Zynex (ZYXI) 13 Mar 232022 Q4 Earnings call transcript

Good morning, ladies and gentlemen and welcome to the Zynex Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Louisa Smith from the Gilmartin Group. Please go ahead.

Thank you, Drew and good morning everyone. financial XX, the XXXX. released year quarter Zynex December ending today, results fourth for and Earlier A available website. on of the copy the company’s press release is

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

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

that, the to call will turn With Thomas. over now I

good Louisa full call. morning year earnings Thank joining us you and today quarter for XXXX you, Thank and for the fourth everyone.

started, this I touch Before we timing of to get the earnings on wanted call.

noticed, many We little later week full normally last we than announce you As of year have February. of usual. announcing are earnings a during the

also the to it close in results are work only extra for the and January. early. no – year reported audit get hours so today. that a [ph], week ended new I point thank to announce want usual, while still our year, we give out weeks, here needing We that should preliminary we to this is as also our of Markham X we announce change the And have we firm we since However, not there earnings but in the a long up involved to Zynex completed. to able hard first March. at end I staff financial a back can to week decided

pleased seventh our share the Zynex. million, We posted and another revenue adjusted in the are of a was straight four and and year earnings $XX.X we for revenue record We Total with were Diluted revenue to same XXXX quarter $X.XX quarter QX order per for million ended So and report of quarters increase growth. new straight of highs in orders both profitability. have XX% XXXX. EBITDA $XX.X the period record results quarter. for was delivered over for

line in of number productivity We third a beating line XXXX. through We significant monitoring the had we proud quarters maintaining prescriptions company’s of in support of quarter, business in a preceding second the in sales seen the our top growth fourth increased have history rep received we previously the division. bottom the are while hit development milestone also to healthy highest and

We active force are more up, our not demonstrating prescribers robust gaining sales gaining that of products. is indication growth in and and has momentum a let productivity more our key that

force allowed sales a XX% over Revenue and of and QX for our XXXX quarter. in our the growth productivity order and profitability XX% strong third of remained growth order

now come and that this we growth can quarter into order our first of XX% we over point, XX%. will As well the are see above in

performance per and moment. between estimates and bottom XXXX with our earnings the full accelerating line on $XXX and and We hitting for remain at the revenue between guidance So, growth top and is order $X.XX. share strong million $X.XX both confident $XXX anticipate clearly of our million year

performance and have management’s spent We that and come. growth the both back in in Earlier this shareholder $XX value potential in division and stock over the monitoring confidence million remain past these to the so the team buybacks finished pain to year. far years and year, and our of buyback deliver management we buying committed stock strongly we of million the $XX our underscore third feel

or blood device Monitoring this detection our to And ZMS has fluid Zynex is detection we will the commercialization. and the the and enrollment for blood year, bring clearance Solutions of oximeter sepsis and the of early laser-based monitor pulse an FDA’s team our we trial market. device, in first working pending to announce incredibly Earlier clinical announced loss strong CM-XXXX. the

note, plan ZMS despite our guidance and division on making, you cleared that CM-XXXX generation the the the rates FDA. coming first recall, revenue meaningful may already growth any for we is division. from do our the As not by revenue is progress Please XXXX,

Our still pulse year Labs following oximetry is prototyping just with of ago. But Kestrel the second strides of important team acquisition the is our the a stage laser-based in product. making development of generation the over

mention the also I’d of like received. to acknowledgment Zynex has some recent

many been Over strong by rapid several Deloitte recognized the our last including we organizations, growth and months, have Forbes for performance. and

in list the Best Small taking in industry. America’s #XX Companies, of one including us the and number healthcare honor equipment the Forbes ranked of as services us

commitment to dedication We and growing are our extraordinarily we highlight both believe and proud of the patients these our shareholders. business to and have and they accolades the providing value

consistent Zynex continues guidance expectations. with model efficient is meet delivering results that an to business our

power excited will in diverse are innovation plans well Between am opportunities. as in come. key sales into the our of and We as quarters to I team occurring the is our pain the market to progress commercial division expand considerable see that growth monitoring making business management, realization executed on in strong game-changing compelling that our the initiatives organization

Chief a management pain Operating that, I the business detailed call will over on update With turn for division. Lucsok, the now more Anna to Officer, our

Thank you.

from pain is order described, revenue both management perspective volumes. a consistently growing and Thomas As with

scratching opportunity penetration. all We to as growth to achieve potential have optimum XXX expand number a filling of territories just the surface market into significant the sales remain are and We to territories. committed additional

on previously, growth these However, dependence line as able the noted bottom territories. healthy are additional without we we have and maintain still to rates profitability

rep with $XXX,XXX. and sales XXXX ended year revenue reps per approximately annual approximately We XXX was full our

And increase and XXXX year. steady Productivity last a of quality the applicants XXXX rep in seen and high. all-time at revenue months. per grew have of the over prior in XX% quarter XX% the hires performance an new over fourth We over remains grew several

critical improvement and to performance. a recent is Efficiency metric operational

optimize So mechanisms we to are closely it. monitoring

to identify targeted regional early layer productivity lead layer reps. of We oversight sales sales their sales performance within sales continues responsible average sales and of on. lead expand force to management, Each an our new drive the regional continue underperformers consistent of hires and this X training for and performance Through new monitoring increased hires currently oversees reps.

the employee described, wages and challenges with rep inflationary maintain retaining Corporate some seeing a still relates efficiency macro compensation recruiting are committed pressures. particularly We in lingering as environment, are increased to a I But as just sales we team. sales and to has high-quality and the have order to it corporate result.

payer largest emphasize from to volume comes with of types. patients by work insurances all we And that all Medicare. all companies And orders continue orders. Zynex insurance and and with currently, workers’ cases. followed want coverage in commercial process all Tricare we takes to work compensation, our We Again, to their

other we requirements. And integrity provide the patients. Centers itself quality Services our regulatory policies, regular processes standards Accreditation through as well We all are audits for for care meet accredited Healthcare. Zynex and to and the and delivery prides value in to official our we as through and commitment confirm of go Medicare Commission Medicaid to

Don Solutions, President to to ask division. updates now speak will to the of I Vice related Gregg, Zynex that business Monitoring

billion oximetry. believe you, of sepsis Thank and products we towards and product We monitoring development laser-based products and a $X strategic several milestones includes that hemodynamic next Anna. pulse several market ZMS these addressable monitoring, over has portfolio the for working pipeline quarters. regulatory approximately are that is the

for offices, the larger lab and facility expansion into needed Additionally, recently our production ZMS we announced a of space.

increased I the has the considerably and XX% terms Our XX last by year has developments. and in what bring the months of am future headcount progress will XXXX. commercialization excited advanced throughout coming towards over division about

The pulse blood similar two built fluid CO-Oximeter product on the within oximeters division NiCO technology, are lines a HemeOx monitoring and monitor. CM-XXXX and the the

Both these is the audience and or As a is co-oximeter systems to also oximeter oximeter. the benefits non-invasive on an as technical NiCO what’s technology known devices. of XXX(k) is laser-based used hospital pulse as year. for products, be FDA a laser in track and hemoglobin the legacy will to our HemeOx submission this alternative that to the reminder utilize clinical products about a

demonstrated The as diverse to the LED been technology software development. found patient are populations are other prototype has Society We this not throughout clinical October of several the led NiCO year key pigmentary laser to new on clinical in XXXX at is the readings opposed planning excellent accurate we a with engineering to feedback on the systems for tone. year produce and skin across there Anesthesiologists bias bringing be based research American as manager, among and more by personnel studies

or we monitor. wireless a hospital This previously on any additional cleared before our other Alternatively, FDA CM-XXXX, We’ve requirements product already cleared in which will – the hemodynamic awaiting to but and is blood The previously a CM-XXXX CM-XXXX, testing and within device. the is CM-XXXX is data submitted ZMS to next-generation non-invasive guidance by to the used the is monitor the of setting. further the capability. commercialize begin added with be fluid the also FDA device are wireless the

throughout to the blood as loss of States. United completed series We participants detection it with have a studies XXX and approximately relates ongoing

we We’ve relative announced part index. with the collaboration CM-XXXX’s detection Vitalant, trial blood recently the take partnered blood IRB-approved and Additionally, specificity the them provider. loss a with nation’s non-profit largest our measuring research patented sensitivity to services independent of in clinical

the market I’m from we this the through throughout monitoring and are clinical or division we’ve testament XXXX, confidence have eagerly We the opportunity by disruptive progress this product. anticipating opportunity results new made to more planning technology. am of a thrilled relevance publish to on in unique the the to five capitalize trials in our the

year look to now turn this Officer, will fourth more Moorhead, a over call in-depth for Financial at full quarter Chief Dan performance financial and for the XXXX. I

quarter release of today of the XXXX. for refer a Please Thanks, financial press full to issued year Don. our earlier for results summary our fourth and

million compared increased I’ll $XX.X Orders fourth $XX last the in and year-over-year, First, to quarter. fourth grew $XX.X $XX.X from quarter in revenue million. million quarter. fourth million XXXX. margins of million net the XX% year-over-year revenue XX% revenue million Gross $XX.X XX% were to grew Supplies $XX.X from the XX% XX% year. increased in to to Device review

in quarter XXXX $X.X compared marketing $XX.X $XX.X in and the expenses were in to fourth $XX.X of period were Solutions related or reminder The and headcount back-office the Approximately G&A in remainder to compared Monitoring in last Sales division million million the the XX% primarily year. of investments new million fourth quarter expenses same headcount XXXX. G&A to to is related products. order in is our increase for the and growth. our related launch million

expense EBITDA of million diluted $XX.X the a quarter. percent fourth for was as was XXXX. Net Tax share was $X.XX million. in Adjusted income per XX% produced quarter $X.X and the

orders grew million For $XXX.X $XX.X to the to $XXX.X XX%, increased and million million $XX.X full in million. increased to year. revenue grew net $XXX.X compared year, revenue XXXX. XX% Device last $XX.X from Supplies year-over-year XX% revenue million XX% million from to

of XXXX was compared $XX million increased Adjusted million $X.XX $X.XX the produced and is was the full margin division. XX% $XX.X year related same million per compared XX% of share the was Sales in grew $XX.X investments half income grew marketing EBITDA to expense Solutions $XX.X XXXX. the XX% expenses diluted in to in X% Monitoring full almost to income X.X diluted year-over-year that Gross to year. or to increase per $XX.X XX% G&A for expense and net XXXX. XX% year-over-year million. Net share for to Tax in last and million. year.

pay And XXXX, third ended in from stock finally, XX% cash. and debt year million which million by a to related allowed dividend to we million. the down increased $XX initiate our pay Kestrel acquisition buyback, $XX.X cash during $X Cash us the with operations our

it With back to Thomas. that, I’ll over turn

Thank you, Dan.

per $X.XX the be to XXXX As to share representing $XXX of of earnings $XXX share. and for a growth our in total approximately million million, to over approximately revenue we range XXXX XX% expect outlook, $X.XX diluted

$X we quarter revenue in of of with million total XXXX, $X.XX. of range adjusted to million expect be For share the earnings $XX to the $XX first to per

please operator, call the for questions. that, up With open

Thalmann. [Operator ahead. Instructions] with go comes Ladenburg The Cohen from first question Jeffrey Please

is How Hey, good morning. doing? everyone

Jeff. morning, Good

a the just with to auditor? the or what on there timing a so issue So just issue Was main it the and recap, of items? one main issue was was timing number

traded year no companies new, X longer job I would announced little year. really with to and publicly when worked working [indiscernible] We Markham a was the the are expected say very, great matter to simply have to of had early call. to it. to any is close full and there No, it earnings underestimated a we the bit. for we is We it’s the very extend They That’s a have done take years. the Markham going how that with past long has throughout all

Okay. when that hit? And Thomas, should to what K, we the about expect

Should not in today, or hit day if X. next the

through that XXX sales heard aspirationally, the to was Okay, a XXXX? does good of up got unfold outlook it. now I to QX, throughout you’re but your that look from estimation And reps how portion

in I of kind the think we’ve reps mid-XXXs. talked about sales

XXX year net. adding the So during approximately

Okay. Got it.

that them the Some that some to of to spend commercial, commercial QX year. other not of divisions be you’re this the related expect you showing are yet

a sounds guess NiCO, file this year. to like it I I’m see XXXX we and So spend. in should predominantly, will referring the the XXX(k) which some pull-through

is spend to There be going both. on

you’re see we a think – give of going lot range. a why to that’s I

Some to we of And submitted well. some the the ox get could FDA, may have additional things see launch as additional expenses the side to as closer there expenses. as we pulse some gets

spend little is what I of range of to get submission how we quickly a and commercialization. we a just bit and So there think there

you as And Okay. past so? Got far related what’s divisions, – other do coming quarter FDA the have then of lastly, had expected these quarter it. or And have to so? some the or you over over any inspections as

last certainly it had So all we quarter. Zynex was passed over and Monitoring ZMI or this We’ve of inspection, part from FDA Don a But issues. Monitoring the previous the Zynex Zynex Medical not any is inspection, from division. which a without

prior to our or launch? Okay. further divisions And on to you inspections would of newer expect commercial related some the

And the but No, say it’s scenario I are there on the – of so, less inspections on than not a a FDA. approvals, regular side. years. basis, with Inspections to of as company happening intervals different see a those be based wouldn’t I have – whole on said, what’s X those the shouldn’t tend we in on any – product the through product

So, that’s independent.

type It it. in as Got about talk a you trajectory Any XX%, XX% full Dan, adjusted averaged about thoughts And year On Okay. cadence ‘XX. then similar of are had like expecting an you for looks you EBITDA could growth adjustment ‘XX? basis, do ‘XX? the around you that in you see are are year. but over full – fourth where you it there the quarter, like coming for you for on teens, XX% looks high and

year think saw in Yes. this adjusted No, we in from and think, away EBITDA at you I bit. towards what were should look little we similar when ‘XX year, you pushing the more a see growth generally, I guiding EPS ‘XX. But to

it. Got

Okay. Thanks for and the for call readout. thanks

you. Yes. Thank

Sandler. comes with question Piper go Simran next The from Kaur Please ahead.

key million This morning. of the $XXX you to can congrats And what of the franchise low Good the for guidance on on at and specifically, pain the Thank on you Hey. end end full is and questions assumptions Adam. assumed ZMS? the million, $XXX print. range? core Simran just the for walk for off the starting Maybe high is us year versus through taking

Maybe take we accounting Yes. though in bit in of basically We this that. might for I our one. – year, a be not there guidance, of that will any revenue even are ZMS little

the seeing next revenue obviously, growth increased years. is order management to now result several going in And all that’s the the pain So, division. we are over

year, mentioned sales And couple some by up the assume as here quarters. around end the the of reps. of earlier that to obviously is that XXX can going get hit of that in the we And to assumptions Dan next

not in be is itself increase initially. productive that So, sales in reps an will there

end are the that’s in the But $XXX increasing more million would range reps expect are range. end continue if the be anything. fixed of the than we more and $XXX revenue versus existing of probably million experiencing part the of reps range to high into they of what would sales existing in as our productivity the going to So, right our the And productive, expenses. low be growth to turn that now. we in determine to more high And become

the it how very that from based payments on to by length is a do which stable really scenario and is amounts companies. and don’t we health obviously cash, treatment have preset We any And And collect insurance of when comes preset companies. we preset that determined is quantities insurance changes. foresee

terms force for little if insurances have market in a of anything also in employees the on So, could sales productivity a terms our of the better up. hires moving as corporate I headquarters bit revenue Colorado. somewhat you from as here don’t our for in are us But to of and labor add, Anna? new mix still we dependent well help know

productivity of the sales To reps?

Yes.

in seen that increase first productivity obviously, them XXXX. two of mix, throughout an more forward. we end insurance and reps, the have our on seeing mix then We sales the And XXXX payer of driving focus are and months of especially

No, of for follow-up and trying here, really, circle layer the of when perfect. I we should wanted to impact was ZMS back in year. Great. think kind build. And P&L that of assumed you through spend hone is how on the what the to OpEx specifically on I my guess am the I about the just cadence

kind about of Last year, $X ZMS, million in do we what about ZMS have and we with talked ‘XX. increased

We spent another $X a in we increase I similar about $X.X so think about million. see million. XXXX,

some of the versus is of it exit just at. rate that Some hires, started new year is and we what

over see course into the we of at year, G&A This G&A layered that ended will of you year. So, the revenue. XX%

just pretty were year, in hit at XXXX. the generally that and that stays the on us with continues side, XX%. about in Same think I constant we think sales this good, ZMS inflation I pretty investments to

next similar many and then we to the hire Obviously, fairly But on expect we add inflation end the top going of and number where depends it fairly stay think I year. constant. those to it’s think are of people people how revenue line. up percents year, I we with this

was that No, quick Perfect. on capital Okay. one a Dan. maybe And great, deployment.

So, million last completed you year. guys $XX about stock buybacks in

should capital stock think how allocation this buyback? and we year So, about specifically

on I still table. think the it’s

do to continue still will We that.

We from cash operations. generating are still

and do that we consider. cash will the have that’s excess So, we something business, still in still so

of we and for We shareholder are always pretty at good value to provides look all provides value. what going shareholders, us, for believe that and our

Perfect. Okay.

for guys. I think you, that’s Thank me. it

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

taking for you Thank my questions.

does the need inspect before to clarify, clearance? Just to the FDA the CM-XXXX guaranteeing facility manufacturing of XXX(k)

specifically. Not

As facilities before, our come I on mentioned cGMP, and audit of it’s a routinely as when – to just matter part of inspect and they taking etcetera.

come or paragraph inspect will randomly for that. they there comments that have out, can to parts the to a more check will always check will last on at at then time. They They So, there we of products on and for as the company They something to CM-XXXX, thing to quality do is the things. They come And more them various to a all look just will could various as was it’s look – areas the don’t missing at. first those look that. out. things areas. And like It some they instance, manual suggesting in adding keep the we will improve. thing be be

to takes here a than for specifically has recent a less we complete the days. again, when business, our for lot with increase. likely have are to only get specific taken few most clearance out the grow it as they a them we time audit But tied it’s an And not continue them, device. in will and planned, it So, time they to audits

that of could communication Okay. second FDA indicate of And half the first half recent clearance this occur or year this year? has in with

is Don. This Yes.

continuous We have have a with information the contact times. been basis. in at requested on FDA They various

ask just of in that continues communication. be year, for. information that that early first we It type to might but expecting may We the depends it have still of in this second half are the I FDA am the of half. on the this

it. Got

far in of the also labor maintain status Lastly, the up will market, given first you you likely you new orders are think and of growth momentum speed do or the to Thank the hiring? quarter seen reps, current of likely you. pace have you so the hiring

we in critical the – be are hire. we and more continue of say the would terms I we talent to more of quality

it market. We a have our is efforts increased because difficult

to critical. of have the more productivity we is if per and That we increased here to increased funnel, hire. we increased past it want that significant who more put but also you months sales that the we critical is rep how seen many in a how part terms So, of be way, continue in have we are

the in I we – pace. at something net-net So, will market, unless to think changes same will continue the we labor about hire

So, XX the net the approximately that tight, very It’s that hopeful throughout but... better still course, labor of a look – are every adding of going year. hoping we forward. we And month reps still to up are market will

you. Okay. Thank

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

Well, you today. joining for us thank

by We milestones. regulatory year we yet of we the record about have upcoming excited encouraged coming operational Zynex. out several for are another are and submissions And momentum

year your Zynex. and a appreciate day. We great expect be company, XXXX interest Have another to the in for transformational I

Thank concluded. now today’s for attending presentation. has conference The you

now may disconnect. You