RBC Capital Further Trims Zynex (ZYXI) Target, Investor Lawsuit Looms – Hagens Berman

/EIN News/ -- SAN FRANCISCO, April 21, 2025 (GLOBE NEWSWIRE) -- Zynex, Inc. (NASDAQ: ZYXI), the Denver-based medical technology firm, is facing a deepening vortex of financial, regulatory and legal challenges, with RBC Capital Markets reportedly further reducing its outlook on the company’s stock. The company faces added pressure from a recently filed securities class action lawsuit, alleging the company made false and misleading statements regarding its revenue recognition practices and its relationship with Tricare, a major payer now temporarily suspending payments.

Hagens Berman is investigating claims for alleged violations of the U.S. securities laws and urges investors who purchased Zynex securities and suffered substantial losses to submit your losses now.

Class Period: Mar. 13, 2023 – Mar. 11, 2025
Lead Plaintiff Deadline: May 19, 2025
Visit: www.hbsslaw.com/investor-fraud/zyxi
Contact the Firm Now: ZYXI@hbsslaw.com
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Dismal Q4 Results Prompts Multiple Downgrades

On April 15, 2025, RBC Capital Markets reportedly further reduced its price target for Zynex stock to $5 per share. This marks the second downward revision in as many months and represents a significant erosion from RBC’s initial $11 per share target, effectively cutting its valuation outlook by approximately 55%.

The latest adjustment from RBC Capital analyst Shagun Singh follows a disappointing fourth-quarter 2024 earnings report on March 11 that revealed a year-over-year revenue decline of approximately 2%, landing at $46.0 million. The company also swung to a net loss of $0.02 per share, a stark contrast to the $0.04 profit reported in the same period a year prior, despite a stable gross profit margin of 78%.

Singh, who also downgraded Zynex's rating to "Sector Perform" from "Outperform" last month, cited a lack of clarity surrounding the company's operational and commercial prospects following the recent financial disclosure.

A significant factor weighing on Zynex is the temporary suspension of payments from Tricare, its largest customer, as the insurer conducts a review of past claims. The company has also declined to provide financial guidance for the current year and has initiated a workforce reduction of roughly 15%. Singh previously flagged the potential for a "domino effect" stemming from the Tricare situation, further eroding investor confidence.

The payment woes with Tricare appear to be intertwined with more serious allegations leveled against Zynex in a newly filed securities class action.

Zynex Securities Class Action Alleges "Oversupplying" Scheme

The securities class action lawsuit, Tuncel v. Zynex, Inc., et al., filed in the U.S. District Court for the District of Colorado, alleges that Zynex engaged in a practice of "oversupplying" customers with products, notably electrodes, which purportedly inflated revenue figures. The complaint contends that this practice drew the scrutiny of insurers, including Tricare, and that Zynex failed to adequately disclose the potential for adverse consequences such as network exclusions and potential government penalties. The class action seeks to represent investors who purchased Zynex securities between March 13, 2023, and March 11, 2025.

The truth allegedly began to emerge through a June 4, 2024 report by the medical journal STAAT, which detailed an alleged "oversupplying scheme" involving excessive shipments and inflated billing. The report also indicated that insurers were moving to exclude Zynex from their networks.

The lawsuit then points to Zynex's March 11, 2025, announcement of its weak fourth-quarter and full-year 2024 results as the moment the alleged truth was revealed. During the earnings call, Zynex CEO Thomas Sandgaard attributed the revenue shortfall to "slower than normal payments from certain payers" and the Tricare payment suspension.

Hagens Berman’s Investigation

Hagens Berman is investigating the alleged claims. “The recent developments, including the lowered outlook and the specifics of the class action, underscore the serious concerns surrounding Zynex's disclosures. Our investigation is focused on ensuring accountability for any potential wrongdoing that may have harmed investors,” said Reed Kathrein, the Hagens Berman Partner leading 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 ZYXI@hbsslaw.com.

About Hagens Berman
Hagens 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, 844-916-0895