Sign in

You're signed outSign in or to get full access.

ZI

ZYNEX INC (ZYXI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $22.3M, down 55% year-over-year and down 16% sequential; gross margin was 68% vs 80% a year ago; net loss was ($20.0)M or ($0.66) per share, including a non-cash $10.3M deferred tax asset allowance ($0.34 per share impact) .
  • Management suspended revenue and profitability guidance for Q3 2025 amid CEO transition and CFO departure; incoming CEO Steven Dyson will review forecasting and update investors in coming quarters .
  • Cost actions accelerated: Sales & marketing expense fell 45% YoY to $12.8M; total annualized savings targeted at ~$40M with reductions and operational restructuring taking fuller effect in Q3–Q4 .
  • Strategic catalysts: NiCO laser pulse oximeter 510(k) submission (May) with anticipated additional information in August and an expected ~six‑month clearance timeline (management indicated December is more likely), plus payer mix optimization; TRICARE payment suspension remains a central headwind .

What Went Well and What Went Wrong

What Went Well

  • Operational discipline: “We have implemented several efficiency improvements... reallocating staff to more profitable business lines... These improvements will result in annualized savings of approximately $40 million, most of which will take full effect in the third and fourth quarters of this year.” — Thomas Sandgaard .
  • Expense control traction: Sales & marketing expense down 45% YoY to $12.8M; G&A down to $12.7M in Q2; management expects further S&M down 15–20% and G&A down 10–12% sequential into Q3, then flattening .
  • Product pipeline: NiCO laser pulse oximeter submitted to FDA; management emphasized conformance with January 2025 draft guidance and potential to address skin pigmentation bias and unlock co‑oximetry market; clearance targeted ~six months from August AI (around December) .

What Went Wrong

  • Revenue shock: Net revenue fell to $22.3M vs $49.9M a year ago (and below prior Q1 guidance of “at least $27M”), driven by TRICARE payment suspension, sales force reductions, shipment/billing changes, and utilization management program curbing supply shipments .
  • Margin compression and loss: Gross margin declined to 68% (80% a year ago) with continued servicing of TRICARE patients yielding COGS without revenue; Adjusted EBITDA was ($8.9)M vs $3.5M a year ago .
  • Guidance and balance sheet overhang: Guidance suspended; $60M convertible notes became current (May 2026 maturity), with active refinancing discussions underway, adding near‑term capital structure uncertainty .

Financial Results

P&L and Cash Metrics by Quarter (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$46.0 $26.6 $22.3
Gross Profit ($USD Millions)$36.0 $18.2 $15.2
Gross Margin %78% 69% 68%
Net Income ($USD Millions)($0.6) ($10.4) ($20.0)
Diluted EPS ($USD)($0.02) ($0.33) ($0.66)
Adjusted EBITDA ($USD Millions)$0.6 ($11.8) ($8.9)
Sales & Marketing ($USD Millions)$19.3 $16.9 $12.8
G&A ($USD Millions)$17.3 $14.4 $12.7
Cash from Operations ($USD Millions)$2.4 ($10.5) ($6.2)
Cash & Equivalents ($USD Millions)$39.6 $23.9 $17.5

Q2 2025 vs Prior Year and vs Prior Quarter; Estimates

MetricQ2 2024Q1 2025Q2 2025S&P Global Consensus
Revenue ($USD Millions)$49.9 $26.6 $22.3 N/A (unavailable)
Diluted EPS ($USD)$0.04 ($0.33) ($0.66) N/A (unavailable)
Gross Margin %80% 69% 68% N/A (unavailable)
Adjusted EBITDA ($USD Millions)$3.5 ($11.8) ($8.9) N/A (unavailable)

Note: Wall Street consensus estimates via S&P Global were unavailable for Q2 2025 (GetEstimates returned no data).

Segment Revenue Breakdown

SegmentQ2 2024 ($M)Q1 2025 ($M)Q2 2025 ($M)
Devices$15.9 $11.9 $11.0
Supplies$34.0 $14.7 $11.3
Total Net Revenue$49.9 $26.6 $22.3

Additional KPIs and Balance Sheet Items

KPIQ4 2024Q1 2025Q2 2025
Cash Collections ($USD Millions)——$26.1
Accounts Receivable, Net ($USD Millions)$18.0 $14.1 $10.3
Convertible Notes – Current Portion ($USD Millions)——$59.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)Q2 2025At least $27.0M Actual: $22.29M Bold miss vs guidance
EPS ($USD)Q2 2025Loss of ($0.20) per share or better Actual: ($0.66) Bold miss vs guidance
Revenue & Profitability GuidanceQ3 2025N/ASuspended Suspended

Earnings Call Themes & Trends

TopicQ4 2024 MentionsQ1 2025 MentionsQ2 2025 Current PeriodTrend
TRICARE payment suspensionNewly notified; 20–25% revenue exposure; meeting planned for April Awaiting response (expected June); continue servicing patients Suspension continues; servicing existing/new patients; inflow down with sales headcount reduction Persistent headwind; operational workaround
Cost reductionsInitiated H2'24; set stage ~15% staff reduction; ~$35M annual savings targeted Additional cuts (June); ~$40M annualized savings; fuller impact in Q3–Q4 Accelerating savings
NiCO laser pulse oximeterPositive trial; pipeline highlighted FDA 510(k) submission imminent Submitted in May; AI expected in Aug; ~six‑month clearance (~Dec) Advancing toward clearance
Sales force restructuringEfficiency focus implied Sales headcount ~39% lower; productivity focus Further realignment; compensation changes; exiting underperformers; aim to staff 800 territories Productivity over scale
Guidance postureProvided quarterly guidance Guided Q2 revenue/EPS Guidance suspended in Q3 amid leadership changes More cautious stance
Balance sheet/refinancingConvertible notes issued in 2024 —$60M converts reclassified current; refinancing efforts underway Near‑term refinancing task

Management Commentary

  • “We completed two transformational events… appointed Steven Dyson as our new CEO… submitted our NiCO laser pulse oximeter to the FDA.” — Thomas Sandgaard .
  • “These improvements will result in annualized savings of approximately $40 million, most of which will take full effect in the third and fourth quarters of this year.” — Thomas Sandgaard .
  • “Gross profit… 68% of revenue… lower due to lower revenue and continuing to support new and existing Tricare patients which yields cost of goods sold with no related revenue.” — Press release .
  • “We’re expecting an AI [additional information request]… in August… clearance would be closer to that December timeframe.” — Don Gregg .
  • “Our convertible debt of $60 million is due in May of 2026… it’s now a current liability. We are… working with our advisors to refinance.” — Dan Moorhead .

Q&A Highlights

  • NiCO regulatory timeline: Management expects August AI and ~six‑month clearance thereafter, with December more likely; prepared for potential additional FDA questions .
  • TRICARE outlook: No timeline; continuing to service patients per DHA direction; inflow reduced given sales headcount cuts .
  • Expense trajectory: S&M expected down another 15–20% in Q3; G&A down 10–12% in Q3; then flattening, showing fuller effect of cost actions .
  • Revenue shortfall drivers vs guidance: Lower supply shipments due to utilization management and insurer allowables, alongside TRICARE suspension and sales force reductions .

Estimates Context

  • S&P Global consensus for Q2 2025 revenue and EPS was unavailable; therefore, comparison vs Street estimates cannot be made based on S&P data (GetEstimates returned no data). Company results materially missed its own prior Q1 guidance for Q2 (Revenue ≥$27M; EPS loss ($0.20) or better), delivering $22.29M and ($0.66), respectively .

Key Takeaways for Investors

  • Revenue decline and margin compression were principally driven by TRICARE payment suspension, deliberate shipment/billing changes, and reduced sales capacity; risk persists until resolution or full payer diversification is achieved .
  • Cost restructuring is showing traction (S&M down 45% YoY), with ~$40M annualized savings expected to be more visible in Q3–Q4; watch for sequential improvement in cash burn and opex lines as leading indicators .
  • Guidance suspension and leadership transition (new CEO, CFO departure) elevate forecasting uncertainty near term; monitor the first post‑transition guide for credibility and reset .
  • NiCO laser pulse oximeter represents a potential medium‑term growth vector and category disruptor; December 2025 clearance is a plausible timeline if the August AI proceeds as expected; regulatory milestones will be stock catalysts .
  • Balance sheet: $60M converts now current (May 2026 maturity); refinancing outcome and terms are key for de‑risking; watch for updates .
  • Sequential cash flow improvement in Q2 (CFO flagged reduced cash burn; cash from ops improved vs Q1) suggests early benefits from cost actions despite revenue pressure .
  • Near‑term trading: The narrative hinges on cost execution, TRICARE resolution pace, and NiCO regulatory progress; expect the stock to react to updates on guidance resumption, refinancing, and FDA interactions .