ZYNEX INC Q1 FY2024 earnings call

Management Statement and Operational Highlights

• Revenue momentum: First quarter revenue up 10% year-over-year, with eighth straight quarter of record high order numbers.
• Cyber event impact: Approximately $1 million in revenue was delayed due to change healthcare's cyber event, expected to be recognized later in 2024.
• Cash flow: Positive cash from operations of $2.1 million in Q1, an increase from the prior year.
• Salesforce expansion: Salesforce expanded to approximately 450 reps, focusing on maximizing productivity and profitability.
• Product milestones: FDA clearance for the M-Wave device, progress in monitoring division products including the blood and fluid monitor and NICO pulse oximeter.

Segment Performance

• Pain Management Division: Revenue in Q1 2024 was $46.5 million, up from $42.2 million in Q1 2023. Orders increased 23% year-over-year. The division received FDA clearance for the M-Wave Neuromuscular Electrical Stimulation device, which is in production and shipping. Revenue from rehabilitation products now accounts for approximately 25% of all orders.
• Zynex Monitoring Solutions: Continued development of blood and fluid monitor and laser-based pulse oximeter. Received FDA clearance for the second-generation blood and fluid monitor in 2023. The NICO laser-based pulse oximeter is expected to submit an application to the FDA in the fourth quarter of 2024.

Guidance

• Reaffirmed 2024 revenue guidance of at least $227 million.
• Q2 2024 revenue expected to be approximately $52 million, a ~16% increase year-over-year, with diluted earnings per share of $0.08.
• Full year 2024 expected revenue of approximately $227 million (23% growth year-over-year) and diluted earnings per share of approximately $0.50.
• Continued stock buyback, with approximately $15 million remaining on the $20 million plan.

Risks

• Cyber event risk: Impact on revenue recognition, with uncertainty regarding potential recurrence though not certain.
• Regulatory risks: Uncertainties in FDA clearance and commercialization of new monitoring products.
• Market risks: Competition and challenges in commercializing new products in the monitoring division.

Question and Answer

• Q: How much of the $1 million revenue impact from the cyberattack was in supplies versus devices?

A: Breakouts are similar to normal, with device and supplies roughly 25%-30% and 70%-75% respectively; expecting recovery in Q2.

• Q: Any reason to believe the cyber incident could recur later this year?

A: Uncertain, as it affected thousands of companies and was related to a large provider's cyber event; hard to say if recurrence is likely.

• Q: Plans for commercializing the blood volume monitor?

A: Focus on the CM-1700 as the next commercial product, with no current plans to license the CM-1600 technology.

• Q: Remaining amount for share buybacks?

A: About $15 million left on the $20 million share buyback plan.