PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read and consider carefully the more detailed information in this prospectus supplement and the accompanying prospectus, including the factors described under the heading “Risk Factors” in this prospectus supplement and the consolidated financial statements, notes to the consolidated financial statements, financial and other information incorporated by reference in this prospectus supplement and the accompanying prospectus, as well as the information included in any free writing prospectus that we have authorized for use in connection with this offering, before making an investment decision.
Our Company
The Company was founded by Thomas Sandgaard in 1996, when he founded two privately held companies that were eventually combined to form the current company. Zynex, Inc., a Nevada corporation, is the parent company of and conducts business within six subsidiaries: Zynex Medical, Inc. (“ZMI”), a Colorado corporation, Zynex Neuro Diagnostics, Inc. (“ZND”), a Colorado corporation, Zynex Monitoring Solutions, Inc. (“ZMS”), a Colorado corporation, Zynex Billing and Consulting, LLC (“ZBC”), a Colorado limited liability company, Zynex Europe (Zynex Europe ApS) (“ZEU”), a Danish corporation, and Pharmazy, Inc. (“Pharmazy”), which was incorporated under the laws of Colorado in June 2015 as a wholly-owned subsidiary of ZMI.
As of December 31, 2019, the Company conducted most of its operations through its primary subsidiary, ZMI. One other subsidiary, ZEU, generated minimal revenues during the years ended December 31, 2019 and 2018 from international sales and marketing. ZMS has developed a blood volume monitoring device which received 510(k) clearance by the U.S. Food and Drug Administration (“FDA”) in February 2020 and is awaiting approval by the Certificate European (“CE”) Marking in the European Union (“EU”). As a result, ZMS has achieved no revenues to date. Our inactive subsidiaries include ZND, ZBC, and Pharmazy. The Company’s compounding pharmacy operated as a division of ZMI dba as Pharmazy through January 2016.
Over 99% of our consolidated revenue in the years ended December 31, 2019 and 2018 is attributable to ZMI. In addition, our electrotherapy pain management business, including our NexWave® and TENSWave devices and supplies, accounted for more than 90% of our billings in the quarter ended March 31, 2020. Moreover, for the quarter ended March 31, 2020, more than 75% of our total revenue was from recurring revenues, which are revenues from products billed more than once per device, including leased devices and supplies (such as electrodes and batteries).
Zynex Medical, Inc. (ZMI):
ZMI designs, manufactures and markets medical devices designed to treat chronic and acute pain, as well as activate and exercise muscles for rehabilitative purposes with electrical stimulation. ZMI devices are intended for pain management to reduce reliance on medications and are designed to provide rehabilitation and increased mobility through the utilization of non-invasive muscle stimulation, electromyography technology, interferential current (“IFC”), neuromuscular electrical stimulation (“NMES”) and transcutaneous electrical nerve stimulation (“TENS”). All our medical devices are intended to be patient friendly and designed for home use. The ZMI devices are small, portable, battery operated and include an electrical pulse generator which is connected to the body via electrodes. The products are cost effective when compared to traditional physical therapy, and often result in better mobility, less pain and increased potential for a patient to return to work earlier than with traditional therapies alone. All of our medical devices are marketed in the U.S. and follow FDA regulations and approval. Our products require a physician’s prescription before they can be dispensed in the U.S. We consider the physician’s prescription as an “order,” and it is on this basis that we provide the product to the patient and either bill the patient directly or the patient’s private or government insurer for payment. ZMI’s primary product is the NexWave device, which offers IFC, NMES and TENS modalities in one device to deliver pain-alleviating therapy for various pain, including the two most common types of chronic pain, which, according to the National Institute of Health Statistics’ Health, United States, 2006, was back pain (27%) and neck pain (15%). IFC treatment is significantly stronger and reaches deeper than TENS to stimulate motor nerves to