Zynex Inc ((ZYXI)) has held its Q1 earnings call. Read on for the main highlights of the call.
Zynex Inc’s recent earnings call presented a mixed sentiment, with promising developments such as the FDA submission for their NiCO pulse oximeter and strategic cost reduction initiatives. However, these positives were overshadowed by a significant revenue decline, increased net loss, and ongoing uncertainty regarding the TriCare payment suspension, painting a challenging financial outlook for the company.
NiCO Pulse Oximeter FDA Submission
Zynex has made significant progress with its NiCO pulse oximeter, having completed and passed all EMC and safety tests. The company plans to submit this innovative product to the FDA shortly. The NiCO pulse oximeter is expected to revolutionize the market by providing accurate readings regardless of skin pigmentation, with commercialization anticipated in 2026.
Cost Reduction Measures
In response to current challenges, Zynex has implemented a cost containment strategy, reducing its corporate staff by 15%. This move is expected to result in annual savings of approximately $35 million, helping the company navigate through its financial difficulties.
Diversification of Revenue Streams
Zynex is actively targeting new growth areas, such as personal injury, and has increased the proportion of its diversified product orders to 34% in Q1 2025, up from an average of 30% last year. This diversification is part of the company’s strategy to stabilize and grow its revenue base.
Strong Cash Position
Despite the financial challenges, Zynex maintains a strong balance sheet with $40 million in working capital and approximately $24 million of cash on hand, providing a cushion to support its operations and strategic initiatives.
Significant Revenue Decline
Zynex reported a net revenue decline to $26.6 million in Q1 2025 from $46.5 million in Q1 2024. This decrease was primarily due to a temporary payment suspension from TriCare and reduced sales force productivity, highlighting the company’s current financial struggles.
TriCare Payment Suspension
The temporary suspension of payments from TriCare during a compliance review has significantly impacted Zynex’s revenue. The situation remains unresolved, with a decision expected by June 9th, adding to the company’s financial uncertainty.
Increased Net Loss
Zynex reported a net loss of $10.4 million or $0.33 per share in Q1 2025, compared to a net income of $10,000 in the same quarter last year. This increase in net loss underscores the financial challenges the company is facing.
Decrease in Gross Profit Margin
The gross profit margin for Zynex decreased to 69% in Q1 2025 from 80% in Q1 2024, reflecting the impact of reduced revenue and increased costs on the company’s profitability.
Forward-Looking Guidance
During the earnings call, Zynex provided guidance amidst the challenges posed by TriCare’s temporary payment suspension. The company reported Q1 2025 revenue at $26.6 million, a significant decrease from the previous year. In response, Zynex announced a restructuring plan, including a 15% staff reduction, expected to save approximately $35 million annually. Despite these setbacks, the company remains optimistic about future growth, particularly with the upcoming FDA submission for their NiCO pulse oximeter, which is anticipated to drive revenue in 2026. For Q2 2025, Zynex has projected revenue of $27 million with an EPS loss of $0.20, as they continue to adjust their operations and capitalize on new revenue opportunities.
In summary, Zynex Inc’s earnings call highlighted a challenging financial landscape, marked by a significant revenue decline and increased net loss. Despite these hurdles, the company is taking strategic steps to stabilize its operations, including cost reduction measures and revenue diversification. The upcoming FDA submission for the NiCO pulse oximeter presents a potential growth opportunity, offering a glimmer of hope for future financial recovery.