ZYXI (2020 - Q3)

Good afternoon, everyone and welcome to the Zynex Q3 2020 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] 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. 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 31, 2019, as well as Forms 10-Q, 8-K and 8-Ka, press releases in the company's website. Please note today’s event is being recorded. And at this time I would like to turn the conference call over to Thomas Sandgaard, Founder, Chairman, and Chief Executive Officer. Sir, please go ahead. Thomas S

Thank you. Good afternoon. My name is Thomas Sandgaard, President and CEO of Zynex. Welcome to our 2020 third quarter earnings call. I am excited to announce yet another quarter of revenue growth and positive net income. Our third quarter revenue of $20 million increased 69% compared to the same quarter last year. It was also the highest quarterly revenue in the history of the company. It was actually our 17th straight quarter with positive net income, and fully diluted earnings per share was $0.04. Adjusted EBITDA for the third quarter was $2.4 million, as we continued to invest in growing our sales force. Similar to many companies, we've seen the impact of COVID-19 pandemic. And Q3 orders came in at 96% higher than Q3 of last year, which was an increase of 37% year-over-year order growth in Q2 and we saw momentum in order growth during Q3 with 83% in July and August and 117% in September. October is currently trending above 120% compared to October last year, which is a strong benchmark as October last year was by far our strongest month in 2019. The continued strength in order speaks volumes to the relationship our sales force has with many prescribers, and the need for them to prescribe non-opioid non-addictive prescription strength solutions for the patients in pain. The investment in expanding our sales force continues to progress as we expand our geographic footprint across the U.S. We continue to aggressively add sales reps, and eclipse 400 total reps in the third quarter. Our recruiting efforts have been aided by a surge in candidates due to the increased unemployment rates related to COVID-19. We expect these new hires to provide significant productivity increases in Q4 and beyond. We expect to have over 500 sales reps by year end. Revenues slowed slightly in Q3 due to the lower Q2 orders in April and May related to COVID-19, but still grew 69% in the third quarter compared to 87% in the second quarter. As a reminder, our business model was billing for the devices monthly used and supplies as they are consumed by our patients causes a lag between orders and revenue growth. As business continues to get back to normal and orders continue to grow, we expect revenue and revenue growth to follow accordingly. Also want to mention that our operations continue without interruption and our supply chain remains uninterrupted. In addition, it's our practice to keep several months of finished products on the shelf, have over four months of components on hand for internal assembly, and 12 to 18 months of orders placed with our vendors on top of the in-house materials. We have also increased our second sourcing to become less dependent on individual vendors. It is critical for us to have the ability to ship immediately to a patient in pain. The opioid epidemic continues to be a serious issue in this country, and we're 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 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 stand out as some of the best products in the industry. The NexWave for pain management, our NeuroMove device for stroke rehabilitation, and the InWave for incontinence treatment. Those all puts us in a very strong product position in the rehabilitation markets. We also continue to see great potential from both of our product divisions, our existing revenue-generating area for pain management, as well as a huge unmet potential for our blood volume monitor. As most of you probably already know, we managed to get FDA clearance for our CM1500 blood and fluid monitor earlier this year. The CM1500 is a non-invasive monitor intended to monitor patient's 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, where internal bleeding today are common and difficult 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. Last week we announced we hired Neil Friery as the President and COO of this division. Neil has a strong background from primarily Zimmer Biomet, in particular the surgical side and comes with a lot of knowledge about medical devices and also blood loss monitoring at hospitals. At Zimmer Biomet, Neil managed P&L, led product development, manufacturing, sales and marketing, product launches, and quality functions for their $400 million surgical division with 600 employees and 35% EBITDA margins. He specifically built a 130 men sales force from scratch and also led several acquisition efforts in the cardiac device market. Before that, he was Director of Finance or Controller for five years at Zimmer Surgical. Going forward, Neil will be leading our sales, marketing, clinical research and engineering efforts. In the near-term, this division still utilizes manufacturing, human resources, accounting and QA resources from Zynex Medical, the other division. But will at some point have their own self-sufficient functions. I will now turn the call over to Dan Moorhead, our CFO.

Thanks, Thomas. First, I'll review our 2020 third quarter results. Orders grew 96% year-over-year, and net revenue grew 69% to $20 million from $11.8 million in 2019. Device revenue increased 99% to $5.3 million, compared to $2.7 million last year. Supplies revenue increased 61% year-over-year to $14.7 million from $9.2 million. Gross margins were 79% in the third quarter of 2020. Sales and marketing expenses increased to 125% year-over-year, as we continue to aggressively grow our sales force. G&A expense grew 70% year-over-year. Much of that increase was related to increased headcount in our reimbursement and patient support functions related to our order growth. Third quarter net income was $1.3 million or $0.04 per diluted share, compared to net income of $2 million, or $0.06 per diluted share in the third quarter last year. Adjusted EBITDA, which is a standard EBITDA calculation, plus an exclusion of non-cash stock-based compensation and other income expense, and is reconciled in our press release, was $2.4 million in the third quarter. I will now review our 2020 nine month results. Orders grew 85% year-over-year, which increased net revenue 74% to $54.5 million from $31.3 million in 2019. Device revenue increased 88% to $13 million, compared to $6.9 million last year. Supplies revenue increased 70% year-over-year to $41.5 million from $24.4 million. Gross margins were 78% in the first three quarters of 2020. Sales and marketing expenses increased 117% year-over-year, and G&A expense grew 63% year-over-year. 2020 nine months net income was $7.3 million or $0.21 per diluted share, compared to net income of $6.5 million or $0.19 per diluted share through three quarters last year. Adjusted EBITDA increased 27% to $10.2 million in the first three quarters. On the balance sheet, as of September 30, our cash balance was $41.2 million, up from $14 million at year-end. As many of you know, we completed an equity transaction during July, which added approximately $25 million to the balance sheet. Our working capital grew 189% to $50.3 million at September 30, compared to $17.4 million as of December 31, 2019. With that, I'll now turn the call back over to Thomas.

Thank you, Dan. I'm especially excited about our year-over-year growth in orders of 96%, and our revenue growth of 69% in the midst of the COVID-19 pandemic. It's a huge testament to our efforts to grow out of sales force and clearly justifies the investments in our sales personnel, sales management, and insight support functions. Our focus continues to be growing our sales force at a rapid rate to eventually cover the entire country now in just a few months from now. It is also important that we really don’t have any significant competitors left. Our increased orders due to a larger sales force combined with strong reimbursement for our products continues to drive increased revenue and profitability. I’d like to take a minute to review what we have accomplished so far in 2020. In the midst of a pandemic, we are forecasting to beat our original full year revenue guidance, which we gave in February of this year. This year alone and before year end, we will have hired over 300 new sales reps. Our reps are now more effective in the first three months than ever before and we are very bullish on expanding sales orders and what it will be able to produce in Q4. And therefore, the revenue of those orders will turn into in 2021 and 2022. We estimate our fourth quarter revenue to be between $25.5 million and $26.5 million with adjusted EBITDA between $2.3 million and $3.3 million. This revenue range is 80% to 87% higher than last year’s fourth quarter revenue. This is up from 69% year-over-year revenue growth in the third quarter. As a reminder, nearly all of our collections from bill income from insurance companies, mostly private insurance, but also government, auto insurances, workers' comp, and personal injury attorneys. Payments from those are either dictated by contractual amounts we have established or allowable amounts already well-established through our industry, and negotiated amounts on a patient-by-patient basis. These amounts are typically discounted by deductibles and co-pays and other allowable discounts and we end up getting much less than our MSRP. That's typical throughout the healthcare industry in the U.S. This pattern is the same whether we get paid for the device or patient supplies. We are careful to make sure our billing practices are always within the law and comply with all guidelines and regulations. We also undergo regular accreditation by a third-party to ensure we continue to be compliant. My long-term goals are like the therapy 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 out domestic sales force, as well as potential acquisitions of complementary technologies. We have just recently added three employees in the Monitoring Solutions division including our new President and COO and we are in the process of adding four additional executives and managers to this division to launch our blood volume monitoring. We will continue to update everyone as we continue to build out this division. In summary, we now announced yet another great quarter with strong growth in orders, growth in revenue and profits, which puts us in a position of strength going forward. We will now answer questions from our listeners.

Ladies and gentlemen, we will begin today’s question-and-answer session. [Operator Instructions] Our first question today comes from Jeffrey Cohen from Ladenburg Thalmann. Please go ahead with your question.

So, hi, Thomas and Dan. How are you?

Very well. How are you doing, Jeff?

Just fine, hiding in there. So, just a few questions for you. Firstly, on the device side, it looked like about 8% higher in our estimates. Is there any read into that? Is that basically just a function of more sales coming on with earlier orders? Or is there is something else to read into there?

Not a whole lot, but Dan?

I don’t think there is much. But there can always be changes in mix when they lease or buy the device. It’s really just how the revenue comes in on the devices. So I don’t think there is anything trending that you would need to know.

Maybe slight changes in the mix of insurance companies and their preferences which is how we have to set up, how we bill each insurance company.

Okay. Got it. And could you give us a little flavor on the ratio of the back office support to the sales organization? Is that increasing kind of ticking up along with the sales organization build out or any color there for us?

Yes. I can say, we finally completed the addition of a total of 15 regional sales managers that obviously each control what eventually will be this year of up nearly 800 sales reps. In the back office, we have – we now have 15 inside sales people that are supporting those sales reps with anything they might need during the day. And obviously, then we have the whole pipeline to the system from the order entry to patient enrollment to the patient experience group and we have established that call patients within a day or two after they receive the device. And obviously, we have a very large call center for all the questions that the patients may have. So that’s all there. But really what you could say is the core of the business is the engine we have there that bills insurance companies. That is separate from our sales force obviously and they work directly on that. We can call it the second part of the sales process making sure that insurance companies understand with the prescription and insurance coverage and the fact that we have shipped the device. We obviously need to get paid and now that’s what the billing. The base department we have is the billing department. But there is a lot of departments.

Okay. Got it. One more if I may. Could you talk about the second sourcing? And what’s it for? Is it just specific to PCM boards or other components? Can you talk about that a little bit?

Yes. It’s every component we use. So one example is obviously the semiconductors that go in it. It’s like billing it’s also what we do. And some of the components are automatic. It’s very easy to find second sources for those. So that’s not a problem. But when you get to customize LCD displays for instance, then, we have – along through. And ask that we develop the devices, just have one vendor. We have another one that’s – the phase, then goes to the customers plastic enclosure for the lead wire, et cetera, for the bags that device comes in. So everything really has a second source now. Just to make sure, and we now have volumes that can justify having two multiple vendors well with our trading to just the pricing. So, the cost price of our devices are certainly not going up.

Okay. Perfect. Thanks for taking the questions.

Sure. Thank you.

Our next question comes from Yi Chen from HC Wainwright. Please go ahead with your question.

Thank you for taking my question. Could you remind us currently how many sales reps do you have?

At the end of the quarter, we had approximately 410 or something like that.

May have been a little higher than that. 430 somewhere in that. Yes.

Right around there and obviously it’s a higher number as of today and we expect by year end to have over 500.

Okay. Got it. So, right now, the U.S. is experiencing a rebound in COVID-19 cases. It looks like the rebound is not going to end until probably the end of the coming winter. So, do you expect continuing negative impact from COVID-19 for the coming quarter? And how do you see the growth trend will ramp up going into the first and second quarter of 2021?

At this point, we don’t see any impacts. As I mentioned, October is even stronger than September in terms of year-over-year order growth. And we can obviously attribute that a lot to additional sales reps and also how productive new reps are now becoming. What we are also seeing is unlike in April, May, when there was a lot of nervousness and people are not sure about how to open clinics, how to deal with patients if they should allow them and it’s – they should allow sales reps in. That has now found – you could call it a balance between making sure that there is enough distancing and just dealing with the pandemic while still operating as a business. So, we don’t, at this point see any slowdown in terms of clinics that are winning through our sales reps, et cetera. And I am sure there is also some tailor medicine going on some of the prescribers we have see the patients or maybe a Zoom call and then prescribe accordingly. And obviously, different ways to still communicate with those prescribers. So, all in all, at this point, we don’t see any signs of slowdown. So, compared to when we got out of COVID and how all the orders are growing right now, it’s nearly a straight line up.

Got it. So, for the division of the blood volume monitor. Can you give us some color on what activity the company will be conducting during the current and next quarter? And if they don’t, the timeframe for a commercial launch?

Yes. Secondly, we can sell and there might be a few hospitals that might be interested in placing some precious orders. So, those are initial talks at this point. We continue to conduct pilot studies to collect more data that we use for product development and we also have clinical studies in the works to eventually be published when using the device in the surgical setting. And then, we also had a few studies underway that are much more practical that adhere to what’s actually suggested by a few research class hospitals – research institutions’ hospitals. They suggest to assist us with collecting data. So, we are in a pretty - in a very simple fashion can see, how many minutes we detect earlier than someone that seen – and are seeing a recovery, for instance would detect that someone has an issue was maybe internal bleeding. So, we are initiating a couple of studies that are very, simply put will be helping us significantly in terms of the sales efforts. So that’s on the clinical side. We continue to develop on the CM-1600, a version that is a lot more elegant to use. It’s also wireless and looking at some of the parameters in a fashion that’s going to make it even less complicated in the ORs, in terms of the wires, et cetera. So, that’s what’s going on and we already have initial sales efforts going on. We’ve had a few contacts from the international site that we could also or we will be looking at. And other than that, it’s as soon as Neil comes in to the office in a few days, we’ve already started talking about the strategic plan for that division and we – that will be the first day. There are so many things we can do with this product. So let’s make sure we start in the right corner.

Is it reasonable to expect that 1500 could be launched sometime in 2021?

Yes. Absolutely.

Okay.

Surely, it’s already launched. But in terms of maybe not less than – no trade shows right now for that things we can do in – on social media and obviously with direct sales efforts as we are doing now. And it’s hard to say when we can call that a formal launch because we are probably more just be slowly ramping up those efforts rather than a big splash. So, we’ll see.

And to follow-up on CM-1600, does that device need a separate 510k approval? And in what timeframe do you expect the approval to occur?

We – it doesn’t – you just say, technically, it would not necessarily need a separate 510k trends. But our plan is when it’s through the FDA with another 510k. We should be able to in somewhere between two and maybe five months to file that application.

Got it. And finally, regarding the use of the – what’s the progress of moving the inventory? And the related operations into the new facility. Is there any disruption to the overall operations of the company?

The good news is that, the way we are set up, we won’t even know that there was a difference. I think we can do that seamlessly. A big portion of our inventory is already over there. But it’s taken now a couple of weeks. We do it slowly because we do have so much to make sure we have everything ready in the pipeline. And here in a few weeks, I believe the – that the whole assembly line and the work stations will hit towards the end of November be over there and it will all be – everybody will start moving, I would say, December 1st probably an appropriate day. So we now have a total of 84,000 square feet here. We have 50,000, 51,000 square feet over there and we have nearly 10,000 square feet in the building next door. So, that’s a 145,000 square feet that we now occupy. And we need more and so, as definitely getting production and the warehouse out of here, it’s going to give us a little bit of breathing room.

Our next question comes from Matthew O'Brien from Piper Sandler. Please go ahead with your question.

Afternoon. Thanks for taking the questions. For starters, just the suppliers’ number in the quarter was a lot lower than that I have been modeling. So, can you talk about the weakness there and specifically, I think you had a payer that’s stopped covering starting July 1st, what kind of impact did you see in that region?

It wasn’t really a payor issue that – if you are talking about the TRICARE…

That’s not, it certainly is.

That’s really not. You know the decrease in orders during Q2 drove, revenue was up from about $19.3 million to $20 million in the quarter. Devices were up just because the orders and the supplies flattened out in the quarter, but patients start driving again on the order growth that we posted in the quarter.

Okay. So, I guess the next question would be on the – from the press release the employee and supply chain issue that you have seen in Q3. Are those completely resolved? Do you feel comfortable that you are in good shape now as we head into Q4?

Yes, there weren’t any issues. I think we were pointing out that we’ve seen the issues of COVID-19 and we’ve dealt with those and we haven’t really seen a lot of issues. We’ve done a pretty good job on the operations side making sure that we’ve gone pretty smooth through the pandemic in Q2 and Q3. And then, now we are just looking towards Q4.

Okay. And then, I guess, the reason for these questions is really surrounding the Q4 guide. It’s a humongous step up and I know you’ve got a lot more reps in place. But, versus what we saw in Q3, it’s a really base step up. So the confidence in that level of improvement is driven by, I get the reps, but what from a productivity perspective gives you that confidence? Are you seeing it so far here early days in October that you feel comfortable in getting to that level of a step up? And I guess, to follow through on that question, as we head into 2021, I know you guys are pretty bullish about the 2021 outlook is for the business. Any updated thoughts to as you think about next year? Thanks.

I’d say, without putting too many numbers on it, obviously the growth in orders we are seeing right now, we won’t see much revenue in Q4 from that. But that is what is part of building some confidence into what level of revenue we’ll see over the four quarters in 2021. And so, I think we will be expecting that we, for quite some time can keep the growth rates on revenue at the, right around the 100%. And if we can continue order growth for another quarter or two of well over 100%, then eventually revenue will catch up to that and start showing growth over 100%. But here in late this year, we’ll formally be working here internally on setting the – or forecasting the numbers for next year.

Okay. And the big step up in Q4, the confidence there?

Again, in terms of orders, absolutely, we are already seeing it and a little bit of that will obviously drop into revenue for Q4. But cash collections are still strong, which is what is used to drive the net revenue numbers that we plough. So, I think we can feel we are very confident about the numbers we just put out there.

Okay. Thank you.

Our next question comes from Marc Wiesenberger from B. Riley FBR. Please go ahead with your question.

Thanks. Good afternoon. Can you just talk about what drove the order acceleration from the kind of 76% in July to 117% in September? Was that primarily driven by the new reps or was there some productivity gains, as well from existing reps?

Primarily new reps, I would say, what we consider a sitting. So those reps that have been with us for a year or two and all really seen this and it’s significant productivity gains from, but those reps that may have started in January, February, early March, and that had a very significant slowdown in during COVID – for us we experienced COVID as April, May slowdown on orders and a little bit early June. Once we really back into it, we’ve seen some incredible productivity gains, as well as brand new reps may have gotten on board in July, August that are now producing incredible numbers. So, I’d still say these – believe it or not, it seems like we’ve been able to recruit even better and provide initial training even better than we did to maybe a year or two ago. And on top of that, we now have 15 regional sales managers in place. So, now they really do have the time to get out and hold the hands of brand new reps immediately after they get deployed. That probably also helps a little.

Understood. Of the 200 reps that you started the year with, how many are producing at least $1 million in trailing 12 month sales? And then, how many are producing at least $500,000 in trailing 12 month sales?

I don’t have that number present. But if I should guess, somewhere between 10 and 20 of those and if you look at the runrate-wise.

Yes.

Maybe, then, not anymore than that. There is not yet and still heavy lifting.

Got it. In a steady state world, what are you expectations for the number of orders sales reps can generate per month?

They should be able to produce over 100 orders per month. Our projections in order to make all the numbers come together is fairly conservative as long as they do 60 orders a month on the average throughout the sales force, then we realistically may not be able to push them anymore than that. And that will make our long-term goals come together. If we can get although 100, I remember when our – a competitor, Empi, that was a division of DJO, when they were in business, if someone produced less than 100 orders a month, they wouldn’t be working for them anymore. So, I think it’s for budgeting and forecasting purposes, it’s we have a pretty conservative number in there. But that’s in $6 million in annual revenue, annualized revenue per rep.

Got it. Thanks. And one more for me. Turning to the blood volume monitor, I mean, we saw that you released an announcement expanding your facilities, you’ve hired a new Chief Operating Officer for the monitoring solutions division. Can we read between the lines to infer that you guys are closer to determining your go to market strategy and favoring a go to loan path, as opposed to a joint venture or licensing deal? And then how should we think about of the cadence of spending associated with the blood volume monitor over the next 12 to 18 months? Thank you.

Yes, I think with Neil coming on board and with his background and the talks we have – many talks we have had already obviously, that we are pretty close to be defining the – at least the initial strategy here. Without preempting what will come up with, I am still expecting that we’ll be doing a bit of everything in terms of working strategic partnerships, licensing, royalty, OEM private labeling versus going into a loan until we find out what really works. As far as I know this part of the market, that’s typically a very viable strategy. So you don’t purchase often too much and to need it to negotiate with either way. But we’ll see how all that works. And we’ll probably see a little bit of revenue maybe towards the early or middle of next year. How much, it’s hard to say and that probably depends on how many resources we put on the sales side of it here early on. We already have a few resources on and it’s – I got I maybe – we get – we have received a lot of interest and very open arms when we talk about it, which is a little unusual when you are out there trying to sell some boxes. So it’s very encouraging.

Great. Thank you.

Thank you.

And our next question comes from James Terwilliger from Northland Capital Markets. Please go ahead with your question.

Hey, Thomas, can you hear me?

Yes, I can hear you. How are you doing?

Good. How are you doing? Three quick questions really, very quickly and thanks for taking my question. On the COVID issue, you guys have put up tremendous growth numbers even better growth numbers when you are considering the impact of COVID and the shutdown of the economy and what it’s done to other companies. You had tremendous momentum and then it kind of – you almost had to catch up rather it’s down a little bit. When it started to slowdown, was it more of a regional issue that you saw? Was it one particular region that said, hey, things are kind of shutdown? Or did you really seen that slight slowdown more on the national scale? Was it coming from one region, the northeast, the southeast, the west coast, or was it just, hey, every sales rep is there and we are getting locked out of the facility. Can you expand at all in terms of the COVID hit that you took?

Yes, I would say, when we look back at April, May, early June, when that really hit us, and after that we worked ourselves out of it. We obviously saw in general that certain parts of the country, we were harder hit than others. But at that point, I would say, our national coverage in terms of sales reps went that dense. So, therefore, it was much more on a by sales rep basis. We saw, for instance, our best producing reps during that period were right smack in the middle of Manhattan. And in terms of which reps had problems were probably more a reflection of if we had good existing relationship with prescribers, sort of that they could still contact them by phone, by email, by text messaging or whatever it was. And in some cases, have the ability to drive by, maybe just drop off update prescription packs or something like that without – actually, without entering the clinic. So there was a lot of creativity. We did – we really produced a lot of sales material and sales training to do distant selling during those months. And it was much more on a – it looks like it was a random, which reps picked up on that well and which ones didn’t. So, it was much more by rep and we didn’t see any direct correlation with the regions that were considered hot spots back then.

Okay. Great. Thanks. That was excellent additional color. And my second question is really from a high level concerning reimbursement. I mean, and again, within the healthcare marketplace, sometimes fiscal years in October and November, we might reset reimbursement clearly were coming towards the end of the year with December. From a high level, do you view where you see it today, do you view reimbursement as pretty stable or do you think there is going to be any significant changes with what you see today?

Having done this for very close to 25 years, I have not seen any changes in 25 years on a macro level. On a micro level, it’s always an issue, which insurance company is the most difficult one these months. But, other than that, we don’t see any trends. When it comes to traditional HMO commercial insurances, we see the same pattern right now where here towards the end of the year, many of the deductibles in it and of the allowable amounts, that insurance companies produce, we therefore collect the – a bigger portion of it being cash. And so, cash collections is in the last three months of the year, always a little stronger. And that’s also why we – that we always somewhat upbeat when it comes to projecting fourth quarter revenue.

Okay. Great. And then, lastly, just very quickly. I think you are going to hate this one the most. So, forgive me ahead of time. Now that we are talking about the launch of the monitor in 2021 as you put that team together, what can you see, what can you discuss about maybe the R&D pipeline as we move into 2021? What are you excited that you are working on? And what are you able to discuss that you are working on? And I’ll jump back in queue. Thanks, Thomas.

Yes. And I have talked about a little bit about the CM-1600 that we're probably well over halfway with them. So, we will see when we can here very soon start producing prototypes and I am also looking ahead to a CM-1700, that's a more embedded version of what we already have. Functionality will be more or less the same. But that – having it more embedded would also mean it will be easier for us to create versions for maybe the U.S. military, as well as maybe private-labeling or OEM for other companies. And then I have already made some other inventions that once I think we get some patents filed and stuff like that, maybe we'll talk more about that. And obviously, it's still an option to add more technologies that will fit into the hospital monitoring space from other companies that's an idea I'd say.

Alright. Well, thanks, guys. Thanks for taking my questions. I'll jump back in queue. Thanks, Thomas. Thanks, Dan. Goodbye.

Thanks, James.

And ladies and gentlemen, with that, we will conclude today's question-and-answer session. I'd like to turn the conference call back over to management for any closing remarks.

Yes, 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 and have a great day to all.

And ladies and gentlemen, with that, we’ll conclude today’s conference. We do thank you for attending. You may now disconnect your lines.