Zynex, Inc. Q1 FY2025 earnings call

• Thomas Sandgaard discussed TriCare's temporary payment suspension, meeting with the Defense Health Agency on April 9th, and expecting a response by June 9th. The company is restructuring to run without TriCare in the worst case, refocusing the sales force, trimming unproductive sales reps, and promoting other products. - Anna Lucsok mentioned the 15% staff reduction in March, annual savings of ~$35 million, and a diversified product mix with product order percentage increasing to 34% in Q1 2025. - Don Gregg provided an update on the NiCO pulse oximeter, having completed third-party testing and finalizing FDA submission, expecting to file in May, and discussed the technology's superiority in providing accurate readings across all patients.

Net revenue for the first quarter ended March 31, 2025 was $26.6 million, down from $46.5 million in Q1 2024. Device revenue was $11.9 million and supplies revenue was $14.7 million. Gross profit in Q1 2025 was $18.2 million (69% of revenue) compared to $37.2 million (80% of revenue) in Q1 2024. Sales and marketing expenses decreased 28% to $16.9 million. G&A expenses were $14.4 million in Q1 2025 vs $13.3 million last year. Net loss was $10.4 million and $0.33 per share in Q1 2025 vs net income in 2024. Adjusted EBITDA loss for Q1 2025 was $11.8 million vs adjusted EBITDA of $1.7 million in Q1 2024. The company maintained a strong balance sheet with $40 million in working capital and approximately $24 million in cash on hand.

• Estimated Q2 revenue at $27 million and EPS loss of $0.20 per share as the company rightsizes to return to profitability. - Anticipates providing 2025 guidance around Q2 results in July.

• TriCare's temporary payment suspension and uncertainty around the outcome. - Audit firm acquisition causing stock price issues. - Regulatory uncertainties with the FDA submission for the NiCO pulse oximeter.

Q: Could you give more color into the conversation with TriCare, why they denied coverage, evidence presented, and domino effect?

A: At this time, no additional info; presented compliance with guidelines, no other payer conversations on issues.

Q: What got worse in Q1 vs last month's guidance, and non-TriCare business?

A: Revenue miss due to TriCare and sales rep productivity; non-TriCare business operating normal, waiting for TriCare clarity to give full guidance.

Q: If outcome positive, will TriCare give lump sum payments for Q1 and Q2?

A: Don't know exact flow, but TriCare said would reimburse unpaid claims.

Q: If net outcome negative, stop servicing TriCare patients and plan to make up revenue?

A: Refocus sales force to grow in other areas to make up potential revenue loss.

Q: If NiCO approved before end 2025, when will it generate meaningful sales?

A: NiCO will launch immediately upon clearance, with 2026 as the year for revenue.