Zynex Investors Face Crucial Deadline as Fraud Allegations Mount

The class action lawsuit against Zynex, Inc. (NASDAQ: ZYXI) has reached a critical juncture, with investors holding losses now urged to act before a May 2025 deadline. At the heart of the case are allegations that Zynex engaged in an "oversupplying scheme" to inflate billing to insurers, a claim that has sent its stock into a tailspin and triggered scrutiny from federal regulators. For investors, the stakes are high: the lawsuit could reshape the company’s financial future and determine whether shareholders can recoup losses from what plaintiffs call a "fraudulent" business model.

The STAT Report: A Watershed Moment

The lawsuit, filed by Pomerantz LLP, hinges on two key events. The first was a June 4, 2024, report by STAT, a respected medical journal, which accused Zynex of systematically overprovisioning pain management supplies to patients. According to the report, Zynex sent excessive monthly shipments of electrode pads and batteries—items insurers were then billed for at inflated rates. The fallout was swift: insurers began excluding Zynex from their networks, and its stock price dropped 5% the day the report broke.

The STAT allegations also raised red flags about Zynex’s compliance with federal healthcare regulations. Overbilling schemes, if proven, could expose the company to False Claims Act penalties, which carry fines of up to $27,500 per violation. For context, Zynex’s market cap at the time of the report was around $300 million—a figure that now looks far more vulnerable.

Tricare Suspension: A Financial Body Blow

The second pivotal moment came on March 11, 2025, when Zynex disclosed a revenue shortfall and revealed that Tricare, a federal healthcare program accounting for 20–25% of its annual revenue, had suspended payments pending an audit of prior claims. The news sent ZYXI’s stock plummeting 51.3% in a single day, closing at $3.41—a historic low.

Analysts point to this as evidence of systemic risks in Zynex’s business model. Tricare’s actions suggest not just a contractual dispute but potential fraud investigations. The suspension, combined with slower insurer payments, has thrown Zynex’s cash flow into doubt, raising questions about its ability to sustain operations without new financing.

Legal and Financial Risks Ahead

Pomerantz’s lawsuit argues that Zynex misled investors about both its billing practices and financial stability. If successful, the case could force the company to pay damages or face operational overhauls. The firm’s track record is notable: Pomerantz has secured over $4 billion in recoveries for clients in securities class actions, including cases against major companies like Boeing and Volkswagen.

Yet the road ahead is fraught with uncertainty. Zynex has denied the allegations and may counter that its supply practices were compliant with insurance contracts. However, the dual blows of the STAT report and Tricare’s suspension have already eroded investor confidence. As of March 2025, ZYXI’s stock trades at roughly a third of its 2023 highs, and its debt-to-equity ratio has worsened, suggesting heightened financial strain.

A Deadline with High Stakes

Investors who purchased Zynex shares between June 2023 and March 2025 have until May 19, 2025, to seek lead plaintiff status in the case. Lead plaintiffs play a critical role in shaping litigation strategy and negotiating settlements, so the decision carries weight. For those considering involvement, the calculus is clear: the lawsuit offers a potential pathway to recovery, but waiting past the deadline forfeits that right entirely.

Conclusion: A Crossroads for Zynex Investors

The Zynex case underscores the fragility of companies reliant on opaque billing practices in healthcare—a sector increasingly under regulatory scrutiny. With its stock down over 50% in months and a major revenue stream suspended, Zynex faces not just legal battles but existential challenges. For investors, the May 19 deadline is a hard stop to influence the outcome of a case that could define the company’s future.

The data tells the story: ZYXI’s share price has lost over 70% of its value since late 2023, and its current valuation—around $120 million—reflects investor skepticism. While lawsuits often drag on, the combination of Pomerantz’s expertise and the severity of the allegations suggests this case could set a precedent for how courts view "oversupplying" schemes in healthcare billing. For shareholders, the next move is urgent—and the clock is ticking.

For more information or to join the case, contact Pomerantz LLP at newaction@pomerantzlaw.com or 646-581-9980.