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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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