Zynex (ZYXI) 28 Apr 202020 Q1 Earnings call transcript

Good day and welcome to the Zynex First Quarter 2020 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

Certain statements in this release are forward-looking and such statements are subject to numerous risks and uncertainties. significantly results vary in or may statements. such results from expressed the implied Actual

could XXXX, results with cause from that Risk factors Risk actual our of are Exchange note recorded. X-Ka, Form in including press XX-K annual XXst, in Factors the year and this section forms being forward-looking as company's ended the to described on our well XX-Q, Please Securities filings the Commission, the statements differ materially event releases is report December website. for as X-K, and

Founder, conference I and would turn go to Officer. now ahead Executive like over the to sir. Thomas Sandgaard, Chief Please Chairman

another Good income. President XXXX quarter and growth afternoon. and to Sandgaard, call. our Thomas first Welcome name My CEO quarter of announce I'm of positive is revenue net Zynex. earnings to excited

with positive the first straight for per our first history of of an $X revenue million, same of revenue first share last was year. compared million XX% XXXX. EBITDA net highest the was XX% of increase diluted in company. quarter quarter increased $X.XX quarter quarterly quarter to Our the Adjusted quarter the was also income. XXth It the income and to compared the $XX.X It fully

we in and expand continue our progress the to orders grew investment strong across continues the We quarter as force see our for to The expanding sales we U.S. footprint in products. our geographic XXX% first reimbursement year-over-year

subsequent expect growth sales and from demand aggressively of strong a the these periods. new the products. sign is in result reps growth every our the order continued future a is for and orders adding revenue growth to order Order steep sales to we This force see month growth momentum of

the an device we the it, over prescription, decided continue health patients As relief. revenue related typically or device. needing as years our well the or insurance device as supplies and a uses if order length is time may reaches company the longer recognized you to by call after patient the the order of our for no continued the already, is know patient months as use The many pain primarily of of point

In force sales aggressive sustained QX, growth. we our

During the sales continued to filling over reps. across April so up first all far sales aggressive of XX We've adding November our than QX as hired XX we direct territories hiring in goal we year. this reps reach quarter, more new XXX U.S. by in our push

XXX sales expect QX. We the reps end about to just of have by

the growing in as of quarter faster XXXX. is first XX% Revenue than XXXX over not grew we revenue

XXXX result between This and several having was XXXX obviously quarters well growth quarter XXX% is first a for grown XX%. Our over prior. of year-over-year orders

our by model of the used like them for earlier. temporary in now. was monthly patients XX% as tip is in supplies periods derived from helpful use is our Our orders received billing they're slowdown and business devices a consumed prior actually revenue even

many to and physicians on pandemic of companies, we on prescribe Similar also to have supply impact our but navigating the availability of not COVID-XX employee issues. products, the chain only seen

in January orders February, orders compared down XX% down to and are of and average. January approximately the were the average our compared orders and March February number XX% April to

going to order higher numbers orders be year's in QX last XX% forward. doubling and come than still to of the compared to last than We QX numbers year, QX expect more the back in in and same

for the in the for many with force speaks need our relationships This the patients non-opioid prescribers non-addictive prescription has decline strength sales in volumes solutions pain. minor to and prescribe to temporary them orders

therefore in and on uses supplies, less collections. -- and revenue time related revenue reminder, from a As orders and the slowdown short-term cash me, impact revenue recognized patient our an from excuse order an over typically is device the has

to adds and April quarter strong, which collections our year first full cash in in Our this were our the confidence of estimates. year

continue or staying employees difficult suspected during at operations due home period. interruption this despite to illness without either our Our anxiety of few a an

Our and raw supply uninterrupted chain non-Chinese materials. second all components remains our as secured sources of for we previously

placed it's receive immediately months' with critical components as on orders on products in-house several a assembly of a our finished to XX the four months months XX for for have to our prescription. pain to shelf, have ability over hand practice to on addition, In to top materials. us we in and vendors keep of of It internal is the patient of the ship

The use and issue get opioids patients to opioid prescription this to of physicians we're working technology be the a first serious continues pain. strength defense epidemic line to our for increasingly of when off in country as and treating

devastating of to tens the the due impact die opioid level where thousands yearly has Currently, abuse. reached

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

new of Our some as management pain the puts products our for rehabilitation the incontinence pain best stand in move industry for in and stroke for strong and a for device the out rehabilitation, management, markets. that wave rehabilitation us treatment very in in position makes way still product products

see in of well as for our divisions both above product to management our great as huge a volume continue pain monitor. We area unmet potential potential existing revenue-generating for

The for year. balance blood patient's earlier intended monitor of monitor probably get is most surgical we already this fluid centers. non-invasive managed clearance and and As you hospitals know, CMXXXX to a monitor CMXXXX in to FDA fluid

We fewer safer substantial initially to and of lead bleeding detect less common as unmet needs mortality, believe target internal and and is are hospitals ICU serious and surgeries blood rooms display until rooms recovery product biggest typically complications the We one in loss expect surgeries, complications, difficult today. will today where to well to operating occur. as this that

turn call to over now Dan I CFO. Moorhead, the will

Thomas. Thanks

to quarter revenue $X.X quarter XXXX million in $X.X year-over-year XX% to our compared last net First, million drove million Supplies of revenue million the to I'll year-over-year, from Gross XX% which were first from to $XX.X up first XXXX. XXXX. Orders to $X.X grew review results. million. XX% $XX.X XX% margins Device increased year. in increased $X million XXX% revenue

marketing was increased much growth. increase billing related increased our continue grew functions year-over-year in support and the our XXX% expenses Sales as the expense to order XX% grow and related our of to G&A to to we salesforce. patient year-over-year, headcount

income or $X.XX to million $X.X $X.XX diluted diluted income share net in per year. compared of million quarter $X.X first First last was net per or share the quarter

to is our which plus EBITDA, an in is XXXX. a EBITDA release, and of in $X of and compensation, calculation increased stock-based million Adjusted standard other and the reconciled non-cash, first expense income quarter press XX% exclusion

related we exercises. option an During income benefit to had quarter, of stock for deductions $XXX,XXX the tax

up year end. was million XXst, at of On from $XX as the cash sheet balance million, March balance XXXX, our $XX.X

we by against million to levels COVID-XX. quarter, inventory our to related chain the During slowdown increased protect X possible supply

We have to-date. not issues had any supply chain

March at working to XXXX. December as grew XXst Our compared to XXst, capital of $XX.X $XX.X million million

now the call over I'll to turn back Thomas.

orders our Thank justifies efforts you, testament revenue and It XX%. support growth XXX% and personnel, sales grow in inside the our Dan. to to and sales investments functions. I'm growth of a our excited year-over-year of about clearly in management, our especially huge force sales

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

continue reimbursement Our for products increased strong sales a and orders revenue combined due to profitability. drive with increased to our larger force,

would $XX.X and last and million We at EBITDA XX% we second range million adjusted million $XX between $X.X million, revenue estimate $X.X This annual is to with our revenue. to on quarter here growth first guidance the quarter second in $XX from year-over-year come our revenue XX% quarter million. XX% maintained year's between in is be This up revenue to revenue million. just the $XX saw than and

collections and a nearly As personal but injury attorneys. insurance, from billing all reminder, mostly comp, from insurance, insurance of private comes auto workers' government, also our companies,

are by amounts contractual and on established established, have a either amounts throughout those patient-by-patient from our dictated Payments we negotiated amounts well industry already liable basis.

up and deductible than by much through deductions less discounted it co-pay in as getting industry end typically care are U.S. amounts the typical and MSRP, is health our the we These

is for we supplies. whether paid get or the the patient device pattern same This

comply to regulations. the We make with are that always within and guidelines are all practices careful billing law our and sure

also undergo by to continue accreditation compliant. regular be We that third-party ensure we a to

and market My huge the is growing for of take market void as management complementary our of the well includes force disappearance to domestic and the or acquisitions share sales competitors. long-term advantage to our huge electrotherapy grow in pain rehab our technologies. prescription after the division This of as main continue for goal to our potential

to an entire in We're cleared blood FDA. the launch by adding monitor that we and recently organization the executives process building had volume start to product and seven division after product of managers the the

sell the to We that able the device in both the marking European Europe. to for to be the and U.S. also recently still with working and eventually body European obtain CE obtained notified product patent

as continue out will continue to everyone build division. We we to update this

great which another in quarter yet going strong orders, profit, growth in forward. very strong puts announced us position we a with in growth summary, revenue, In and

We answer our from will now questions listeners.

now will begin [Operator question-and-answer Instructions] the We session.

comes our first Jeffrey with Cohen today ahead. Thalmann. question And Ladenburg go Please from

you? Dan. and Thomas How are Hi,

you are Jeff? How doing, Good.

Just fine.

device quarter. few you supply fantastic A break So, the revenue quarter? questions. Did and the out for

break income -- the press Did we on it's statement of in the the release. face

-- Maybe you if know don't was. can. I it all that's So,

is. it and $X,XXX There [ph]. Okay. $X,XXX

it about collaborations market in bit got planning little can sounds as direct distributors or placements, domestically? volume as far it. using to not Okay, any going the you're And far as talk blood and timing supplies, you then a on as monitor like manufacturing

Initially, some not and expect actually people that see support us they hospital, strong we're potentially as space that that for them. place devices working a opinion just on on able there'll as organization that key only relationships can couple to of organization, into some be for but it. help We to so will leaders, have testing loan of part devices as the building well be key -- sell therefore in we it some works also develop

hopefully and the our some to larger be more for I expect from But also at take we develop relationships create surprised on spark that medical little interest a wouldn't companies. and and prove own companies. -- we'll we device other able be the concept therefore, interest longer to will of indirectly

it. back the And it to and you're Okay, that end of on forward? plus the half and sales how does ahead I like for year in you've by force XXX sounds said of there look think the full which past--? got the get number Is steam going a the QX

Then And XX of months XXX than to we'll month. a from a at get right to That's XX month. running XXX. now have we're five more cadence a

as be when So for and mistakes as there potential attrition potential room perform. some should don't slowdown well people

quarter margins, Got we or forward? slightly? going about Dan year, Or expected it. first little shy and a on but item particular the the you we there over bit was had when any think that in And last less particular of should commentary what hit how two the a

is normal XX%. say We'd XX%,

end, a Sometimes it's mix, lot high factors of mix, beginning weigh of in of year kind margins there. there's payer little on on the the product it a on bit. can the at depends Deductibles

the range them So, in we and normal think we in range. they're normal to that expect stay

payers lastly compared to quarters four then as first -- duration, Thank pharmaceuticals. change from you. affect any of And reimbursement, as generally this Okay. have amongst that from how coverage speaking, docs this far year you may and just me, prescribing seen how the year, are

coming here and been real months therefore hit just our, that our with couple relationships more terms more their those at real our kept of that are change doing how in and reps steady prescriptions No, doctors sales prescribed. telemedicine to more term, able shorter relationships Obviously, for maintain a are pretty the it rate. of temporarily or products the no has of in in -- our a

impressive. that's So, very

change. terms significant any of we not have seen reimbursement, In

come a do normally Our in deductibles. the stronger cash of early than the year, little in April depressed of phases in they patient's first it's typically the because has quarter collections where in insurance and

was that a positive So surprise.

really after But little. crisis normally than like little expedited flow cash it and to change it It seen get we paid good large few very how little used they But that will look bit. payments that a the long-term scrutinize kicked be, have companies least other a with as has at prescription. claims therefore a doesn't less do insurance We as here decided helped the has way. than that on it's that a COVID to our much that it average put

pharmaceuticals like earlier avoiding greater scripts Does buy does And straight the it Are in Okay. getting docs it degree feel you're go feel? cycle? written electrics? to to at a how

exactly don't we to development. in reminded be much they'll that time. more what this do sales non-addictive an probably that therefore I It's country, physicians defense. opioids and a should that expect say as rather more any line corner I about significant as happens Yet, over of really be every slower we the there'll it first see technology you're would that reps likely prescribe something suggesting, than of get out

definitely could getting country. in our of a of corner that, but I as So result the probably force more see sales every

Okay, Thanks quarter. questions. got it. my for Nice taking

ahead. And our Please from Chen go comes question next HC Wainwright. Yi with

for the for there Thank persist surge you the a question. taking XXXX you is fall could my first revenue be could incorporated into that persist, and there second have pandemic summer COVID-XX is, guidance, and winter? My question in the consideration through

We have that that mentioned throughout orders of slow April, as very the obviously down incorporated degree little to and to and month I same slow earlier. of some down March the in a degrees end entire

start get the June, sales same amount to per be towards up will year. to right, nearly for then soft saw rate the but We a two-thirds to up of a reps the orders again month our where first to be per in eventually the little month in the May the soft expect of end of or that May producing back and we early picking pick half less, rep to May, of right be to degree, be same

from to than growing from the much over for then over or quarter but year revenue first where standpoint, quarter a bonuses. like when as softer compared so our doesn't saw, expect XXX% that, of most shortfall the the of year, revenue received XX% last business really our, impact of revenue most we to well instead comes an period XX% So year because of second of our model, and our to last orders that or of downfall we we order short much be

of in year's that. lot where So therefore, that like helps situation in to us actually end up the, a the of have predictability predictability terms we a and going

not not take huge they available are So as to hit, -- we -- we don't a as don't used be. when doctors

the sales the reps? Got quarter, number this Can of it. for to end us I expect current recall you right. XXX, mentioned the reach rep that sales you remind by you number total

Currently minus might speak, have as we as I two. be about adding one of today, reps we or we think. or plus And X, XXX

to assume to have XX go. another So room well -- can we XXX that hit XX month, we a have be XX. attrition over to we hire if of -- another will by a then we there's And XX for if lot June

in Do -- that you comment Okay. could you in the the recur think quarter? Could following on that the benefit could first tax quarters?

from subsequent recur to No. option or It related won't in time the exercises quarters. It's a large one back. years some

in So -- state. plus XX% I to would future forecast in continue X% that the XX% the fed range the

give plug commercial Okay. rough logging of Last potential Thanks. for question. monitor? Got it. you -- launch us the a timeframe plug one Could

Towards the the very of end year.

Got Okay. Thank you. it.

to hurry to reason up. build no We have the need We it organization.

And Yeah. you. solid the Thank congratulations quarter. on

you. Yeah. Thank

go next Marc Riley. Please our ahead. B. And question comes with Wiesenberger from

that the and able sales to meet what Thank percentage of person provider talk doctors breakdown meeting healthcare on What Good for how to you kind the are And regards versus sales you. are virtually? came relationships reps from -- point, with give and same percentage which Can orders in providers? afternoon. rep existing about us new with can you of interactions? new the a then still

not, even see I tell no. the short to through flying called a be Zoom, single than can and physicians we've if seen really called or that, very up by simply over week trained getting that one think one not, that you got was it or go way we training every at maybe got into space I technology them reps, answer to our least a one answer this would of Denver exceptions, two is recently But actually rather -- if I getting just creatively dozen, here. in to seen contacting think detail, and extensive it we've into that a the new in was eventually

cetera. existing goes customized and cases off they've this material for, like also prescription and provide for reps some able the and been devices, In clinics clinics to drop have et drive we pads able -- demo to for by the been

a can to than obviously, and popping is that, relationships those lot pills. contact them of -- keep keep better those to, And still have So strong we relationships, whole just text, email, hey, we're without those seasoned face going. they call physicians or still reps able with reminding this face

and So, the come actual -- the put way. mix orders between that how we slicing try, in that in that not we fashion really like not cake the we're it

heavily getting that's on other the last maybe like throughout It about guess I experience you're leaning kind training. long the physical your be how and virtual And would have they getting expect you expert sounds in to talk What's on are year? reps to ultimately for relative train come tools expectation Zoom been going virtually Understood. line the that that what And to for would training? reps virtually will of person. that

last training the take so think I to is question. good the

First, I seems thing think be trained. and not prefer that, into is we of the for to to training it be this They continue as as the do so probing an is to as efficiency can were we good traveling the long safest they that issue can. still

large week We sales very have of the first of XX May, be trained a in probably way. that reps that'll class

when terms May impact over, is most is, Xst over. in of of that the all importantly, this and And COVID I when, is decided

are degree They for have to expect So policy We think are be up. three what inside I We be that some to maybe just week clinics to It's but two, Southeast. we allows they for opening And that's used a to, to around just in beginning or part those business. opening from country see will maximum we clinics, things open easy. mostly kidding. away those running up of that definitely like uncertain the as -- see No. reps weeks that of up. opening am a states when stopped they the sales just up. still will in

states, but maybe be I in a should states start think There'll states than other for politically that that, other normal. we of as typically been after where several followed by towards be operating will hit, probably position more states or harder we end May, we are more have shutdown get the weeks some

so, supply offerings and do next nice them you supplies previous other or have and expanded acceleration the payment different growth if wave? in in any look symbols? Real supplies the the the Understood. than And dynamics in reimbursement with with quarter, for

Could understand again? part the question you repeat your I question. first didn't the of

you expanded with Have with Sure. if the And next so, them payment similar other dynamics your offerings other the consumables? go along to supply products or the that associated are wave? the

No. Nothing has changed.

Okay.

the anything attach, beyond no it down -- wraps patients or electrodes, around braces there's like go put that to easier So, to be kind to for of might --

have we For when back if That way. that easier backs reaching electrodes so electrode, hard low a find the work instance, we that the has for prescription actually after was time the reimbursement get that garments patients their It���s to it's typically place what for out that. insurances we that treatment they with get can allow patient. added the do to to the

increased to done but amount. hand very used for I sleeves, And also glove, of and significant to think that There's don't we've provide be electrical to gloves And stimulation. well, elbow the they also something did percentage any has the knee, years. they can that pay

as elevated any for accounts accounts me. risk, -- economy? more anything any about you're Two reviewing of it. throughout counterparty like as the you in across looking that stresses worried maybe your maybe Got items, noted Have you're receivable, financial that, Understood. your

UnitedHealthcare insurance all. at payments to one us. accelerating actually I very of we've some Not large them seen mean, companies being

is like capable So doing of helps looks that. it the financial

strategy? with is timeline announced large last you going the having And change to Could a your one, recently Great. reasoning sales with move? and And I the growth think behind Thank you're that you. talk sales any impact force. maybe you the the change leadership about in that that

strategy and internally was a in there's decided It change during don't a there. I QX. was change think made just that

before. no it everything's in strategy, was running same there's the as So change still

much. very you Thank Great.

[Operator Instructions]

go ahead. next And Terwilliger from from James comes our Securities. question Northland Please

Can Thomas. you hear Hello, me?

How I you? hear Yeah, are can you.

Congratulations three have out. leave nice you don't Dan. and Dan want I very on Okay, for good. I numbers. some one to really got questions then for

side, I touched the think On and monitor upon you've this.

to with not down the fortunate almost launch have shut now the hospital huge right has way a You're COVID market.

Right.

limited new build FDA many when seven, ready you the is few whistles it's get look team these Is launch gets launch it process people already before year mind. the that with their five much here? things? the to you by in feedback that work been approved, or bells As such the that some a go? clinical to to they any do that times products a you approved pretty sometimes there monitor that next time have of Or monitor Does want might tweak and that to

that right. we say, call monitor much the we done that it we we a to product, modifications through The It's well. is as just to not version halfway pretty this a more you finishing to ready run up. or have FDA that stick another file. are, Yet, less we expect that All can internally, so of few go. changes in here And the obviously, could CMXXXX many there's product,

All was improvements. significant of it

whistles the and the into We've newer in bells for order right. next you're smart all at the about and FDA be so it So We're sticking to been long generation. process.

what's hospital, A and to not hospital the no, lot even with struggling into setting, they're fortunate companies to with in closed. of that. it's especially -- be almost almost if well, trying you're the are device So, happened get

a want nothing I it So nonetheless. it's there's a almost about don't benefit that's COVID benefit, -- to call

fashion. do to an orderly We things in try

so clinical are what Is important answered, from pain? high been What a looking force. device me the rehab? for? of background? right think to Just you hire Is medical tell my of a question it lot looking focus Is you of background, for? because -- is -- it's person. type but a is it when going to it what more are I So level, the back next really a sales And pharma that's

the So person? you how define do right

right more to the no relationships amount by certain also is their creating We at with own good to existing they're someone they even to there that happen, a good person need plainly, things because and or on making friends. make out relationships. at They have have begin define of drive

face. able So still for. has to get the got back add door those you with habits, things it's week that prior sales organization keep and are come And background, every we or strategy your building They medical to and habits I to on. come actually we're going someone we And and but device. smacked be -- in pharmaceutical clinics. closed the the look here it's oft sales Those our rare see medical that whether fit wouldn’t bad with call it necessarily sales how doesn't early

And I so space experiences, business experience. would That that usually with prior service hire. profile say, that the some medical have we not sales XX% basic of experience, what but without some in hired those necessarily be, medical right would hopefully candidates now get

deductibles. then and And on quickly seasonality you. thank And very Excellent.

I seasonality. think terms In about then seasonality put and mean, should throughout How is -- a some and the deductibles things push kind a try you that and time I QX you move of that's deductibles, but that seasonality up but get And stronger? the deductibles, year? the of we kind as with QX is the of growth, of kind strong such

Yes. Deductibles ways. in hit two

patient company, check they an hit to patient First, on are payment zero see, want .because to for that's they some they either to it very January as deductibles insurance many degree and because the physicians typically then take auto but bill in the that to low of us don't hit and side, for down dollar their not that, go hunt get February, copay. where or

physician help there we be summer trying having to simply available. is and vacation all by around we're down little can in a it's usually us is available at get fewer We patients. time physicians some But We slow. to the -- work And strong for see there. selective are in really most out see that entire Thanksgiving, very on a prescriptions. a because that bit typically slowed the week we takes physicians And month write December that then

December, On years since quarter our it side, if regular intervals. and and up from before prescription two we it just the get from January goes suddenly from recurring later. billing That pick orders our typically that might be sometimes means shortfall revenue we of February with one to in a a comes revenue intervals in that in or monthly can all that revenue deductible then before avoid stop

have That's We patient on it that the the accounts the getting and for to January, that's bill service was And calculation. bill the in because supplies date to would result that. if have of device we what for for using deductible claim.

can So, typically, recognition. every first possibly terms of as year. weak quarter conservative in are we our as cash of somewhat in we collections therefore the And go revenue

year. So that's week always from the of a revenue standpoint on proportionally compared to rest the

Dan. actually may quarter? Dan, number And it. a the have question Did that then for Thanks. my you for leads missed I into lastly Excellent. DSO give just

around about it. ways days, there's average right for which to typically calculate different a -- is about We're We're XX lot of us.

my on much questions. jump Congratulations you back taking a Okay. Excellent. Thanks, quarter. guys. in for very queue. Thank nice I'll

you. Thank

And Mr. concludes conference the I'd session. like to closing remarks. back Sandgaard Thomas question-and-answer any this over to turn our for

earnings today's this call and has been you into for appreciate signing the hope I I informative all. day Thank interest you. a call. great everyone Thank and to and in listening

for today's you is The now attending concluded. presentation. conference Thank

may a your line, day. great now disconnect You and have