Investor Lawsuit Accuses Medical Device Maker Zynex (ZYXI) of Inflating Revenue Through Excessive Shipments; Subsequent Earnings Report Reveals Significant Financial Strain– Hagens Berman

A class-action lawsuit has been filed against Zynex, Inc. (NASDAQ:ZYXI), a medical device manufacturer specializing in electrotherapy devices, alleging that the company and certain of its top executives misled investors by overstating revenue through the practice of shipping excessive and unnecessary supplies to patients.The complaint, Tuncel v. Zynex, Inc., No. 25-cv-00913, filed in the U.S. District Court for the District of Colorado, seeks to represent individuals and entities who purchased or acquired Zynex securities (NASDAQ: ZYXI) between March 13, 2023, and March 11, 2025. Lead plaintiff motions for the Zynex class action lawsuit must be filed with the court no later than May 19, 2025.Hagens Berman is investigating the alleged claims and urges Zynex investors to submit your losses now.Class Period: Mar. 13, 2023 - Mar. 11, 2025Lead Plaintiff Deadline: May 19, 2025Visit: www.hbsslaw.com/investor-fraud/zyxiContact the Firm Now: [email protected]844-916-0895Did Zynex Deceive Investors with Inflated Revenue Figures? Lawsuit Alleges Misleading PracticesThe lawsuit contends that Zynex engaged in a scheme to inflate its reported revenue by routinely sending patients more products, including electrodes, than were medically necessary. This practice, the suit alleges, drew scrutiny from insurers, most notably Tricare, the health care program for active-duty and retired U.S. military personnel, potentially leading to adverse consequences such as removal from insurer networks and government penalties.Concerns surrounding Zynex's business practices were amplified on June 4, 2024, with the publication of a report in the medical journal STAT. The report, titled "How a device maker inundated pain patients with unwanted batteries and surprise bills," detailed what it described as an "oversupplying scheme" whereby Zynex allegedly sent excessive monthly supplies, such as electrode pads and batteries, to generate higher billings to insurers. Following the publication of the STAT report, Zynex's stock price reportedly fell by more than 5 percent.The lawsuit further highlights Zynex's disclosure on March 11, 2025, when the company announced its financial results for the fourth quarter and full year of 2024. In its report, Zynex revealed a significant revenue shortfall in the fourth quarter, attributed to slower payments from certain payers. The company also disclosed that Tricare had temporarily suspended payments while it reviewed prior claims. This announcement triggered a sharp decline in Zynex's share price, plummeting by more than 51 percent, according to the legal filing.Tricare Suspension Exacerbates Financial Woes: Post-Lawsuit Report Reveals Deepening Revenue and Profit Decline.The financial repercussions of the Tricare payment suspension and the alleged prior practices became more evident after the lawsuit was filed. On April 29, 2025, Zynex reported a substantial decline in its first-quarter 2025 financial performance. Net revenue for the quarter plummeted to $26.6 million, a sharp decrease from the $46.5 million reported in the same period of 2024. The company also saw its gross profit margin contract significantly, falling to 69 percent in the first quarter of 2025 compared to 80 percent in the prior year. This downturn resulted in an adjusted EBITDA loss of $11.8 million for the quarter, a stark contrast to the $1.7 million in adjusted EBITDA recorded in the first quarter of 2024.During the subsequent earnings call, Zynex Chief Executive Officer Thomas Sandgaard directly addressed the TriCare payment suspension as a primary factor contributing to the disappointing first-quarter results. Mr. Sandgaard stated that the disruption had a significant impact on revenue calculations and prompted the company to initiate a restructuring effort to prepare for a potential prolonged halt in TriCare payments.Looking ahead, Zynex has issued a muted revenue guidance of $27 million for the second quarter of 2025 and anticipates an earnings per share (EPS) loss of $0.20. Reflecting the considerable uncertainty surrounding its relationship with TriCare, a key payer, the company has withheld its full-year financial guidance.Hagens Berman's Launches Inquiry into Zynex's Disclosures Amidst Financial TurmoilShareholder rights law firm Hagens Berman has announced an inquiry into the circumstances surrounding Zynex's recent financial disclosures and the allegations leveled in the class-action suit."Our investigation seeks to determine whether the company sufficiently revealed the potential pitfalls inherent in its billing methodologies and its dependence on TriCare's financial contributions," said Reed Kathrein, the partner spearheading the firm's probe.If you invested in Zynex and have substantial losses, or have knowledge that may assist the firm's investigation, submit your losses now »If you'd like more information and answers to frequently asked questions about the Zynex case and our investigation, read more »Whistleblowers: Persons with non-public information regarding Zynex should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].# # #About Hagens BermanHagens Berman is a global plaintiffs' rights complex litigation firm focusing on corporate accountability. The firm is home to a robust practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and other wrongdoings. Hagens Berman's team has secured more than $2.9 billion in this area of law. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.Contact: Reed Kathrein, 844-916-0895SOURCE: Hagens Berman Sobol Shapiro LLP

Investor Lawsuit Accuses Medical Device Maker Zynex (ZYXI) of Inflating Revenue Through Excessive Shipments; Subsequent Earnings Report Reveals Significant Financial Strain– Hagens Berman

FAQ

Why Very Bearish?

How important is it?

Why Long Term?

Related Companies

Related News