Q1 2025 Zynex Inc Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to the Zynex first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
Good afternoon, ladies and gentlemen, and welcome to design next first quarter 2025 earnings Conference call. At this time, all participants are in listen only mode.
A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded I would now like to turn the conference over to Brian <unk> Investor Relations for side effects.
Brian Prenovo: I would now like to turn the conference over to Brian Prenovo, Investor Relations for Zynex. Thank you, operator, and good afternoon, everyone. Earlier today, Zynex released financial results for the first quarter ended March 31st, 2025.
Brian: Thank you operator, and good afternoon, everyone.
Brian: Earlier today <unk> released financial results for the first quarter ended March 31, 2025, the copy of the press release. It is available on the company's website.
Brian Prenovo: A copy of the press release is available on the company's website.
Brian Prenovo: Joining me on today's call are Thomas Sandgaard, Chairman, President, Chief Executive Officer, Dan Moorhead, Chief Financial Officer, Anna Lucsok, Chief Operating Officer, Donald Gregg, President of Zynex 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.
Thomas Vanguard: Joining me on today's call are Thomas Vanguard, Chairman, President Chief Executive Officer, Dan Moorhead, Chief Financial Officer, and it look sock Chief operating officer, Downgrades, 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.
Brian Prenovo: We encourage you to review the company's past and future filings with the SEC, including, without limitation, companies 2024 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.
We encourage you to review the Companys past and future filings with the SEC, including without limitation company's 2024 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.
Thomas Vanguard: <unk> without limitation statements regarding product development product potential regulatory environment sales and marketing strategies capital resources or operating performance with that I'll now turn the call over to Thomas.
Thomas Sandgaard: With that, I'll now turn the call over to Thomas. Thomas? Yeah, thanks, Brian. And good afternoon, everyone. Thank you for joining us today for the first quarter 2025 earnings call.
Thomas Vanguard: Yeah, Thanks, Brian and good afternoon, everyone.
Thomas Vanguard: Thank you for joining us today for the first quarter 2025 earnings call.
Thomas Sandgaard: We will meet today Anna Lucsok, the Chief Operating Officer. Donald Gregg, President of our Zynex Monitoring Division, and Dan Moorhead, our Chief Financial Officer. Anna will provide an update on the appeals process for TRICARE and the other initiatives we are pursuing in pain management. And Don Gregg will discuss patient monitoring and the pending submission to the FDA for our knee-cold pulse oximeter. Dan will discuss the first quarter's financial results.
Thomas Vanguard: With me today are analog soft our chief operating officer.
Speaker Change: Done a great precedent of a signage monitoring division and Dan Moorhead, Chief Financial Officer.
Speaker Change: And I will provide an update on the appeals process with <unk> and the other initiatives. We are pursuing in pain management and done Greg will discuss patient monitoring and depending submission to the FDA for our Nikko pulse Oximeter, Dan will discuss the first quarter's financial results.
Thomas Sandgaard: And before Anna discusses operations, I'd like to thank our employees and shareholders for their patience and dedication. and I want to offer our shareholders some clarity around the current situation and stock price. And clearly our stock price is very low right now, and likely lower than it's really justified. And several things have added to our current situation. As you all know, our business model is to obtain a prescription for patient use of our devices and then build an insurance company for the use. We deal with over 3,000 insurance companies daily and are constantly navigating challenges and obstacles put in our way in securing reimbursement.
Speaker Change: Before I discuss the separation so I'd like to thank our employees and shareholders for their patience and dedication.
Speaker Change: And I want to offer our shareholders some clarity around current situation on stock price.
And clearly our stock price is very low right now and likely lower than its really justified and several things have added to our current situation.
Speaker Change: As you all know our business model is to obtain a prescription for patient choose about devices and then bill the insurance company for the us.
Speaker Change: We did with over 3000 insurance companies daily and are constantly navigating challenges and obstacles put in a way insecurity in securing reimbursement.
Thomas Sandgaard: Recently, a new challenge was that TRICARE abruptly placed a temporary payment suspicion while they're looking into if our claims comply with their policies and guidelines. We are used to these kind of behaviors constantly over the past several decades and We therefore did not include bills to TRICARE in our recent revenue calculation. If and when this all gets resolved, it will get incorporated into our financials per accounting guidelines.
Speaker Change: Recently, a new challenge.
Speaker Change: Was that Tricare abruptly placed a temporary payment suspicion, while theyre looking into if our claims complied with their policies and guidelines.
Speaker Change: We are used to these kind of behaviors constantly over the past several decades.
Speaker Change: We therefore did not include spills to try <unk>.
Speaker Change: <unk> revenue revenue calculations.
Speaker Change: If and when this all gets resolved it will get incorporated into our financials per accounting guidelines.
Speaker Change: We had a chance to meet with Tricare or.
Thomas Sandgaard: We had a chance to meet with TRICARE, or what's called the Defense Health Agency, on April 9th. And we believe we presented strong arguments that we have clearly followed all current and existing guidelines and policies. They committed to providing a response before June 9th, which was 60 days after the meeting, and we now have up to 40 more days to wait, but hopefully we will hear from them sooner.
Speaker Change: Whats called the Defense Health Agency on April nine and we believe we presented a stronger commence that we've cleared a followed all current and existing guidelines and policies.
Speaker Change: Committed to providing a response before June lines, which is 60 days.
Speaker Change: After the meeting.
Speaker Change: Now have up to 40 more days to wait but hopefully.
Speaker Change: We will hear from them sooner.
Thomas Sandgaard: As a reminder. We are actually had an audit and completed an audit with TRICARE back in 2022 and entered the time. We made all recommended adjustments to billing and reimbursements that they've requested. The evidence we outlined in our presentation to TRICARE strongly supported our consistent compliance with TRICARE billing practices, and we hope, as it works through our arguments, that coverage and payment gets restored. But of course, we never know the outcome here short term.
Speaker Change: As a reminder.
Speaker Change: Yeah.
Speaker Change: Actually had an audit and completed in all of its tricare.
Speaker Change: Back in 2022 and at the time.
Speaker Change: We made all of the commodity adjustments to billing and reimbursement that they've requested.
Speaker Change: The evidence we outlined in our presentation to Tri.
Speaker Change: Strongly support lower consistent compliance with Tri care billing practices and we hope as they worked through our arguments that coverage and payment gets restored but of course, we never know the outcome, yes short term.
Thomas Sandgaard: Not long ago, an accounting firm called CPIS acquired Markham. Markham is our auditors or was our auditors, and that acquisition made it possible for short collaborators or short news agencies to skew the story so that it sounded like our auditors dumped Zynex as a client, which was clearly not the case. The mandatory 8K filing we made made this narrative possible, which clearly did not help the stock price.
Speaker Change: Not long ago at accounting firm.
Speaker Change: <unk> called cheapest acquired Barco Barco is our auditor so what's our auditors.
Speaker Change: And.
Speaker Change: That acquisition made it possible for short collaborator so short news agencies. So skewed the story so that it sounded like our auditor's dumped <unk> has declined which was clearly not the case.
Speaker Change: The mandatory 8-K filing.
Speaker Change: We made made this narrative possible, which clearly did not help the stock price either.
Thomas Sandgaard: I want to emphasize that we are restructuring our business to run without Tricare Business in a worst-case scenario going forward, trimming a lot of overdue fat in the organization and restructuring several areas of the business. Once this is completed later this year, we'll be poised to get back on our growth track. We're refocusing our sales force on new revenue opportunities, which will help us grow even without tractor patients and will eventually help us get back to current revenue levels and even more as growing our sales force with more productive sales reps will drive more growth.
Speaker Change: I want to emphasize that we are restructuring our business to run without Tri care business in a worst case scenario going forward.
Speaker Change: A lot of overdue fat in the organization and restructuring several areas of the business. Once this is completed later this year, we'll be poised to get back on a growth track.
Speaker Change: We are refocusing our sales force.
Speaker Change: New revenue opportunities, which will help us grow even without <unk> patients and will eventually help us get back to current revenue levels and even more as growing our sales force with more productive sales reps will drive more growth.
Thomas Sandgaard: We also continue to promote other products, such as brazing, toro, and striping. As part of our cost containment, we have continued to trim unproductive sales reps and leaving territories open for better hires in the future.
Speaker Change: We also continue to promote other products such as pricing <unk> prescribers.
Speaker Change: As part of our cost containment, we have continued to trim unproductive sales reps and leaving territories open for better highest in the future.
Thomas Sandgaard: You will later hear in more detail about finishing up our game-changing pulse oximeter. In short, we have completed and passed all EMC and safety tests. The last, which was the last missing item that we were waiting for and we'll be submitting to the FDA in what we believe will be just over a week. I'm very excited about finally getting ready to launch this product into the world's biggest device market, which is pulse oximetry. A product that has no bias when patients have darker skin, a product that will not show incorrect oxygen data when there's, for instance, carbon monoxide poisoning.
Speaker Change: You will later here in more detail about finishing up our game changing pulse oximeter.
Speaker Change: In short, we have completed and passed all EMC and safety tests.
Speaker Change: The last which was the last missing items that were waiting for.
Speaker Change: We'll be submitting to the FDA in what we believe will be just over a week.
Speaker Change: I'm very excited about finally getting ready to launch this product into the world's biggest device market, which is pulse oximetry.
Speaker Change: A product that has no bias when patients have darker skin a product that will not show incorrect oxygen data.
Speaker Change: This for instance, carbon monoxide poisoning and fundamentally we'll be able to do the same thing as when hospitals take a blood sample to be sure that hemoglobin spaces.
Thomas Sandgaard: And fundamentally, we'll be able to do the same thing as when hospitals take a blood sample to be sure that hemoglobin species, what hemoglobin species are in the blood. With our technology, this can now be done non-invasively, real-time, and accurately show levels of oxygen, carbon monoxide, methemoglobin, and reduced hemoglobin.
Speaker Change: What hemoglobin spaces are in the blood.
Speaker Change: With our technology this cannot be done noninvasively real time accurately show levels of oxygen.
Speaker Change: Carbon monoxide methemoglobin reduced hemoglobin <unk>.
Thomas Sandgaard: a revolution that would or could replace old technology pulse oximeters as we will have the same price levels and form factors that hospitals are used to. Hopefully, shareholders will pay attention to our progress on the background of these recent challenges that we now have a clear path to turn things around and a clear path to continue growth in both divisions. We're still confident that our non-invasive approach with at-home pain management devices have real growth opportunities to provide non-opioid relief to patients. We remain focused on ramping our hospital monitoring division, which represents a large and growing market opportunity, with a better mouse trap in the pulse oximeter model.
Speaker Change: Evolution.
Speaker Change: Could replace old technology pulse oximeter.
Speaker Change: As we will have the same price levels and form factors that hospitals are used to.
Hopefully shareholders will pay attention to our progress on the background of these recent challenges.
Speaker Change: <unk>.
Speaker Change: That we now have a clear path to turn things around and a clear path to continued growth in both divisions.
Speaker Change: We are still confident that our noninvasive approach with at homepage pain management devices have real growth opportunities to provide non opioid relief to patients.
Speaker Change: We remain focused on ramping our hospital monitoring division, which represents a large and growing market opportunity with a better mouse trap in the pulse oximetry market.
Thomas Sandgaard: Our revenue is also becoming more diversified with increased call points. More products, technologies, and more industry. We're very optimistic about the future of Zynex as we have proven to be a business that can grow quickly and profitably.
Speaker Change: Our revenue is also becoming more diversified with increased call points more.
Speaker Change: More products technologies and more end users.
Speaker Change: Very optimistic about the future of signings as we have proven to be a business that can grow quickly and profitably. We think there is a plethora of gross paths available in the years to come.
Thomas Sandgaard: We think there's a plethora of growth paths available in the years to come.
Anna Lucsok: And I will now turn the call over to Anna Lucsok to provide a more detailed update on the operations and our status with Tricare. Anna? Thank you, Thomas. As Thomas mentioned, we were notified by TRICARE of a temporary suspension of payments as they complete their review. In early April, we met with the Defense Health Agency and supplied them with our evidence regarding their questions to billing practices. And we believe we supplied good information to their inquiries and provided strong evidence to dispute their claims and questions. We expect to hear from them in June or earlier, but we're happy with the information and documentation we showed to their As a reminder, if or when the reimbursements begin again, TRICARE would be responsible for paying all of the claims that have been appropriately processed during the temporary halt, which would show significantly increased revenue.
Speaker Change: I will now turn the call over to analog socs to provide a more detail update on.
Speaker Change: The operations and our status with Tricare Aetna.
Speaker Change: Thank you Thomas Thomas.
Speaker Change: Thomas mentioned, we were notified by Tricare and the temporary suspension of payments if they can.
Speaker Change: Barry.
Speaker Change: In early April we met.
Speaker Change: Health agency and supply them with our evidence regarding your question the billing practices.
Speaker Change: And we believe we can provide good information to their inquiries and provided strong evidence.
Speaker Change: Their claims in question.
Speaker Change: We expect to hear from them in June or earlier, if we're happy with the information and documentation Mashelkar therapy as a reminder, if or when the reimbursement to begin begin again tricare would be responsible for paying all of the claims that have been appropriately profit during the temporary halt which would show significantly increase revenue.
Steve: Thanks, Steve.
Anna Lucsok: We remain in network with TRICARE and are expected to continue processing new and existing plans for treatment for TRICARE patients. Tricare told us that they want current and new patients to continue receiving care through this process.
We remain in network with Tricare and are expected to continue processing, new and existing clients to treatments with tri care patients.
Steve: Greg you told us what current and new patients to continue receiving here with this product.
Anna Lucsok: In March, we decreased overall staff by approximately 15%, mostly in our corporate office. We anticipate this, along with other expense reductions, will result in annual savings of approximately $35 million.
Steve: In March we decreased overall staff by approximately 15% mostly in our corporate office.
Steve: This along with other expense reductions will result in annual savings of approximately $35 million.
Anna Lucsok: Beyond TRICARE, we remain excited about several new opportunities for growth with various insurers, including focusing on new areas like personal in Although it's still in the early days, revenue is growing and we're excited about the possibilities. Our sales force continues to drive a diversified product mix in Q1 2025 with our non-next wave product order percentage increased to 34% up from an average of 30% less.
Steve: Beyond Tricare, we remain excited about several new opportunities for growth with various insurers, including focusing our new areas like personal injury.
Steve: <unk> is still in the early days revenue is growing and we're excited about the possibility.
Steve: Our sales force continues to drive a diversified product mix in Q1, 2025, and so our next wave product order percentage increased to 34% upfront and averaged 30% last year.
Donald Gregg: I'll now turn the call over to Donald Gregg to provide a more detailed update on the patient monitoring system. Thank you, Anna. I want to provide an update on the progress of our Neco pulse oximeter and the overall market opportunity for this product. We have successfully completed third-party testing and are finalizing documentation for our FDA submission as we expect to file this in May.
Steve: I'll now turn the call over to John Greg to provide a more detailed update on the patient monitoring business.
John Greg: Thank you Anna.
John Greg: I want to provide an update on the progress of our Nikko pulse oximeter and the overall market opportunity for this product.
John Greg: We have successfully completed third party testing.
John Greg: And are finalizing documentation for our FDA submission as we expect to file this in may.
Donald Gregg: I would also like to spend a few minutes discussing why we are so passionate about this technology and the massive opportunity we believe is in front of us. We believe this technology will be superior to what is currently in the market and will improve health equity across the patient continuum of care. There are very few clinical procedures that do not use pulse oximetry. Pulse oximeters are used to provide clinicians with a patient's blood oxygenation level in order to assess oxygenation status and inform next steps in care. A broader goal of healthcare providers is to ensure that any disparities in care are minimized to every extent possible.
John Greg: I would also like to spend a few minutes discussing why we are so passionate about this technology and the massive opportunity. We believe is in front of US. We believe this technology will be superior to what is currently in the market.
John Greg: And we will improve health equity across the patient continuum of care there.
John Greg: There are very few clinical procedures that do not use pulse oximetry.
John Greg: Pulse oximeter are used to provide clinicians with a patient's blood oxygenation level in order to assess oxygenation status and inform next steps and care.
John Greg: A broader goal of health care providers to ensure that any disparities and care are minimized to every extent possible.
Donald Gregg: Skin pigmentation and thickness have both been shown to alter the oxygen measurement displayed when using LED-based pulse oximetry, resulting in biases which can have negative impacts on patient care and outcomes. Laser pulse oximetry is not biased in the same manner as LED pulse oximeters, allowing for more accurate readings across all individuals, regardless of skin pigmentation. more accurate data results and improve care and better patient outcomes. We believe our Neko pulse oximeter will provide reliable and equitable care for all. LED pulse oximeters on the market today are challenged to provide accurate and unbiased results due to inherent technological limitations.
John Greg: Skin pigmentation and thickness have both been shown to alter the oxygen measurement displayed when using led based pulse oximetry.
<unk> and biases, which can have negative impacts on patient care and outcomes lays.
John Greg: The laser pulse oximetry is not biased in the same manner as LCD.
John Greg: Pulse oximeter, allowing for more accurate readings across all individuals regardless of skin pigmentation.
John Greg: More accurate data results and improve care and better patient outcomes.
John Greg: We believe our Nikko pulse oximeter will provide reliable and equitable care for all.
John Greg: Led pulse oximeter on the market today are challenged to provide accurate and unbiased results due to inherent technological limitations.
Donald Gregg: This shortcoming risks compromised patient care, especially for individuals with darker skin pigmentation or comorbidities, which put them at higher risk. We are working closely with key opinion leaders to broadly educate clinicians in every care area about the science of laser-based pulse oximetry, which is the key element of NECO's fractional hemoglobin measurements and the reason supporting the anticipated positive impact of this technology on patient care. Additionally, ongoing and upcoming clinical trials will allow us to publish widely on the benefits of our technology. After FDA submission, we expect approval to take approximately six months, and this is based on FDA data.
This shortcoming risks compromised patient care, especially for individuals with darker skin pigmentation, or comorbidities, which puts them at higher risk.
John Greg: We are working closely with key opinion leaders to broadly educate clinicians and every care area about the science of laser based pulse oximetry, which is the key element of Nicos fractional hemoglobin measurements and the region reason supporting the anticipated positive impact.
John Greg: Of this technology on patient care. Additionally.
Additionally, ongoing and upcoming clinical trials will allow us to publish widely on the benefits of our technology.
John Greg: After FDA submission, we expect approval to take approximately six months and this is based on FDA.
Data.
Donald Gregg: We have been preparing for commercialization with an early awareness education campaign that is targeting physicians across the country. Our goal is to have a pipeline of physicians interested as early adopters to both evaluate laser-based pulse oximetry and utilize NECO in their practice following FDA clearance. Taken together, NECO will hit the market following clearance with a strong foundation of clinical results and commercial development. Patient monitoring is a multibillion-dollar market that we believe NECO will enter as a superior product that can meaningfully improve care to the broadest range of patients when they need it most. Zynex is pushing to be a key industry partner and leader to all clinicians and further demonstrate how NECO's laser pulse oximetry technology inherently solves the current market challenges, especially skin pigmentation bias, while bringing new precision medicine technology forward in the field of patient monitoring.
John Greg: We have been preparing for commercialization with an early awareness education campaign that is targeting physicians across the country. Our goal is to have a pipeline of physicians interested as early adopters to both evaluate laser based pulse oximetry and utilized Nico in their practice following FDA clearance taken.
John Greg: Together Nico will hit the market following clearance with a strong foundation of clinical results and commercial development.
John Greg: Patient monitoring is a multibillion dollar market that we believe Nico will enter as a superior product that can meaningfully improve care to the broadest range of patients when they need it most <unk> pushing to be a key industry partner and leader to our clinicians and further demonstrate how nicos laser pulse.
John Greg: Cemetery technology inherently solves the current market challenges, especially skin pigmentation bias, while bringing new precision medicine technology forward in the field of patient monitoring.
Donald Gregg: We are incredibly excited about next steps as we have a clear trajectory to FDA submission and commercialization of this game-changing technology.
Speaker Change: We are incredibly excited about next steps as we have a clear trajectory to FDA submission and commercialization of this game changing technology I will now turn the call over to Dan Moorhead, Chief Financial Officer for a more in depth look at the quarter's financial performance.
Daniel Moorhead: I will now turn the call over to Dan Moorhead, Chief Financial Officer, for a more in-depth look at the quarter's financial performance. Thanks, Don. Please refer to our press release issued earlier today for a summary of our financial results for the first quarter ended March 31st, 2025. Net revenue was $26.6 million compared to $46.5 million in the first quarter of 2024. Device revenue was $11.9 million and supplies revenue was $14.7 million. The revenue decline was primarily attributable to the temporary payment suspension from Tricare and slowing order growth related to our focus on sales rep productivity and lower sales headcount.
John Greg: Thanks, Don.
John Greg: Please refer to our press release issued earlier today for a summary of our financial results for the first quarter ended March 31 2025.
John Greg: Net revenue was $26 $6 million compared to $46 5 million in the first quarter of 2024.
John Greg: Device revenue was $11 9 million and supplies revenue was $14 7 million.
John Greg: The revenue decline was primarily attributable to the temporary payment suspension from Tricare and slowing order growth related to our focus on sales rep productivity and lower sales head count.
Daniel Moorhead: Gross profit in the first quarter was $18.2 million, or 69% of revenue, as compared to $37.2 million, or 80% of revenue, in Q1 2024. Sales and marketing expenses decreased 28% to $16.9 million in the first quarter of 2025. The primary contributor to the decrease in sales and marketing expenses was our headcount reduction. DNA expenses were $14.4 million in the first quarter of 2025 compared to $13.3 million last year. Net loss was $10.4 million and 33 cents per share in the first quarter of 2025 compared to net income of $10,000 last year. Adjusted EBITDA loss for the three months ended March 31st, 2025 was $11.8 million as compared to adjusted EBITDA of $1.7 million in the quarter ended March 31st, 2024.
John Greg: Gross profit in the first quarter was $18 2 million or <unk>, 69% of revenue as compared to $37 2 million or 80% of revenue in Q1 2024.
John Greg: Sales and marketing expenses decreased 28% to $16 9 million in the first quarter of 2025, the primary contributor to the decrease in sales and marketing expenses was our head count reduction.
G&A expenses were $14 4 million in the first quarter of 2025% compared to $13 3 million last year.
John Greg: Net loss was $10 4 million and 33 per share in the first quarter of 2025 compared to net income of 10 or 10000 last year.
John Greg: Adjusted EBITDA loss for the three months ended March 31, 2025 was $11 8 million.
John Greg: As compared to adjusted EBITDA of $1 7 million in the quarter ended March 31 2024.
Daniel Moorhead: Despite the difficult first quarter, we maintain a strong balance sheet of $40 million in working capital and approximately $24 million of cash on hand.
John Greg: Despite the difficult first quarter, we maintain a strong balance sheet of $40 million in working capital and approximately $24 million of cash on hand.
Thomas Sandgaard: With that, I'll now turn the call back over to Thomas. Thank you, Dan. And although we received some unwelcome news at the beginning of this year, we are optimistic about the growth prospects of the company and the varying opportunities that we have going forward. We hope to receive a response from TRICARE here in the next 40 days or hopefully less, and we'll continue to provide high-quality service to those patients here in the meantime, as well as accepting new patients that are covered by TRICARE. Beyond the TRICARE issue, we are pursuing further growth avenues to propel the business forward.
Thomas Vanguard: With that I'll now turn the call back over to Thomas.
Thomas Vanguard: Thank you Dan.
Thomas Vanguard: And although we received some unwelcome news at the beginning of this year, we are optimistic about the growth prospects of the company and the various opportunities that we have going forward.
Thomas Vanguard: We hope to receive a response from <unk> in the next 40 days or hopefully less and will continue to provide high quality services to those patients in the meantime.
Thomas Vanguard: Accepting new patients that are <unk>.
Thomas Vanguard: Covered by trachea.
Thomas Vanguard: Beyond <unk>, we are pursuing further growth avenues to propel the business forward.
Thomas Sandgaard: Our mission is to improve the quality of life of patients suffering from debilitating pain and or illness by providing the highest and best technology and service standards. In pain management, we do this by providing a non-opioid alternative to pain management and our monitoring division aims to measure data more accurately across patients to provide more equitable healthcare outcomes. We will continue to adjust the cost structure as needed with the long-term goal of generating revenue above and beyond 800 million a year. Looking forward, we believe we have additional customers and revenue streams that can drive further growth.
Thomas Vanguard: Our mission is to improve the quality of life for patients suffering from debilitating pain or illness by providing the highest and best technology and service standards and.
Thomas Vanguard: And pain management, we do this by providing a non opioid alternative to pain management and our monitoring Division Division aims to measure data more accurately.
Thomas Vanguard: Across patients to provide more equitable health care outcomes.
Thomas Vanguard: We will continue to adjust the cost structure as needed with the long term goal of generating revenue above and.
Thomas Vanguard: And beyond $800 million a year.
Thomas Vanguard: Looking forward, we believe we have additional customers and revenue streams that can drive further growth.
Thomas Sandgaard: We have a solid balance sheet with a strong cash precision, and our historic profitability allows a high degree of flexibility to allocate capital in multiple ways. We have shown the ability to adjust to market, customer and reimbursement changes, and continue investing in our business.
Thomas Vanguard: We have a solid balance sheet with a strong cash position.
Thomas Vanguard: Our historic profitability allows us a high degree of flexibility to allocate capital in multiple ways.
Thomas Vanguard: We have shown the ability to adjust to market customer and reimbursement changes and continue investing in our business.
Thomas Sandgaard: As for the second quarter, we estimate our revenue to come in at $27 million and the EPS, or earnings per share, to be a loss of $0.20 per share as we continue to right-size the business to return to profitability as soon as possible.
Thomas Vanguard: As for the second quarter, we estimate our revenue to come in the $27 million.
Thomas Vanguard: EPS or earnings per share to be a loss of <unk> 20 per share as we continue to right size the business to return to profitability as soon as possible.
Operator: With that, operator, please open the call 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 number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question.
Thomas Vanguard: With that operator, please open the call up to questions.
Thomas Vanguard: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answers that question should you have a question. Please press the star followed by the number one on your Touchtone phone you'll hear that you had have been raised should you wish to decline from the polling process. Please press the star followed by the number.
If you are using a speaker phone. Please go ahead sir.
Thomas Vanguard: Thank you Amit.
Speaker Change: One moment. Please for your first question.
Shagun Singh: Your first question comes from the line of Shagun Singh from RBC. Your line is now open. Please go ahead. Thank you so much for taking the question. I was hoping you can give us a little bit of more color into the conversation with TRICARE. You know, did you get a better sense of why they denied coverage? You know, what kind of evidence did you present? You know, how do you feel about the decision on June 9th? And then, I guess also more importantly, have you had conversations with other payers? Are they worried about anything? Could there be a domino effect?
Speaker Change: Your first question comes from the line of <unk> Zhang from RBC. Your line is now open. Please go ahead.
Speaker Change: Alright. Thank you so much for taking the question I was hoping you can give us another but.
Speaker Change: More color.
Speaker Change: The conversation with Tricare.
Speaker Change: Did you get a better sense of why be denied coverage what kind of evidence did you did you present.
Speaker Change: How do you feel about the decision on June 9th and then I guess also more importantly have you had conversations with other payers are they worried about anything could there be a domino effect any color around the conversations you're having would be helpful.
Shagun Singh: Any color around the conversations you're having would be helpful.
Speaker Change: Okay.
Thomas Sandgaard: So at this time we don't have any more information that we can provide as we mentioned in the during the call we We met with the Defense Health Agency. We presented our arguments The claims that we received from TRICARE for payment suspensions are fairly vague. So we just presented our compliance with their guidelines and policies There are no other conversations with any other payers right now about any type of issues, and I also wanted to emphasize that this is not denied coverage. They continue to process our claims. This is a temporary payment suspension while they confirm that the evidence that we've provided and the arguments that we've provided and following their policy is appropriate.
Speaker Change: So at this time, we don't have any more information that we can provide as we mentioned during the call.
Speaker Change: <unk>.
Speaker Change: We met with the Defense Health Agency, we presented arguments.
Speaker Change: The claims that we received from Tricare core payments suspensions of fairly vague that we just presented our compliance with their.
Speaker Change: There are guidelines and policies.
There are no other conversations with any other payers right now about any type of issues and then I also wanted to emphasize that.
Speaker Change: This is not denied coverage to continue to process to process. Our claim state. This is a payment temporary payment suspension.
Speaker Change: They confirm that.
Speaker Change: Evidence that were provided in the argument that we provided.
Speaker Change: Owing their policy is.
Speaker Change: Appropriate.
Shagun Singh: Thank you.
Speaker Change: Got it. Thank you and then I just wanted to kind of touch on Q1 guidance.
Thomas Sandgaard: And then I just wanted to kind of touch on Q1 and guidance. You know, you guys gave us an update last month, I believe in March, and, you know, you guys missed Q1. So what got worse? What was unanticipated versus last month? And then also, with respect to your 2025 guidance, like, you know, you still haven't, you know, provided that, but, you know, is it likely? Or could you consider giving us a look into the non-TriCare portion of the business and how that is doing or what your expectation is in 2025? Thank you for taking the question.
Speaker Change: You guys gave us an update last month I believe in March and.
Speaker Change: You guys missed Q1, so so so what got worse.
Speaker Change: Anticipated versus last month, and then also with respect to your 2025 guidance like you still haven't.
Speaker Change: Provided that but.
Speaker Change: Is it likely or could you consider giving us a look into the non <unk> portion of the business and how that is doing and what your expectation is in 25. Thank you for taking the questions.
Speaker Change: Okay.
Speaker Change: So I.
Daniel Moorhead: So, you know, I'd say a couple of things. You know, when you're talking about the revenue miss in Q1, you know, there's a multitude of factors, you know, it's, you know, we have ins and outs with payers all the time. And our revenue recognition is pretty sensitive to those changes. And so we had a couple of those in Q1 and so we ended up a little short, I would say, for the rest of the year. You're correct. We haven't given guidance yet. We were waiting, you know, just to get a little more clarity on Tricare before we do that.
Speaker Change: I'd say a couple of things so.
Speaker Change: When you are talking about the revenue Miss in Q1.
Speaker Change: There's a multitude of factors.
Speaker Change: We have ins and outs with payers all the time and our revenue recognition is pretty sensitive to those changes and so.
We had a couple of those in Q1 and so we ended up a little short I would say for the rest of the year. You are correct. We haven't given guidance yet we were waiting just to get a little more clarity on Tri care.
Speaker Change: Before we do that so we would expect to give the remainder of the year hopefully when we announce our Q2 guidance or our Q2 results in Q.
Daniel Moorhead: So we would expect to give the remainder of the year, hopefully, when we announce our Q2 guidance or our Q2 results in Q, you know, at the beginning of Q3 in July, but generally, I would say, you know, again, the rest of the business operating as normal, you know, again, like we said, you know, we have some things bounce from quarter to quarter, but nothing else that was, you know, super material in that period.
Speaker Change: At the beginning of Q3 in July.
Speaker Change: But generally I would say again the rest of the business is operating as normal.
Speaker Change: Again, like we said, we have some things bounce from quarter to quarter, but nothing.
Alex: Alex It was super material in that period.
Alex: Thank you.
Yi Chen: Your next question comes from the line of Yi Chen from HC Wainwright. Your line is now open. Please go ahead. Thank you for taking my questions. My first question is, could you please confirm that the first quarter revenue and also the guidance for the second quarter contain no payments from TRICARE? That's correct.
Speaker Change: Your next question comes from the line of E. Cheng from H C. Wainwright. Your line is now open please.
Speaker Change: Go ahead.
E. Cheng: Thank you for taking my questions. My first question is could you. Please confirm that the first quarter revenue and also the guidance for the second quarter contained metal payments from thank you.
Speaker Change: That's correct.
E. Cheng: Okay.
E. Cheng: So.
Daniel Moorhead: So, if the outcome is positive, do you believe TRICARE will give you a lump sum payment that was due in the first quarter and the second quarter? I don't know that we're positive on how it'll come through, but they have told us that we would get reimbursed for those claims that haven't been paid. We know that all those claims, even some from the fourth quarter of last year, have been adjudicated, and we can see that in the system. The missing thing is obviously the decision to open up for the temporary payment suspension. So, ideally, there would be one or a number of payments on the same day, if they want to spread that out.
E. Cheng: If the outcome is positive.
E. Cheng: <unk> will give you a lump sum payment that was due in the first quarter in the second quarter.
E. Cheng: I don't know that were positive on how it will come through but they have.
E. Cheng: For us that we would get reimbursed for those claims that haven't been paid we know that all of those claims even some from the fourth quarter of last year has been adjudicated and.
E. Cheng: We can see that in the system.
E. Cheng: Missing thing is obviously the decision too.
E. Cheng: To open up for the temporary payment suspension.
E. Cheng: So ideally that would be.
E. Cheng: Or a number of.
E. Cheng: Payments on the same day.
E. Cheng: Want to spread that out all.
Daniel Moorhead: How that would flow in a positive outcome, we don't know that yet.
E. Cheng: How that would flow in.
E. Cheng: In a positive outcome.
E. Cheng: We don't know that yet.
Thomas Sandgaard: The main thing is, certainly for me... is that we believe we have proven in very clear terms that we have complied with all guidelines and policies that they have in place.
E. Cheng: The main thing is certainly for me.
E. Cheng: Is that.
E. Cheng: We believe we have proven.
E. Cheng: In very clear terms that we are compliant with all guidelines and policies that they have they have in place.
E. Cheng: Okay.
Thomas Sandgaard: and uh if let's just uh you know Assume if, for whatever reason, the outcome is negative, will you stop servicing the TRICARE patients? And is there a plan or are you considering a plan that would be able to make up the revenue loss? To make up the revenue that else was coming from TRICARE, that's, we're addressing that, but refocusing ourselves for, so that we will grow in other areas. They have so many hours available in a day, and if we direct them to other areas, that we expect that to generate the equal amount or maybe even better revenues, depending on what clinics they hit.
E. Cheng: And if let's just.
E. Cheng: Hum.
E. Cheng: If for whatever reason that outcome is negative.
E. Cheng: Will you stop servicing the trachea patients and is there a plan or are you considering glammed outlook.
E. Cheng: Yes.
E. Cheng: The revenue loss with the question.
E. Cheng: Your patients.
E. Cheng: The two Meg up to revenue.
E. Cheng: Sure.
E. Cheng: Els was coming from from trachea.
E. Cheng: Yes.
Speaker Change: We're addressing that by refocusing our sales force so that we will grow in other areas. So many hours.
Speaker Change: Available in a day and if we direct them to other areas that we expect that to <unk>.
Speaker Change: Generate the equal amount or maybe even better revenues, depending what clinics they hit.
Thomas Sandgaard: and yeah.
Speaker Change: And.
Speaker Change: Yes.
Speaker Change: Okay.
Yi Chen: And last question. So if NECO is approved before the end of 2025, do you expect NECO to generate a meeting for sales in 2026? Or it's more likely a Yeah, so we will Launch NECO immediately once it's cleared. and 2026 is the the year for revenue for for NECO. We will start with a controlled launch and ensure that we can build and service this for our customers. But 2026 is the year for revenue for NECO. Okay, thank you very much. You're welcome.
Speaker Change: And last question so.
Speaker Change: Yes, Nicole is.
Speaker Change: <unk> approved before the end of 2025.
Speaker Change: You expect <unk> to generate meaningful sales in 2026 or more likely 2027.
Speaker Change: Yes, so we will.
Speaker Change: Launched Nico immediately once it's cleared.
Speaker Change: In 2026 is the year for revenue for for Niko.
Speaker Change: We will start with a controlled launch.
Speaker Change: And ensure that we can build and service this for our customers.
Speaker Change: 2026 is the year for revenue from Nico.
Speaker Change: Okay. Thank you very much.
Speaker Change: Youre welcome.
Operator: There are no further questions at this time.
Thomas Vanguard: There are no further questions at this time, please continue Mr. Thomas Vanguard.
Thomas Sandgaard: Please continue, Mr. Thomas Sandgaard. Yeah, thank you for joining us today. We are pleased with our performance here this last year and the consistent growth that our team is delivering. We obviously had a hiccup earlier in the year that we are working through and resizing the business. So with that said, we look forward to leveraging the momentum that we have and with our sales force and the business model that we have built and speaking to you at upcoming investor events. We appreciate your time and interest in Zynex.
Speaker Change: Yeah.
Speaker Change: Yes. Thank you for joining US today, we are pleased with our performance here. This last year and the consistent growth that our team is delivering we obviously had.
Speaker Change: Earlier in the year.
Speaker Change: That we are working through.
Speaker Change: And right sizing the business.
Speaker Change: So with that said, we look forward to leveraging the momentum we have.
Speaker Change: And.
Speaker Change: It was with our sales force and a business model that we have we have built and speaking to you at the upcoming Investor events. We appreciate your time and interest in <unk> have a great day.
Thomas Sandgaard: Have a great day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.