Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zynex Inc (ZYXI, Financial) reported a 13% year-over-year increase in orders for the third quarter of 2024.
- The company achieved FDA clearance for its new TensWave device, enhancing its product portfolio in non-opioid pain management.
- Zynex Inc (ZYXI) has a strong cash position with a balance of $37.6 million, up 22% from the previous quarter.
- The company is making significant progress in its Patient Monitoring division, with the NiCO pulse oximeter nearing FDA submission.
- Zynex Inc (ZYXI) continues to diversify its revenue streams, with non-NexWave private label rehab products making up over 31% of total orders.
Negative Points
- Net revenue for the third quarter was essentially flat at $50 million compared to $49.9 million in the same quarter of 2023.
- Device revenue decreased to $14.9 million from $16.9 million in the third quarter of the previous year.
- Net income declined to $2.4 million or $0.07 per diluted share, down from $3.6 million or $0.10 per diluted share in 2023.
- Adjusted EBITDA decreased to $5.1 million from $7.3 million in the third quarter of 2023.
- The company experienced a deceleration in order growth due to sales rep pruning, impacting the overall growth rate.
Q & A Highlights
Q: Can you explain the deceleration in order growth during the third quarter and how orders are trending in the fourth quarter?
A: Thomas Sandgaard, CEO: In the third quarter, we saw a 17% year-over-year increase in October orders. Moving forward, we expect to maintain double-digit order growth, although not consistently at the 20% level we've seen previously. We anticipate this trend to continue into next year.
Q: Could you provide an update on the strategic review process and any changes in timing?
A: Thomas Sandgaard, CEO: The strategic review process is ongoing. We have received a couple of letters of intent and are moving forward with one interested entity. However, we do not expect a closure in the immediate timeframe.
Q: Can you discuss the TensWave device and its indications, and whether patients would use it alongside NexWave?
A: Thomas Sandgaard, CEO: The TensWave device is not typically used alongside NexWave. NexWave offers three modalities, including differential current and neuromuscular electrical stimulation. TensWave is a high-quality device for situations where a TENS-only device is approved, often dictated by insurance coverage.
Q: Was there any share repurchase during the third quarter?
A: Daniel Moorhead, CFO: We did not repurchase any shares during the third quarter. The plan remains open, but no purchases were made at this time.
Q: Do you plan to add additional sales reps before the end of 2024, and what is the expected total by year-end?
A: Thomas Sandgaard, CEO: We plan to add a net of 10 sales reps monthly over the next 18 months. This includes additional training and optimizing candidate selection to ensure higher success rates for new reps.
Q: How many sales reps will be needed to effectively market the NiCO pulse oximeter once cleared by the FDA?
A: Donald Gregg, President of Zynex Monitoring Solutions: We are considering both direct and indirect sales forces and will decide in Q1 2025. Initially, we will start with a few area managers and directors, focusing on specific market segments for a controlled product launch.
Q: Will the Monitoring division be independently profitable compared to the Pain Management division?
A: Thomas Sandgaard, CEO: The Monitoring division operates independently, with no synergies on the sales side. We believe it will be profitable long-term, although there will be a ramp-up period to reach that point.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
