Zynex 2025 Q1 Earnings Misses Targets as Net Income Plummets

Zynex (ZYXI) reported its fiscal 2025 Q1 earnings on Apr 29th, 2025. The medical technology company fell short of revenue expectations with reported earnings of $26.6 million, missing the estimated $30.83 million. Zynex anticipates a minimum of $27 million in net revenue for Q2, signaling potential improvement but still below last year's performance. The company expects an EPS loss of $0.20 per share, as it works to diversify revenue sources beyond TriCare due to its temporary payment suspension.

Revenue
Zynex's revenue experienced a significant decline, dropping 42.9% year-over-year to $26.58 million for Q1 2025. The devices segment generated $11.90 million, while supplies contributed $14.68 million, culminating in the total net revenue of $26.58 million.

Earnings/Net Income
Zynex recorded a net loss of $10.4 million in Q1 2025, translating to an EPS of -$0.33, a stark decline from the $10,000 net income and stable EPS in the previous year. The negative EPS reflects the company's weakened financial performance.

Price Action
The stock price of Zynex edged down 0.45% during the latest trading day, decreased by 1.33% over the most recent week, and has dropped 8.23% month-to-date.

Post Earnings Price Action Review
The Q1 2025 earnings report revealed a substantial year-over-year revenue decrease from $46.5 million to $26.6 million, failing to meet the estimated $30.83 million. This decline, alongside a net loss of $10.4 million and an EPS of -$0.33, likely triggered negative market sentiment. The temporary suspension of payments from TriCare, Zynex's largest insurance customer, further impacted gross margins, reducing them from 80% to 69% and contributing to the company's financial struggles. The anticipation of a Q2 revenue increase to $27 million may not have sufficed to counteract the negative sentiment, given the severity of the Q1 performance. Despite the challenging outlook, strategic adjustments and potential seasonal revenue growth could aid in recovery over time.

CEO Commentary
Thomas Sandgaard, Chairman, President, and CEO, expressed optimism about restructuring Zynex's business to reduce reliance on TriCare. He emphasized efforts to address inefficiencies and refocus the sales force on new revenue opportunities. Sandgaard remains confident in the growth potential of Zynex’s non-invasive pain management devices and the pulse oximeter technology, expecting a diversified revenue stream and a strong balance sheet to support future growth.

Guidance
For Q2 2025, Zynex expects revenue to reach $27 million, with an anticipated EPS loss of $0.20 per share. The company has withheld full-year guidance due to uncertainties surrounding TriCare but is optimistic about its long-term goal of surpassing $800 million in annual revenue.

Additional News
Faruqi & Faruqi, LLP, a national securities law firm, announced a class action lawsuit against Zynex, alleging that the company inflated revenue through oversupply practices, drawing scrutiny from insurers like TriCare. This lawsuit reminds investors of the May 19, 2025 deadline to seek lead plaintiff status. The legal action highlights claims of false and misleading statements by Zynex’s executives regarding their business operations and prospects, exacerbating the company's ongoing challenges. Additionally, Zynex has implemented cost-reduction measures, including a 15% staff reduction aimed at annual savings of $35 million, as it navigates the financial turbulence caused by these allegations.