Q4 2023 Zynex Inc Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to the Zynex Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Good afternoon, ladies and gentlemen, and welcome to design next fourth quarter and full year 2023 earnings conference call.
At this time all participants are in a listen only mode.
Operator: 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 Quinn Callanan from Ramsey, North America. Please go ahead.
A question and answer session will follow the formal presentation.
Mind you This conference is being recorded.
I would now like to turn the conference over to Crunch on them.
North America. Please go ahead.
Quinn Callanan: Thank you, operator. Good afternoon, everyone. Earlier today, Zynex released financial results for the fourth quarter and year ending December 31st, 2023. A copy of the press release is available on the company's website. Joining me on today's call are Thomas Sandgaard, Chairman, President, and Chief Executive Officer; Dan Moorhead, Chief Financial Officer; Anna Lucsok, Chief Operating Officer; and Don Gregg, President of Zynex Monitoring Solutions.
Thank you operator, and good afternoon, everyone earlier today is that extra released financial results for the fourth quarter and year ended December 31 2023.
A copy of the press release is available on the company's website. Joining me on today's call are Thomas Vanguard, Chairman, President and Chief Executive Officer.
Dan Moorhead Chief Financial Officer.
Lusaka, Chief operating officer, and Don Craig President XI and X monitoring solutions before we begin I'd like to remind you that during this conference call. The company will make projections and forward looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC regarding <unk>.
Quinn Callanan: Before we begin, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC, including, without limitation, the company's 2020-B Form 10-K and subsequent Form 10-Qs, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors may include, without limitation, statements regarding product development, product potential, the regulatory environment, sales and marketing strategies, capital resources, or operating performance. With that said, I'll now turn the call over to Thomas. Thanks, Quinn. And good afternoon, everyone.
Including without limitation.
He is 2020.
Form 10-K, and subsequent form 10, Qs, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements.
This may include without limitation statements regarding product development product potential regulatory environment sales and marketing strategies capital resources or operating performance.
I'll now turn the call over to Thomas.
Thanks, Glenn and good afternoon, everyone. Thank you for joining us today for the fourth quarter and full year 2023 earnings call.
Thomas Sandgaard: Thank you for joining us today for the fourth quarter and full year 2023 earnings call. 2023 was highlighted by ongoing revenue momentum, leading to a record revenue for the year of $184 million, up 17% from the prior year. The fourth quarter marked our 11th consecutive quarter of profitability and 7th straight quarter of record high order numbers. Once again, we received the highest number of prescriptions in company history, exceeding our previous record.
2023 was highlighted by ongoing revenue momentum leading to our record revenue.
But for the year of 184 million.
17% from the prior year.
The fourth quarter marked our 11th consecutive quarter of profitability and seventh straight quarter of record high order numbers.
Once again, we received the highest number of prescriptions in company history exceeding our previous record.
Thomas Sandgaard: I'm proud to announce that we also produced 17.8 million in positive cash from operations in 2023, another all-time high for the company. With that, we are able to continue to invest in further sales growth, also in our monitoring division, and aggressively buy back stock on the open market. During the first quarter, we made an allowance of $6.2 million on accounts receivables, which decreased our net revenue and profitability. We continue to analyze our receivables and collections from payers. This adjustment is an anomaly and a non-recurring adjustment. Net of this adjustment, revenue was close to a negative revenue.
I'm proud to announce that.
Produce.
$17 8 million in positive cash from operations in 2023 and.
Another all time record for the company.
With that we are able to continue to invest in further sales growth also monitoring division and aggressively be buying back stock on the open market.
During the first quarter.
<unk>, an allowance of $6 2 million on accounts receivables, which decreased our net revenue and profitability.
We continue to analyze our receivables and collections from Paris This adjustment.
Anomaly.
A nonrecurring adjustment.
Net of this adjustment with close to as negative revenue revenue increased $284 3 million, while producing 17.
Thomas Sandgaard: Revenue increased to 184.3 million while producing 17 cents of earnings per diluted share. Dan Moorhead, our CFO, will expand on this adjustment during his portion of the presentation. Significant credit goes to our team who were able to drive revenue higher and deliver significant earnings per share and key cash flow as we expanded our sales force, invest in our new business, Zynex Monitoring, and combat wage inflation like many others in the business. Our sales force has continued to expand the market each quarter, enabled by a strong team and great products. Orders increased 43% for the full year compared to the year before and increased 29% year-over-year in the fourth quarter.
Earnings per diluted share.
Dan Moorhead, our CFO will expand on this adjustments during his portion of the presentation.
[noise] significant credit goes to our team who were able to drive revenue higher and deliver significant earnings per share and free cash flow as we expand our sales force and invest in our new business signings monitoring and combat wage inflation like many others in the business.
Our sales force has continued to expand the market each quarter.
By a strong team and a great and great products.
Orders increased 43% for the full year compared to the year before and increased 29% year over year in the fourth quarter.
Thomas Sandgaard: We believe there is considerable runway for us to continue growing orders into the future, leveraging our current portfolio and growing pipeline of existing and exciting new products. To help drive this autogrowth, in the fourth quarter, we submitted a 510k application to the FDA for our new EMWAY neuromuscular electrical stimulation device, and already in February of this year, we received 510K clearance. The M-Wave is set to replace its predecessor, the E-Wave, which has been fundamental in NMES treatments across the U.S. since 1998. The E-Wave, which is a product we have been manufacturing for several decades, has helped over 17,500 patients with muscle-related issues such as drop foot, quadriup, shoulder subluxation, and hand rehabilitation. The M-Way is designed to improve the way patients manage their neuromuscular conditions. And with advanced features and a user-friendly design, the M-Way allows patients to be treated in a clinical or home setting with ease.
We believe that as consumers considerable runway for us to continue growing orders into the future leveraging our current portfolio and growing pipeline of existing and new.
An exciting new products.
Okay.
To help drive this order growth in the fourth quarter, we submitted a five 10-K application to the FDA for our new employee neuromuscular electrical stimulation device.
And already.
Already in February of this year received.
10-K clearance.
<unk> set to replace its predecessor, the <unk>, which has been fundamentally NMS treatments across the U S. Since 1998.
The wave.
Which is a product we have.
Been manufacturing.
For several decades and has helped over 17500 patients with muscle related issues such as drop foot.
What we.
Showed us a fixation on hand rehabilitation.
<unk> is designed to improve the way patients manage.
Neuromuscular conditions and advanced features and a user friendly design.
<unk> allows patients to be treated in a clinical or home sitting with these <unk>.
Thomas Sandgaard: The compact and lightweight design of the M-Way ensures portability and easy integration into a patient's recovery routine. The user-friendly interface and ease of use when designing a custom electrotherapy regimen will encourage an even broader adoption of our therapeutic products. And as I mentioned, in February of this year, we received FDA clearance for the product, and it's paving the way for the launch of the product. We expect that to be in the next month or two. As you know, we have spent the past many years building nationwide sales coverage with 800 territories, and we are just shy of 500 of these being populated by now. We are focused on filling all 800 territories and making our sales reps fully productive. It takes up to three years before a new representative is typically fully productive.
Compact and lightweight design of the employee insurance profitability, an easy integration into patient recovery boutiques.
The user friendly interface ease of use when designing our custom I would like to therapy regimen will encourage an even broader adoption of our therapeutic products.
And then as I mentioned in February of this year, we received the FDA clearance for the product and paving the way for <unk>.
Launching the product and we expect that to be in the next month or two.
As you know we have spent the past many years building nationwide sales coverage with 800 territories and we are just shy of 500 of these being populated by now.
We are focused on filling all 800 territories and making our sales reps fully productive.
It takes up to three years before a new rep is typically fully fully productive and.
Thomas Sandgaard: And at this point, only half of our sales reps have more than one year in terms of tenure. Having built this strong pipeline to prescribers that see patients in pain and in need of rehab, we are now putting an extra effort into diversifying our revenue stream. Our best-selling product, The Next Wave, was nearly 85% of all orders received a couple of years ago, and only 50% were from all other products, such as low-back support, bracing products, cervical traction, cold or hot therapy equipment, and compression. It is now up to 25%, and we have launched an initiative this month with incentives for our sales force to also promote these products more actively. We do not expect this to cannibalize our next wave of revenue but rather be an addition to our revenue in pain management, in addition to the impressive results from our Profitable Pain Management Division.
At this point only half of our sales reps has more than one year in terms of tenure.
Having built this strong pipeline to prescribers that C patients in pain and in need of rehab, we're now putting in extra effort into diversifying our revenue stream, our best selling product. The next wave was nearly 85% of all orders received a couple of years ago and only 50% was from all other.
Products, such as low back support pricing products serve a contraction cold or hot therapy equipment and compression.
It is now up to 25% and we have launched an initiative. This month with incentives for our sales force to also promote these products more actively.
We do not expect this to cannibalize our next wave revenue profile. In addition to our revenue in the pain management Division.
In addition to the impressive results from our profitable pain management Division.
Thomas Sandgaard: Our monitoring division, Zynex monitoring solutions, continues to move forward in the first quarter with further development of our blood and fluid monitor and our laser-based pulse oximeter. We were excited to announce FDA clearance last year for our second generation blood and fluid volume monitor, a non-invasive and wireless technology targeted to improve patient outcomes with better fluid management in hospital settings.
Our monitoring.
The signings monitoring solutions.
The monitoring division continued to move forward in the fourth quarter.
With further development of our platinum fluid monitor on our laser based pulse oximeter.
We were excited to announce FDA clearance last year for our second generation plug in fluid fluid volume monitor.
It's noninvasive and wireless technology targeted to improve patient outcomes with better fluid management and hospital settings, we continue to collect additional data in clinical trials.
Thomas Sandgaard: We continue to collect additional data in clinical trials, and Don Gregg will provide further updates on this product and his prepared remarks. We have three additional products in the pipeline in our hospital monitoring products division, a laser-based pulse oximeter, NECO, a monitor for early detection of sepsis, and a non-invasive laser-based monitor of total hemoglobin levels called the HEMOC. The monitoring division is pre-revenue, and we expect to submit an application to the FDA for our laser-based pulse oximeter mid-year 2024. All in all, we're making great progress in the patient monitoring division, which we believe will have game-changing growth potential for the company. Looking ahead, we are making significant progress building on our holistic, non-invasive approach to at-home pain management devices and diversifying the new product.
And Greg will provide further updates on this product in his prepared remarks.
We have three additional products in the pipeline in our hospital monitoring products Division.
The base pulse oximeter.
Nico and monitor for early detection of sepsis in a noninvasive laser based monitor of total hemoglobin levels called the <unk>.
The monitoring division is pre revenue and we expect to submit an application to the FDA for our laser based pulse oximeter midyear 2024.
We're making great progress in the patient monitoring division, which we believe will have a game changing growth potential for the company.
Looking ahead, we are making significant progress building out our holistic noninvasive approach with at home pain management devices and diversifying the new products.
Thomas Sandgaard: We are rapidly expanding direct sales distribution channels that are delivering accelerating and high-returning revenue, a high recurring revenue as we continue to execute operationally and strategically. In tandem, we are focused on ramping our Hospital Monitoring Division, which represents a large and growing market opportunity. We expect consistent growth and strong financial performance in 2024, following the double-digit growth we've produced year after year. We also expect additional catalysts and regulatory milestones during the year as we work to execute on our strong pipeline of new products. We look forward to additional updates in the months to come as we build our sales force and execute on our growth objectives to improve the quality of life for patients suffering from debilitating pain and illnesses and bring long-term value for our shareholders. With that, I will now turn the call over to Anna Lucsok, our Chief Operating Officer, for a more detailed business update on the Pain Management Division. Thank you, Thomas.
We are rapidly expanding.
<unk> sales distribution channels that are delivering accelerating in high returning revenue.
High recurring revenue as we continue to execute operationally and strategically.
In tandem we are focused on ramping our hospital monitoring division, which represents a large and growing market opportunity.
We expect consistent growth and strong financial performance in 2024, following the double digit growth we have produced year after year.
We also expect additional catalyst and regulatory milestones during the year as we work to execute on our strong pipeline of new products.
We look forward to additional updates in the months to come as we build our sales force.
And execute on our growth objectives to improve the quality of life for patients suffering suffering from debilitating pain and illnesses.
And bring long term value for our shareholders.
With that.
I'll now turn the call over to Anna <unk>, our Chief operating officer for a more detailed business update on the pain management Division.
Thank you Thomas J. This is pain management division had another impressive quarter with 29% order growth and 43% order growth for the full year.
Anna Lucsok: Zynex's pain management division had another impressive quarter with 29% order growth and 43% order growth for the full year. As Thomas mentioned, we also received FDA clearance for our next generation NMES device. NMES treatments have several uses, including aiding recovery from surgery, managing chronic conditions, and even enhancing exercise performance in healthy individuals.
Thomas mentioned, we also received FDA clearance for our next generation in EMEA.
Let me ask treatments have several users, including aiding recovery from surgery, managing chronic conditions and even enhancing exercise performance in healthy individuals.
Anna Lucsok: The M-Wave replaces its predecessor, the E-Wave, and is the next evolution in NMES devices, allowing for more customizable treatments within clinical and home settings. We continue to target filling 800 sales territories while diligently ensuring the right individual is matched to the right territory. We ended the fourth quarter with approximately 475 sales reps, and year-to-date revenue per rep on an annualized basis, not including the receivable write-off, was approximately $415,000, an increase of 5% over 2022. We added a net of approximately 60 sales reps during the year, which decreases the growth in revenue per rep in the near term as those new reps ramp up. Our direct sales force is relatively new, with an average tenure of 18 months. As our team continues to mature, we expect to drive sales efficiency higher. I look forward to another profitable year for the Pay Management Division and updating you all on our market expansion and future calls. I'll now ask Don Gregg, President of Zynex Monitoring Solutions, to provide updates related to that business development. Thank you, Anna.
And wave replaces a sprint assessor E waste and it's the next evolution in EMEA devices, allowing for more customizable treatments within clinical and home settings.
We continue to target selling 800 sales territories, while diligently ensuring the right individual is matched to the right territory. We ended the fourth quarter with approximately 475 sales reps and year to date revenue per rep on an annualized basis, not including the receivable write off was approximately.
415000, an increase of 5% over 2022.
We added approximately 60 sales reps during the year, which decreases the growth in revenue per rep in the near term.
<unk> ramp up.
Alright direct sales force is relatively new with an average tenure of 18 months.
Our team continues to mature we expect to drive sales efficiency higher.
I look forward to another profitable year for the pain management Division and updating you all on our market expansion in future calls.
Now as John Greg President XI and X Ray solutions to provide updates related to the dividend.
Thank you Ana our patient monitoring division is truly a ground up growth effort and a long term investment for XI and X to dip to diversify our revenues towards becoming one of the largest medical technology companies. We are looking to leverage this management team's past success at building businesses to grow our second.
Donald Gregg: Our Patient Monitoring Division is truly a ground-up growth effort and a long-term investment for Zynex to diversify our revenues toward becoming one of the largest medical technology companies. We are looking to leverage this management team's past success at building businesses to grow a second line of products with a much larger market opportunity at comparable profitability. Zynex has the technologies and strategies necessary to make a successful entrance into the new product line and market, but the process of acquiring FGA clearance can be somewhat lengthy with occasional delays.
Line of products with a much larger market opportunity a comparable profitability.
<unk> has the technologies and strategies necessary to make us successful entrance into the new product line and market, but the process of acquiring FDA clearance can be somewhat lengthy with occasional delays.
Donald Gregg: The fluid monitoring product via our CM line of monitors is a precursor technology for sepsis monitoring. CM technology is introduced to operating rooms, entirely new capabilities that could alter the standard of care and ultimately improve the welfare of patients. We continue to consult with experts, key opinion leaders, and thought leaders in the space to refine the capabilities of our products and ensure maximum uptake by potential customers. We expect that building a successful stand-alone fluid monitoring market will take longer than other new monitoring products, but we believe strongly in the benefits patients will experience and the value proposition provided by the technology. Our non-invasive laser pulse oximetry line, including NECO and HEMOX, continues progressing positively.
The fluid monitoring product via our <unk> line of monitors is a precursor technology for substance monitoring RCM technologies introduced the operating rooms entirely new capabilities that could alter the standard of care and ultimately improve the welfare of patients we continue to consult with experts.
Key opinion leaders and thought leaders in this space to refine the capabilities of our products and ensure maximum uptake by potential customers. We.
We expect that building a successful standalone fluid monitoring market will take longer than other new monitoring products, but we believe strongly in the benefits patients will experience and the value proposition provided by the technology.
Our noninvasive laser pulse oximetry line.
Including Nico and he marks continues progressing positively.
Daniel J. Moorhead: We expect to submit NECO to the FDA in mid-2024. We are working diligently to engage experts, key opinion leaders, and professional societies to raise awareness of the science of laser pulse oximetry. We recently finalized our go-to-market strategy in this space along with developing marketing execution strategies. Considering the competitive dynamics in this space, we will refrain from detailing our initial go-to-market strategy until closer to product launch. I will now turn the call over to Dan Moorhead, Chief Financial Officer, for a more in-depth look at financial performance for the quarter. Thanks, Don.
We expect to submit an equal to the FDA in mid 2024, we are working diligently to engage experts key opinion leaders professional societies to raise awareness of the science of laser pulse oximetry. We recently finalized our go to market strategy in this space along with developing marketing execution strategies.
So during the competitive dynamics in this space, we will refrain from detailing our initial go to market until closer to product launch.
I will now turn the call over to Dan Moorhead, Chief Financial Officer for a more in depth look at financial performance for the quarter.
Thanks, Don.
Daniel J. Moorhead: Please refer to our press release issued earlier today for a summary of our financial results for the fourth quarter and full year 2023. After commenting on our financial results, Thomas will review our guidance for 2024. Before we get into the financial results, I wanted to provide some brief color on the fourth quarter adjustment. During Q4, we placed an allowance on $6.2 million of slow-collecting accounts receivable.
Please refer to our press release issued earlier today for a summary of our financial results for the fourth quarter and full year 2023.
After commenting on our financial results Thomas will review our guidance for 2024.
Before we get into the financial results I wanted to provide some brief color on the fourth quarter adjustment.
During Q4, we placed an allowance on $6 2 million a slow collecting accounts receivables.
Daniel J. Moorhead: When our expected collections are adjusted, they are recorded as revenue, not bad debt or G&A expenses. As Thomas mentioned, this is a non-recurring adjustment. We continue to have strong relationships with our payers. It's important to consider that our cash from operations increased 29% in 2023 and was a company record despite the adjustment, and our DSOs decreased during 2023, unrelated to this adjustment, both of which are great indicators of how the business is performing. The adjustment net of taxes affected our diluted earnings per share by 13 cents.
When our expected collections or adjusted their recorded to revenue not bad debts, our G&A expense.
As Thomas mentioned this is a nonrecurring adjustment we continue to have strong relationships with our payers.
It is important to consider our cash from operations increased 29% in 2023 and was a company record despite the adjustment.
And our Dsos decreased during 2023 unrelated to this adjustment both of which are great indicators of how the business is performing.
The adjustment net of taxes affected our diluted earnings per share by 13%.
Daniel J. Moorhead: For the full year 2023, net revenue increased 17% to $184.3 million from $158.2 million in 2022. Orders increased 43% in 2023 compared to 2022. Adjusting for the receivables allowance, net revenue would have been $190.5 million, a 20% increase compared to 2022 and in line with our estimates. Device revenue increased 35% to $58.8 million compared to $43.5 million in the prior year. Supplies revenue increased by 9% year-over-year to $125.5 million from $114.7 million in the prior year.
For the full year 2023, net revenue increased 17% to $184 3 million from $158 2 million in 2022.
Orders increased 43% in 2023 compared to 2022.
Adjusting for the receivables allowance net revenue would have been $190 5, million% to 20% increase compared to 2022 and in line with our estimates.
Device revenue increased 35% to $58 8 million compared to $43 5 million in the prior year.
Supplies revenue increased by 9% year over year to $125 5 million from $114 7 million in the prior year.
Daniel J. Moorhead: Gross profit for the full year of 2023 increased to $146 million, or 79% of revenue, as compared to $126.2 million, or 80% of revenue, in 2022. Sales and marketing expenses were $86.7 million in 2023 compared to $67.1 million in 2022, primarily due to an increased headcount of our sales force and increased commissions and incentive pay related to improved order volumes and higher than normal wage inflation. G&A expenses will be $48.5 million in 2023 compared to $36.1 million last year.
Gross profit for the full year of 2023 increased to $146 million or 79% of revenue as compared to $126 2 million or 80% of revenue in 2022.
Sales and marketing expenses were $86 $7 million in 2023 compared to $67 one in 2022.
Primarily due to increased head count of our sales force and increased commissions and incentive pay related to improved order volumes and higher than normal wage inflation.
G&A expenses were $48 5 million in 2023 compared to $36 1 million last year.
Daniel J. Moorhead: Approximately 16% of the increase in G&A is related to investments in our monitoring solutions division and related headcount to launch our new products. The remainder is primarily due to compensation and benefits expense driven by headcount growth associated with the growth of the company and increased order volume. Net income was $9.7 million and produced $0.27 per basic and diluted share in 2023 compared to $17 million, or $0.44 per basic and diluted share in 2022. Adjusting for the receivables allowance, net income would have been $14.4 million net of tax, or $0.40 per basic and diluted share, which was in line with our estimate.
Nearly 16% of the increase in G&A is related to investments in our monitoring solutions division and related head count to launch our new products.
The remainder is primarily due to compensation and benefits expense driven by head count growth associated with the growth of the company and increased order volumes.
Net income was $9 7 million and produced <unk> 27 per basic and diluted share in 2023 compared to $17 million or <unk> 44 per basic and diluted share in 2022.
Adjusting for the receivables allowance net income would have been $14 4 million net of tax or <unk> 40 per basic and diluted share which was in line with our estimates.
Daniel J. Moorhead: Adjusted EBITDA for the year ended December 31st, 2023 was $22.3 million compared to $28.1 million in the year ended December 31st, 2022. Now we'll look at our fourth quarter results. In the fourth quarter, orders increased 29% year-over-year to the highest number of orders in company history for the seventh consecutive quarter.
Adjusted EBIT for the year ended December 31, 2023 was $22 3 million compared to $28 1 million in the year ended December 31 2022.
Now I will look at our fourth quarter results in the fourth quarter orders increased 29% year over year to the highest number of orders in company history for the seventh consecutive quarter.
Daniel J. Moorhead: Net revenue was $47.3 million compared to $48.8 million in the fourth quarter of 2022. Adjusting for the receivables allowance, net revenue would have been $53.5 million, a 10% increase compared to the Q4 of last year. Device revenue was $16.3 million compared to $15.9 million in the fourth quarter of last year.
Net revenue was $47 3 million compared to $48 8 million in the fourth quarter of 2022.
Adjusting for the receivables allowance net revenue would have been $53 5, million% to 10% increase compared to the Q4 of last year.
Okay.
Device revenue was $16 3 million compared to $15 9 million in the fourth quarter of last year supplies revenue was $31 million versus $32 9 million in the fourth quarter last year.
Daniel J. Moorhead: Supplies revenue was $31 million versus $32.9 million in the fourth quarter of last year. Gross profit in the fourth quarter was $37 million, or 78% of revenue, as compared to $39.4 million, or 81% of revenue, in 2022. Sales and marketing expenses were $21.7 million in the fourth quarter of 2023, compared to $19.2 million in the same period in 2022. And G&A expenses were $13 million in the fourth quarter of 2023 compared to $10.1 million last year. Net income was $1.2 million and produced $0.04 per basic and diluted share in the fourth quarter of 2023, compared to $7.5 million or $0.20 per basic and diluted share in 2022. Adjusting for the receivables allowance, net income would have been $5.8 million net of tax, or $0.17 per basic and diluted share in the fourth quarter, and in line with our estimates.
Gross profit in the fourth quarter was $37 million or 78% of revenue as compared to $39 4 million or 81% of revenue in 2022.
Sales and marketing expenses were $21 $7 million in the fourth quarter of 2023 compared to $19 2 million in the same period in 2022 and.
And G&A expenses were $13 million in the fourth quarter of 2023 compared to $10 1 million last year.
Net income was $1 2 million produced <unk> <unk> per basic and diluted share in the fourth quarter of 2023 compared to $7 5 million or <unk> 20 per.
Basic and diluted share in 2022.
Okay.
Adjusting for the receivables allowance net income would have been $5 8 million net of tax or <unk> 17 per basic and diluted share in the fourth quarter and in line with our estimates.
Adjusted EBITDA for the three months ended December 31, 2023 was $9 9 million compared to 11 4 million in the quarter ended December 31 2022.
We ended the year with $44 $6 million in cash on the balance sheet and working capital of $69 3 million cash.
Daniel J. Moorhead: Adjusted EBITDA for the three months ended December 31st, 2023 was $9.9 million compared to $11.4 million in the quarter ended December 31st, 2022. We ended the year with $44.6 million in cash on the balance sheet and working capital of $69.3 million. Cash flows from operations in 2023 increased 29% year-over-year to a record $17.8 million. In the fourth quarter, we continued our stock buyback and repurchased $14 million of common stock, bringing the total repurchases in 2023 to $38.4 million. And over the last 24 months, we've purchased $65 million. We continue to balance deploying cash generated between investing in our business and returning cash to shareholders because we believe both offer attractive return profiles. The continuing buyback reflects our belief in the management team, and the growth opportunities for both divisions. We remain committed to creating shareholder value in the near and long term. With that, I'll turn the call back over to Thomas. Thank you, Dan. We've had a strong start to the first quarter.
Cash flows from operations.
In 2023 increased 29% year over year to a record $17 8 million.
In the fourth quarter, we continued our stock buyback and repurchased 14 million of common stock, bringing the total repurchases in 2023 to $38 4 million and over the last 24 months, we've purchased $65 million.
We continue to balance deploying cash generated between investing in our business and returning cash to shareholders. We believe both after offer attractive return profile.
The continuing buyback reflects our belief in management team the growth opportunities for both division and we remain committed to creating shareholder value in the near and long term.
With that I'll turn the call back over to Tom Thank you Dan.
We've had a strong start to the first quarter.
And with the continued growth in orders in the first quarter I can tell you we off to a good start in that in January we grew 23% year over year and in February we're looking at 29% year over year growth.
And in terms of revenue for the quarter, we expect revenue to come in at 47, 5 million, which is approximately 13% higher than the first quarter of 2023 and diluted earnings per share of <unk>.
As for our 2024.
Thomas Sandgaard: And with the continued growth in orders in the first quarter, I can tell you we're off to a good start in that in January, we grew 23% year over year. And in February, we're looking at 29% year over year growth. And in terms of revenue for the quarter, we expect revenue to come in at $47.5 million, which is approximately 13% higher than the first quarter of 2023, and diluted earnings per share of 3 cents. As for our 2024 outlook, we expect total revenue to be approximately $227 million, representing growth of approximately 23% over 2023, and diluted earnings per share of approximately $0.50. We are incredibly proud of the growth that we have consistently demonstrated over the past several years.
Outlook, we expect total revenue to be approximately $227 million representing.
Representing growth of approximately 23% over 2023 and diluted earnings per share of approximately <unk> 50.
We are incredibly proud of the growth that we have consistently demonstrated in the past several years topline revenues produced high levels of profitability and free cash flow, which has allowed us to expand our sales force launch of new business lines to diversify our revenue stream and continue repurchasing our shares.
Yes.
The business, we have created and the profitability, we able to generate allows us a high degree of flexibility to allocate capital in several ways.
We have the ability to continue investing in our business and return cash to shareholders simultaneously.
We believe both of these revenues will produce substantial shareholder value.
With that.
Thomas Sandgaard: Top-line revenue has produced high levels of profitability and free cash flow, which has allowed us to expand our sales force, launch a new business line to diversify our revenue stream, and continue repurchasing our shares. The business we have created and the profitability we are able to generate give us a high degree of flexibility to allocate capital in several ways. We have the ability to continue investing in our business and return cash to shareholders simultaneously. We believe both these avenues will produce substantial shareholder value.
<unk>. Please open the call up for questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answers question. So do you have a question. Thanks Breakfast star followed by the one and you touched on corn.
I'll have Tom to put your hand has been raised the Jewish to decline from the hurdle.
Please press the star followed by the channel.
Using a speaker phone please lift the handset before Johnson Amit.
Okay.
Operator: With that, Operator, please open the call up for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Did you wish to decline from the polling process? Please press the star followed by the 2. If you are using a speakerphone, please flip the handset before pressing any key.
Your first question is from Jeffrey Cohen from Ladenburg Thalmann. Please ask your question.
Hi, everyone. Good afternoon, thanks for taking my questions.
I've got a few semi brief ones. So firstly on the receivable balance, perhaps a little more commentary I know that there's been some <unk> in the past about when accounts specifically.
Do you.
I wanted to know if this stems from that apparel.
Wanted to or exchange for multiple tenants.
Jeffrey Scott Cohen: Your first question is from Jeffrey Cohen from Leidenberg-Solomon. Please ask your question. Oh, hi everyone. Good afternoon. Thanks for taking our questions. I've got a few semi-brief ones.
FX both on devices that squash.
Yes.
Yes, so the adjustment Jeff is it.
Is it related to receivables that we're collecting slowly.
Placed an allowance on them as we said it was a bit of an anomaly because current accounts receivable have improved with cash flow and dsos improving both in 2023 and going forward, it's really a non issue.
Daniel J. Moorhead: So firstly, on the receivable allowance, perhaps a little more commentary. I know that there's been some naysaying in the past about one account specifically. United and want to know if this stems from that account or one account, or it stems from multiple accounts and the effect on both the devices that supply. Yeah, so the adjustment, Jeff, is, you know, related to receivables that we're collecting slowly. You know, we placed an allowance on them.
We're not going to get too detailed on it but I would say.
It's not related to a specific account that you are thinking about I don't believe.
But it is.
A payer that we that we continue to work with.
Okay.
Got it that's super helpful. Maybe.
Daniel J. Moorhead: As we said, it was a bit of an anomaly because current accounts receivable have improved, with cash flow and DSOs improving both in 2023. And going forward, it's really a non-issue. You know, we're not going to get too detailed on it, but I would say, you know, it's not related to a specific account that you're thinking about. That's what I don't believe, but it is a pair that we continue to work with.
Maybe Darren can you comment a little bit so it seems like.
CMS is bell.
Ish million or so.
Of G&A operationally currently and what's the plan for.
Launching.
The blood volume monitor what's your plan for any public readouts as far as some of the data that you've been collected.
Donald Gregg: Okay, got it. That's super helpful. Maybe, Don, can you comment a little bit? So, it seems like CMS is about eight-ish million dollars of GNA operationally currently, and what's the plan for launching the blood volume monitor? What's the plan for any public readouts as far as some of the data that you've been collecting? Yeah, Jeff, this is Don.
Yes, Jeff This is Don I just wanted to.
Clarify were about $9 million G&A.
We.
The.
<unk> platform is a long term play for US we're very focused right now on our noninvasive oximeter, essentially our laser pulse oximeter and we're very focused on.
The organization, completing that and getting out to the FDA and into commercialization that will.
Donald Gregg: I just wanted to clarify, we're about 9 million GNA, and we, the CM platform is a long-term play for us. We're very focused right now on our non-invasive fleximeter, essentially our laser pole fleximeter. And we're very focused on the organization completing that and getting that to the FDA and into commercialization. That will be our first product, at this point, that we will actually commercialize and take to the market. Our blood volume, fluid volume platform has been in clinical trials, and we continue to run clinical trials on that to refine that technology. That technology is also very important for our substance monitoring platform.
Our first product at this point that we will actually commercialize and take to the market our blood volume fluid volume platform has been.
Clinical trials and we continue to run clinical trials on that.
To refine that technology.
That technology is also very important for our Subsys monitoring.
Platform and so therefore.
Some investment goes into that but largely we're very focused on the pulse oximeter platform right now.
Thanks for your question.
Yes, that's perfect just to reiterate you are planning on I know you submit also.
Donald Gregg: And so some investment goes into that. But largely, we're very focused on the pole fleximeter platform right now. That answers your question.
The pulse ox mid 2024.
That's correct Yep.
Can I just clarify Jeff they had nine.
It's been about $9 million in 2023, we're looking at closer to 13.
Donald Gregg: Yes, that's perfect. Just to reiterate, you're planning on a submittal for Pulse Ox in mid-2024. That's correct, yep. And I'd just clarify, Jeff, they spent about $9 million in 2023. We're looking at closer to $13 million if you're looking at your forecast for 2024. Got it. That's super helpful, Dan.
If youre looking at your forecast for 2024.
Got it that's Super helpful. Dan and then I guess lastly.
Some questions on in ways that you could just remind you saw as far as.
The target audience, and the payer environment and the channels to market.
Thomas Sandgaard: And then, I guess, lastly, some questions on M-Wave. If you could just remind us all as far as the target audience, the payer environment, and the channels to market, that would be helpful. Yeah, maybe I can answer that one, Mrs. Thomas. So neuromuscular electrical stimulation is a market that is used for re-educating muscles. Typically, it can be after surgery or after sports injuries.
That would be helpful.
Yes, maybe I can answer that one this is thomas.
<unk>.
So new muscular electrical stimulation.
Yes.
A market that is used for reeducating muscles typically.
It can be after surgery RF sports injuries.
And.
So in terms of.
Pay us it's the same as we have for all the other products.
Thomas Sandgaard: And it is, in terms of, It's the same as we have for all the other products. There's a billing code for NMES that's different than the other billing codes that we know are often used. Sometimes the next wave actually is on a patient where it's helping here, but the M-Wave is more versatile, and when it requires specialty settings, for instance, it's much better to put that device on.
Theres, one billing code for Mes that's different.
And the other billing codes that we know.
Are often use sometimes the next wave actually is on a patient where it's helping here, but the <unk>.
He has more versatile and when it requires specialty settings for instance, it's much better to put the device on billing.
Thomas Sandgaard: We'd be billing for that code, and all payers, just like with TENS and interferential, pretty much pay for it. It pays pretty well, so it makes sense to have a dedicated product for these particular applications, but, as always, it depends on what medical conditions, what indications we get on the paperwork from the clinic that then decides, again, what product goes to the patient and what billing codes we're using. I got it. And Thomas, does that expand your TAM as far as the target audience, as far as the physicians out there, which the sales force is targeting? Does that tack on additional physicians in additional geographies? No, because we were selling the E-Wave, a product we also manufactured, an older generation of it. It was actually one of the very first products I developed a couple of decades ago.
That code and all pay us just like pretends any differential pretty much paid for it.
Yes.
<unk>. So therefore, it makes sense to have a dedicated product.
For for these particular applications, but.
As always it depends on what.
Medical conditions, what indications, we get on the paperwork from the clinic.
Then decides.
Again, what product that goes to the patient and what we're feeling country using.
And Thomas is on expand your Tam for AC charger audience as far as the dispositions Altair, which the all of the sales force is targeting does that Chuck on additional physicians in nutrition geographies.
No because we were selling the <unk> product, we also manufactured and older generation of <unk>.
It's actually one of the very first products are developed.
A couple of decades ago.
So.
It doesn't expand it but it gives the sales force.
Thomas Sandgaard: So it doesn't expand it, but it gives the sales force a much easier to sell and a more versatile and easier to use product rather than the E-Wave that will be phased out here over the next couple of months as production ramps up and we start supplying the E-Wave. Got it. Okay, great.
And much easier to sell and more versatile and easier to use product <unk> that'll be phased out here over the next couple of months as production has ramped up and we start supplying the speedway.
Okay Super Thanks for taking our questions.
Jeffrey Scott Cohen: Thanks for taking our questions. Thank you. Thank you. Your next question is from Shagun Singh from RBC. Please ask your question. Great, thank you so much. And I apologize for any background noise at the airport.
Thank you.
Thank you. Your next question is from Sheng Zhong from RBC. Please ask your question.
Oh, great. Thank you so much and I apologize for any background noise on the MTA.
Shagun Singh Chadha: So I guess I have two sets of questions for you, you know. First of all, with respect to strategic alternatives, can you just provide us with an update on where you are with that review process? And, you know, if we should expect any news on that front in 2024. And then just with respect to your guidance, can you help us with the cadence to the year, you know, on revenue as well as margins? And then I'm just trying to figure out how should we think about your adjusted revenue guidance of 19% for 2024 in the context of the 43% order growth that you see that you saw in 23 and 29% exhibition growth? Thank you so much for taking the question. Oh, sorry, I didn't hear you say, but you were asking about the strategic alternatives, which to a large degree are us focusing on a going private transaction, and that is still continuing. We're talking to a couple of potential private equity firms that are pretty deep in the weeds and have done, I would say, probably most of their due diligence.
So I guess two sets of questions from me first.
With respect to strategic alternatives can you just provide us with an update on where you are with that review process.
And if we should expect any news on that front in 2024, and then just with respect to your guidance can you help us with the cadence of the year.
On revenue as well as margins.
I'm just trying to figure out how should we think about.
Adjusted revenue guidance of 19% for 2024 in the context of the 43%.
The growth that you see.
Slide 23.
In 2009% exiting Q4, thank you so much for taking the questions.
The strategic alternatives.
Strategic alternatives.
Oh, sorry.
Sorry, I didn't hear it but.
Steve So you were asking about the strategic alternatives, which.
To a large degree.
Is us focusing on a going private transaction.
And that is still continuing.
Looking to.
Two to a couple of.
Potential private equity firms.
That are pretty deep in the weeks and has done I.
I would say probably most of their due diligence.
Thomas Sandgaard: Whether we get to conclude a transaction with any of those, or if we decide to go in a different direction is obviously still to be seen. Some of that will depend on... negotiations in regards to that, and if we have the right partner to move forward with.
Whether we get to conclude.
Transaction was with any of those or or if we decide to go in a different direction is obviously is assumed to be.
To be seen.
Some of that will depend on.
Valuation and negotiating.
In regards to that and if we if we have the right partner to move forward with.
Thomas Sandgaard: So it's looking very positive. However, we have nothing positive to report for another couple of months. That was great.
So.
It's looking very positive however.
However, we will do nothing.
Daniel J. Moorhead: And then just on 2024. Yeah, I would say, you know, again, when you're looking at revenue growth versus order growth, you're always going to have some differences there. I would say, you know, we did 43% for the year, but a lot of the larger numbers were in the first half. I would just say, you know, the comps were a little easier.
Narrative to report protocol would be another couple of months.
And then just on 2024.
Yeah, I would say again when youre looking at revenue growth versus order growth Youre always going to have some differences there I would say, we did 43% for the year, but a lot of the larger numbers were in the first half I would just say the comps were a little easier and as the sales force got more effective in the back half of 'twenty two those got a little tougher so.
Daniel J. Moorhead: And as the sales force got more effective in the back half of 22, those got a little tougher. So, you know, the 20% revenue growth kind of is showing that. And that continued growth, I would say margins we expect to stay constant or slightly expand a little bit. You know, our production group has done a really good job with pricing here, so we would expect to continue to see those strong margins, you know, into 24 and beyond. Great
Sure.
The 20% revenue growth.
Kind of just showing that and that continued growth I would say margins, we expect to stay constant or slightly expand a little bit.
<unk>.
Production group has done a really good job with pricing here. So we would expect to.
Continue to see those strong margins.
The 24 and beyond.
Oh, great any color on cadence through the year on sales and marketing.
Daniel J. Moorhead: Any color on the cadence through the year on sales and markets? Um... You know, I would expect it, you know, obviously we had a little higher comps this year as, again, Salesforce continues to do better, but, you know, as far as order growth is concerned, I think we're looking at mid-20 growth, and I think we see that across most of the quarters. I don't think it's going to jump around too much, so it should be a little steadier this year than it was in the prior year, and that, again, should drive that, you know, approximately 20% revenue growth.
I would expect it.
Obviously, we had a little higher comps. This year is again, the salesforce continues to do better but.
As far as order growth.
We're looking at mid 'twenty growth and I think we see that across most of the quarters I don't think its going to jump around too much. So.
It should be a little steadier this year than it was in the prior year and that again should drive that approximately 20% revenue growth and don't forget right now the forecast is.
Daniel J. Moorhead: And don't forget, you know, right now the forecast is, you know, EPS going from what would have been 40 cents this year to 50, so, you know, over a 25% increase in kind of pro forma EPS year-to-year. Thank you. Thank you. Your next question is from Ye Chen from H.C. Wainwright.
EPS going from what would have been 40 this year to 50 so.
Over a 25% increase in.
Pro forma EPS year to year.
Thank you.
Thank you. Your next question is from <unk> Chen from H C. Wainwright. Please ask your question.
Yi Chen: Please ask my question. Thank you for taking my questions. Regarding the 23% expected growth in 2024, out of that, how much will be primarily driven by the next wave? Okay, calm down there.
Thank you for taking my questions.
Oh.
Regarding the 23% expected growth in two.
2024.
Out of that how much will be primarily driven by next week.
Can you comment on that.
Okay.
Thomas Sandgaard: Yeah, I would say that we don't expect the growth to slow down on the next wave. So let's assume that it is in the 20% range. We are pushing hard to see revenue growth from all the other products that we are selling through our sales force. And that's probably where the majority of this is going to come from.
Go ahead, Dave.
Yes, I would say that.
We don't expect the growth to slow down on the next wave so let's assume that is.
And the 20% range.
We are pushing hard to see revenue growth from all the other products that we are we are selling through our salesforce.
And.
That's probably where the majority of this is going to come from and so all of those other products.
Thomas Sandgaard: So all those other products will hopefully double in terms of orders and therefore get us up to... more than 25% order growth and again spilling over to what we expect to be a 23% growth in revenue. So the next wave will still be the main growth driver within 2024, correct? Well, ideally, we'll get that one below 50% while we really grow the orders, but chances are that it'll still be a little over 50% as we exit the year. And long-term, we are hoping to have a much more diversified product portfolio also in the pain management division. Got it. Got it. And I'm also curious, are there any attractive opportunities out there that the company could look at that involve fast-growing products on the market that Zynex could potentially acquire versus using the existing cash to buy back more shares? We are evaluating about a handful of those that are exactly making products that we either sell right now or similar to what we sell right now. That would be a great complement and also in a price range where we could afford it. We have not initiated any negotiations, but we are getting pretty deep in our research.
We will hopefully double in terms of terms of Otis and therefore get us up to.
More than 25% order growth and against spilling over to what we expect to be at 23% growth in revenue.
So next wave is we'll still be the main growth driver for <unk>.
2024, correct.
Well ideally, we'll get that one below 50%, while we really drove the orders.
The chances are that it will still be a little over 50%.
Exit the year.
And long term.
Hoping to have a much more diversified.
<unk> product portfolio also Lindsay.
Pain management Division.
Got it got it.
And.
I'm also curious are there any attractive opportunities out there that the company.
Good.
And look at that May evolve fast growing.
Products on the market.
Our next.
<unk> could potentially acquire.
Versus using the existing cash to buyback more shares.
We are evaluating about a handful of those or is that.
Exactly making products that we either sell or similar to what we sell right now of what would be a great complement and also in a price range, where we could afford it.
<unk> initiated any negotiating but we.
Getting pretty decent no research there.
Thomas Sandgaard: Got it. Thank you. Thank you. There are no further questions at this time.
Got it thank you.
Thank you there are no further questions at this time I will now hand, the call back to Thomas and go ahead with closing remarks.
Thomas Sandgaard: I will now hand the call back to Thomas Sandgaard for his closing remarks. Well, thank you for joining us today. We're pleased with our performance this quarter and the consistent growth our team is delivering. We look forward to leveraging that momentum throughout the rest of the year and speaking to you at upcoming investor events. We appreciate your time and interest in Zynex. Have a great day. Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining us. You may all disconnect.
Well. Thank you for joining US today, we are pleased with our performance this quarter and the consistent growth. Our team is delivering we look forward to leveraging that momentum throughout the rest of the year and speaking to you in upcoming investor events.
We appreciate your time and interest in <unk> have a great day.
Thank you ladies and gentlemen, the conference has now ended.
Thank you all for joining you may all disconnect.