New York, NY - On April 3, 2013, Taglich Brothers released an updated research report on Zynex, Inc. (ZYXI) and reiterated a Speculative Buy rating with a 12-month price target of $1.10 per share. The report noted the following key investment considerations:
• The rising prevalence of chronic pain associated with age-related illnesses should drive demand for Zynex’s noninvasive electrotherapy technology, which treats a broad range of pain conditions.
• The US electrotherapy market is projected to grow to $820 million by 2016, up from $600 million in 2012. By expanding its sales force, adding new products, and increasing the number of its electrotherapy systems in service, Zynex sales increased 38% annually from 2007 to 2012, a period in which sales of the US medical device market were largely flat.
• That growth rate will moderate as the company expands, but continued market penetration, new products, recent acquisitions, and overseas expansion should drive annual revenue gains of 9% to 15% during the next two years.
• Due partly to a large recurring high-margin revenue stream, Zynex’s gross margin of 80%+ is exceptionally high. As the company achieves better control of its operating expenses, leverage should significantly improve profitability.
• In 4Q12 (results released Mar. 14, 2013) Zynex earned $0.01 per share, on revenue of $10.6 million. We projected EPS of $0.02 per share on revenue of $11.4 million. In 2012 Zynex earned EPS of $0.05 on revenue of $40 million. In 2011 the company earned $0.05 per share on revenue of $34 million.
• For 2013 and 2014 we project 30%+ EPS gains on modest revenue growth as gross margins widen slightly and operating expenses are better leveraged.
The full report can be viewed at http://www.taglichbrothers.com/equityuniverse/companies/zynex/zynex.aspx.
Zynex, Inc. (ZYXI: OTCBB), based in Lone Tree, Colorado, manufactures a line of electrotherapy devices used for pain management and rehabilitation. Revenue has increased sharply, growing threefold in the last three years alone.
Zynex’s non-invasive transcutaneous electrical nerve stimulation (TENS) and interferential current (IF) systems have been used to treat pain ranging from mild persistent problems such as sore muscles to acute postoperative pain.
The company’s neuromuscular electrical stimulation (NMES) systems are used mainly by physical therapists to treat victims of trauma, stroke, or incidents that degrade muscle function, enabling stroke or spinal injury victims to regain lost mobility, functionality, speech, and memory.
In addition to its own products, Zynex distributes private labeled electrical stimulation devices, electrodes and batteries produced by other manufacturers. A substantial portion of revenue is recurring – rentals, and electrodes and batteries provided to patients using rental or purchased units.
In the US, which accounts for most of its sales, the company sells its medical devices through 200 sales representatives, two-thirds of which are independent contractors. Overseas, Zynex has distributors in Canada, Australia, Southeast Asia, the United Arab Emirates, the Netherlands, and Germany.
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