Zynex third quarter net revenues increase 42% to $9,427,000

Zynex, Inc.Nov 3 2011

Zynex, Inc. (OTCBB: ZYXI), a provider and developer of non-invasive medical devices for electrotherapy and stroke rehabilitation, neurological diagnosis and cardiac monitoring, announces its third quarter 2011 financial results.

The Company generated net revenues of $9,427,000 for the three months ended September 30, 2011, which represents a 42% increase over third quarter 2010 net revenue and a 12% increase over the second quarter of 2011. Year to date net revenue of $24,455,000 increased 42% over the prior year to date net revenue.

The Company reported a third quarter 2011 gross profit of $7,492,000, which reflects a 79% gross profit percentage, unchanged from the third quarter 2010 gross profit percentage. Selling, general and administrative (SG&A) expenses in the third quarter of 2011 totaled $6,389,000 compared to $4,606,000 in the third quarter of 2010. The 39% increase in SG&A during the third quarter of 2011 as compared to the third quarter of 2010, was a direct result of additional sales commission, based on the incremental net revenue growth, and specific investments made to expand the sales force and improve billing and reimbursement department efficiencies. The Company reported third quarter 2011 income from operations of $1,103,000, income before income tax of $1,016,000 and net income of $591,000, versus third quarter 2010 income from operations of $625,000, income before income tax of $582,000 and net income of $368,000.

Thomas Sandgaard, CEO stated: "The aggressive expansion of our sales force has allowed us to further penetrate domestic markets, which has resulted in a significant increase in orders and respective revenue growth. We still have many geographic areas that we have not fully penetrated and expect to continue to add field sales personnel to fill the untapped markets. To date, we have expanded our field sales force to over 200. Previous investments made in our infrastructure to accommodate our current and anticipated sales growth have begun to payoff, as our third quarter 2011 net income has increased significantly over the prior quarter in 2010 and increases in our net revenue for the respective periods have out paced that of our SGA expenses. SGA expenses increased 39% over the third quarter of 2010 and 11% over the second quarter of 2011. "

Mr. Sandgaard continued: "We have been working vigorously on activities to further the growth of Zynex. In our Zynex Medical subsidiary, in addition to expanding our sales force, we recently received FDA 510k clearance on our next generation TENS device, the NexWave, which we have successfully released to market. In our Zynex NeuroDiagnostics subsidiary, we previously announced that we signed a non-binding letter of intent with NeuroDyne to acquire substantially all of their assets, subject to certain conditions. We expect to close the acquisition subsequent to satisfactory completion of our due diligence, currently being conducted, and final documentation. There is no assurance we will complete this transaction, and although a definitive agreement has not been signed, the transaction is currently structured with minimal upfront consideration and an earn-out based on success of NeuroDyne products. We believe this acquisition will provide us an entrance into the neurodiagnostic market and allow us to diversify our current product offerings. In our Zynex Monitoring Solutions subsidiary, we have also been preparing our non-invasive blood volume monitor for clinical evaluations, which have commenced. Our blood volume monitor device will serve, what we believe, is a currently un-met need in the market for safer surgeries and safer monitoring of patients during recovery."

Outlook:

The Company has refined its prior guidance by narrowing anticipated annual net revenue guidance to between $33 million and $34 million and narrowing the range of its net income per diluted share guidance to between $0.08 and $0.09 for 2011.