Zynex (ZYXI) 29 Jul 222022 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Zynex Second Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. I would now like to turn the conference over to Ms. Gilmartin the from Smith Group. Louisa Please go ahead.

on Chuck, released financial you, A of is and quarter good Zynex today, copy available release press Earlier everyone. the Company's results XXXX. website. afternoon, of Thank the for second the

are on Officer; President Financial and Sandgaard, me President Solutions. Chief Lucsok, Operating Officer; Joining Donald Thomas Moorhead, of Gregg, Monitoring Executive Vice Dan Chairman, call today's Chief Anna Chief Officer; and Zynex

make results the conference to those events and I'd to begin, may you to environment, and specific call, future factors over the now regarding without like and will differ statements. past review factors and turn you this actual we Before future the to that potential, that the events. in Company the call marketing described the capital With limitation, subsequent filings statements or Form may cause remind without product regulatory Company's will from projections Company's limitation, development, These operating I encourage XX-K statements XX-Qs, include, forward-looking Thomas. forward-looking performance. Form with these identify resources during that, We including, XXXX sales strategies, product materially regarding or SEC, the which

Thank today you, for good quarter Thank XXXX call. joining everyone. for you Louisa, and afternoon, us earnings second the

Company's an number growth the orders revenue for saw the XX% profitability of also long-term was and quarter, to of history. Total we plans. remain June the increase monthly quarterly our and in quarter's on revenue quarter, This million exceptionally second continue strong, we highest year-over-year. in execute as the and $XX.X Both for

we continued and I'm for and year the the were strong over per full demonstration and both the XX% And was over quarter-over-quarter, are Earnings share, quarter quarter Second second on forward track grew consistent achieving orders our sequentially looking growth bottom-line top EBITDA performance. million. to Zynex's to diluted first and $X.XX guidance. X.X quarter experiencing XXXX. adjusted quarter of XX% XXXX

We yet the how program this During are an grow our to million and ended we $XX which XX plans. fill engineering established all in and now additional top-line. clinical CM-XXXX our as FDA confident to and and volume another buyback completed growth commercially second blood year. shareholders program with and to strategic the during monitor, half based second product the gearing we more open. XXX continue monitoring still returns device on this the continue even that, detection Pending we will up volume XXX generation the to positions and sepsis we monitor hire market making job oximeter. pulse growth believe progress U.S. research normal further keep a and accelerate Once laser our are clearance fluid our products cadence, In of across we division, our are eventually approximately believe to quarter fluid are on our XXX sales launch territories the we second blood we for quarter, value for delivering our We second executing a We initiative signals share reps. buyback order million. reiterate a sales quality to The market and by consistency strategically sales efficiently numbers, order evidenced of difficult ability we significant to the ability the quarter, new of our hire growth. new existing amount record demonstrating high second pro to reps reps. as achieved more makes current in and job it In

Chief mid the Operating laser the to will see also of of oximeter to a submission Anna now here turn next we Officer. call second the Lucsok, to year, pulse FDA and prototypes based the I year. are targeting half over We this expect in our

in to remains the for division its division source primary the At commercialization, the Thomas. is you, revenue management monitoring still pain Zynex. up ramp Thank

XX% over the Revenue quarters per revenue a seen Sales XXXX XX% high we've by to in the QX last of quality over growth sales part due grew revenue into quarter. to driver large growth. force and consistent productivity in in size past As rep compared productivity force. discussed, top-line primary QX for several and Thomas sales has increase and rather developed our order than

rep challenges, We continue very the lifecycle emphasizing they're be by earlier ensure of And Similarly inflation other impacted new Cash has existing fit. pay. and which XX reps have efficiency incentive from year. and to network have we to seen to to throughout our and force been reps. not underperformers in and over the were facing are normal both half new employee and any last their a out shifts XX wages existing sales companies we payers the with remain in incorporated sales the of bottom-line. of selective primarily collections impacted with than months, good identifying have strong the dynamics Both macroeconomic Company first increased in more and

many Additionally, chain medtech concerns others largely in unaffected supply space. the in we've been in fact by

not supplies components and built up transit Our for to channels. shipping access has changed and significantly to inventory and year-over-year longer account we've times

into necessary ask able Don VP of Gregg, division. our keep I'll providers a Zynex Monitoring materials. updates related to We that to to secondary steady to business now to tap manufacturing also the Solutions have been speak handle on

X.X effective to two within primary that market and development a known capitalize We including laser-based implement an product monitoring, of substance growth market comprises have of growth Anna. driving are otherwise oximetry. has pipeline, total There patient share. programs multi monitoring to Thank monitoring, you, Zynex portfolio on as the billion approximately started division the we addressable ZMS estimate pulse a monitoring ZMS, strategy future on and division, hemodynamic division.

whose Kestrel Labs Zynex the of products acquisition. CO-Oximeter and the NiCO integrated HemeOx The technologies through first development the is

monitoring clinical blood blood and respectively. arterial building as hemoglobin monitor is used been pulse-oximeter efforts. HemeOx in which fluid hospital R&D products, CM-XXXX will to the critical associated FDA FDA its personnel, the are the track monitor, NiCO for second CM-XXXX agency teams end discussions and remain it multiparameter, submitted The wireless on oximeter fluid based to systems and submission all for and wireless the and laser additional mid with The we are non-invasive commercialization at and and and allows a and and in the has ZMS The blood we be of that out information requested. continuous provide in XXXX to a the non-invasive The XXXX. adding engineering

confident still as are planned. that is progressing We clearance

population. As it shock blood commercialization response launch set studies CM-XXXX, clinical using is opportunity completed new in the and this the to to relates patient addition and in recovery support of to clinical to are which volume, Multiple the evidence ongoing ZMS track creation process. recently trials, validation for the

will will the We in CM-XXXX apheresis ongoing presenting Dan the examine new forward on the to and over Additional the in blood study. our quarters turn donation call market enrollments we coming now Financial I to are Moorhead, continuing Chief Officer. opportunity. seizing look and data

was and And year and for million of the the additional same XX% Tax increased due and of year. compared lower $X.X period $X.XX $X.X today grew deduction in the were second options Thanks, XXXX. issued a or XX% the from to Sales million of during increased than The finally, results in were $XX.X net $X.X adjusted XX% XX% as and $X.X related million. related the of grew Don. expense and six year-over-year grew an XX% $X.X net XX% headcount million. year-over-year Device Please to were to percentage million related spend. $XX.X is summary our $X.X million in $XX.X XXXX. a from quarter quarter, press our increase $XX.X second year-over-year. refer orders financial EBITDA in In compared solutions quarter stated margin increase in million, for launch QX for expenses XX% line earlier for previously marketing a XX% months stock quarter, grew revenue to revenue second division Gross million XX% to income million to new XX% quarter was expenses year-over-year, monitoring to Device release normal quarter and second million per of the in $XX.X to XXXX. second quarter. diluted in to ago. $XX is to our investments the revenue million in $X.X an with produced monitoring second million increased which exercised the compared increase in in G&A last quarter share to the to to at the million estimates products. our

compared XXXX. and As Device to far year. Supplies a period D&A to revenue months over $XX.X results half in to marketing X% $XX.X Gross was XX% XXXX XX% grew from million million six to the compared year-over-year revenue grew $XX.X orders margin our in year. for of increase the increased net ago. year-over-year first compared million for the increased $X.X million last revenue were half, of $XX.X from XX% million $XX.X million. to in year million, million, $XX.X were $XX.X first year XX% million million Sales expenses to $XX an $XX.X XXXX. expenses same XX% year-to-date, and

to interest. As for the development million from our XXXX reminder, adjusted to $X.X tax other Income in of million net $X.X deductions the due as $X.X of used $XX.X mentioned We grew half share year to to $X.X EBITDA compared activities of outflows range million, positive for diluted last options. increased XX% flows normal million of debt $XX.X million And XX% than a of $X.X and the monitoring million to and to division, operations was year-to-date. accounted earlier, XX% of due between related to income related the continue changes a differences. including XX% programs. service $X.XX year. cash, additional XXX% payments cash and the to down in produced to the timing stock or we research expenses which year-over-year tax percentage Tax buyback million quarter for grew and of to per from $XX.X due in and the ended a as $X.X operating million first expense solutions year $X.X to year-to-date $X.X with lower the invest QX finally remainder in treatment payments increase in expect million, million Cash XXX% of million. at slightly expense And we and

issuing QX. turn turn it quarterly reporting as I process, our in plan Before discontinue over of And to flash I'll with that part back the practice reports and I inform Thomas, beginning back the want of to Thomas. that, investors analysts call to to pre-announcement we over

Thank you, Dan.

million, total estimate most for XXXX, that in our and current we we million range to $XXX in and an uncertainty microeconomic guidance assessment As questions. noted between estimate full are $X EBIDA previous and with $XX EBIDA of the affirming epidemic the and environment revenue adjusted of and $XXX reflect XX% over $XX And the $X million, to Adjusted come for is year XXXX dealt operator, the other of the revenue million continued estimated by factors. call of to how earlier, with COVID-XX between quarter million. With million up and year. relating between the evolving figures of million. for to recent open representing growth a third XX% million government please impact $XX the $XX These that's labor

you. [Operator And ahead. go will the Adam with come question Thank Maeder first from Please Instructions] Sandler. Piper

on over sounds in Adam. you you QX. the starting progression taking a procedure order It record environment saw Simran is on Maybe for with June. This detail for you've more of and little volumes the Thank the had the course bit like questions. that

pent think July? could sales have thus there about bit about related mind? mean, then, you just demand do little is from talk curious, up I into COVID? if be trended far that So, some you in force was And a things maybe your would how Or

And same the continue environment showing as is compared sort in alluded July new than year. more can to trending growth. we developing. all than of to its the think as entire an safely earlier, from is better how internal It's great sales that reps I definitely last force is direction we're already. are more to quarter medical see productivity July the an issue entire for productive, say as sales a and right relatively already our growth becoming we'll all that And strong we force, external. and rather this

And then could for the quarter, remind sales me in you where net you in QX? force ads finished

XXX. Right around

was there an of reps from the like prior XX sounds it So attrition about quarter.

attracting macro confidence of just kind your general, know, pressures, the of environment maybe as in about given well and about target to And general quality hiring I on some wages. just touched end. headwinds getting guys inflationary these your talk So on reps, in though, rep XXX that you by the as

can quality after in the where terms because prudent hire. XXXX, and approach. your a had having a been It's the obviously here kind did amount reps difficult lower significant that produce We can we of of as of as say didn't we those year of bar to we we and really maybe well the in that

same XX-day performance, a keep do very those hire, So really high in long-term continue we of increase steady we the bar have the at first to it a the which indication level, strong in always their is shows performance.

per rep, to stronger the and force. the attrition of building a would is sales handle are number we reps we in But to are able really or recruit have So amount fairly to versus now is change small so. significantly I say, not enough we stronger

productive is quickly year, more coming numbers. later those the Of hire a about number in up we expect and some and end. reps the certainly why the gross course, increasing with in of kick little reps towards do the from that's talking that becoming we're it'll who loosen But significant

squeeze if I on guide. just in then good one more could And

So, the mil range maintained you full XX and to guide of QX. for year was a issued XX

So hand, I in $XX midpoint. at think QX the a about QX, the million now in this hefty with pretty particularly, ramp results imply does

productivity of target? of giving during that hitting sales is like kind of of and the is Or there adding that's rep more kind a bolus through reps? come continuation necessarily this reps to and you year without So, expectation of the expecting comfort your full QX, you're ramp

an year, and the different the of are always sets the revenue become see things, insurance deductibles one towards on different less driven Thos auto the on seasonality of of by two two is increase mostly very we Throughout the that obviously of kinds end there's revenue. side then year.

always then looking right we are the even XX% And to that growth. XX% revenue fourth at or the revenues at is year. we the see over a less sometimes than and start you of year, So, level a either the at the little quarter growth same now overall the previous

when July, little because So, for But third that don't that the vacation pattern, on throughout the and the deductibles. by shows us, doctors typically and orders to revenues a insurance in are growing different of whole more fourth especially get the out majority quarter. we a but steadily. weaker, it's doctors the year Obviously, where January they hit see bit want in

revenue, ourselves on the of So, it's not pressure natural it's part suddenly ramp we it's the perfectly that, just business. we've that additional to like of side on our see we seasonality up put revenue

the did QX XXX, of it's a if of this total, percentage the of you the year, a look The almost if same. with you year, at range QX they're And year. the then the kind of the QX last percentages the we this look at year, total, and And same. percentage the as of last mirroring almost total of as the guide, midpoint exactly exactly

So, the it's of nothing that's out ordinary.

monitoring there from anything the the then real business? for And just is quick, contemplated guide in

No.

question ahead. Jeffrey go next Ladenburg The Please come will Thalmann. Cohen from with

on the number a XX.X It buyback. sounded there you had like

initiated So second that does that piece? mean that you've

Yes. Correct.

Okay.

or the of was as the quarter the X.X currently? of end So

of quarter. end the the was That

it. Got

further guess yet. I nothing Okay. get we'll

by as front bit us through then the about? So Don, I've talking the by is talk thoughts a there little envisioning to if regions question by I updates ask the you about but already and you're only think maybe down times it NiCO road Any for that. development about guess the Because to far together commercial could on you I'm the not when about platform done yourself next talk the doing about any what about talk XX, you're the distributors. as and HemeOx, for going territories

Yes.

the force. to the internal think First actually to product, to think as we the development for The nature, commercialization, designing in timeline we planned that in with devices go-to-market. commercialize about put want allow the so about and wireless the and to and connectivity some combination These the and and like too speak understand we're can they probably things both can't is With system that technology products. I of things then individuals said, the this platform that that And that. and commercialization have about a are how clinical sell device. will in a this both more much indirect data force upfront track sale our takes collect direct because sales us and hospital we're therapy it except a an is laser-based say and sales that all, we that, to be try devices on of

focus that we way the market, important your very a how hospital it's will question? and in go-to-market in that beginning. so, And will the Does primarily answer you

on back X.X look same? the how's Thanks. on half the back mentioned the for half? around ZMS that G&A Dan, Yes. fun the And for half You

little been No, because ramping. a we've more than that, it's just

we is that will So, going We year. said wind somewhere the I to we range year, more we up, spent about last in about X so to spend X X.X this were X.X for think. about year where full

Then maybe and number on about, that the both patient on That's awareness about I out Okay. years side of side, folks practices trends both there quarters being think practices, the a we number which Thomas, growing helpful. when you months that lastly, and How currently are and question for of utilization of past you the reflected guess and to and awareness is and are out of physician talk when number and added? internally about expanding and and prescribers there. think

the here. pain assume you division are I about management talking

Yes.

Okay.

force the face-to-face management is just when bucket, physicians. interaction talking than pain business do we that. to with also So, drop the between Everything say, market. the of prescribing billion has would we by a million comes model, awareness, because it to $XX are general little about sales more are $XX our sort our I in and the still driven And very a to

of the country. rep front our, in there yes have in that's this we industry that It's prescriber. are we that's yes, this here. the that, And when the name seen a I more probably been because hear occasionally, is I've next before, years in someone here but other where than past awareness in XX Colorado something obviously So,

losing a a money see tested you more neck than call other other have a up to a instead their having and approach of force ton lot approach. of We much things of different push approach seen break We things, on of can trying that. do trying also you and pretty a companies sales any other on end direct pull

something We measure on pay force. really we million these our and our going of attention not and us in revenue products. believe to annual drive productivity that's end measure I obviously to. it's above goal what sales XXX will be And So, the to

next Wiesenberger Securities. ahead. The come from will B. Marc Riley question with go Please

than in how breakdown been And quarter, trending much give rough second more could us is was a the of breakdown you the XX,XXX that versus Of recently? if wondering other of NexWave orders products? that how I'm

believe years articles orders we are of and I that received That's in when after by when part NexWave of kicks the several takes out obviously to XX% why actual we while being subsequent see the out, of orders terms significant the sent before in. or revenue XX% obviously that prescription. supplies a

up. improved call So, a but substantially. little We bit, has gone it's not diversification the

us patients how have? that you then And update last maybe And year? how prior active maybe and to if quarter could the many you trended relative do currently on

here Obviously, information treating. a on that, And that's known active when XXX,XXX to not I a metric with that's and there. people on always somebody do We basis, day-to-day know and are get treating device. in don't the not don't, tracking somewhere think treating is I we approaching we're that we're patients. be still but

we little that it's in but So, area. bit think it's a somewhere number, round of

could around kind your materials of is you the that's in-clinic the and talk advertising marketing taken about sales those to have think and for lot some take have inflationary rising kind any to experienced potentially some kind kind of maybe foods for that then around to costs? expense probably And actions of And marketing the them a I mitigate then of of or maybe what dynamics, if percentage actions to stuff. reps. those with respect you're stuff fuel And percentage that, wondering of related kinds if the the of of you some going costs,

those per to providing they're those respect service fuel, meals, a are that on in clinics rep basis. or and of With times, at capped kind the

only they So, really the I has per effectively. to us and that that so allocate so spend can't affected their much say can month have because dollars rep

haven't increased since up has months. that We significantly the last in six gas gone

would And rent both of say, say the in haven't mix we've that well. on small of But to as so, budget mentioned. that's we've of been significantly increases we I as to able and them here the that salaries down pretty more to grown price of capped factors T&E piece to or materials, as budget. related the obviously, the and well. make the haven't is is as of seen that's be And to an we But those producing efficient. continued increase and that number we as grow, piece do the versus, obviously I seen some that you Most far a kind has of a efficient again, any spoke a there, bring due would I percentage of going commissions and outsourcing

XXX reps. sales a relatively sales and with we force obviously, large And have

internal of and All that's to marketing I'd and that, So, outside. instead of Because on it in prescription inflation fairly individualized literally how is it, done for large internally, our we scale that supply all very material switch to and here customize efficiencies materials, of kinkos having by proof can is them, able That quickly instance, pads we physician, cetera. customized it doing we gears a all of call reps for and in names and very flexibility et individual that's here. for your prescriptions, also we version a you have that to say. lot own, the send have generated printed a sales

me switch from ZMS. and just then to are two these to more And going

within that a commercial strategy be half a the launch second up you really potentially you after clearance. this kind talk you finalized heard think that medium it many year reps reps? which Does term completely ZMS that I of remind and have goal what's go sales in you're now the building of you for kind about sales the is segment, can a sales mean rep alone different market. And CM-XXXX the if us and going there for for gearing obviously the how up after I will you of base

So, sales scheduled is, FDA. respond to the current commercialization we're team to the

Let scheduled up me to or return respond device. the just and building say, consider the to we're back commercialization FDA. sell And will the we to team

We in year. are a beginning next that the that's a plan bring also number over be indirect direct help reps fairly to manage limited a of have small channel. will of few place because number And a in that ramping on quarters we will an

discussions just would capabilities maybe solutions about talk provide would of one I've of there? me, of kind wondering, helpful? that I you if any much. that very more connected just think envisioning for the could a And software terms kind final about a kind you revenue platform what in then heard division. details And Thank you're for creating recurring recently, additional be the monitoring and and of I'm

things typically collects it'd devices of some that is behind a that, wireless, downloads, solutions around on-prem et updates so connected the everything then cloud the in type there's near cetera. business devices, to is Bluetooth whether data, communication, like the that industry that. today. device field, in or data, look There's a hospital provides medical Yes, model Most be and at via

SaaS with it. We envision vision behind our wherever can a do can updates, reporting, in some all are do And a the can world. data, platform to building they connected it devices download are platform communicate to model it that it's to of have business collect

there software. are the revenues and way that from from the from disposables the So capital

The next question with Chen will Please ahead. come H.C. go from Yi Wainwright.

you Thank general your taking U.S. economy could Could first going comments question a whether impact negatively recession questions. some My my business you regarding in the forward? give us for is.

other things. service lot by these and insurance It's a are a medical of of paid types and

know know what so don't we things. that this. of we we a I and far going what there fairly direct is you types income, to So people's or minimal. with feel impact be expect seen But, those Obviously to never co-pays discretionary with have see is on

given you your the Got sufficient to team get product? hiring it. blood And number, to quickly launch for for sales you target the environment how new the achieve the to clearance the reps, current get for the reps could once monitor

capital XX sell equipment, days equipment bring will on. to take system XX that level-type Reps probably to

whether We a want to as mentioned bring we number within limited have because and geography that on, outlined strategic plan those that geographies of a will the what and types or it's of the marketplace. And they after, is those. and have a of academic hospitals, the a in be the also other to we approach on types to ramp there territories institutions, I based need success go

kind on will our launch. that see be based number we a so, quarters think over of of that, how I And spread

how timeframe remind additional Thank $XX you $XX million? similar to complete a period And you initial take to long the did you. million can expect lastly, share it us And buyback? a complete do program of the

expect in one slower. a this we would go quite bit We XX to original about The to XX days. one did

change. now, So, pace. a at slower it there right much it's may out But and executing it's

concludes the question-and-answer go I would Please This over our conference like Mr. any session. remarks. for turn ahead. closing to back Thomas to Sandgaard

going and Thank in productivity you. joining in Bye. health interest call your Zynex. maintaining in and Thank today. forward high our the sales look to financial from and thanks evening We forward rep quarters. anticipate you this your Enjoy for upcoming us for growth

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

disconnect. You may now