Zynex Investors Face Critical May Deadline as Fraud Allegations Unfold

Investors in Zynex Inc. (NASDAQ: ZYXI) are under a ticking clock: a May 19, 2025 deadline looms for those seeking to join a federal securities class action lawsuit alleging fraud and mismanagement. The case, spearheaded by law firm Faruqi & Faruqi, LLP, centers on claims that Zynex artificially inflated revenue through deceptive practices, misled shareholders about risks, and ultimately triggered catastrophic losses. With the company’s stock price plummeting over 85% since early 2024, the stakes for investors could not be higher.

The Allegations: A Scheme to Inflate Revenue

Zynex, a manufacturer of medical devices for pain management and rehabilitation, is accused of engaging in an “oversupplying scheme” that inflated revenue by shipping excessive quantities of products—such as electrodes and batteries—to patients. According to the lawsuit, this practice allowed Zynex to bill insurers like Tricare (the U.S. military’s health program) for unnecessary supplies, thereby artificially boosting financial results.

The fallout began in June 2024, when a STAT news report exposed the scheme. The revelation caused Zynex’s stock to drop 5% to $9.35 per share—a stark warning of the risks to come. The crisis deepened in March 2025 when Zynex disclosed a 51.3% stock plunge to $3.41 after Tricare suspended payments due to ongoing investigations into its billing practices. By May 2025, shares had fallen further to $1.79, with a market cap of just $57 million—down from a 52-week high of $12.19.

A Pattern of Misleading Statements

The lawsuit asserts that Zynex executives made materially false or misleading statements throughout the class period (March 13, 2023–March 11, 2025), downplaying risks while overstating financial health. Key omissions included:
- The “oversupplying scheme” and its potential to trigger insurer scrutiny.
- The risk of exclusion from Tricare and other insurance networks.
- The likelihood of federal penalties for fraudulent billing.

These misrepresentations, the suit argues, created an artificially inflated stock price, benefiting executives and insiders while leaving investors unaware of the coming storm.

The Legal Landscape and Investor Options

The case, Tuncel v. Zynex, Inc., is now seeking lead plaintiffs to oversee litigation. To qualify, investors must have purchased ZYXI shares during the class period and demonstrate the largest financial interest in the outcome. While the lead plaintiff role is critical, even non-lead plaintiffs may share in any settlement or judgment if the case succeeds.

Faruqi & Faruqi emphasizes that missing the May 19 deadline forfeits the right to influence the litigation’s direction. Investors with losses exceeding $75,000 are encouraged to contact the firm directly via toll-free numbers (877-247-4292 or 212-983-9330, Ext. 1310) or through its website,
www.faruqilaw.com/ZYXI.

Whistleblowers and the Broader Implications

The lawsuit also invites input from former employees, whistleblowers, or shareholders with knowledge of Zynex’s practices. This underscores the potential for additional evidence to emerge, amplifying the case’s strength. Notably, other law firms—including Pomerantz LLP and Robbins Geller—have also filed related claims, signaling the severity of the allegations.

For Zynex, the repercussions extend beyond legal battles. The company’s ability to secure insurer partnerships, a lifeline for its revenue model, now hangs in the balance. With Tricare’s suspension of payments and ongoing scrutiny from regulators, Zynex faces existential threats that could reshape its future.

Conclusion: A Crossroads for Investors

The Zynex case is a stark reminder of the risks inherent in investing in companies with opaque financial practices. For those who held ZYXI during the class period, the May 19 deadline is non-negotiable: missing it could mean losing the chance to seek redress for losses.

The data is unequivocal: Zynex’s stock has collapsed by over 85% since mid-2024, with its market cap shrinking to a fraction of its former size. The lawsuit’s success hinges on proving that executives systematically concealed risks to maintain an illusion of stability.

Investors must act decisively. By reaching out to legal counsel and understanding their rights, they can protect their interests in what is likely to be a defining chapter for Zynex—and a cautionary tale for markets.

Key Statistics:
- Zynex’s stock price dropped 51.3% on March 12, 2025, after Tricare’s payment suspension.
- Over $200 million in investor value has been erased since early 2024.
- Faruqi & Faruqi has recovered hundreds of millions for investors in prior cases, including the $7.2 billion Enron settlement (via co-counsel).

Time is running out. The clock is ticking.