2,336        2,644 
                                                                            
Income tax expense                                         788        1,080 
                                                   -----------  ----------- 
                                                                            
Net income                                               1,548        1,564 
Plus: Net loss - noncontrolling interest                     5            - 
                                                   -----------  ----------- 
Net income - attributable to Zynex, Inc.           $     1,553  $     1,564 
                                                   ===========  =========== 
                                                                            
Net income per share - attributable to Zynex,                               
 Inc.:                                                                      
  Basic                                            $      0.05  $      0.05 
                                                   ===========  =========== 
                                                                            
  Diluted                                          $      0.05  $      0.05 
                                                   ===========  =========== 
                                                                            
                                                                            
Weighted average number of common shares                                    
 outstanding:                                                               
                                                                            
  Basic                                             31,062,428   30,750,108 
                                                   ===========  =========== 
                                                                            
  Diluted                                           31,222,126   30,978,288 
                                                   ===========  =========== 
                                                                            
                                                                            
                                                                            
                                                                            
                                ZYNEX, INC.                                 
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                           (AMOUNTS IN THOUSANDS)                           
                          YEARS ENDED DECEMBER 31,                          
                                                                            
                                                     2012          2011     
                                                 ------------  ------------ 
                                                  (unaudited)               
Cash flows from operating activities:                                       
  Net income                                     $      1,548  $      1,564 
Adjustments to reconcile net income to net cash                             
 used in                                                                    
operating activities:                                                       
Depreciation expense                                      864           806 
Change in the value of contingent consideration           (31)            - 
Provision for losses on accounts receivable               485         1,190 
Amortization of intangible assets                          48             - 
Amortization of financing fees                             50            91 
Issuance of common stock for services                      20            79 
Provision for obsolete inventory                          573           149 
Deferred rent                                            (296)         (221)
Employee stock-based compensation expense                 166           267 
Deferred tax benefit                                     (168)         (295)
Changes in operating assets and liabilities, net                            
 of business acquisitions:                                                  
  Accounts receivable                                  (1,725)       (4,865)
  Inventory                                            (2,070)       (1,046)
  Prepaid expenses                                         50          (148)
  Deposits and other current assets                       (12)            3 
  Accounts payable                                       (132)          876 
  Accrued liabilities                                    (112)          724 
  Income taxes payable                                   (137)          464 
                                                 ------------  ------------ 
                                                                            
Net cash used in operating activities                    (879)         (362)
                                                 ------------  ------------ 
                                                                            
Cash flows from investing activities:                                       
  Purchases of equipment and inventory used for                             
   rental                                              (1,321)       (1,267)
  Cash paid for domain name                               (18)            - 
  Cash paid for acquisition of NeuroDyne (Note                              
   5)                                                    (245)            - 
                                                 ------------  ------------ 
                                                                            
  Net cash used in investing activities                (1,584)       (1,267)
                                                 ------------  ------------ 
                                                                            
Cash flows from financing activities:                                       
  Net borrowings on line of credit                      2,617         2,019 
  Deferred financing fees                                  (2)         (147)
  Payments on notes payable and capital lease                               
   obligations                                           (131)         (104)
  Issuance of common stock                                 13            48 
                                                 ------------  ------------ 
                                                                            
  Net cash provided by financing activities             2,497         1,816 
                                                 ------------  ------------ 
                                                                            
Net increase in cash                                       34           187 
Cash at the beginning of the period                       789           602 
                                                 ------------  ------------ 
Cash at the end of the period                    $        823  $        789 
                                                 ============  ============ 
                                                                            
Supplemental cash flow information:                                         
Interest paid                                    $        352  $        411 
Income taxes paid (including interest and                                   
 penalties)                                      $      1,127  $        911 
                                                                            
Supplemental disclosure of non-cash investing                               
 and financing activities:                                                  
Equipment acquired through note payable and                                 
 capital lease                                   $          -  $         73 
Common stock issuances for business acquisition  $        158  $          - 
Increase in contingent consideration for                                    
 business acquisition                            $        135  $          - 
Contribution of property and equipment by                                   
 noncontrolling interest                         $         10  $          - 
                                                                            
                                                                            

Contact:
Zynex, Inc.
Anthony Scalese
CFO
303-703-4906

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