Zynex Announces Third Quarter Results and Settlement

Zynex, Inc. (OTCBB:ZYXI), a provider of pain management systems and electrotherapy products for medical patients with functional disability, reports its financial results for the third quarter of 2008 and a complete settlement of a claim of Anthem BlueCross BlueShield (“Anthem”).

Results for the third quarter of 2008 and the first nine months of 2008 include the following highlights:

  • Net rental and sales revenue for the three months ended September 30, 2008 was $3,502,994. This amount is after two items relating to the Anthem claim – (1) not recognizing revenues of approximately $1,075,000 from the rental of certain devices to insureds of Anthem during the third quarter of 2008 and (2) the deduction of a provision for settlement in the amount of $1,009,594. (The components of the provision for settlement are explained below.)
  • Net rental and sales revenue for the nine months ended September 30, 2008 was $12,291,658. This amount is also after the same two items.
  • Even after these items, net rental and sales revenue for the third quarter of 2008 increased 66% compared to the $2,104,446 for the same quarter of 2007. Net rental and sales revenue for the first nine months of 2008 increased 148% compared to $4,946,384 for the nine months ended September 30, 2007.
  • Net income increased to $3,251,040 for the first nine months of 2008 compared to $1,197,694 for the corresponding period in 2007, an increase of 171%.

Thomas Sandgaard, President and CEO of Zynex said: “Sales and rentals to date in the fourth quarter of 2008 continue at a strong pace, and our internal projection for net revenue in the fourth quarter is in excess of $7,000,000. In regard to the settlement, we believe that Zynex continues to have a good relationship with Anthem. Zynex continues to provide products to Anthem insureds and continues to have a network agreement with Anthem.”

On November 18, 2008, Zynex completed a settlement of all matters pending with Anthem. In the settlement, Zynex agreed to pay Anthem a partial refund of $679,930 over 12 months and to waive rights to payments of outstanding billings for certain devices provided to Anthem insureds from September 1, 2007 through September 30, 2008. The provider settlement provision in the consolidated statements of operations is the sum of this $679,930 and the write-off of accounts receivable of $329,664 that existed as of June 30, 2008.

Zynex has a line of credit with Marquette Healthcare Finance. Marquette has consented to the settlement with Anthem. Marquette has also provided a draft waiver of an event of default relating to the Anthem matter, which will not be final until executed, and has indicated that it will work with Zynex to re-set a covenant which would not otherwise be satisfied.

About Zynex, Inc.

Zynex (founded in 1996) engineers, manufactures, markets and sells its own design of electrotherapy medical devices in two distinct markets: standard digital electrotherapy products for pain relief and pain management; and the NeuroMove(TM) for stroke and spinal cord injury (SCI) rehabilitation. Zynex’s product lines are fully developed, FDA-cleared, commercially sold, and have been developed to uphold the Company’s mission of improving the quality of life for patients suffering from impaired mobility due to stroke, spinal cord injury, or debilitating and chronic pain.

Safe Harbor Statement

Certain statements in this release are “forward-looking” and as such are subject to numerous risks and uncertainties. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause actual results to materially differ from forward-looking statements include, but are not limited to, the need to obtain external capital in order to grow our business, larger competitors with greater financial resources, the need to keep pace with technological changes, our dependence on the reimbursement from insurance companies for products sold or rented to our customers, acceptance of our products by health insurance providers for reimbursement, acceptance of our products by hospitals and clinicians, our dependence on third party manufacturers to produce our goods on time and to our specifications, the acceptance of our products by hospitals and clinicians, implementation of our sales strategy including a strong direct sales force and other risks described in our 10-KSB Report for the year ended December 31, 2007.

Consolidated Statement of Operations

Third Quarter 2008 and 2007 Ended September 30,

3 Months, 9 Months,
2008 2007 2008 2007
Net Sales and rental Income $3,502,994 $2,104,446 $12,291,658 $4,946,348
Net Income (loss) $205,837 $614,465 $3,251,040 $1,197,694
Net Income Per Common Share Basic $0.01 $0.02 $0.11 $0.04

Common Shares Used in Computing Per Share Amount-Basic

29,311,220 26,807,712 28,722,456 26,518,714
Net Income Per Common Share Diluted $0.01 $0.02 $0.11 $0.04

Common Shares Used in Computing Per Share Amount-Diluted

31,666,011 29,332,352 30,576,626 28,588,545

Contacts:

Zynex, Inc.
Thomas Sandgaard, CEO, 303-703-4906
www.zynexmed.com

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