Zynex (ZYXI) and the Risks of Financial Restructuring in a Troubled Medical Tech Sector

The medical technology sector has long been a battleground for innovation and financial resilience, but for Zynex, Inc. (NASDAQ: ZYXI), the challenges have reached a critical juncture. On December 15, 2025, the company filed for in the U.S. Bankruptcy Court for the Southern District of Texas, initiating a court-supervised reorganization . This move, facility, underscores the precarious position of Zynex in a sector marked by regulatory shifts, liquidity constraints, and operational volatility. For shareholders, the restructuring raises urgent questions about the viability of the plan and the potential for equity value preservation.

A Financial Freefall and Sector-Specific Pressures

Zynex's financial woes are stark. In Q3 2025, , . This collapse was driven by a Tricare payment suspension, changes in payer claim submission practices, and workforce reductions, all of which disrupted device orders and patient onboarding. Compounding these issues, Zynex for the quarter, . , as reported in the financial results.

The medical tech sector itself has been a double-edged sword for Zynex. While the industry's long-term growth potential remains intact, Zynex has struggled to adapt to payer dynamics and regulatory scrutiny. For instance, the Tricare payment suspension-a significant revenue source-highlighted the company's vulnerability to third-party reimbursement policies. Additionally, the sector's competitive landscape, characterized by high R&D costs and stringent FDA approvals, has limited Zynex's ability to pivot quickly.

The Restructuring Plan: A High-Stakes Gamble

Zynex's Chapter 11 filing includes a $22.3 million DIP loan, structured in three draws , , , . The loan is secured by a first-priority lien on all company assets and includes a minimum return on invested capital of 2.00x. While this financing provides immediate liquidity, the terms are onerous, . The DIP facility's maturity-triggered by the earliest of 105 days post-filing, an event of default, or a sale of assets-adds further uncertainty.

The restructuring also includes a competitive sale process for "all or substantially all" of Zynex's assets, with a 105-day timeline for completion. This approach reflects a strategic pivot from internal reorganization to asset monetization, a path that could yield higher returns for creditors but leaves little room for equity holders. Notably, the company has explicitly warned that shareholders are likely to face "significant losses" under the restructuring plan.

Equity Holder Risks: A Bleak Outlook

For Zynex's shareholders, the risks are multifaceted. The company's market capitalization has plummeted , . The Nasdaq delisting, effective December 24, 2025, further erodes investor confidence, with the stock expected to trade on an over-the-counter (OTC) market. This shift not only reduces liquidity but also diminishes the visibility of Zynex's equity, making it harder to attract new investors.

The restructuring plan's equity treatment is equally dire. While the DIP loan is secured by company assets, the absence of explicit terms for equity conversion, dilution, or cancellation suggests that existing shareholders may see their stakes rendered worthless. Thomas Sandgaard, , faces a particularly high risk of total loss. Moreover, the company's refusal to appeal the Nasdaq delisting-a decision framed as a pragmatic acceptance of its financial reality-underscores the bleak prospects for equity recovery.

Sector-Wide Implications and Lessons Learned

Zynex's plight is emblematic of broader challenges in the medical tech sector. Companies reliant on third-party reimbursement models, such as Tricare or private insurers, are particularly vulnerable to policy shifts and payment delays. For investors, the case of Zynex highlights the importance of diversifying revenue streams and maintaining robust liquidity buffers. It also underscores the need for rigorous due diligence on companies operating in highly regulated industries, where compliance costs and reimbursement uncertainties can quickly erode profitability.

Conclusion: A Cautionary Tale for Shareholders

Zynex's Chapter 11 restructuring represents a desperate but necessary attempt to avert total collapse. However, the plan's aggressive terms, coupled with the company's deteriorating financial health and sector-specific headwinds, paint a grim picture for equity holders. While the DIP loan provides a temporary lifeline, it is unlikely to restore value for shareholders in the absence of a credible path to profitability. For investors, the Zynex saga serves as a stark reminder of the risks inherent in high-leverage, cash-burn scenarios-particularly in industries where regulatory and reimbursement dynamics can shift overnight.