Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Zynex, Inc (NASDAQ:ZYXI)
Q4 2019 Earnings Call
Feb 27, 2020, 4:15 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Zynex 2019 Q4 and Full Year Earnings Conference Call. [Operator Instructions]

Certain statements in this release are forward looking, and as such, are subject to numerous risks and uncertainty. Actual results may vary significantly from the results expressed or implied in such statements. Risk factors that could cause actual results to materially differ from forward-looking statements are described in our filings with the Securities and Exchange Commission, including the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31st, 2019, as well as forms 10-Q, 8-K and 8-K/A, press releases in the Company's website. Please note this event is being recorded.

I would now like to turn the conference over to Thomas Sandgaard, Founder, Chairman, and Chief Executive Officer. Please go ahead, sir.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Good afternoon, my name is Thomas Sandgaard, President and CEO of Zynex. Welcome to our fourth quarter and full year 2019 earnings call. I'm excited to announce another quarter of revenue growth and positive net income.

Our fourth quarter revenue of $14.2 million, increased 52% compared to the same quarter last year, which was the highest quarterly growth rate of 2019. It was also the highest quarterly revenue in the history of the Company. It was our 14th straight quarter with positive net income, as we reported $0.09 per fully diluted share. Adjusted EBITDA for the fourth quarter was also an all-time high at $4.1 million, an increase of 30% compared to the fourth quarter of 2019.

The investment in expanding our sales force continues to progress as we expand our geographic footprint across the U.S. We grew orders 129% year-over-year in the fourth quarter, and we continued to see strong reimbursement for our products. Orders grew consecutively 31% between the third and the fourth quarters, as a result of more of our sales force becoming productive. This order growth is a result of aggressively adding new sales reps to the sales force every month and the steep order growth is a continued sign of strong demand for our products, order growth momentum and the subsequent revenue growth, we expect to see from these orders in future periods.

As you may know already, the revenue of an order is typically recognized many months or years after the order or the prescription, as patients continue to use our device and the related supplies for continued pain relief. The length of time the patient uses our device is primarily decided by the health insurance company, as well as if the patient reaches the point of no longer needing the device.

In Q4, we sustained our aggressive sales force growth. Our 10-K will report 176 total sales reps that included 134 direct-Zynex only reps, but that number doesn't include new hires that have start date in 2020, due to end year holidays. As of today, we have well over 200 sales reps and through last week, we've added more than 42 direct reps this year, 16 in January and 24 alone in February, as we push hard to reach our goal of filling all 400 territories across United States.

And another important achievement during 2019 was the improvement of our sales on boarding and training. Our investments have paid off and the average sales rep production during the first 90 days has more than doubled during 2019. We will continue to refine our training program, as it's critical for our reps to get off to a good and fast start. We also continued to improve on our efforts to provide warm leads for our newly trained reps, as soon as they are deployed. I should point out that our orders continue to grow at an accelerating rate and cash collection from insurance companies, they remained fairly constant and as monthly rentals and supplies are built [Phonetic] for many months and years after the prescription is received.

So to put it into perspective and some of you that look at these things might want to take notes here. And so, if we try to follow order growth and revenue growth, orders grew between 21% and 27% in the second half of 2018 compared to the year before, while revenue only grew between 15% and 19%. Then in the first quarter of 2019, orders grew 28% and revenue grew 34%. So there was a little catch up from prior periods.

In the second quarter of 2019, orders grew 65% as we have reported, while revenue grew 36% year-over-year. In the third quarter of 2019 orders grew 95%, while revenue now had increased up to a growth rate of 45%. In the fourth quarter last year, orders grew 129%, so more than double over the year before, while revenue slowly grew up to a growth rate of 52%. And for the first quarter of this year, right now we are two-third into the quarter, we are on pace to beat the fourth quarter year-over-year order growth, while we are estimating revenue growth at approximately 55%. I believe this gives a pretty good overview of how much lag days from prescriptions are received to revenue recognition.

I'm very pleased to see our gross profit margin remain at the 81% level for 2019, an indication that the industry for prescription strength electrotherapy is still not only stable but very healthy and viable. The opioid epidemic continues to be a serious issue in this country, and we are increasingly working to get patients off opioids and for physicians to use our prescription strength technology as the first line of defense when treating pain. Currently, the devastating impact of the opioid crisis has reached a level where tens of thousands die yearly due to opioid abuse. We continue to develop more tools to make physicians aware of our technology that literally has no side effects.

Our products for pain management and rehabilitation still standout as some of the best in the industry. The NexWave for pain management, our new move device for stroke rehabilitation and the InWave for incontinence treatment, those products put us in a very strong product position in the rehabilitation markets. We continued to see great potential in both of our product divisions. Our existing revenue generating area for pain management, as well as the huge unmet potential for Blood Volume Monitor.

As most of you probably already know, we managed to get FDA clearance for our CM-1500 Blood and Fluid Monitor, a few days ago. The CM-1500 is a noninvasive monitor intended to monitor patients fluid balance in hospitals and surgical centers. We expect to initially target ORs and surgeries that typically display substantial blood loss, as well as recovery rooms and ICUs were internal bleedings today are common and difficult to take -- to detect until serious complications occur. We believe this product will lead to safer surgeries, fewer complications and less mortality, one of the biggest unmet needs in hospitals today.

Until now, our effort has primarily been in -- on engineering, regulatory and clinical research. The product works well. We have so far produced three dozen of these devices, we get all the packaging, production procedures and everything ready to go for a market launch. And we will initially focus on developing key opinion leaders of KOLs in the medical hospital and research communities, building an organization of business development people, marketing will be increasing the clinical research and also expand our production capabilities for this product line.

Even though this is a very different call point then our pain management business, and therefore a separate business unit, we will initially be able to leverage and take advantage of the synergies from our well-established production lines, Human Resources, quality control, etc.

I will now turn the call over to Dan Moorhead, our CFO.

Dan Moorhead -- Chief Financial Officer

Thanks, Thomas. First, I'll review our 2019 fourth quarter results. Orders grew 129% year-over-year, which drove net revenue up 52% to $14.2 million from $9.3 million in 2018. Device revenue increased 117% to $3.8 million compared to $1.8 million last year. Supplies revenue increased 37% year-over-year to $10.4 million from $7.6 million.

Gross margins were 80% in the fourth quarter of 2019 and 2018. Beginning in 2019, we began breaking out sales and marketing expense from G&A. This breakout provides greater clarity related to our sales growth initiative and the overall financial statement impact. Sales and marketing expenses increased a 110% year-over-year, as we continued to grow our sales force. G&A expense grew 25% year-over-year. Much of the increase was related to the increased headcount in our billing and patient support functions related to our order growth.

Fourth quarter net income was $2.9 million or $0.09 per diluted share compared to net income of $2.6 million or $0.08 per diluted share in the fourth quarter last year. Adjusted EBITDA, which is a standard EBITDA calculation, plus an exclusion of non-cash stock-based compensation and other income and expense, and is reconciled in our press release, increased 30% to $4.1 million in the fourth quarter of 2019. We have increased income tax expense year-over-year due to our profitability over the last two years, which utilize our net operating losses and put us in a taxable position.

Now on to the full-year results. Orders grew 83% year-over-year, which drove net revenue up 42% to $45.5 million from $31.9 million in 2018. Device revenue increased 57% to $10.7 million, compared to $6.8 million last year. Supplies revenue increased 39% year-over-year to $34.8 million from $25.1 million. Gross margins were 81% for the years 2019 and 2018.

2019 net income was $9.5 million or $0.28 per diluted share, compared to net income of $9.6 million last year. 2019 net income was impacted by an additional $1.8 million in tax expense as we utilized our NOLs during 2018. Adjusted EBITDA was $12.1 million, up 11% from $10.9 million last year. We generated operating cash flows during 2019 of $6.3 million compared to $9.4 million in 2018. Cash flows were affected by increased tax expense in 2019 and growth in inventory and receivables.

On the balance sheet, as of December 31, 2019, our cash balance was $14 million, up from $10.1 million at year-end and net of the $2.3 million dividend which was paid in the first quarter. Our working capital grew 137% to $17.4 million at year-end compared to $7.3 million as of December 31, 2018.

With that, I'll now turn the call back over to Thomas.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Thank you, Dan. I'm especially excited about our year-over-year growth in orders of 129% and our revenue growth of 52%. It's a huge testament to efforts to grow our sales force and clearly justifies the investments in our sales personnel, sales management and inside support functions. Our focus continues to be growing our sales force at a rapid rate in geographic areas, which we don't currently cover to take advantage of the void left in the market by two previous very large competitors.

Our increased orders due to a larger sales force, combined with strong reimbursement for our products, continues to drive increased revenue and profitability. We estimate our first quarter revenue to come in between $14 million and $14.5 million with adjusted EBITDA between $2.3 million and $2.8 million. As a reminder, first quarter revenue is historically affected by health insurance deductibles not being met in the beginning of the year. And for the full year of 2020, we estimate revenue between $75 million and $80 million, and adjusted EBITDA in the range of $15 million to $18 million.

As a reminder, nearly all of our collections from billing comes from insurance companies, mostly private insurers but also government, auto insurances, workers' comp and personal injury attorneys. Payments from those are either dictated by contractual amounts we have established, allowable amounts already well established throughout our industry and negotiated amounts sometimes on a patient-by-patient basis. These amounts are typically discounted by deductible and copay deductions, and we end up getting much less than our MSRP as is typical through the healthcare industry in the U.S. This pattern is the same whether we get paid for the device or whether we get paid for the patient supplies.

We are careful to make sure our billing practices are always within the law and comply with our guidelines and regulations. We also undergo regular accreditation by a third party to ensure that we continue to be compliant. My long-term goal for our electrotherapy and rehab division is to continue to grow our share of the huge market for prescription pain management and to take advantage of the huge void in the market after the disappearance of our main competitors. This includes growing our domestic sales force as well as potential acquisitions of complementary technologies.

The latest news as you've heard is that the FDA just now decided to clear our CM1500 non-invasive blood volume monitor for sale in the U.S. We have already obtained patent protection in both the U.S. and Europe. And while we have obtained FDA clearance in the U.S., we are still working with the European notified body to obtain CE Marking. We will continue to update everyone as we are building out this division.

In summary, we announced yet another great quarter with strong growth in orders, growth in revenue and profit, which puts us in a very strong position going forward. We will now answer questions from our listeners.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question today will come from Yi Chen with H.C. Wainwright. Please go ahead.

Boobalan P. -- H.C. Wainwright -- Analyst

Hi, this is Boobalan calling in for Yi Chen, and congratulations on the strong quarter. So I wanted to talk a little bit about the NexWave. So how many sales reps have been -- have you guys added so far in 1Q '20 for the marketing needs of NexWave? And how many additional reps are expected to add during the rest of the year?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

We -- yeah, this is Thomas. We have added 40 reps so far, 16 in January, 24 in February, and we're looking to increase that number substantially in March. And before the end of the year we expect to be up to a full coverage of 400 sales reps.

Boobalan P. -- H.C. Wainwright -- Analyst

For the blood volume monitor, how large of a sales force do you consider to launch?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Technically, you could say that we have already launched now, we have the ability to sell. I expect that we will start adding some business development people that can start working with key opinion leaders and potentially also start selling direct to some hospitals say initially, but that's something that's probably going to develop slowly. But it's happening separate from our existing sales force and separate from the rest of the organization. We are working -- already looking for additional space just for that separate division.

Boobalan P. -- H.C. Wainwright -- Analyst

And what is the estimated timeframe for the launch of blood volume monitor and how many hospitals would you like to target in the initial phase?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Well, we don't have a specific number of hospitals there. We will be targeting write-off [Phonetic]. We still have a month or two, I believe, of getting settled with the whole sales and marketing and business development of that division.

Boobalan P. -- H.C. Wainwright -- Analyst

And with regards to the price level, what's the approximate price level? And maybe you can talk about the gross margin of the device? And then how many units, would you like to -- or do you expect to deliver in 2020?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

We don't have a number on how many units we expect to deliver, but we expect the MSRP to be $30,000 or right around that level, both in the U.S. and later more or less the same price level in Europe. There is going to be an element of consumables that go with the product, and we are still to settle on the pricing of those. But they'll obviously -- the consumables will add to the revenue stream, as well long-term.

Boobalan P. -- H.C. Wainwright -- Analyst

Okay. That's it from me, and congrats again.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Thank you very much.

Operator

Your next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Hi. Thomas and Dan, how are you?

Dan Moorhead -- Chief Financial Officer

We're doing great. How are you doing Jeff?

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Awesome. Okay. Just a couple of questions. Firstly on BVM can you talk a little bit about your physical facility there were four floors? How many floors may be added and how many square feet? It sounds like you're going to do all the assembles there in front and manufacturing. And could you talk about, perhaps from Dan's side, how you're planning on reporting it out for [Indecipherable] 10%, will you be reporting it separately or not?

Dan Moorhead -- Chief Financial Officer

Once we get to that level, we'll definitely report it separately. Obviously, initially, it's going to be less than that. So when it becomes material, it will be a segment that we we report.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

And we're looking for somewhere between 10,000 and 20,000 square feet initially for that group. But in a setup, where we can be pretty agile in terms of growing out this base. We obviously have a pretty good experience with building these devices. It's not that different from building our NexWave and NeuroMove and InWave devices. And that shouldn't be that -- so the production won't be the bottom line. [Speech Overlap]

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Will it be in your same building or same campus?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

We hope to keep things in the same campus. It's a good question. Obviously, the production part of it can stay here in the -- at least initially, in the same building.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Okay. And then, big picture what you're talking about on guidance Q1 and the year, I mean, that's pretty dramatic and significant growth write off of what we're currently forecasting. So based on the continued trajectory as far as the orders and the revenue, I would assume that you would expect those rates to continue to move north on arguably both sides, both orders and revenues? Is that right?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Obviously, in the first part of this year, we are two months into it, unless the bottom falls out of March, which obviously with the increase in sales reps and how productive new reps from last year are quickly becoming -- we have an expectation of growing even faster in the first quarter than we did in the fourth quarter. Yeah.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Okay. And then as far as the numbers you threw out on the guidance side on the EBITDA side, the $2.3 million and $2.8 million of the $14 million to $14.5 million for Q1 and the $15 million to $18 million of the $75 million to $80 million for the year. Your 2019 EBITDA of $12.1 million of the $45.47 million, 26% so -- as we are showing is $17.5 million for the first quarter and then $21.2 million. Could you talk about maybe the $26 million going to $22 million as far as, where that money is being spent. Is it more on -- is it more on personnel or is it more equipment in equipment or is just the dramatic increases for our sales organization?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Obviously, personnel -- we will have to keep increasing our personnel to just keep up with the orders and processing them to get paid. And then there all the support functions that needs to grow with the increase in personnel. But dollar wise for the next quarter or two from here, we will definitely see a steep increase in the sales expenses, the base salaries and obviously the commissions -- sales commissions, as orders continue to grow. So that's where you're going to see the most. We hope at all times to keep the G&A portion of the expenses below the -- well below the top line growth. But for short while we'll still see the growth in sales expenses to be higher than the revenue growth. We got a -- we are investing in the sales force, basically.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Okay. And then, remind us of now or current total FTEs and square footage on your facility, all the floors, all four.

Dan Moorhead -- Chief Financial Officer

I believe we have 85,000 square feet or 86,000 square feet by now.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Correct. We have -- in the building, we have 160 employees, somewhere in that range.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Okay. And that's about what percent of total?

Dan Moorhead -- Chief Financial Officer

We are just taking -- say that again.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

What's the total employees?

Dan Moorhead -- Chief Financial Officer

Well, you just have to add the sales on top of that. So out of 300...

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Perfect.

Dan Moorhead -- Chief Financial Officer

Yeah, 330 it's something like that. Yeah, that is.

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Okay. And then, Thomas, you talked about in the past previous terms when you've talked about this BVM with me. So how do we think about this? There is 4000, 5000, 6000 hospitals of which units could be highly utilized in a number of departments.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Right. So, ideally, I would like to -- eventually, have sold up to about 20 of our devices to an average hospital or surgical center. And that -- if that all comes true and it all had a $30,000 price point. We're obviously talking about $3 billion. That's -- that would be an ideal scenario. We'll see how it works out

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Excellent. Thanks for taking the questions.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Yeah, thanks, Jeff.

Operator

And our next question comes from Marc Wiesenberger with B.Riley FBR. Please go ahead.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Yeah. Thank you. I dialed in a little late. So I apologize if maybe you addressed any of this in your remarks. But how many new territories did you expand into in the fourth quarter? And then maybe how many new territory you're looking to expand into for the full year 2020?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Yeah the 2020 question is obviously, pretty easy because we have a little less than 200 open territories right now. And so that's what we expect to expand into between now and the end of the year. In the fourth quarter, we had a -- quite a mix -- quite a few additions, but we also had quite a bit of clean up in our sales force in the month of December. That's why we -- on the payroll a little below 200 at year-end. But right now, we got about 200, because we added 40 sales reps in January and February, 16 in January, 24 in February, and it looks like we're behind -- will more than that in March.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Understood. Can you provide some updates on the productivity of new reps on an absolute basis and maybe relative to the cohorts kind of from the fourth quarter in 2018 and the first quarter in 2019. Kind of, how quickly are they getting their first orders, how long to breakeven that kind of thing?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Yeah. If you look at our gross profit margins and the base salaries of close to $50,000 a year, and the commission rates -- we breakeven on a rep when they exceed three or four orders. So that's pretty good, because -- all because of the high gross profit margins. Excuse me. Then if you look at how well our training is playing out right now, we are well over double in the first 90 days of new reps order production compared to as you said a year ago. So things are getting better in terms of the better productivity and that also speaks for that. We should have less retention in our new sales force going forward compared to what we had last year.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Sure. As you're scaling the business, can you talk about some of the initiatives that you put in place with regards to maybe automating some more processes to help scale up and quantify either the time or the monetary benefit you're getting from that?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Well, we have so many initiatives going on all the time. But one of them a while back was that Mike have mentioned, new files would take us with -- our billing system would take us up to 20 minutes to get set up correctly in the system after order entry and all that, and eventually be able to build an insurance company after we ship the device. We've automated that and in a manner, where it's just a matter of seconds now after everything is -- all the boxes are checked etc. So if you can imagine that we are -- we will -- it won't be long before we will be smelling 10,000 orders a month and what kind of bottleneck that would be, if we were to take 20 minutes on the average order before we could even bill it and the amount of people that would take to process. So that's a significant improvement.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Understood. With the growth that you're seeing, is there a reason that you are not deploying capital at a faster rate to capture additional business? I mean, would you consider maybe taking on some debt to add leverage and fuel the growth even further? Or kind of how should we think about your kind of capital allocation strategy for supercharging?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Because of how cash flow positive we are, we can grow faster by adding more cash. We have 14 -- or at the end of last year, we have $14 million in the bank and continued to grow our cash balance at that rate or better I should say, because we don't have those items that are non-operational such as dividends and stock buybacks, etc.

So, even at a right where we are growing as fast as we possibly can, we still keep adding to our cash balance. So, I would say, unless we run into an acquisition where we would need more money than -- would be healthy for our cash balance or for the new division will be expenses that would tap unreasonably into that cash balance, then we could potentially get it. But it's -- there's absolutely no urgency in raising money here, on the contrary.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Okay. Can you talk about progress that reps are making selling additional products beyond the NexWave?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

We carry products from other manufacturers. Cervical traction is one of them, low-back support device is another one, cold therapy that's primarily used after orthopedic surgery, products like that. And we've begun promoting those products a little bit here recently and have seen a good response from the clinics that our sales force service in terms of that. So, we're getting a little of diversification on that end. And that's obviously helpful from a strategic point of view.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Do you expect that to kind of accelerate throughout the year or kind of stay status quo or?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

I would peg a point in between. Not necessarily accelerate, but continue to be -- we will continue to see more and more of it, yes.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Okay. Understood. Have you changed anything with the amount of consumables being shipped to patients? And maybe can you remind us the quantity the average patient receives on a monthly basis and kind of how that flexes up and down?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

It is so individual by patient, by insurance company. Even within the same insurance company, they tend to approve a different quantities of supplies and all that. So, I couldn't really give you a number on that. But obviously, we report supplies and devices separately. As you've noticed, there is a little bit of a bump in in device revenue in the last quarter here that was because of we saw a significant increase in orders, and that's obviously where you would see more device revenue as the supplies revenue will be coming in the following months and years after that.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Sure. And one...

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Depending on insurance coverage.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Understood. And one final one for me. Thomas, you've been at this from a while, maybe could you just share what you learned from your competitors exiting the market? And maybe more importantly, what specific things have you put in place to prevent what happened from them to happening from Zynex?

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Number one is, obviously, we try to, at all times, stay ahead of issues that our compliance-related and also our quality systems -- we try to stay ahead of the game. So that's definitely one. And then, I would say that we could see compared to the kind of financial performance they -- those competitors show, that our investments in high-quality, smart and with good negotiating skills employees throughout the organization, but it's primarily something that has benefited our billing part of the organization, has really paid off well.

Good quality employees gone a long way in. I believe we're also smarter than maybe we have seen other companies in the industry when it comes to negotiating contracts etc., with insurance companies. So it's really an overall saying that makes all these click, but our improved financial performance really started five years ago when we started putting an emphasis on hiring better quality employees, and it's really paying off. I'd say that 99% the reason why we're doing so well today is good quality employees.

Marc Wiesenberger -- B.Riley FBR -- Analyst

Great. Thank you very much.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Thomas Sandgaard for any closing remarks.

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Thank you. I hope today's earnings call has been informative for everyone, and I appreciate the interest in Zynex and listening into this call. Thank you all, and have a great day.

Operator

[Operator Closing Remarks]

Duration: 36 minutes

Call participants:

Thomas Sandgaard -- Chairman of the Board, President and Chief Executive Officer

Dan Moorhead -- Chief Financial Officer

Boobalan P. -- H.C. Wainwright -- Analyst

Jeffrey Cohen -- Ladenburg Thalmann -- Analyst

Marc Wiesenberger -- B.Riley FBR -- Analyst

More ZYXI analysis

All earnings call transcripts

AlphaStreet Logo