Zynex (ZYXI): Why the Q1 Slide Could Be a Setup for a Major Turnaround

The first quarter of 2025 was a turbulent period for Zynex (NASDAQ: ZYXI), with its stock plummeting to $2.20 by March—a 72% drop from its 52-week high of $8.30. While the immediate catalyst was a temporary suspension of payments from Tricare, the company’s largest insurer, the broader decline has created a compelling entry point for investors. Here’s why the technical setup and near-term catalysts suggest this could be a golden buying opportunity.

The Q1 Decline: A Perfect Storm of Headwinds

The key driver of ZYXI’s Q1 stumble was the abrupt halt in Tricare reimbursements, which accounted for 40% of its revenue. This suspension forced Zynex to slash costs—reducing its workforce by 15%—and led to a net loss of $10.4 million. Yet, the company has been proactive: it secured an appeals meeting with Tricare in April and expects a resolution by June.

Beyond Tricare, investors were spooked by delays in FDA submissions for its NiCO oximeter, a breakthrough device that could diversify revenue. However, management now confirms the submission will be finalized “within weeks,” a critical step toward commercialization.

Valuation: A Stock at 40% of Its Sales Potential

Zynex’s current valuation is starkly disconnected from its fundamentals. With a trailing price-to-sales (P/S) ratio of 0.43—down from 0.72 in 2024—the stock trades at just 43% of its sales per share. Historically, ZYXI has traded at a P/S multiple of 0.6–0.8 during growth phases, suggesting upward room.

Even more compelling: Zynex’s cash reserves ($23.9M) and working capital ($40.1M) remain intact, despite the Tricare headwind. This liquidity provides a cushion to weather near-term storms while capitalizing on growth opportunities.

Technical Setup: A Bullish Reversal in the Works

The technical picture paints a clearer path forward. After collapsing below its 50-day moving average in March, ZYXI has found critical support at $2.15–$2.20, a zone where accumulated volume and institutional buying have historically halted declines.

Key Levels to Watch:
- Resistance: $2.31 (50-day SMA) and $2.48 (14-day ATR upper band). A break above $2.31 would signal a shift to bullish momentum.
- Support: $2.16 (broken trendline) and $2.05 (yearly low). A hold above $2.16 could catalyze a rebound toward $2.60.

Catalysts to Ignite a Turnaround

1. Tricare Resolution by June: If Zynex wins its appeal, Tricare payments could resume, potentially adding $15–$20M to Q3 revenue. Even a partial reversal would boost confidence.
2. FDA Nod for NiCO Oximeter: This game-changing device, which improves oxygen monitoring in patients, faces a regulatory decision by late 2025. Analysts project it could generate $50M+ in annual sales by 2026.
3. Cost-Cutting Payoff: The 15% workforce reduction aims to save $35M annually. If realized, this could swing ZYXI back to profitability by Q4 2025.

Tactical Recommendation: Buy the Dip, Set a Floor at $2.16

The current setup favors aggressive investors:
- Buy on dips to $2.16–$2.20, where institutional buyers have historically stepped in.
- Set a stop-loss below $2.05, but note that this is a multi-year support zone.
- Target $2.60–$2.80 in the near term (if Tricare news is positive) and $3.50–$4.00 in 2026 (post-NiCO launch).

Historically, a buy-and-hold approach tied to earnings releases has proven risky. From 2020 to 2025, such a strategy returned -63%, underperforming the market’s 99.78% gain. With a maximum drawdown of -82.99%, this underscores the importance of timing entries to key support levels and catalyst-driven opportunities rather than relying on traditional triggers.

The Bottom Line

ZYXI’s Q1 stumble was a necessary correction to clear excess pessimism. With a robust balance sheet, a critical regulatory resolution looming, and a transformative product on deck, the stock is primed for a rebound. For investors willing to act now, the risk-reward here is asymmetric: limited downside below $2.15, but substantial upside if near-term catalysts fire.

Act fast—the setup won’t last forever.