Zynex(US:ZYXI)2025-03-11 20:45Financial Performance - Net revenue increased by $8.0 million or 4% to $192.4 million for the year ended December 31, 2024, compared to $184.3 million in 2023[218] - The company recorded a net income of $3.0 million for 2024, down from $9.7 million in 2023, marking a decrease of 69%[218] - Operating cash flows were reported at $12.7 million, a decrease of 28% or $5.0 million from the previous year[219] - Net cash provided by operating activities decreased to $12.7 million in 2024 from $17.8 million in 2023, primarily due to lower profitability and a decrease in accounts payable[242] Revenue Breakdown - Device orders grew by 16%, contributing to a 1% increase in device revenue to $59.6 million for the year ended December 31, 2024[230] - Supplies revenue increased by $7.2 million or 6% to $132.7 million for the year ended December 31, 2024, driven by a larger customer base[231] - Costs of revenue for devices and supplies increased by $1.1 million or 3% to $39.4 million, but as a percentage of revenue, it decreased to 20% from 21%[232][233] Expenses and Cost Management - General and administrative expenses increased by 24% to $60.4 million for the year ended December 31, 2024, compared to $48.5 million in 2023, representing 31% of revenue, up from 26% in 2023[235] - Sales and marketing expenses decreased slightly to $86.6 million, with a reduction in percentage of revenue from 47% to 45%[234] - The company is restructuring its staff, reducing overall headcount by approximately 10%, which is expected to save about $35 million annually[215] - Other expenses for the year ended December 31, 2024, were $2.4 million, primarily due to interest expense on Senior Convertible Notes, while other income in 2023 was $1.8 million[236] Cash Flow and Financing Activities - Net cash used in financing activities for the year ended December 31, 2024, was $17.1 million, mainly due to $15.6 million in treasury stock purchases[244] - The company repurchased approximately $15.6 million worth of common stock due to strong cash flow results[214] - The company issued $52.5 million in 5.00% Convertible Senior Notes in May 2023, with an additional $7.5 million from an over-allotment option[240] Tax and Working Capital - Income tax expense decreased to $0.6 million for the year ended December 31, 2024, with an effective tax rate of 17%, down from $2.8 million and 23% in 2023[237] - Working capital as of December 31, 2024, was $58.3 million, down from $69.3 million in 2023, with cash and cash equivalents at $39.6 million and accounts receivable at $18.0 million[238] Business Risks and Strategic Planning - TriCare, representing approximately 20-25% of annual revenue, temporarily suspended payments, prompting the company to seek reinstatement[214] - The company acknowledges risks and uncertainties in forward-looking statements, which could materially affect actual results[10] - Management's discussion includes expectations regarding future operations, margins, and profitability, highlighting strategic planning[10] - The company does not assume an obligation to update forward-looking statements, indicating a cautious approach to future projections[11] Asset Management and Valuation - The company allocates the purchase price of acquired companies to tangible and intangible assets based on estimated fair values, with excess recorded as goodwill[265] - Goodwill impairment assessments are conducted annually, with potential triggers including significant decreases in market price and adverse changes in business climate[266] - Contingent consideration liabilities related to business acquisitions are classified within Level 3, with fair value estimated using a Monte Carlo simulation[267] - The company emphasizes the uncertainty in management's estimates of fair value, which could lead to impairment of intangible assets if assumptions are not met[265] - Future cash flows from long-lived assets must exceed carrying values to avoid write-downs, indicating a focus on asset performance[266] - Significant adverse changes in legal or regulatory factors may trigger impairment reviews, reflecting the company's responsiveness to external conditions[266] - The company utilizes independent third-party valuation specialists for fair value assessments, ensuring accuracy in financial reporting[265]