Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zynex Inc (ZYXI, Financial) reported a 20% year-over-year increase in orders, marking the 9th consecutive quarter of record high order numbers.
- Revenue per sales rep increased by 26% over 2023, indicating improved sales efficiency.
- Gross profit margin remained strong at 80%, consistent with the previous year.
- The company continues to diversify its product offerings, with rehabilitation products now making up 28% of total orders.
- Zynex Monitoring Solutions division is progressing towards the commercialization of the NICO pulse oximeter, with FDA submission expected by the end of the year.
Negative Points
- Despite the increase in orders, the overall revenue for 2024 is expected to be lower than initially anticipated.
- Net income for the second quarter of 2024 was $1.2 million, a significant decrease from $3.4 million in the same period of 2023.
- Sales and marketing expenses increased to $23.2 million in Q2 2024, up from $21.6 million in Q2 2023.
- The reduction in the sales force has impacted near-term revenue growth, although it is expected to improve long-term productivity.
- The company's guidance for 2024 revenue growth has been revised down to approximately 9%, compared to previous higher expectations.
Q & A Highlights
Q: Can you comment on the order growth specifically for your flagship product, NexWave, given the large guidance reduction despite record-breaking order growth?
A: The growth on the NexWave device continues, but the other products are growing faster. It's not a decline in NexWave orders.
Q: How should we think about the cadence of operating expenses in the second half and any P&L color you can provide?
A: We expect G&A expenses to remain fairly constant as a percentage of revenue. Sales and marketing expenses should decrease as a percentage of revenue, improving long-term earnings per share.
Q: Is there any update on the strategic alternatives front?
A: Nothing material to announce at this point. The process is progressing positively, but no material disclosures are available yet.
Q: What is the current number of commercial reps, and how might this look for the back half of the year?
A: We are just below 400 reps, down from about 450 at the start of Q2. We continue to hire while pruning underperformers, aiming for significant improvement in sales rep productivity.
Q: Any commentary on the NICO product for 2025 and its commercial launch?
A: NICO is expected to generate revenue in 2025, with FDA submission planned for Q4 2024. Clearance could come in late Q1 or Q2 2025, with commercialization efforts starting thereafter.
Q: Are there any seasonality or macroeconomic trends to be aware of for the back half of the year?
A: The industry remains stable with no significant price pressure. Usual seasonality includes lower orders in January, February, and during holidays. Cash collections are conservative in Q1 due to insurance deductibles.
Q: Could you give an update on the blood volume monitor and its potential revenue generation in 2025?
A: The blood volume monitor is not expected to generate revenue in 2024 or 2025. Our focus is on the NICO product, which is part of a $2.5 billion market.
Q: What are the expected financial results for the third quarter and the full year 2024?
A: For Q3 2024, we expect total revenue of $50 million and diluted earnings per share of $0.05. For the full year, we anticipate total revenue of approximately $200 million, representing 9% growth over 2023, and diluted earnings per share of $0.20.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
