LONE TREE, CO — (Marketwired) — 08/08/13 — 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 second quarter 2013 financial results.
The Company-s total net revenue decreased 45% to $5,472,000 for the three months ended June 30, 2013 from $10,026,000 for the three months ended June 30, 2012. Year to date net revenue of $13,140,000 decreased 31% as compared to the prior year to date net revenue of $18,970,000. The decline in net revenue for the three and six months ended June 30, 2013 as compared to the same periods in 2012 was a direct result of the decline in orders from the Company-s Zynex Medical electrotherapy products.
The Company reported a gross profit of $3,589,000, or 66% of net revenue, for the second quarter of 2013, and $9,066,000, or 69% of net revenue, for the first six months of 2013, as compared to a gross profit of $8,240,000, or 82% of net revenue, for the second quarter of 2012 and $15,371,000, or 81% of net revenue, for the first six months of 2012. The decrease in the Company-s second quarter and year to date 2013 gross profit percentage, as compared to the same periods in 2012, was primarily a result of the lower sales volume for the periods, as the Company had less net revenue to cover manufacturing costs and incremental expenses incurred because of an increase to the Company-s allowance for obsolete inventory, due to excess quantities now in the field.
The Company reported Selling, General and Administrative (SG&A) expenses of $6,153,000 or 112% of net revenue, for the three months ended June 30, 2013, and $11,986,000, or 91% of net revenue, for the six months ended June 30, 2013, as compared to $7,308,000, or 73% of net revenue, for the three months ended June 30, 2012 and $13,953,000, or 74% of net revenue for the six months ended June 30, 2012. Decreases in the Company-s SG&A expenses during the second quarter and year to date 2013 as compared to the same periods in 2012, were primarily attributable to lower sales commissions, based on the decrease in orders and net revenue, and a reduction in headcount.
The Company generated a second quarter 2013 loss from operations of $2,564,000, loss before income taxes of $2,700,000 and net loss of $1,716,000, or $0.06 per share, versus a second quarter of 2012 income from operations of $932,000, income before income taxes of $844,000 and net income of $473,000, or $0.02 per share. The Company generated a 2013 year to date loss from operations of $2,920,000, loss before income taxes of $3,192,000 and net loss of $2,020,000, or $0.06 per share, versus a 2012 year to date income from operations of $1,418,000, income before income taxes of $1,237,000 and net income of $793,000, or $0.03 per share.
Thomas Sandgaard, CEO stated: “2013 has been a difficult year for Zynex thus far. We have encountered industry challenges related to health care reform that affected our Zynex Medical electrotherapy business. Specifically, because of reimbursement changes for durable medical equipment, uncertainty continues to exist at the medical practitioner level causing a delay and decline in demand for our electrotherapy products. We have also experienced reimbursement challenges from government and third party payors related to certain medical indications for our Zynex Medical electrotherapy products. These market factors had a negative effect on our financial results for the first half of 2013, causing us to report significantly less revenue than the comparable period in the prior year resulting in a year to date net loss. In response to these challenges, we have lowered our fixed expenses by reducing our annual employee costs by approximately $3 million. We have also successfully renegotiated our existing building lease, in which, our base rent has been lowered and we are now operating in an approximate twelve month free rent period, which results in cash savings over the next twelve months of approximately $1.5 million. We are committed to returning the Company to profitability and will continue to make expense adjustments as necessary throughout the remainder of 2013.”
Mr. Sandgaard added: “Beyond the cost cutting measures we have completed, we are focused on capitalizing on new opportunities across all of our divisions. In our Zynex Medical electrotherapy sales channel, we recently added new products that are less impacted by insurance reimbursement. In Zynex NeuroDiagnostics, we expanded our sales force and have been distributing electroencephalography (EEG) and sleep diagnostic products in the US and have recently entered into a new sales agreement to distribute mobile sleep diagnostic devices and a sleep apnea treatment device. We are investing in our Zynex Billing and Consulting division where we expect increased service based revenue going forward. We believe these steps serve to diversify our product mix and further reduce our dependency on insurance reimbursement.”
Conference Call and Webcast Information:
Zynex, Inc. will host a conference call and webcast at 9:00 a.m. MT (11:00 a.m. ET) today to discuss its second quarter 2013 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.
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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: .
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, 2012.
Contact:
Zynex, Inc.
Anthony Scalese
CFO
303-703-4906