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On Wednesday, H.C. Wainwright adjusted its outlook on Zynex Inc. (NASDAQ:ZYXI), decreasing the 12-month price target from $17.00 to $15.00, while retaining a Buy rating on the stock. The decision came after Zynex reported its fourth-quarter and full-year financial results for 2024. According to InvestingPro data, the company currently trades at $7.00, near its 52-week low of $6.91, suggesting potential value opportunity for investors. The company experienced a year-over-year (YoY) decline of 3% in total revenue for the fourth quarter, totaling $46.0 million, which fell short of the expected $53.7 million.
The revenue shortfall was attributed to delayed payments from a payor, with Tricare having temporarily suspended payments for a review of prior claims. Tricare’s suspension is significant as it accounts for about 20-25% of Zynex’s annual revenue. The company reported a net loss of $0.6 million, or ($0.02) per share, which is below the projected income of $2.8 million.
Despite the fourth-quarter setback, Zynex’s full-year 2024 results showed a 4.4% YoY growth in total revenue, reaching $192.4 million. The company also reported a net income of $3.0 million, or $0.09 per share. Notably, Zynex saw a 16% increase in orders for the year. InvestingPro subscribers can access detailed analysis of Zynex’s financial health, including 10+ additional ProTips and comprehensive valuation metrics in the Pro Research Report, helping investors make more informed decisions during this transitional period.
In response to the current challenges, Zynex is reducing its overall staff by 15%, which is expected to save about $35 million annually. The company continues to expand payor coverage, which could help mitigate some of the near-term sales impact. Zynex’s management anticipates a minimum revenue of $30 million and a diluted EPS of ($0.30) or better for the first quarter of 2025.
Zynex is scheduled to meet with Tricare in April, with hopes that payments will be reinstated. However, the timeline for resolving this issue remains uncertain. H.C. Wainwright believes that although the growth rate of orders may slow down, it will continue to increase in upcoming quarters. Consequently, the firm’s estimated market value has been revised to $472 million, or approximately $15 per share, leading to the updated price target.
In other recent news, Zynex Inc. reported a net loss for the fourth quarter of 2024, with earnings per share (EPS) of -$0.02, missing analysts’ expectations of $0.10. The company’s revenue was $45.98 million, falling short of the anticipated $53.3 million, signaling challenges in meeting market expectations. Additionally, Zynex disclosed a slower-than-usual receipt of payments from certain payers, including a temporary suspension of payments by Tricare, which accounts for 20-25% of the company’s sales. This development has led the company to refrain from issuing guidance for 2025 and plan a 15% workforce reduction to align costs with anticipated revenue levels.
RBC Capital Markets downgraded Zynex’s stock from Outperform to Sector Perform, reducing its price target from $11.00 to $5.50, citing operational concerns highlighted during the earnings call. The firm expressed worries about the potential for further complications with other payers following the issues with Tricare. Despite these challenges, Zynex maintains a strong gross profit margin of 78% and is focusing on diversifying into patient monitoring technologies, with anticipated revenue from this segment expected in late 2025 or 2026 pending FDA clearance.
Zynex’s cash on the balance sheet increased by 5% from the previous quarter to $39.6 million, providing some financial cushion amid the current uncertainties. The company is actively working with Tricare to resolve the payment suspension, with a meeting scheduled for April to address the issue. Investors and analysts will be closely monitoring Zynex’s ability to manage its payer relationships and adjust its cost structure as it navigates these operational headwinds.
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