Zynex (ZYXI) 11 Nov 182018 Q3 Earnings call transcript

Good morning, everyone, and welcome to the Zynex Q3 2018 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Thomas Sandgaard, CEO of Zynex. Please go ahead.

is I'm name of and my Zynex. morning, Thomas President Sandgaard, CEO Good third call. XXXX to quarter Welcome our earnings Today's certain uncertainties. statements and are in this release subject numerous that to risks and such are forward-looking results Actual vary statements. results implied significantly the may in expressed from such or cause including that to results December section report XX-Q, our the are Risk could forward-looking the Securities on materially filings annual for ended in Factors company's XX, our press Risk well with from the website. Form and statements as actual X-K factors X-K, differ described releases as Exchange year XX-K the Commission, and XXXX, of forms amendments,

First off, of quarter I'm consecutive excited announce ninth our profit. to

million Our of net income fully third was $X.XX quarter $X.X and diluted revenue per share.

before. our die to the where reached line devastating prescription-strength off quarter year net country. positive and a tens And for balance pain. impact to unique our products, that for value reported trust XX% this This level patients Our opioids $X.X increased has the as last a Revenue patients opioid we of a the the get that company, of opioid million, a is the Currently, the financial for shareholders first results compared of avoid treating reward serious of portion and we $X.XX to to to to the very income be our cash thousands accumulating in part their have one-time strategy patience distribute of positive are to and our special due working same share. opioid in history XX% a and shareholders as earnings in of And to consistently so able we of epidemic me use of same in we we're our the the decided loyal year. dividend Zynex helping physicians issue abuse. quarter yearly increasingly moment up now and continues are defense a from particular when create addiction. now in The technology

continue that side develop make tools aware We has no our physicians technology more effects. to to of literally

our an force across industry order the grew profit stronger to our I'm growth productive. month Orders experienced see not in a for quarter of keep the of while U.S., for even viable. to and very the at sales geographic sales continues but reimbursement grew we third we year-over-year the XX% accelerating margin electrotherapy as our reps gross further prescription-strength second is October, stable be And the As quarter. growing between result orders XX% for indication pleased the that and products. of healthy we XX% level, third still remain new the becoming and very footprint only

all million the which to shareholders. benefiting at first months cash $X.X anti-dilutive our $X.X increased year-end effectively third Our cash our from of million Due the the significant event position stock year, of to bought stock through of a quarter. common $X during strong X company this million the operating buyback creates end program, at flows

can as fluid first best value for on for for product and is I this emphasize strong finally of rehabilitation we well product rehabilitation for CE monitoring. industry. internal InWave the and in bleeding I We treatment blood of some Monitor. this the Volume products NexWave cannot announce future noninvasive that position incontinence we product hope Our enough protecting in the The rehabilitation Marking additional stand pain as European that how obtained clearance. other puts the us applications noninvasive FDA to as many market recovery ultimately for pain of loss and as a during develop should device our the stroke our during important market And has eventually the mention in management as the volume It's NeuroMove very patent also indicate these out markets. blood Blood well. management, in surgery, still U.S. for for the and the

divisions, potential turn continue management great the to CFO. for in as We both huge potential Moorhead, a over Monitor. of see revenue-generating our call to Volume I existing our the our for see unmet will we product well as Dan area pain now Blood the

Thomas. Thanks,

million in review to $X.X third Device our million to quarter from revenue million. year-over-year XXXX. XX% increased year. compared from increased Supplies XXXX $X.X Net revenue million to million First, results. I'll XX% revenue increased million $X.X $X.X last to XX% $X.X $X.X

in Our the XX%. gross margins quarter remained at

increased income noncash, adjusted to in calculation million year. EBITDA, $X.XX share to $X.X million net compared diluted in or is income net and diluted the decrease year-over-year quality primarily $X.X quarter $X.X regulatory the compared of stock-based departments. the force year. of last per Adjusted quarter EBITDA $X.XX to billing, last sales QX third our current orders drive exclusion plus investment to our per press future or reconciled The was and which and personnel and Third in standard headquarters in is million our due an XX% to share compensation release, million related in EBITDA in the to increased is $XX slight primarily

cash million XXXX device results. million million drove margins $X.X $XX.X to to XXXX. diluted or XX% revenue Supplies $X.X year. from last last of Product Net from $XX.X The to million from the $X.X increase from XX% $X.X revenue Now year-over-year in was operating XXXX, million growth XX% million to $X.X compared XX% revenue revenue XX% $XX.X X-month increased $XX.X to million the last gross to million. $X.X compared from increased in last increased during million million, XXXX. months up XXXX in year. which in income XX% share year. net million was of We flows on year. to $X.X XX% EBITDA X million, generated Adjusted XX% of up $X.XX net to an $X.X per first increased income of

first cash although as to sheet, compared $X of our during stock. cash X months of did XXXX, XXXX, million balance spent On we due XX, our operating million $X.X strong million was repurchasing common XXXX, the the to $X.X on December XX, at flows September balance

working XX% $X.X XXXX. Our $X.X the as million now December Thomas. compared back turn million to XX, to over call capital I'll to of grew

you, Thank Dan.

Our very cover rapid the void focus X continues in we of geographic to be the don't our take on growing competitors. in force areas, currently advantage by left rate market previously large at sales a which to

our to profitability. million between $X.X This million EBITDA and million million our grow quarterly the EBITDA our will and or continue quarter up total the competitors. market is pain management of Earnings adjusted is We for in revenue come per for million; advantage $X.XX the compared $XX.X and between now diluted our adjusted million in to force, around $X prescription between are fourth in market disappearance to and for trending huge to the compared reimbursement to earnings million to and goal continue with XXXX million of to our $XX.X to million; EBITDA the rehab now of XXXX a Our to $X.XX million My XXXX. X year. to revenue after projected larger add $X.X be between $XX.X of division $X.X continue $X.X increased and main take in XXXX. orders and due to for $XX.X increased and estimate combined long-term our in our sales drive share $XX.X strong fully electrotherapy full products, share void revenue huge share. And a the

our will in exchange, effort continue get use ability a our up-listing in which currency, future. It stock stock. also We to to ultimately engage exposed potentially national a the the again to improve and stock stock people as acquisitions actively will we also liquidity in improve should our more

strong and we another As In hope special I growth staffing be business we the to indicates of this as next will earnings just have cetera. no today, since beginning quarter last in our with great Blood in orders, by revenue of of et our support announced the the status yet our advertising, patent update profit. summary, dividend announced new our research phase call. up obtained appreciated the clinical Monitor The development, Volume more developing to with division shareholders. on

this looking internally. products to at additional are including products adding more developed We to add also division,

now from questions answer will our listeners. We

first from please Jeffrey Gentleman, comes ahead Thalmann. from today Instructions] go question Ladenburg Cohen [Operator with Our your question.

Hell, Thomas Daniel, and you? are how

you Good doing? how morning, Jeff,

fine. Just

apologize to going questions I'm advance for in which redundant. So are any

and you maybe over could FTEs what a talk the quarter expect force of over also and the sales So little size field you'd bit X in last the and quarters? next the changes about total the

to reps, XXX sales over were XX this year. the approximately just is throughout force of now which Yes, those up added sales

Zynex's selling - not were not So time we most, year. all on had their of and up XXX, very about this spending they but the until beginning all for independent products

are consistently relatively sales of products. of of a force So some XX that. be that lower, We dedicated be have sales about reps. new reps when sales reps of this up new, may But seeing estimated obviously of just XX% that they are to earlier having to started I And in XXX% in we great growth our year the remember we Zynex would now is new launched our probably all close The that that are year. sales we XX% to of higher program will at group end little the the very estimate these original adding than number. performance week.

of expected. And fast we're better at slightly adding how benchmark them. is growth terms we're order we nearly So in than our

Okay, Is a composition, as changes the as NexWave revenue quarter? "material" bit to any platforms? as medical could else little you revenue that about the any talk beyond as it far of well? any safe And pricing other for commentary nothing as far composition assume was

everything Yes, at It's still immaterial the point. mix NexWave and changed. is primarily this hasn't else

and NexWave associated supplies Yes, obviously.

the or of what quarter far patent status? Now or it. anything that news you're close Monitor? were behind, as had as your less your the more Blood aware comments anything got application And closer on Okay, Volume that for you beyond the

call FDA went with reasonably had that yesterday a follow-up the We conference well.

process. so are in And things

Closer?

Closer.

of speaking NASDAQ and/or anything listing? on the And closer, Okay. update closer with

we in No, that keeps the them. so... do issues not are we And a enduring with we keep here, let's being And waiting have working say, the, the dialogue really. That and progress. to

deterrence in you that it. reimbursement, of talk me, big-picture, then potentially? anything activities XX,XXX-foot that's you legislation, picture both a finally, changes, kind opioid affect recent about adversely view, or of the may Got Any big market? could And market in that positively changed bit for little kind

Obviously, we inexpensive well interest being the solving strong than Other technology all products the effective very reimbursement see obviously to opioid we prescription-strength medication. see with that, compared epidemic. our a and increased being is an problem as as for in

really the problem not we're seeing any changes, remains gigantic. However, significant so

Perfect.

Tom. Dan. thanks Thanks Okay,

Brothers. Halpern Our ahead Please from go question question. Howard next from your comes Taglich with

guys. on quarter, the Congratulations

Thank you.

revenue? device guess, sales new in to I driver the that the really the, of adds bump they terms nice the In are force, for year-over-year

be that straight Yes, a correlation. would

it. force It'd be new hiring of of off QX, end beginning sales the of a lot kicked We QX. kind of

So we year sales of to new that the be this growth have. would a lot attributed that force

how long And term? bring hope to to point you does the on new over they sales producing should the reps, long get of be it even when what would you midway take

here It between depends. see second on to We the to But we most, saw up months. moved be somewhere month, X that, the hit #X one in last X month and for her rank. midpoint that

when So see order we orders. there obviously. that received significant And recurring Then until a actually is the to revenue, the when those obviously slow and the most it's we a cash. very of bill get process, we after delay revenues, for have

significant they to those amount we when quarters a long get from delay. rep for So next it's a cash, actually of over many a the orders billed actually start all see to until and hire the orders getting we we

in of we'll initiatives that of the the year. we put all next result considering benefit most place I this think So from year,

nice, second be or Okay. first Should sold? terms next, I at steady devices half next seeing quarter, the don't should of of some uptick in area, in in increased product know, in device year? of And number the on seeing an the we the be fourth based growth the sales we uptick the quarter point

the pretty is in supplies growth. - with would device I line trend the

astronomically seen versus side anything know device on don't the I supply what the going that see now. growth on you're from different rates you've right to So

So targets. supplies device obviously, would should force their sales depends it in soon right - I and their rates kicks I stay sales now in, think the growth how the allocation rates their say individual respective and consistent. new But between growth fairly the on

candidates are acquisition companies And with seeing that - you? coming you you are in that potential mitigate are to of seeing doing terms there the epidemic? potential targets? or what opioid help seeing Are what fit might companies out Or you you're are to

potential be can as side would or a effects products help Obviously, rehabilitation purposes. NexWave companies few mentioned, pain for alleviate are There and, other our targets. device products that be beneficial that without complement you

Okay.

good the up keep well Okay, guys. work,

you. Thank

question your next from Our with Please comes ahead Riley B. question. from Wiesenberger Marc FBR. go

you. morning. Good Thank

talk company driving that increased As the about initiatives efficiency are and/or sales the is growing, from perspective? can maybe of the you some billing internal

me very products. yes, very I you much in that our billing please developed ago Billing we let very sales get to sales. in year. in in example Antonio, come Billing, research things X successful some as the in us - started been then as with obviously initiatives working most, with, we if insurance reps, to need we little date look begin about of clinic we - leads we in now modified go can believe other at touch give internally as decades of on in warm and they is company is "Yes, competitors terms having a we companies in by visit first have terms the Then - some of where group San them hiring been what insurance and improvement had obviously orders, several very workforce part and where the the great industry et this that for An every here sales and we we still billing have our got that cases, strong, get paid. ago well brand-new see the company, processes one a as files, into. in relatively than market where that very a to of we to cetera. understanding Or sales, our for group have city to city successful earlier do soon the out We those working have possible." in reimbursement sales reasonably being better hired is years inside of large simply since call with would every consistent help the sales X leads the for reps reps in is we've experience experience It's - terms a we more quickly and and was give

make at time of in the of that we an reps addition especially the where sales doctors' sales lot what often as beginning, rejection, successful. offices the of time, It's reps sales well. seen lot of has of we we've of don't to For take cold-calling, years of we industry new a a efficient, very in drop-off made saw to are when compared a involved reps lot doctors' that lack gatekeepers very a their much the few sure added several get making ago, that performance because too

just sales sales And the what at all we're is in that we us. So job from I that we're here a proven fact better efforts that give to think of think the very our supporting billing are our doing and efficient. be going I support with reps to has beginning

are next push? kind place at where kind That's specific your geographic targeting great. the well-staffed you moment? of of not Any you're Where

don't simple. already Yes, where city the answer amount pretty of have a is being reps is Any targeted. significant we

show really in, well have all sales hope it to be be blanket or an physicians and so that that the example, break is we're this Los process able prescribing as We for Angeles should in goal to to few adding difficult and to we service in area. an entire makes our Los month additional as X. of the should with country the added so, obviously the had As competition high-quality Angeles in possible. We've next reps here up, competition then reps And the in to, area X - the on. a

Excellent. What's the NexWave typical demographic of the customer?

surgery. often and tunnel. or Traditional increase application, result is - overall a The a of, decrease carpal back recovery surgery, in an pain. use knee is device orthopedic is a where application. instance, patient NexWave after the it circulation patient a And typically increase There's also pain, elbow pain customer would blood tennis for facilitate often just and is big our to low knees

pretty all or help can chronic that's So - any we whether device. in pain, much acute pain, pain patient this it's with

geographic, In the there data? the are see trends race, that in of age, any terms you

to young rep There are a There's there's people entire widespread. area the don't by older other geographical presence come are - - of themselves. we very part - our orders. in very It's have sales They we as And population. see obviously the people spectrum. to patient so no get the need really than, age a nothing

one just more then And me. for Great.

month, number to geography or up your Following What that second the rank. rep the in was up - on in? about moved #X your the anecdote

That the kind East the Coast, of was on area. Mid-Atlantic

very you Thank much. Great.

you. Thank

Our from Potter next Michael Monarch your question ahead question. comes Please go with Group. from Capital

of on me good can hoping blood bit another been I'm Hey approval color questions answered, congratulations give quarter. guys, process. the have my very Most more a but monitor on maybe little you

a anticipate FDA You you what you Mark going that the you information the had Do mentioned past, the of with looking year. receive before we're FDA CE Is the still in additional case? the for? our that call yesterday. I And end think mentioned had that then is - the to

In some question them of safety of are questions, to a terms some about FDA, a the clarification have index also a displaying. questions related testing. the battery. about we number backup are on There There we of was was

measuring the some the end how each more terms that in index. are parameters of is we actually of And of up clarification in

more done. of we So to on FDA able get a might rounds before are in But should number working keep a the on they'll to it. And that. back be couple days, we be of there

a our done the safety XXXXX all moving we're a And together. more and that's certification Marking, using of combination is also putting called In body. testing that CE quality on all terms along. regimented Nemko, product, entity And of the systems the of certified process, an it's that's process that we've

Do anticipate the you receiving still before CE year-end? Mark

We're That far might so too off. a close now. not I'm of stretch. I'm course, getting be hoping But

million you bought $X mentioned that But Okay. And share many shares. the we buyback how shares...

yes. end the At quarter, of the third

For the you were one of additional us go please? shares any months, ahead, - X -

Go ahead.

repurchased any in quarter? additional shares Were third the

yes. Absolutely,

How repurchased QX? shares in many

$X was averaging don't the front be share. Let Q me the in a value we've But the about see. spent It in we've the about $X.XX in will quarter. share dollar And quarter been have $X.XX, of later today. I the me. in million

So the million by XXX,XXX divided roughly $X X, so shares.

- continuing QX? And is Okay. in are you

purchases been have There in yes. QX,

And how the plan? much is left on

have that me. in don't I of front

Not lot. a whole

Yes, it's minimal.

Okay. And program? another repurchase I'm look is continuing assuming going take share at the board a to

Correct, also have of we also available, the that. - Obviously, in spend we cash how yes. dividend, light at we're that and the looking how

bring Okay, bit? on? We additional in did people support can about How a staff talk little talked the we you about the many increase salespeople. support

quarter period? or the during During the

Let's the months. do year the quarter-end and the X for for

debts sales. was quarter, really Most when would in you of and if During - been were 'XX the look trends, that. off SG&A lightly it mostly have at when ability staffed jumped. the at we We support. Remember, we that's QX it's came support There SG&A cash, really some the before the pretty We right flow. paid the And end hiring. of started started cash really to QX.

order flatten from support X patient on the small can you on side, more been staff - we to conversion, year-to-date, QX. But it of side, scale will there. adds of between we'll or start obviously added people see support the as And get about we the here. those billing there's XX was year-to-date. the And have out X then So we've and on kind most support in QX,

Okay.

additional an year-to-date added in... XX we So people

numbers, round in Yes, yes.

Okay, in G&A.

Yes.

guys, keep up good work. Thanks terrific. the Alright,

you. Thank

your BJK LLC. question comes from Jones Our with ahead from Investments, Please next question. go Ken

Thank you.

gentlemen First thank quarter. for fabulous of I you appreciate all it.

much. you very Thank

question when thoughts opioid curious the alternatives. within to listen the any the promoting I political My discussions any I'm been if general about around of really, discussion And I don't this epidemic, spheres. the political and public American there's hear nondrug

is it There various for markets. it that it's our in all maybe fact for door to state message a to pounded that. the obviously we could could be do if or physician of have with case, are the only bill discuss the something to problem be point, ways, support the reps really patient and the the we textbook that resonates other the with et that pretty physicians of it be to obviously. a media, frequently. products a of for they up We're the or we influence market They're really written, it's And able matters, it to to company. type the an until actually could are you in is - cetera. most online, with buck that product, are radio, advertising the and sales market face-to-face topic. it's Obviously, it's finding a kinds is, potentially to help opioids is here, in forward. only able from in of are offer sales drive order equip get supporting when what certain your this problem. better different to a interesting a at terms the perception level reps, physician. case, encounter NexWave. - product, But the have are terms and better prescription we how decides angles. And get that really for have once this - they problem, you we that's from avenues well by this mitigate written, then the TV, with we we And particular in in better that as a encounter look But sales we that we factor material determines helpful many the a in from because in that what prescription, certain face-to-face our political able those as this have story representative being between sales reps And to most, But Yes, bang in try our

you. Thank

your Our Please Instructions] Mike Crawford. comes with go next ahead question [Operator question. from

from to flow Riley to for additional calling your with Thomas investing thanks B. the you into Volume with business, proceed how FBR. be capital Monitor buyback. look And just with Thomas. and Also the the shareholders I'm curious the returning at invented, special dividend generation, you with Dan, and But Blood able product should Thanks. free cash you

Right.

have SG&A to that cash that, how we That's a are what with the now obviously cushion accumulated. nearly that we the decent of company's I initiatives we needed the expenses. make it. some relative organization SG&A a further So able It's are really for developing run space. - at in to X-year have And rate look minor investments in and

For need have with to regulatory a that be to there be there we'll stay I'm may capital. that we options division capital. It's approvals so will strategic the place, and if hard a I - will different really for But But we protection number obviously, a possibility. need will might look about, develop that also to full-blown we outside it's launch, excited consider. because other that we can looking that - to options as closer things strategic in at with believe And get we this. of at a we patent are outside put be

will down to that, say approval? you to proceed get sit already that that just get you U.S., sure if let's if proceed? you to then And in market would is great. a this you Okay, and given Europe the that you're decide whether Or follow-up the pretty to approval

something... may I'm have not - with missed proceed sure I

operations, channel to product your go out to and top this What's new actually of the into going invest NexWave? the and market on out

good as operating take area, when very the Well, expensive. devices it also room. talk to obviously organization, recovery an But an bleedings that's about much internal the and an we We're money. are we is about have and being in experiences These with not very believe expensive. monitoring pretty I in spending cost-efficient rooms obviously area too talking

the It there's profit we like our it gross a revenues money lot here. could currently larger it the doing lot entities. with even and with division partnerships opinion we could And we're But at medical acquire sales we our own sales things need we also with to as where approvals, maybe to you to dive a do what look closer whole getting of then might potentially right, There's device we're the now the space mentioned, that developing at looks a organization at are pain So stake that can have into we're options. and we overshadow we're totally margins. But patent strategic of management a channel. We point If investments, at. - better. a of to to be at key some as having talk comes beginning initial lot that look call strategic leaders. and also with looking what

great. Well, in that seeing folds. we much. how very forward Okay, to look you Thank

exciting. Thank you. It's

over additional today's [Operator for closing showing to this no any questions, to back at I'd in and Instructions] remarks. And like time, call end question-and-answer session turn management conference the

appreciate been has Thank call. this you, to And interest call great listening earnings a informative today's for hope Zynex I to I day the everyone. and in you. thank in all. Yes, and

you We Ladies conference today's thank presentation. and conclude gentlemen, for call. does that joining today's

lines. your disconnect now may You