ZYNEX INC (ZYXI)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $46.0M and diluted EPS was ($0.02), reflecting a shortfall tied to slower payer collections and a temporary TRICARE payment suspension; FY 2024 revenue was $192.4M and EPS $0.09 .
• Results missed company’s prior Q4 guidance of “at least $53.6M” revenue and “at least $0.09” EPS; gross margin held at 78% while adjusted EBITDA fell to $0.6M from $9.9M YoY .
• Management initiated ~15% staff reduction and broader expense actions, targeting ~$35M annual savings; Q1 2025 guidance introduced at revenue “at least $30M” and loss per share around ($0.30) while withholding FY 2025 guidance given TRICARE uncertainty .
• Near-term stock catalyst: resolution/timeline of TRICARE payment suspension (20–25% of revenue), with an appeal meeting scheduled in early April and a potential resolution timeline of up to 12 months per Defense Health Agency .

What Went Well and What Went Wrong

What Went Well

• Gross margin was resilient at 78% despite revenue shortfall, and Q4 cash from operations was $2.4M with cash rising to $39.6M (+5% q/q) .
• Operating discipline: ~15% staff reduction and other cuts are expected to deliver ~$35M annualized savings; CFO indicated sales and G&A run-rate reductions of roughly $1.5–$2M per quarter each as actions flow through Q2 .
• Strategic pipeline progress: NiCO laser pulse oximeter completed human trials (Duke) with positive results; UCSF study showed no pigmentation bias vs LED devices; Open Oximetry Project membership supports credibility and collaboration .

What Went Wrong

• Material miss vs internal Q4 guidance: actual revenue $46.0M vs ≥$53.6M and EPS ($0.02) vs ≥$0.09; adjusted EBITDA margin fell to 1% from 21% YoY .
• Payer mix and product mix headwinds: slower payer payments and TRICARE temporary suspension (20–25% revenue) pressured Q4; device revenue fell due to shift to lower-priced braces and similar products vs NexWave .
• Elevated G&A ($17.3M vs $13.0M YoY) from ZMS/professional fees; FY 2024 underperformed prior guidance (≥$200M revenue, ≥$0.20 EPS) delivering $192.4M and $0.09 .

Financial Results

Quarterly Results (oldest → newest)

YoY Comparison (Q4)

Q4 vs Company Guidance and Consensus

Segment Breakdown (Q4)

Q4 KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our fourth quarter revenue was less than expected… slower than normal payments from certain payers and… TRICARE has temporarily suspended payments… TRICARE currently represents approximately 20–25% of our annual revenue.” — Thomas Sandgaard (CEO) .
• “We are decreasing our overall staff by approximately 15%… will result in savings of approximately $35 million annually.” — Thomas Sandgaard (CEO) .
• “Q4 device revenue was lower due to product mix shift to lower-priced products such as braces… Gross profit was $36 million or 78% of revenue.” — Dan Moorhead (CFO) .
• “We anticipate FDA submission [for NiCO] in the next 30 to 60 days… approval takes approximately 6 months, which would mean a potential fourth quarter 2025 clearance.” — Donald Gregg (President, ZMS) .
• “We will likely have a net loss in the first quarter ranging between $9 million and $10 million… we’ll make adjustments to the cost structures as needed.” — Thomas Sandgaard (CEO) .

Q&A Highlights

• OpEx cuts: Of the ~$35M annual savings, “a little less than half” implemented in 2024; run-rate sales expense likely down $1.5–$2M per quarter; G&A down a similar amount, with additional reductions flowing through Q2 .
• TRICARE process and timeline: Temporary suspension is a post-payment review; appeal meeting scheduled early April; letter states it could take up to 12 months; company remains in-network and continues processing claims, which would be paid retroactively upon reinstatement .
• Payer contagion risk: Management sees no connection to other payers; TRICARE operates independently as a government payer; company works with ~3,000 insurance companies .
• NiCO commercialization: Management evaluating direct, partnered, and indirect/1099 channels; 2026 likely ramp year if clearance achieved late 2025 .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 and Q1 2025 was unavailable due to data access limits; therefore beat/miss vs consensus cannot be determined at this time [SPGI consensus unavailable].
• As an anchor, results materially missed company-provided Q4 guidance (≥$53.6M revenue; ≥$0.09 EPS) with $46.0M revenue and ($0.02) EPS; near-term guidance shifted to Q1 2025 only (≥$30M revenue; ≈($0.30) loss) .

Key Takeaways for Investors

• Near-term risk centered on TRICARE: 20–25% revenue exposure; appeal in early April; timeline could extend up to 12 months—watch for reinstatement updates and potential cash/revenue catch-up when payments resume .
• Cost actions are significant: ~15% staff reduction and other cuts target ~$35M annual savings; CFO detailed quarterly run-rate reductions that should be more visible by Q2 .
• Mix shift weighed on devices: Lower-priced bracing/compression products reduced device revenue vs NexWave, contributing to margin and EBITDA compression in Q4; monitor product mix normalization .
• Liquidity and working capital provide flexibility: $39.6M cash and $58.3M working capital at year-end support operations through reimbursement review and restructuring .
• FY 2024 underperformed internal targets: Actual $192.4M revenue and $0.09 EPS vs prior guidance ≥$200M and ≥$0.20—expect estimate revisions lower absent TRICARE clarity .
• Pipeline optionality: NiCO laser oximeter approaching FDA submission (30–60 days) with potential ~6-month review; plus TensWave clearance broadens pain portfolio—an emerging medium-term driver (late 2025/2026 ramp) .
• Trading setup: Near-term volatility likely around reimbursement headlines; focus on April TRICARE meeting, Q2 OpEx flow-through, and Q1 execution vs ≥$30M revenue guide to gauge stabilization .

Appendix: Additional Context

• Q3 2024: Orders +13% YoY; revenue $50.0M; EPS $0.07; adjusted EBITDA $5.1M; TensWave received FDA clearance; Q4 guidance set at ≥$53.6M revenue and ≥$0.09 EPS; FY 2024 guidance reiterated at ≥$200M revenue and ≥$0.20 EPS .
• Q2 2024: Revenue $49.9M (+11% YoY); orders +20% YoY; EPS $0.04; adjusted EBITDA $3.5M; guidance reduced for FY 2024 to ≥$200M; highlighted rep rationalization and product mix changes .

Sources: 8-K Item 2.02 and Exhibit 99.1 press release; Q4 2024 earnings call transcript; prior quarter press releases and program updates .