Q3 2025 Zynex Inc Earnings Call

Excuse me, ladies and gentlemen, this is the operator speaking. Please continue to stand by and your conference will begin momentarily. Thank you.

Excuse me, ladies and gentlemen. This is the operator. Please continue to stand by your conference will begin momentarily. Thank you.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sinex third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to victim Bajaj Chief Financial Officer of xanxx. Please go ahead.

Thank you, operator, and good afternoon everyone.

Yesterday, we released financial results for the third quarter, September 30, 2025.

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

Before we begin, I would 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 10K, and subsequent form 10 cues 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 restructuring activities or operating performance.

With that.

I'll now turn the call over to Stephen Dyson our CEO.

So thank you forum, and good morning to everyone attending. Today's earnings call.

It's been 3 months since vicram and I joined the company. And since joining, we have been tirelessly focused on addressing the business and compliance challenges challenges, while creating a new future for the company.

As you would already know from our public disclosures, we have an entirely new management team. With the addition of new leaders in sales, legal compliance, regulatory, HR, and billing.

As well as a recent addition to our leadership team in the critical role of strategic marketing.

We have also complemented our governance and oversight with the addition of 2 new directors on our board: Brett Wise and Paul Aronson.

Bret wise is our new audit committee chair and he brings a wealth of experience in healthcare and Medtech as well as Financial expertise with a strong background in compliance oversight.

Paul Aronson is the chair of our special committee.

which is tasked with overseeing the company's efforts to evaluate strategic alternatives for the company, including potential capital raising opportunities and recapitalization and restructuring strategies.

As you can see, from these additions, we have recruited a highly experienced and capable team to help turn the company around.

Now, as this is my first earnings call with investors, I thought it would be good to share a few points on the value. I see in the xyx franchise as well as our near-term strategy and opportunity and priorities

We appreciate the quality of our flagship product, the Next Wave electrotherapy device.

The next wave, device is cleared by the FDA for chronic and acute, pain indications.

The next wave is a product that is very much loved by our patients and clinicians.

People suffering with pain are looking for non-pharmaceutical ways to get back on their feet. And this company has a great product with the reach and the channel to provide life-changing relief to individuals while providing significant value to the Healthcare System.

We have thousands of patient, testimonials supporting the effectiveness of the next wave device.

And it represents an amazing business opportunity.

This is the main reason I came to xyx.

and this is the main reason we have been able to attract great talent to the management team and the directors

moving on to our strategy and priorities over the last 90 days. We've been implementing a 3-part strategy to turn the company around.

First addressing the concerns of government agencies and ongoing investigations.

Second addressing the near-term maturity of our 60 million in convertible senior notes.

And liquidity concerns and seeking to raise New Capital to fund operations.

And third, improving revenue and cash flow performance of the core business.

First, as it relates to government investigations, we are proactively engaging with government agencies and investigators in a collaborative way to deliver a new future for xyx that is focused on compliance and integrity.

These discussions have been positive, and we are making progress on our commitments.

While we do not have certainty on any potential tri-care reinstatement or resolution of ongoing investigations or the timing thereof, it will be critical as we move forward to reach resolution based on the company's commitment to the Future.

In support of our renewed commitment to compliance and integrity.

Starting October 1, we implemented a new resupply order fulfillment policy.

Under this new policy, we do not process resupply orders unless a patient first confirms their needs.

We systematically reach out to each patient to ask about their resupply needs, and patients can contact us at any time.

We are already seeing good results.

Not only is the policy needing to have far more regular patient contact, but our patients are responding positively.

We expect these efforts to result in a significant Improvement. In how patients public and private payers and their providers experience doing business with xyx

Second, we need to manage the company's near-term debt obligations as we seek to raise additional capital.

As, you know, we have 60 million in convertible senior notes that mature in May of 2026.

Also in Q3, we have negative cash flow of 6.3 million. And, as of September the 30th, the company had cash and cash equivalents of 13.3 million on the balance sheet.

It is important that we address the convertible notes, maturity, and our cash burn relative to the amount of cash and cash equivalents in order to continue as a going concern and give certainty to our customers and suppliers that we can honor our commitments going forward.

As you have seen in our announcements, we have recently heard Province, LLC to advise the company on various strategic and financing Alternatives and evaluate a range of strategic Alternatives, including potential, Capital raising, and restructuring strategies.

We've also formed a highly experienced special committee of the Board of Directors to oversee this process.

We have initiated initiated collaborative discussions with our debt holders and while we cannot predict the outcome, we believe that our business plans for the future are compelling and will be critical to this process.

Third, we need to address the company's revenue and cash flow performance.

Since I started, we have initiated several quick win projects in multiple functions within the company focused on near-term performance, improvements in Salesforce productivity,

Order conversion, efficiency and collections.

These efforts are showing early signs of success and are bearing fruit.

After customer orders, volume had been down for many months sequentially. We have recently seen orders stabilize even with a substantially reduced sales force.

To increase sales productivity and improve order volumes, we have improved and simplified our commission plans.

Provided improved communication and Technology to our sales reps and increase their focus on targeted accounts.

We have also engaged with a new partner for our VA business and early signs their point to a good opportunity for increased penetration into VA accounts.

So these are the three key elements of our strategy to turn around the company's performance and create a new feature for ZYX.

While our Q3 performance released yesterday is more of a continuation of the challenges for the first 2 quarters, I'm encouraged to see progress on all 3 elements of our strategy.

Back over to victim our CFO to give you an overview of our Q3 Financial results.

Thank you, Stephen.

Please refer to our press release issued yesterday for our summary of financial results. For the third quarter ended, September 30th 2025,

Net revenue was 13.4 million compared to 50 million in the third quarter of 2024.

Device Revenue was 7.1 million, and Supply Revenue was 6.3 million.

The decline in net revenue for the three months ended September 30, 2025, compared to the prior period, is primarily related to the company's Triare payment suspension, along with the $2.8 million reduction in revenue related to payments received from Triare during the suspension period.

Through the code quarter of 2025, changes to certain pairs, claim submission, and review practices have resulted in denials and payment delays, which have negatively impacted our revenue.

Additionally, Q1 and Q2 workforce reductions in many functions, including sales, have negatively impacted device orders and corresponding supplies, new patient onboarding, and order completion. This has contributed to the overall decline in net revenue during the three months ended September 30, 2025.

Gross profit. In the third quarter, was 8.1 million or 60% of Revenue as compared to 39.8 million or 80% of Revenue in Q3 2024.

Sales and marketing expenses. Decreased 54% to 9.5 million in the third quarter of 2025.

The primary contributor to the decrease in sales and marketing. Expenses was a headcount reduction

GNA expenses were $11.8 million in the third quarter of 2025 compared to $15.3 million in Q3 last year.

Net loss was also negatively impacted by a non-cash asset impairment charge of $30.7 million during the quarter ended September 30, 2025, primarily related to goodwill, definite-lived intangible assets, and certain fixed assets associated with XYZ Modern Training Solutions, Inc.

Net loss was $42.9 million, or $1.42 per share, in the third quarter of 2025, compared to net income of $2.4 million in the third quarter of 2024.

Adjusted EBITDA loss for the 3 months ended September 30, 2025, was $12.3 million, compared to adjusted EBITDA of positive $5.1 million in the quarter ended September 30, 2024.

On the balance sheet, we have $13.3 million in cash on hand as of September 30, 2025, and we were able to reduce our cash burn during the quarter.

as part of our cash management program designx has elected to enter the contractual 30-day grace period, under the terms of the company, 60 million of convertible notes and did not make a 1.5 million interest payment, due November 17th, 2025,

The company is in discussions with holders of the convertible notes regarding potential, restructuring opportunities.

Our convertible debt of 60 million dollars is you may 2026. So you'll notice it's now a current liability.

We are currently working with our advisors to address the liability.

I'll now turn the call back to Stephen.

Thank you, vickram.

And thank you for joining us today. We appreciate your time and interest in xyx, have a great day.

Thank you. And ladies and gentlemen. This now concludes today's conference call. Thank you all for joining me now. Disconnect.