ZYNEX INC Q2 FY2024 earnings call

• Diversification of product revenue streams: Rehabilitation products' volume as a percentage of overall device ordering increased, though it decreased revenue per order. Gross profit margin remains around 80% for these products.
• Sales force adjustments: Aggressively reduced underperforming sales reps, which impacts near-term revenue growth but is for long-term productivity.
• Operational process refinements: Continuously refining processes to maintain profitable growth at scale while ensuring compliance. Order growth was 20% in the period with 10% fewer reps, and revenue per rep annualized was ~$485,000, up 26% from 2023.
• Monitoring division progress: NICO pulse oximeter verification clinical study began, pre-production devices manufactured, and major supply chain readiness achieved. Product pipeline includes four new hospital monitoring products.

In the second quarter, device revenue was $15.9 million compared to $13.7 million in the second quarter of 2023. Supplies revenue was $34 million, up from $31.2 million in the second quarter of 2023. The rehabilitation products (private labor rehab) made up 28% of all orders in the second quarter, up from 25% in the first quarter. The gross profit margin remained around 80% for these products. The Monitoring Solutions division is closing on major milestones for the NICO pulse oximeter, with a verification clinical study beginning, pre-production devices manufactured, and a product pipeline including other hospital monitoring products.

• 2024 net revenue expected to increase approximately 9% from 2023 to $200 million, with diluted earnings per share of at least $0.20 a share.
• Q3 2024 expected total revenue of $50 million, with diluted earnings per share of $0.05.
• Monitoring division's NICO pulse oximeter planned submission to FDA at the end of 2024, entering a multibillion dollar market.

• Factors such as product development, regulatory environment, sales and marketing strategies, capital resources, or operating performance could cause actual results to differ materially from forward-looking statements.

Q: Talking about order growth, specifically on the flagship product NexWave.

A: The growth on the NexWave device still continues, just growing faster on other products, not a declining order growth on NexWave.

Q: How should we think about the cadence second half in terms of operating expenses?

A: G&A expenses will stay a little flattish as a percent of revenue; sales and marketing expenses are expected to decrease as a percentage of revenue, with sales and marketing expenses in Q2 at ~47%, expected to drop to lower 40%’s in Q3 and closer to 40% in Q4.

Q: Update on strategic alternatives?

A: Nothing material to announce at this point, still progressing but no material disclosure.

Q: Update on blood volume monitor and potential 2025 revenue?

A: Focus is on NICO product, which is more mature in the product line; blood volume monitor is not a revenue play for 2024 or 2025 at this point, with focus on NICO in a $2.5 billion market.