Q2 2025 Zynex Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and welcome to the ZYNEX second quarter 2025 earnings conference call. At this time, all participants are in a 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 Dan Moorhead, Chief Financial Officer of ZYNEX. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to the Phoenix Second quarter 2025 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to Dan Moorhead, Chief Financial Officer.

Please go ahead.

Dan Moorhead: Thank you, Operator, and good afternoon, everyone. Earlier today, we released financial results for the second quarter ended June 30, 2025. A copy of the press release is available on the company's website. 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 2024 Form 10-K and subsequent Form 10-Qs, along with any amendments 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 and legal environment, sales and marketing strategies, capital resources, or other operating performance. With that, I'll now turn the call over to Thomas.

Thank you operator, and good afternoon, everyone.

Earlier today, we released financial results for the second quarter ended June 30th 2025.

A copy of the press release is available on the company's website.

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 Companys 'twenty 'twenty four Form 10-K, and subsequent Form 10-Qs.

Along with any amendments.

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 and legal environment sales and marketing strategies capital resources or other operating performance.

With that I'll now turn the call over to Thomas.

Thomas Sandgaard: Thank you, Dan, and good afternoon, everyone. Thank you for joining us today for the second quarter 2025 earnings call. With me today are Anna Lucsok, our Chief Operating Officer; Don Gregg, President of ZYNEX Monitoring; and Dan Moorhead, our Chief Financial Officer. Anna will provide an update on our initiatives in the Pain Management Division, and Don Gregg will discuss how far we've come in our Patient Monitoring Division and our recent submission to the FDA for our NICO pulse oximeter. Dan will go through the second quarter's financial results. The second quarter of 2025 is dominated by many improvements centered around refocusing our pain management business model, not only reshaping our sales force and redirecting them to slightly different call points, but also transforming our corporate structures to better reflect and streamline operations. Later this year and into the next year, we'll see the impact of this effort.

Thank you Dan and good afternoon, everyone.

Thank you for joining us today for the second quarter 2025 earnings call.

With me today are analog Socs, our chief operating officer, Tom Greg President of Sonics monitoring and Dan Moorhead, Chief Financial Officer.

And I will provide an update on our initiatives in the pain management Division and Gregg will discuss how far we've come in our patient monitoring division and our recent submission to the FDA for Niko pulse oximeter.

Dan will go through the second quarters financial results.

The second quarter of 'twenty 'twenty five is dominated by many improvements centered around refocusing our pain management business model.

Reshaping, our sales force and redirecting them, it's a slightly different call points.

But also trends transforming our corporate structures to better reflect and streamline operations.

Later, this year and into the next year, we will see the impact of this effort.

Thomas Sandgaard: We're seeing a reduction to overall expenses of approximately 40 million annualized and a more efficient use of our inventories, better supply chain management, and a more diversified prescriber and payer customer base, all in support of our goal to return to positive cash flow by the end of this year. We recently announced the addition of Steven Dyson as our new CEO, and Steven brings over 25 years of experience in the medical technology sector, primarily through his leadership at Apex, a global private equity firm. Steven brings deep expertise and a proven track record in the medical sector. His leadership will be helpful as we refocus our business strategy toward a more optimized payer mix and work to return ZYNEX to a strong growth trajectory.

We are seeing a reduction to all expenses of approximately $40 million annualized and a more efficient use of our inventories better supply chain management.

Our more diversified prescriber and payer customer base all in support well go to return to positive cash flow by the end of this year.

Yeah.

We recently announced the addition of Stephen Dyson as our new CEO.

Steven brings over 25 years of experience in the medical technology sector, primarily show his leadership at apex global private equity firm.

Steven brings deep expertise and a proven track record in the medical sector.

His leadership will be helpful. As we focus our business strategy toward a more optimized payor mix and work to return <unk> to a strong growth trajectory.

Thomas Sandgaard: His start date is August 18th, and I look forward to working with him in my new role as just Chairman of the Board. I should also mention that he and I are very aligned on all the major things that need to get done. In another also important development, Dan Moorhead, our CFO of AJS, has recently resigned, as announced in our 8K filing two days ago. He's on the call today and available to answer questions. As soon as we have a replacement appointed, we'll update everyone immediately, of course. As I'm sure most of our listeners know, we submitted the FDA application on our NICO laser pulse oximeter back in May.

You start date is August 18th and I look forward to working with him in my new role as just chairman of the board.

I should also mention that he and I are very aligned on all of the major things that needs to get done.

In another also important development.

Dan Moorhead, our CFO of Ags has recently assigned as announced in our 8-K filing two days ago.

He's on the call today and available to answer questions.

As soon as we Havent replacement appointed will update everyone immediately of course.

As I'm sure most of our listeners know we submitted the FDA application that are Niko <unk> laser pulse oximeter back in May.

Thomas Sandgaard: This product marks a historic milestone in the evolution of pulse oximetry and is a major game changer in our mission to improve the quality of care and patient outcomes with unique breakthrough technologies in our hospital monitoring division. We are encouraged by the early attention we've received from the FDA and the line of questions we've answered already. We expect at least one more round of questions that will take several months before clearance. Don will provide you with more details on this exciting development. And the Tricare temporary payment suspension is still ongoing, and it's hard to predict exactly how long it would take before we have a resolution to this. We are obviously hopeful that it will be sooner rather than later. We are actively cooperating with DHA and Tricare in their claims reviews, and we are advocating for the rescission of the payment suspension.

These products make marks a historic milestone in the evolution of pulse oximetry and is a major game changer in automation to improve the quality of care and patient outcomes with unique breakthrough technologies and our hospital monitoring division.

We are encouraged by the early attention we have received from the FCA and the line of questions were answered already.

We expect at least one more round of questions that will take several months before clearance Don will provide you with more details on this exciting development.

And the Tricare temporary payment suspension is still ongoing and it's hard to predict exactly how long it would take before we have a resolution to this.

We are obviously hopeful that it will be sooner rather than later.

We are actively cooperating with DHA and Tri care in their claims reviews, and we are advocating for authorization of the payments pension.

Thomas Sandgaard: In support of Tricare's goals of patient care, we've also agreed to continue servicing existing Tricare patients, and we are honoring prescriptions for new patients. While we are working on a resolution with Tricare, we are redirecting our focus to fully operate without relying on Tricare's revenue. We are committed to diversifying our revenue streams even more. And during the quarter, we continued our efforts to refocus our sales force and operations to reflect the current landscape of insurance coverage and have made significant strides towards improving cash flow. This has included several efficiency improvements in our internal operations, relocating staff to more profitable business units, reducing our cost of goods sold, updating our sales management structures while driving the sales force in the field to become more efficient and productive.

In support of trade case goes for patient care, we also equate to continue servicing existing tri care patients.

And we are annoying prescriptions for new patients, while we're working on a solution, which I can't we are redirecting our focus to fully operate without relying on.

<unk> revenue.

We are committed to diversifying our revenue streams even more.

During the quarter, we continued our efforts to refocus our sales force and operations to reflect the current landscape of insurance coverage and have made significant strides towards improving cash flow.

This has included several efficiency improvements you know internal operations relocating staff to more profitable business units, reducing our cost of goods sold.

Updating our sales management structures, while driving the sales force in the field to become more efficient and productive.

Thomas Sandgaard: Our efforts to redirect our sales force and reduce expenses internally are beginning to take effect now, and over the next several quarters, it will naturally show as improvements to our bottom line. We've reported net revenue of 22 million in the quarter while we collected 26 million in cash in the second quarter. We posted a net loss of 20 million, while more than half of that was due to non-cash adjustments to our tax allowance. We strongly believe in our commitment to help patients with the best products for pain relief without side effects that are associated typically with opioids. We are confident that our efforts to reduce costs and redirecting our sales force will be pivotal to improve cash flow and create a foundation for continuing to grow into the huge demand for our products.

Our efforts to redirect our sales force and reduce expenses internally are beginning to take effect now.

And over the next several quarters it will naturally show as improvements to the bottom line.

Okay.

We've reported net revenue of $22 million.

In the quarter, while we collected $26 million in cash in the second quarter.

We posted a net loss of $20 million well more than half of that was due to a noncash adjustments to our tax allowance.

We strongly believe in our commitment to help patients with the best product for pain relief without side effects that are associated typically with opioids.

We are confident that our efforts to reduce costs and redirecting our sales force will be pivotal to improve cash flow.

Create a foundation for continuing to grow into the huge demand for our products.

Thomas Sandgaard: Our revenue is becoming more diversified with increased call points, increasing sales of other products, technologies, and more end users. We are very optimistic about the future of ZYNEX as we have proven to be a business that can grow profitably. I'll now turn the call over to Anna Lucsok to provide a more detailed update on the operations. Anna.

Oh revenue is becoming more diversified with increased call points.

Increasing.

Other products technologies and more end users.

We are very optimistic about the future of site access we have proven to be a basis that control.

Possibly.

I'll now turn the call over to analog Socs to provide a more detailed update on the operations Anna.

Anna Lucsok: Thank you, Thomas. As Thomas mentioned, we were notified by Tricare that the temporary suspension of payments will continue as they complete their review. We continue to remain an in-network provider and service existing and new Tricare patients as directed by DHA. In June, we decreased overall staff by an additional 14%, mostly in our corporate office. We anticipate this, along with previous expense reductions, will result in an annual savings up to 40 million. As part of the restructure and based on payer performance analysis, we've categorized payers into different tiers and are actively shifting our focus to the most favorable segments. As a result, we've right-sized shipments for orders and adjusted sales commissions to reflect performance. Internally, we've eliminated close to 90 corporate roles, replacing them with more cost-effective outsourced teams.

Thank you Thomas as Thomas mentioned, we were notified by Tricare that the temporary suspension of payments will continue as they complete their review we continue to remain an in network provider and service existing and new Tri care patients as directed by DHA.

June we decreased overall staff by an additional 14% mostly in our corporate office. We anticipate this along with previous expense reductions will result in an annual savings of up to $40 million.

As part of the restructuring and based on their performance analysis, we've categorized Paris into different tiers and are actively shifting our focus to the most favorable segments. As a result, we've right sized shippers for orders and adjusted sales commissions to reflect performance in <unk>.

Generally we've eliminated close to 90 corporate roles, replacing them with more cost effective outsource teams. These actions are expected to reduce expenses, while allowing our teams to focus more efficiently on our core business on a monthly basis.

Anna Lucsok: These actions are expected to reduce expenses while allowing our teams to focus more efficiently on our core business on a monthly basis. While we anticipate a near-term impact on revenue, primarily within our supply segments, it reinforces our patient-centric approach and strengthens our ability to build and sustain long-term value-based relationships with payers. We believe this strategy will drive greater patient outcomes and operational sustainability over time. We've undertaken a comprehensive realignment of our sales force to drive productivity and position the organization for long-term growth. One of the key initiatives has been resetting our sales organization to better align with and reflect our business objectives. In parallel, we've restructured the sales team by reducing the overall headcount and exiting sales reps that don't meet our standards. We also streamline our organizational structure by removing redundancies, which has allowed for oversight and support from senior leadership.

Well, we anticipate a near term impact on revenue primarily within our supply segment. It reinforces our a patient centric approach and strengthens our ability to build and sustain long term value based relationships with payers.

This strategy will drive greater patient outcomes and operational sustainability over time.

We have undertaken a comprehensive realignment of our sales force to drive productivity and position the organization for long term growth one of the key initiatives has been resetting our sales organization to better align with and reflect our business objectives.

In parallel we've restructured the sales team by reducing the overall headcount and exiting sales reps that don't meet our standards.

Also streamline our organizational structure by removing redundancies, which has allowed for oversight of support from senior leadership.

Anna Lucsok: This leaner structure empowers leadership to stay focused on the metrics that matter for the business and performance indicators that enable faster identification of coaching opportunities to ensure every individual representing our company represents our values. Additionally, we revamped our sales compensation model to drive a performance-focused culture that meets the company's objectives for good patient care and experience and regulatory compliance. High-performing sales employees are now rewarded with increased base pay, while mid-tier performers are incentivized to improve through clearly defined targets. This approach not only drives accountability but ultimately creates a clear pathway for reps to appropriately grow their earnings if they deliver better business outcomes for better patient experience. Long-term, our objective remains unchanged. We aim to fully staff all 800 sales territories with highly capable data-driven representatives.

This leaner structure empowers leadership to stay focused on the metrics that matter for the business and performance indicators to enable faster identification of coaching opportunities to ensure every individual representing our company represents our values.

Additionally, we revamped our sales compensation model to drive performance focused culture that needs the company's objectives for good patient care and experience and regulatory compliance.

High performance sales in place and now rewarded with increased base baseball's mid tier farmers are incentivized to improve to a clearly defined targets. This approach not only drives accountability about ultimately creates a clear pathway for reps to appropriately grow their earnings they stay deliver better business outcomes better patient experience.

Long term our objective remains unchanged, we aim to fully staff all 800 sales territories with highly capable data driven representatives will believe this focused and disciplined strategy will allow us to serve our patients more effectively and deliver consistent profitable growth.

Anna Lucsok: We believe this focused and disciplined strategy will allow us to serve our patients more effectively and deliver consistent, profitable growth. I'll now turn the call over to Don Gregg to provide a more detailed update on the patient monitoring business. Don.

I'll now turn the call over to Greg to provide a more detailed update on the patient monitoring business.

Don Gregg: Thank you, Anna. I want to provide an additional update on the progress of our NICO pulse oximeter and the overall market opportunities for this product. We successfully submitted NICO to the FDA in May, and there has been initial interactive review with the FDA. We are expecting an additional information request in August and an overall six-month clearance process. Last quarter, I spent some time explaining why we are well-positioned with this technology and the massive opportunity we believe is in front of us. Clinical results show the NICO laser technology is superior to LED pulse oximeters currently in the market today, as they have severe accuracy issues in patients with darker skin, elevated carbon monoxide or methemoglobin in the bloodstream, and especially those with low levels of blood oxygen. There are very few clinical procedures that do not use pulse oximetry.

Thank you Anna I want to provide an additional update on the progress of our Nikko pulse oximeter and the overall market opportunities for this product.

We successfully submitted Nico to the FDA in May.

And there has been initial interactive review with the FDA.

We are expecting an additional information request in August and an overall six month clearance process.

Last quarter I spent some time, explaining why we are well positioned with this technology and the massive opportunity. We believe is in front of US clinical results show. The Nico laser technology is superior to Leds pulse Oximeter is currently in the market today as they have severe accuracy issues in patients with darker skin.

<unk>.

Elevated carbon monoxide or hemoglobin in the bloodstream, and especially those with low levels of blood oxygen.

There are very few clinical procedures that do not use pulse oximetry.

Don Gregg: Skin pigmentation has 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. These accuracy issues are on the FDA agenda and have resulted in device manufacturer litigation to date. Numerous clinical publications prove LED-based pulse oximeters that are on the market today are inaccurate on darker skin. Given this, 25 attorney generals and the US Senate requested FDA to address pigmentation bias. As a result of this, the FDA funded OpenOximetry to improve the safety and precision of pulse oximeters that openly publish their testing results. Multiple FDA panel meetings resulted in a new draft guidance issued in January of 2025, in which our technology conforms to that guidance.

<unk> segmentation have 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. These accuracy issues are on the FDA agenda and have resulted in device manufacturer litigation to date.

Numerous clinical publications prove led based pulse oximeter that are on the market today are inaccurate on darker skin given this twenty-five attorney generals and the U S Senate requested FDA to address pigmentation bias.

As a result of this the FDA funded open oximetry to improve the safety and precision of pulse oximeter that openly published their testing results.

Multiple FDA panel meetings resulted in a new draft guidance issued in January of 2025, and which our technology conforms to that guidance.

Don Gregg: The NICO pulse oximeter recently submitted to the FDA is powered by patent-protected laser technology that has been validated to solve the accuracy issues of LED technology in a clinical study at Duke University. Laser pulse oximetry is not biased, allowing for more accurate readings across all individuals regardless of skin pigmentation, elevated carbon monoxide or methemoglobin in the bloodstream, and especially those with low levels of blood oxygen. More accurate data results in improved care and better patient outcomes. We believe our NICO pulse oximeter will provide reliable and equitable care for all. In addition to solving current LED-based pulse oximeter technology accuracy issues, the NICO technology platform is poised to unlock the $1 billion invasive lab-based co-oxymetry market with non-invasive laser pulse oximetry technology by bringing it directly to the bedside with instant results and shifting the standard of care.

<unk> Nikko pulse Oximeter recently submitted to the FDA is powered by patent protected laser technology that has been validated to solve the accuracy issues of OLED technology in a clinical study at Duke University Les.

Laser pulse oximetry is not biased, allowing for more accurate readings across all individuals regardless of skin pigmentation.

Elevated carbon monoxide or met the hemoglobin in the bloodstream and especially those with low levels of blood oxygen.

More accurate data results and improved care and better patient outcomes.

Believe or Niko pulse oximeter will provide reliable and equitable care for all in addition to solving current led <unk>.

Based pulse oximeter technology accuracy issues.

Nico technology platform is poised to unlock the $1 billion and base of lab based co oximetry market with noninvasive laser pulse oximetry technology by bringing it directly to the bedside with instant results and shifting the standard of care.

Don Gregg: Co-oxymetry is a critical diagnostic tool for emergency room and hospital patients to determine their treatment pathway. Current co-oxymetry technology is lab-based for the most part, uses similar laser spectrometry technology, and suffers from a number of drawbacks that affect patient outcomes and high hospital cost. Co-oxymetry measurements require a blood draw today, which is painful and risks infection. Patients wait for results from the lab, which reduces the ability to select appropriate treatment in a timely fashion. These labs are sometimes offsite and result in lengthy delays. It's also a more expensive approach due to hospital lab processes and high-cost consumables. The NICO platform uses needle-free, patent-protected laser technology to deliver instant, continuous, and low-cost results at the bedside to unlock this opportunity.

Co oximetry is a critical diagnostic tool for emergency room and hospital patients to determine their treatment pathway.

Current core oximetry technology as lab based for the most part uses similar laser spectrometry technology and suffers from a number of drawbacks that affect patient outcomes and high hospital cost.

Oximetry measurements require a blood draw today, which is painful and risks of infection.

Patients wait for results from the lab, which reduces the ability to select appropriate treatment in a timely fashion. These labs are sometimes off site and result in lengthy delays. It's also a more expensive approach due to hospital lab processes and high cost consumables.

The Nico platform users needle free patent protected laser technology to deliver instant continuous and low cost results at the bedside to unlock this opportunity.

Don Gregg: To close, we submitted NICO to the FDA in May of this year, and we expect approval to take approximately six months from receipt of an additional FDA additional information request that's scheduled for August. Patient monitoring is a multi-billion dollar market, approximately three and a half billion globally, 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. ZYNEX is pushing to be a key industry partner and leader to all clinicians and further demonstrate how NICO's laser pulse oximetry technology inherently solves the current market challenges, especially accuracy and skin pigmentation bias, while improving the field of patient monitoring. 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.

To close we submitted Nico to the FDA in May of this year and we expect approval will take approximately six months from receipt of the of an additional of an FDA additional information request.

Scheduled for August.

Patient monitoring is a multibillion dollar market approximately $3 5 billion globally that we believe Nico will enter as a superior product that can meaningfully improve care to the broadest range of patient patients when they need it most <unk> pushing to be a key industry partner.

<unk> and leader to all clinicians and further demonstrate how nicos laser pulse oximetry technology inherently solve the current market challenges, especially accuracy and skin pigmentation bias, while improving the field of patient monitoring I will now turn the call over to Dan Moorhead, Chief Financial Officer for a more.

And look at the quarter's financial performance.

Dan Moorhead: Thanks, Don. Please refer to our press release issued earlier today for a summary of our financial results for the second quarter ended June 30, 2025. Net revenue was $22.3 million compared to $49.9 million in the second quarter of 2024. Device revenue was $11 million, and supplies revenue was $11.3 million. The revenue decline was primarily attributable to the temporary payment suspension from Tricare and slowing order growth, which was impacted by sales force reductions, shipping policy adjustments, and the redirection of the sales force activity. Gross profit in the second quarter was $15.2 million, or 68% of revenue, as compared to $39.9 million, or 80% of revenue in Q2 2024. Sales and marketing expenses decreased by 45% to $12.8 million in the second quarter of 2025.

Thanks, Don.

Please refer to our press release issued earlier today for a summary of our financial results for the second quarter ended June 32025.

Net revenue was $22 3 million compared to $49 9 million in the second quarter of 2024.

Device revenue was $11 million in supplies revenue was $11 3 million.

The revenue decline was primarily attributable to the temporary payment suspension from Tricare and slowing order growth, which was impacted by salesforce reductions shipping policy adjustments and the redirection of the sales force activity.

Gross profit in the second quarter was $15 2 million or 68% of revenue.

As compared to $39 9 million or 80% of revenue in Q2 2024.

Sales and marketing expenses decreased by 45% to $12 $8 million in the second quarter of 2025.

Dan Moorhead: The primary contributor to the decrease in sales and marketing expenses was our headcount reduction as we continue to focus on sales rep productivity. G&A expenses were $12.7 million in the second quarter of 2025 compared to $14.5 million last year. Net loss was $20 million and 66 cents per share in the second quarter of 2025 compared to net income of $1.2 million in Q2 2024. As Thomas mentioned, included in our net loss is a non-cash charge of $10.3 million or 34 cents per share related to an allowance on our deferred tax assets. Adjusted EBITDA loss for the three months ended June 30, 2025 was $8.9 million as compared to an adjusted EBITDA of $3.5 million in the quarter ended June 30, 2024.

The primary contributor to the decrease in sales and marketing expenses with our head count reduction as we continue to focus on sales rep productivity.

G&A expenses were $12 7 million in the second quarter of 2025 compared to $14 5 million last year.

Net loss was $20 million 66 per share in the second quarter of 2025 compared to net income of $1 2 million in Q2 2024.

As Thomas mentioned included in our net loss is a noncash charge of $10 3 million or <unk> 34 per share related to an allowance on our deferred tax assets.

Adjusted EBITDA loss for the three months ended June 32025 was $8 9 million as compared to adjusted EBITDA of $3 5 million in the quarter ended June 32024.

Dan Moorhead: On the balance sheet, we had $17.5 million of cash on hand at June 30, 2025, and we're able to reduce our cash burn significantly in Q2. We expect it to be even less in Q3. Our convertible debt of $60 million is due in May of 2026, so you'll notice it's now a current liability. We are currently working with our advisors to refinance this liability. With that, I'll now turn it back over to Thomas.

On the balance sheet, we had $17 5 million of cash on hand at June 32025, and we were able to reduce our cash burn significantly in Q2, we expect it to be even less in Q3.

Our convertible debt of $60 million is due in may of 2026. So youll notice. It's now a current liability. We are currently working with our advisors to refinance this liability.

With that I'll now turn it back over to Thomas.

Thomas Sandgaard: Yeah, thank you, Dan. In terms of forward-looking guidance, we have decided to suspend quarterly guidance while we are onboarding our new CEO and looking to appoint a new CFO following Dan's announced departure. Steven Dyson, the incoming CEO, will lead a review of the company's forecasting procedures and will provide an update to investors on the potential resumption of guidance in the coming quarters. Our mission is to improve the quality of life for patients suffering from debilitating pain and illness by providing the highest 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 and provide a more equitable healthcare outcome. We continue to adjust the cost structure as needed and will soon get back to a strong growth trajectory.

Yes, Thank you Dan.

In terms of forward looking guidance.

We have decided to suspend quarterly guidance, while we are on boarding our new CEO and looking to appoint a new CFO following dense announced departure.

Stephen <unk> incoming CEO will lead a review of the company's forecasting procedures and will provide an update to investors on the potential for assumptions of guidance in the coming quarters.

Our mission is to improve the quality of life for patients suffering from debilitating pain and illness by providing the highest technology and service centers.

In pain management, we do this by providing a non opioid alternative to pain management and monitoring division aims to measure data more accurately across patients and provide them with heska.

Health care outcomes.

We continue to adjust the cost structure as needed.

<unk>.

Soon get back to a strong strong growth trajectory.

Thomas Sandgaard: Looking forward, we believe we have additional call points and revenue streams that can drive further growth. We have always shown an ability to adjust to market, customer, and reimbursement changes and continue investing and refocusing our business. With that, let's open the call up for questions.

Looking forward, we believe we have additional call points in revenue streams that can drive further growth.

<unk> always shown an ability to adjust to market customer and reimbursement changes and continue investing in refocusing our business.

With that let's open the call up for questions.

Operator: Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your Dutch telephone. You will then hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by two. And if you're using your speakerphone, please lift the handsets first before pressing any keys. Please go ahead and press star one now if you have any questions. And your first question will be from Jeffrey Cohen at Ladenburg Thalmon. Please go ahead, Jeffrey.

Ladies and gentlemen, if you do have any questions. At this time. Please press star followed by one on your Touchtone phone you will then hear a prompt that you had has been raised and should you wish to decline from the polling process. Please press star followed by two and if you're using a speaker phone. Please lift the handset first before pressing any keys. Please go ahead and press star one now.

Do you have any questions.

And your first question will be from Jeffrey Cohen Ladenburg Thalmann. Please go ahead Jeffrey.

Jeffrey Cohen: Oh, hello, folks. How are you doing? A few questions from our end. I guess, firstly, I just wanted to review and recap with Don on NICO. So the initial submission was May. August is when you expect to return questions back to the FDA, or is August when you expect to hear back from them again and remind us on anticipated approval? Would it be closer to October or December?

Hello folks how are you doing a few questions from our end I guess.

Firstly I just want a review and recap with Dawn Newco show.

The initial submission was made.

August is when would you expect to return questions back to the FDA or is August one.

Do you expect to hear back from them again and remind us on.

Anticipated approval closer to October or December.

Don Gregg: Yeah, thanks for the question. We've been in dialogue with FDA in what's called an interactive review. We've received multiple discussion questions and dialogue with them. We're expecting an AI, which should be in August, and then we are anticipating six months from then clearance. Depending on what is in the AI, based on what we've already had discussions with FDA regarding, I would expect that clearance would be closer to that December timeframe.

Yes, thanks for the question.

We've been in dialogue with FDA.

What's called an interactive review we've received multiple.

Discussion questions and dialog with them, we're expecting an AI, which.

Should be in August and then we are anticipating six months from then clearance.

Depending on what is in the AI based on what we've already had discussions with FDA regarding I would expect that.

<unk> would be closer to that December timeframe.

Jeffrey Cohen: Okay. And you feel confident that there won't be a second AI iteration?

Okay, and you feel confident that there won't be.

Secondarily iteration.

Don Gregg: Well, nobody really knows exactly what the FDA might do in that case, but we have forecasted AI questions. We've got responses ready for those, and we feel pretty confident in our submission to the FDA, given all the work that we've done over the past several years.

Well, nobody really knows exactly what the FDA might do in that case, but we have forecasted AI questions. We've got responses ready for those and we feel pretty confident in our submission to the FDA given all the work that we've done over the past several years.

Jeffrey Cohen: Okay. Got it. Perfect. And then secondly, could you talk about Tricare a little further as far as next steps and timelines as far as a next iteration when you may meet or have some news about the relationship there, and then maybe talk a little bit about those patients and their patients and referrals? So Tricare is solely for inpatients to you. That flow has continued or perhaps diminished, and are those patients going on therapy or alternatively going elsewhere?

Okay, Perfect and then secondly could you talk about charter a little further as far as.

Next.

Time lines for us.

The next generation when you may need or have some news about the relationship there and then maybe talk a little bit about.

Those patients and their patients.

Okay referrals, so tricare story for patients to get flows continued or perhaps diminishing or those patients.

Going on therapy, or alternatively going elsewhere.

Anna Lucsok: So we don't have any information about Tricare payment suspension, next steps at this point, and when and if it's going to get resolved. But we continue to service Tricare patients, existing and new patients. The inflow of patients has reduced a little bit just as a result of reduced sales rep headcount by about half.

So we don't have any information about tri care payments suspension next steps at this point.

And when.

If it's going to get resolved.

But we continue to service tricare patients existing and new patients.

The inflow of patients has.

We changed a little bit just as a result of reduced sales rep headcount by about half.

Jeffrey Cohen: Got it. And then lastly, for Dan, perhaps talk a little bit about the sales and marketing line and/or the G&A line as far as the back half of the year and how those last two quarters may compare with Q2 and where you ended up Q2.

Got it and then lastly for Dan.

Perhaps talk a little bit about the sale of some or the sales and marketing line Android the G&A line as far as the back half of the year.

Are there some class two quarters may compare with Q2, and where you ended up future.

Dan Moorhead: Yeah, I think you know you'll see continued reductions. We made you know the second of our cost reductions were done in June, and so you didn't really get the full effect of those. So on the sales side, I think you're going to continue to see a decrease probably down another 15 to 20 percent in Q3, and then I think it probably flattens out for the rest of the year. And then on the G&A side, it's probably closer to a 10 to 12 percent decrease from Q2 to 3, and then again flattening out. But you'll really start to see the full effect of the cost reductions starting in Q3.

Yes, I think.

Youll see continued reductions we made the second of our cost reductions were done in June and so you didn't really get the full effect of those so.

On the sales side, I think youre going to continue to see a <unk>.

Decrease probably down another 15% to 20% in Q3, and then I think it probably flattens out for the rest of the year and then on the G&A side.

It's probably closer to a 10% 12% decrease from Q2 to three and then again flattening out but.

You'll really start to see the full effect of the cost reductions starting in Q3.

Okay.

Jeffrey Cohen: Okay. Perfect. That does it for us. Thanks for taking the questions.

Okay perfect.

Thanks for taking the questions.

Dan Moorhead: Sure.

Sure.

Operator: Thank you. Next question will be from Yi Chen at HC Wainwright. Please go ahead.

You next question will be from Houston H C. Wainwright. Please go ahead.

Okay.

Eduardo: Hi there. This is Eduardo on for you. Thanks for taking the question. Do you have any more details on the nature of the data request from the FDA? You mentioned that you've done some preparation already to anticipate those questions. Just kind of to get some color on any hesitations they might have or where they're looking for more detail in the technology. You know.

Hi, there this is eduardo on for Ying, Thanks for taking the question.

Any more details on.

The nature of the data requests from the FDA you mentioned that you've done some preparation already to anticipate those questions just kind of get some color on.

Any hesitation that they might have or where theyre looking for more detail in the technology.

Don Gregg: I think that the FDA, Yi Chen, is definitely concerned about LED technology. They want to ensure that our technology and our clinical trial performs as good as or better than LED technology. They've also, you know, we've had a lot of dialogue on claims positioning of it because it is a different light source technology, things like that. And I'm anticipating that, you know, they will continue to review our clinical data. They will continue to review our claims to ensure where this is positioned properly for those claims, etc., etc. And so we are well prepared to talk through this with them and to respond in a very quick manner around that because we'd like to get clearance as soon as possible.

I think that the.

FDA E churn is.

Definitely concerned about led technology, they want to ensure that our technology and our clinical trial performs as good as or better than OLED technology.

They are also we've.

Had a lot of dialogue on.

Claims positioning of it because it is a.

Current light source technology things like that and I'm anticipating that they will continue to review our clinical data. They will continue to review our claims to ensure we're positioned properly.

For those claims et cetera et cetera.

And so we are well prepared to talk through this with them and to respond.

Very quick manner around that because we'd like to get clearance as soon as possible.

Okay.

Eduardo: Thanks. That's really helpful. And I guess curious, I know it might be a little early, any conversations with the new CEO and possible initiatives or strategies, either on the commercial side or the reimbursement side, that you guys might have moving forward?

Thanks, that's really helpful and I guess I'm curious I know it might be a little early any conversations with the new CEO and possible initiatives or strategies.

<unk> side or the reimbursement side.

You guys might have moving forward.

Thomas Sandgaard: Yeah, obviously, I have a close dialogue with Steven Dyson, and the rest of the leadership team is also engaged in basically making sure that things that come up at this point in time, that we're all aligned. All these initiatives to refocus on the pain management side, we're fully aligned on, and it fits well what he's good at, sorting out a difficult situation and make sure that the valuation of the company over the next several years will be much better than it is today.

Yes, let me see.

A close dialogue with.

Steven Dyson.

The rest of the leadership team.

It is also engaged in.

And basically making sure that.

Things that come up at this point in time that we're all aligned.

All these initiatives to refocus on the pain management side with.

We are fully aligned on.

And.

It's it fits well with what he is good at.

Sorting sorting out difficult situation and make sure that the.

The valuation of the company over the next several years.

Well, we'll be we'll be much better than it is today.

Eduardo: All right. That sounds good. Thanks so much for taking the questions.

Alright that sounds good thanks, so much for taking the questions.

Yeah.

Operator: Thank you. Next question will be from Shagun Singh at RBC Capital Markets. Please go ahead.

Thank you next question will be from shotgun <unk> at RBC capital markets. Please go ahead.

Moorman Soo: Thank you, Operator. Good afternoon, everyone. Thanks for taking the question. I guess just a couple of questions for me. Could you touch on why revenue came in below the recently provided guidance? I understand it was due to Tricare and some of the sales force reduction, but beyond that, was there anything incremental that drove the sort of low visibility coming into the quarter? Thank you.

Thank you operator, good afternoon, everyone and thanks for taking the question.

I guess, just a couple of questions from me.

Touch on why revenue came in below that recently provided guidance I understand.

Obviously, you could strike here in some of the sales force reduction, but beyond that was there anything incremental that Joe.

All of the sort of low visibility coming into the quarter. Thank you.

Thomas Sandgaard: Yeah, that's a third component in that we shipped less supplies in the second quarter than we had in prior quarters, simply as a result of the insurance companies that we are now servicing, the allowable and the initiatives we have to have even closer contact with patients as to their actual needs of supplies. I don't know if you have anything to add.

Yes, that's a third component in that we shipped less supplies in the second quarter than we had in <unk>.

Prior quarters.

Simply as a result of the <unk>.

Insurance companies that we are now servicing.

<unk> and and the initiatives, we have to have even closer contact with patients as to their actual needs of supplies.

Yes.

And to us.

Anna Lucsok: Well, we've continued to implement a utilization management control program in place to ensure better patient outcome that continues to impact our supply shipments to patients.

Well, we continue to we continue to implement a utilization management control program in place to ensure better patient outcome.

<unk> continues to impact our <unk>.

Supply of shipments to patients.

Moorman Soo: Got it. Thank you very much. And maybe on Tricare, you talked about how you're still servicing some of these patients when you know that payments aren't necessarily going to be coming in at this time. Is there a reason why you're still servicing them? And perhaps, have you thought about perhaps reallocating resources elsewhere? And maybe can you help us think about what ZYNEX could look like at Tricare? Thank you.

Got it thank you very much and maybe on price here.

You talked about how youre still servicing some of these patients.

Payments are necessarily going to be coming in at this time.

Is there a reason why you're still servicing them and perhaps have you thought about perhaps reallocating resources elsewhere.

Maybe can you help us think about what <unk> could look like ex strike here. Thank you.

Thomas Sandgaard: Yeah. Tricare specifically, or DHA with Tricare has specifically asked us in doing this process here to continue to service their patients and new patients as well. So as annoying as and hostile of a situation as it is, we are obviously doing our best to try to play ball and take good care of patients as we receive those prescriptions. So that's part of basically dealing with this situation here. It's something that's obviously costing us some money with no revenue, and we will continue to evaluate whether we do that. But as Anna mentioned earlier, the number of new orders we are getting has dropped significantly as a result of refocusing our sales force. And that helps a little bit on that equation.

Yes.

So I can't specifically of DHA.

The Tricare has specifically asked us in doing this process here to continue to service their patients and new patients as well.

Sure.

As annoying as hostile.

<unk>.

<unk>.

Doing our best to try to play ball.

And take good care patients as we've received those prescriptions.

So that's part of.

Basically deal in dealing with this situation here.

It's it's something that's obviously costing us some money was with no revenue and <unk>.

We will continue to evaluate whether we do that but as I mentioned earlier.

The number of new orders, we are getting is dropped significantly as a result of refocusing our sales force.

And that helps a little bit on that equation.

Moorman Soo: Got it. Thank you very much. And yeah, this was Moorman Soo on for Shagun.

Got it. Thank you very much and yet this was moments who are on <unk>.

Operator: Thank you. And at this time, Mr. Zangard, we have no further questions registered. Please proceed.

Thank you.

And at this time Mr. Sungard, we have no further questions registered please proceed.

Thomas Sandgaard: Yeah, thank you for joining us today. We obviously didn't see the performance that we had expected here this past quarter. However, I'm very pleased with our plan of improvement and the actions that we have already taken. We appreciate your time and interest in ZYNEX. Have a great day.

Yes, thank you for joining us today.

It didn't see the performance that we had expected chip this past quarter. However, I'm very pleased with our plan of improvement and the actions that we have already taken.

We appreciate your time and interest in <unk> have a great day.

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.

Yes.

Okay.

Okay.

Yes.