Zynex(ZYXI) - 2025 Q2 - Quarterly Results

Company Overview & Management Commentary This section introduces Zynex, Inc., its medical technology focus, and key management strategic highlights for Q2 2025 Company Introduction Zynex, Inc. is an innovative medical technology company specializing in non-invasive medical devices for pain management, rehabilitation, and patient monitoring - Zynex, Inc. is a medical technology company focused on non-invasive medical devices for pain management, rehabilitation, and patient monitoring[1] Management Strategic Highlights In Q2 2025, Zynex appointed Steven Dyson as the new CEO and submitted its NiCO laser pulse oximeter to the FDA, implementing efficiency improvements for annualized savings - Steven Dyson appointed as the new CEO, bringing over 25 years of experience in the medical technology sector[2] - Submitted the NiCO laser pulse oximeter to the FDA, marking a significant milestone in patient monitoring products[2] - Implemented efficiency improvements and sales force refocus, projected to result in annualized savings of approximately $40 million, with most effects in Q3 and Q4 2025[2] Second Quarter 2025 Financial Results This section provides a comprehensive analysis of Zynex's Q2 2025 financial performance, including revenue, profit, balance sheet, and cash flow Overview of Q2 2025 Performance Zynex reported a significant decline in net revenue and a net loss for Q2 2025, primarily due to the Tricare payment suspension, billing changes, and sales force restructuring Key Financial Metrics | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (YoY) | | :----- | :-------------------- | :-------------------- | :----------- | | Net Revenue | $22.3 | $49.9 | -55.3% | | Gross Profit | $15.2 | $39.9 | -61.9% | | Gross Profit Margin | 68% | 80% | -12 ppts | | Net Income (Loss) | ($20.0) | $1.2 | N/A (loss from profit) | | Basic & Diluted EPS | ($0.66) | $0.04 | N/A (loss from profit) | | Adjusted EBITDA | ($8.9) | $3.5 | N/A (loss from profit) | - Net revenue was negatively affected by the Tricare payment suspension, continued changes to shipment and billing procedures, and the impact of sales force restructuring[3] Detailed Income Statement Analysis Net revenue for Q2 2025 was $22.3 million, a 55.3% decrease, resulting in a net loss of ($20.0) million, including a $10.3 million non-cash deferred tax asset adjustment Income Statement Highlights | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (YoY) | | :----- | :-------------------- | :-------------------- | :----------- | | Total Net Revenue | $22.3 million | $49.9 million | -55.3% | | Costs of Revenue | $7.1 million | $10.0 million | -29.2% | | Sales and Marketing | $12.8 million | $23.2 million | -45.0% | | General and Administrative | $12.7 million | $14.5 million | -12.1% | | Income (loss) from operations | ($10.3) million | $2.2 million | N/A | | Net Income (loss) | ($20.0) million | $1.2 million | N/A | - Net loss for Q2 2025 included a non-cash adjustment of $10.3 million ($0.34 per share) related to placing an allowance on deferred tax assets[6] Balance Sheet Summary Total assets decreased to $85.9 million from $122.1 million, primarily due to reduced cash and accounts receivable, while total current liabilities significantly increased to $73.9 million Balance Sheet Highlights | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----- | :-------------------------- | :------------------------------ | | Cash and cash equivalents | $17.5 million | $39.6 million | | Accounts receivable, net | $10.3 million | $18.0 million | | Total current assets | $45.6 million | $75.2 million | | Total assets | $85.9 million | $122.1 million | | Current portion of convertible senior notes, less issuance costs | $59.1 million | $— | | Total current liabilities | $73.9 million | $16.9 million | | Total liabilities | $84.7 million | $86.4 million | | Total stockholders' equity | $1.3 million | $35.7 million | - Deferred income taxes decreased from $4,799 thousand at December 31, 2024, to $0 at June 30, 2025[17] Cash Flow Summary Cash flow from operations for the six months ended June 30, 2025, was a loss of ($16.7) million, with a sequential quarterly reduction in deficit due to expense reductions Cash Flow Highlights | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :----- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by (used in) operating activities | ($16.7) million | $3.2 million | | Net cash (used in) investing activities | ($0.2) million | ($0.3) million | | Net cash (used in) financing activities | ($5.2) million | ($16.6) million | | Net decrease in cash | ($22.1) million | ($13.7) million | | Cash and cash equivalents at end of period | $17.5 million | $30.9 million | - The sequential quarterly reduction in the deficit of cash from operations was attributed to the impact of expense reductions[8] Financial Guidance This section details the temporary suspension of Zynex's financial guidance due to recent executive transitions Suspension of Guidance Zynex has temporarily suspended its revenue and profitability guidance due to recent executive transitions, with an update expected in future quarters - Revenue and profitability guidance temporarily suspended due to CEO and CFO transitions[9] - New CEO, Steven Dyson, will lead a review of forecasting procedures and provide an update on guidance resumption in coming quarters[9] Non-GAAP Financial Measures Explanation This section defines Adjusted EBITDA as a non-GAAP measure, explaining its components and purpose for financial transparency Adjusted EBITDA Definition and Use Zynex provides Adjusted EBITDA as a non-GAAP financial measure to offer greater transparency into the company's financial health and performance - Adjusted EBITDA is presented as a non-GAAP measure to provide greater transparency into the company's financial health and performance[11] - Adjusted EBITDA definition includes adjustments for interest, taxes, depreciation, amortization, stock compensation, restructuring, receivables adjustment, and non-cash lease charges[11] Safe Harbor Statement This section outlines forward-looking statements, emphasizing inherent risks and uncertainties that could impact actual results Forward-Looking Statements and Risks This section outlines forward-looking statements, emphasizing that they are predictions subject to inherent risks, uncertainties, and assumptions - The press release contains forward-looking statements that are predictions subject to risks, uncertainties, and assumptions, and actual results may differ materially[12][13] - Key risk factors include the need to obtain CE marking of new products, acceptance of products by doctors and hospitals, competition, dependence on health insurance reimbursement (including the outcome of the Tricare payment suspension), and economic factors[13] About Zynex, Inc. This section provides a brief description of Zynex, Inc., its founding, and its core business in medical device development Company Description Zynex, founded in 1996, develops, manufactures, markets, and sells medical devices for pain management, rehabilitation, and non-invasive monitoring systems for hospitals - Zynex develops, manufactures, markets, and sells medical devices for pain management, rehabilitation, and non-invasive monitoring systems for hospitals[15] Condensed Consolidated Financial Statements This section presents Zynex's condensed consolidated financial statements, including balance sheets, income statements, and cash flows Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets from $122.1 million to $85.9 million, primarily due to reduced cash and accounts receivable, with current liabilities increasing significantly Condensed Consolidated Balance Sheets | ASSETS | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----- | :-------------------------- | :------------------------------ | | Cash and cash equivalents | $17.5 million | $39.6 million | | Accounts receivable, net | $10.3 million | $18.0 million | | Inventory, net | $12.2 million | $13.9 million | | Total current assets | $45.6 million | $75.2 million | | Deferred income taxes | $— | $4.8 million | | Total assets | $85.9 million | $122.1 million | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current portion of convertible senior notes, less issuance costs | $59.1 million | $— | | Total current liabilities | $73.9 million | $16.9 million | | Total liabilities | $84.7 million | $86.4 million | | Total stockholders' equity | $1.3 million | $35.7 million | Condensed Consolidated Statements of Income (Loss) For the three months ended June 30, 2025, Zynex reported total net revenue of $22.3 million, resulting in an operating loss of ($10.3) million and a net loss of ($20.0) million Condensed Consolidated Statements of Income (Loss) | Metric | For the Three Months Ended June 30, 2025 (in millions) | For the Three Months Ended June 30, 2024 (in millions) | For the Six Months Ended June 30, 2025 (in millions) | For the Six Months Ended June 30, 2024 (in millions) | | :----- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Total net revenue | $22.3 million | $49.9 million | $48.9 million | $96.4 million | | Costs of revenue - devices and supplies | $7.1 million | $10.0 million | $15.4 million | $19.3 million | | Sales and marketing | $12.8 million | $23.2 million | $29.8 million | $46.6 million | | General and administrative | $12.7 million | $14.5 million | $27.1 million | $27.8 million | | Income (loss) from operations | ($10.3) million | $2.2 million | ($23.4) million | $2.8 million | | Income tax expense | $8.9 million | $0.4 million | $5.5 million | $0.4 million | | Net income (loss) | ($20.0) million | $1.2 million | ($30.4) million | $1.2 million | | Basic Net income (loss) per share | ($0.66) | $0.04 | ($0.98) | $0.04 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities was ($16.7) million, with a total cash decrease of $22.1 million during the period Condensed Consolidated Statements of Cash Flows | Metric | For the Six Months Ended June 30, 2025 (in millions) | For the Six Months Ended June 30, 2024 (in millions) | | :----- | :--------------------------------------------------- | :--------------------------------------------------- | | Net income (loss) | ($30.4) million | $1.2 million | | Net cash provided by (used in) operating activities | ($16.7) million | $3.2 million | | Net cash (used in) investing activities | ($0.2) million | ($0.3) million | | Net cash (used in) financing activities | ($5.2) million | ($16.6) million | | Net decrease in cash | ($22.1) million | ($13.7) million | | Cash and cash equivalents at end of period | $17.5 million | $30.9 million | Reconciliation of GAAP to Non-GAAP Measures Adjusted EBITDA for Q2 2025 was a loss of ($8.9) million, or (40)% of net revenue, a substantial decline from $3.5 million in Q2 2024 Adjusted EBITDA Reconciliation | Metric | For the Three Months Ended June 30, 2025 (in millions) | For the Three Months Ended June 30, 2024 (in millions) | For the Six Months Ended June 30, 2025 (in millions) | For the Six Months Ended June 30, 2024 (in millions) | | :----- | :------------------------------------------------------- | :------------------------------------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Net income (loss) | ($20.0) million | $1.2 million | ($30.4) million | $1.2 million | | Depreciation and Amortization | $0.5 million | $0.5 million | $1.0 million | $0.9 million | | Stock-based compensation expense | $0.6 million | $0.8 million | $1.1 million | $1.6 million | | Interest expense and other, net | $0.8 million | $0.6 million | $1.5 million | $1.1 million | | Restructuring charges | $0.3 million | $— | $0.6 million | $— | | Income tax (benefit) expense | $8.9 million | $0.4 million | $5.5 million | $0.4 million | | Adjusted EBITDA | ($8.9) million | $3.5 million | ($20.7) million | $5.2 million | | % of Net Revenue | (40)% | 7% | (42)% | 3% | - Restructuring charges of $327 thousand in Q2 2025 and $554 thousand year-to-date 2025 were fully expensed severance of former corporate employees[21][22]