Earnings call transcript: Zynex Inc Q2 2025 reveals unexpected loss, stock plunges

Zynex Inc (ZYXI) reported a significant earnings miss for Q2 2025, posting an earnings per share (EPS) of -0.66 USD, far below the anticipated -0.2 USD. The company’s revenue also fell short of expectations, coming in at 22.3 million USD compared to the forecasted 27.38 million USD. Following the earnings announcement, Zynex’s stock plummeted by 49.2% in after-hours trading, dropping from 2.49 USD to 1.265 USD. According to InvestingPro data, this decline is part of a broader trend, with the stock down over 80% year-to-date and trading near its 52-week low of $1.23.

Key Takeaways

• Zynex reported a substantial EPS loss of -0.66 USD, missing forecasts by 230%.
• Revenue dropped to 22.3 million USD, a stark decrease from 49.9 million USD in Q2 2024.
• The stock price fell by nearly half in after-hours trading.
• The company has suspended quarterly guidance pending a new CEO review.
• Zynex is targeting a return to positive cash flow by year-end.

Company Performance

Zynex’s Q2 2025 performance was marked by a significant decline in both revenue and profitability compared to the same period last year. The company reported a net loss of 20 million USD, translating to an EPS loss of -0.66 USD. This contrasts sharply with its previous year’s performance, where revenue was nearly double. InvestingPro analysis reveals concerning trends, with the company burning through cash rapidly and maintaining a significant debt burden of $72.46 million. The decline reflects broader challenges within the medical device sector, particularly in patient monitoring and pulse oximetry markets. InvestingPro subscribers have access to 14 additional key insights about ZYXI’s financial health and future prospects.

Financial Highlights

• Revenue: 22.3 million USD, down from 49.9 million USD YoY
• Earnings per share: -0.66 USD, compared to forecast of -0.2 USD
• Gross profit: 15.2 million USD, representing 68% of revenue
• Cash on hand: 17.5 million USD
• Convertible debt: 60 million USD due May 2026

Earnings vs. Forecast

Zynex’s earnings fell significantly short of analyst expectations, with a surprise EPS miss of 230%. The revenue shortfall of 18.55% further compounded investor concerns, marking a notable deviation from past performance. This quarter’s results highlight the company’s ongoing struggles to stabilize its financial health amid operational restructuring.

Market Reaction

The market’s response to Zynex’s earnings report was swift and severe. The stock’s after-hours tumble of 49.2% reflects investor disappointment and uncertainty about the company’s future trajectory. This dramatic drop places the stock near its 52-week low of 1.23 USD, suggesting a challenging road ahead for recovery.

Outlook & Guidance

With the appointment of new CEO Steven Dyson, Zynex has suspended its quarterly guidance as it reassesses its strategic direction. The company aims to achieve positive cash flow by the end of the year, despite the current financial setbacks. This goal appears challenging given the company’s current financial health score of 1.77 (rated as ’FAIR’ by InvestingPro) and a concerning current ratio of 0.62, indicating short-term obligations exceed liquid assets. Upcoming product launches, such as the anticipated FDA approval for the Neko pulse oximeter, could play a crucial role in revitalizing Zynex’s market position. Analysts maintain a consensus target price range of $2.00-$3.70, suggesting potential upside despite current challenges.

Executive Commentary

"We are confident that our efforts to reduce costs and redirecting our sales force will be pivotal to improve cash flow," stated Thomas Sandgaard, Chairman. Don Gregg, President of Monitoring, emphasized the potential impact of their new technology: "Laser pulse oximetry is not biased, allowing for more accurate readings across all individuals."

Risks and Challenges

• Continued revenue decline and profitability challenges
• High convertible debt due in May 2026
• Market competition and technological advancements in patient monitoring
• Regulatory hurdles and FDA approval timelines for new products
• Dependence on TRICARE payments and potential changes in payer segments

Q&A

During the earnings call, analysts inquired about the timeline for the FDA’s additional information request in August and the expected approval of the Neko pulse oximeter by December. Concerns were also raised about the ongoing TRICARE payment suspension and its impact on revenue streams.

Full transcript - Zynex Inc (ZYXI) Q2 2025:

Conference Operator: Afternoon, ladies and gentlemen, and welcome to the Zynex Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Dan Moorhead, Chief Financial Officer of Zynix.

Please go ahead.

Dan Moorhead, Chief Financial Officer, Zynex: Thank you, operator, and good afternoon, everyone. Earlier today, we released financial results for the second quarter ended 06/30/2025. A copy of the press release is available on the company’s website. Before we begin, I’d like to remind you that during this conference call, the company will make projections and forward looking statements regarding events. We encourage you to review the company’s past and future filings with the SEC, including, without limitation, the company’s 2024 Form 10 ks and subsequent Form 10 Qs, along with any amendments, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements.

These factors may include, without limitation, statements regarding product development, product potential, the regulatory and legal environment, sales and marketing strategies, capital resources, or other operating performance. With that, I’ll now turn the call over to Thomas.

Thomas Sandgaard, Chairman of the Board, Zynex: Thank you, Dan, and good afternoon, everyone. Thank you for joining us today for the second quarter twenty twenty five earnings call. With me today are Anna Loxock, our Chief Operating Officer Don Gregg, President of Xanax Monitoring and Dan Moorhead, our Chief Financial Officer. Anna will provide an update on our initiatives in the pain management division, and Don Gregg will discuss how far we have come in our patient monitoring division and our recent submission to the FDA for our Neko pulse oximeter. Dan will go through the second quarter’s financial results.

The 2025 was dominated by many improvements centered around refocusing our pain management business model, not only reshaping our sales force and redirecting them to slightly different call points, but also trans transforming our corporate structures to better reflect and streamline operations. Later this year and into the next year, we’ll see the impact of this effort. We’re seeing a reduction to overall expenses of approximately $40,000,000 annualized and a more efficient use of our inventories, better supply chain management, a more diversified prescriber and payer customer base, all in support for our goal to return to positive cash flow by the end of this year. We recently announced the addition of Steven Dyson as our new CEO. And Steven brings over twenty five years of experience in the medical technology sector primarily through his leadership at APAX, a global private equity firm.

Steven brings deep expertise and a proven track record in the medical sector. His leadership will be helpful as we refocus our business strategy toward a more optimized payer mix and work to return Xynix to a strong growth trajectory. His start date is August 18, and I look forward to working with him in my new role as just chairman of the board. I should also mention that he and I are very aligned on all the major things that needs to get done. In another also important development, Dan Moorhead, our CFO of AGS has recently signed as announced in our eight ks filing two days ago.

He is on the call today and available to answer questions. As soon as we have a replacement appointed, we’ll update everyone immediately, of course. As I’m sure most of our listeners know, we submitted the FDA application on our Neko laser pulse oximeter back in May. This product marks a historic milestone in the evolution of pulse oximetry and is a major game changer in our mission to improve the quality of care and patient outcomes with unique breakthrough technologies in our hospital monitoring division. We’re encouraged by the early attention we have received from the FDA and the line of questions we have answered already.

We expect at least one more round of questions that will take several months before clearance. Don will provide you with more details on this exciting development. And the TRICARE temporary payment suspension is still ongoing, and it’s hard to predict exactly how long it would take before we have a resolution to this. We are obviously hopeful that it will be sooner rather than later. We are actively cooperating with DHA and TRICARE in their claims reviews, and we are advocating proposition of the payment suspension.

In support of TRICARE’s goals of patient care, we have also agreed to continue servicing existing TRICARE patients, and we are honoring prescriptions for new patients. While we are working on a resolution for TRICARE, we are redirecting our focus to fully operate without relying on TRICARE’s revenue. We are committed to diversifying our revenue streams even more. And during the quarter, we continued our efforts to refocus our sales force and operations to reflect the current landscape of insurance coverage and have made significant strides towards improving cash flow. This has included several efficiency improvements in our internal operations, relocating staff to more profitable business units, reducing our cost of goods sold, updating our sales management structures while driving the sales force in the field to become more efficient and productive.

Our efforts to redirect our sales force and reduce expenses internally are beginning to take effect now. And over the next several quarters, it will naturally show as improvements to our bottom line. We reported net revenue of 22,000,000 in the quarter, while we collected $26,000,000 in cash in the second quarter. We posted a net loss of $20,000,000 while more than half of that was due to a noncash adjustment to our tax allowance. We strongly believe in our commitment to help patients with the best product for pain relief without side effects that are associated typically with opioids.

We are confident that our efforts to reduce costs and redirecting our sales force will be pivotal to improve cash flow and create a foundation for continuing to grow into the huge demand for our products. Our revenue is becoming more diversified with increased call points, increasing sales of other products, technologies and more end users. We are very optimistic about the future of Sinax as we have proven to be a business that can grow profitably. I’ll now turn the call over to Anna Luxoft to provide a more detailed update on the operations. Anna?

Anna Loxock, Chief Operating Officer, Zynex: Thank you, Thomas. As Thomas mentioned, we were notified by TRICARE that the temporary suspension of payments will continue as they complete their review. We continue to remain an in network provider and service existing and new TRICARE patients as directed by DHA. In June, we decreased overall staff by an additional 14%, mostly in our corporate office. We anticipate this, along with previous expense reductions, will result in an annual savings up to $40,000,000 As part of the restructure and based on payer performance analysis, we’ve categorized payers into different tiers and are actively shifting our focus to the most favorable segments.

As a result, we’ve rightsized shipments for orders and adjusted sales commissions to reflect performance. Internally, we’ve eliminated close to 90 corporate roles, replacing them with more cost effective outsourced teams. These actions are expected to reduce expenses while allowing our teams to focus more efficiently on our core business on a monthly basis. While we anticipate a near term impact on revenue primarily within our supply segments, it reinforces our patient centric approach and strengthens our ability to build and sustain long term value based relationships with payers. We believe this strategy will drive greater patient outcomes and operational sustainability over time.

We’ve undertaken a comprehensive realignment of our sales force to drive productivity and position the organization for long term growth. One of the key initiatives has been resetting our sales organization to better align objectives. In parallel, we’ve restructured the sales team by reducing the overall headcount and exiting sales reps that don’t meet our standards. We also streamlined our organizational structure by removing redundancies, which has allowed for oversight and support from senior leadership. This leaner structure empowers leadership to stay focused on the metrics that matter for the business and performance indicators that enable faster identification of coaching opportunities to ensure every individual representing our company represents our values.

Additionally, we revamped our sales compensation model to drive a performance focused culture that meets the company’s objectives for good patient care and experience and regulatory compliance. High performing sales employees are now rewarded with increased base pay, while mid tier performers are incentivized to improve their clearly defined targets. This approach not only drives accountability, but ultimately creates a clear pathway for reps to appropriately grow their earnings as they deliver better business outcomes through better patient experience. Long term, our objective remains unchanged. We aim to fully staff all 800 sales territories with highly capable data driven representatives.

We believe this focused and disciplined strategy will allow us to serve our patients more effectively and deliver consistent profitable growth. I’ll now turn the call over to Don Greig to provide a more detailed update on the patient monitoring business. Don?

Don Gregg, President of Zynex Monitoring, Zynex: Thank you, Anna. I want to provide an additional update on the progress of our Nico pulse oximeter and the overall market opportunities for this product. We successfully submitted Nico to the FDA in May, and there has been initial interactive review with the FDA. We are expecting an additional information request in August and an overall six month clearance process. Last quarter, I spent some time explaining why we are well positioned with this technology and the massive opportunity we believe is in front of us.

Clinical results show the Nikko laser technology is superior to LED pulse oximeters currently in the market today as they have severe accuracy issues in patients with darker skin, elevated carbon monoxide or meth hemoglobin in the bloodstream, and especially those with low levels of blood oxygen. There are very few clinical procedures that do not use pulse oximetry. Skin pigmentation have been shown to alter the oxygen measurement displayed when using LED based pulse oximetry, resulting in biases which can have negative impacts on patient care and outcomes. These accuracy issues are on the FDA agenda and have resulted in device manufacturer litigation to date. Numerous clinical publications prove LED based pulse oximeters that are on the market today are inaccurate on darker skin.

Given this, 25 attorney generals in the US senate requested FDA to address pigmentation bias. As a result of this, the FDA funded open oximetry to improve the safety and precision of pulse oximeters that openly published their testing results. Multiple FDA panel meetings resulted in a new draft guidance issued in January 2025 in which our technology conforms to that guidance. The Nico pulse oximeter recently submitted to the FDA is powered by patent protected laser technology that has been validated to solve the accuracy issues of LED technology in a clinical study at Duke University. Laser pulse oximetry is not biased, allowing for more accurate readings across all individuals regardless of skin pigmentation, elevated carbon monoxide, or methohemoglobin in the bloodstream, and especially those with low levels of blood oxygen.

More accurate data results and improved care and better patient outcomes. We believe our Nico pulse oximeter will provide reliable and equitable care for all. In addition to solving current LED based pulse oximeter technology accuracy issues, the Niko technology platform is poised to unlock the $1,000,000,000 invasive lab based co oximetry market with non invasive laser pulse oximetry technology by bringing it directly to the bedside with instant results and shifting the standard of care. Co oximetry is a critical diagnostic tool for emergency room and hospital patients to determine their treatment pathway. Current co oximetry technology is lab based for the most part, uses similar laser spectrometry technology, and suffers from a number of drawbacks that affect patient outcomes and high hospital cost.

Cocoaximetry measurements require a blood draw today, which is painful and risks infection. Patients wait for results from the lab, which reduces the ability to select appropriate treatment in a timely fashion. These labs are sometimes off-site and result in lengthy delays. It’s also a more expensive approach due to hospital lab processes and high cost consumables. The Neko platform uses needle free, patent protected laser technology to deliver instant, continuous, and low cost results at the bedside to unlock this opportunity.

To close, we submitted NECO to the FDA in May, and we expect approval to take approximately six months from receipt of an additional of an FDA additional information request that’s scheduled for August. Patient monitoring is a multibillion dollar market, approximately 3 and a half billion globally, that we believe NECO will enter as a superior product that can meaningfully improve care to the broadest range of patient patients when they need it most. Zynex is pushing to be a key industry partner and leader to all clinicians and further demonstrate how Nico’s laser pulse oximetry technology inherently solves the current market challenges, especially accuracy and skin pigmentation bias, while improving the field of patient monitoring. I will now turn the call over to Dan Moorhead, Chief Financial Officer, for a more in-depth look at the quarter’s financial performance.

Dan Moorhead, Chief Financial Officer, Zynex: Thanks, Don. Please refer to our press release issued earlier today for a summary of our financial results for the second quarter ended 06/30/2025. Net revenue was $22,300,000 compared to $49,900,000 in the 2024. Device revenue was $11,000,000 and supplies revenue was 11,300,000.0 The revenue decline was primarily attributable to the temporary payment suspension from TRICARE and slowing order growth, which was impacted by sales force reductions, shipping policy adjustments and the redirection of the sales force activity. Gross profit in the second quarter was $15,200,000 or 68% of revenue as compared to $39,900,000 or 80% of revenue in Q2 twenty twenty four.

Sales and marketing expenses decreased by 45% to $12,800,000 in the 2025. The primary contributor to the decrease in sales and marketing expenses was our headcount reduction as we continue to focus on sales rep productivity. G and A expenses were $12,700,000 in the 2025 compared to $14,500,000 last year. Net loss was $20,000,000 and $0.66 per share in the 2025 compared to net income of $1,200,000 in Q2 twenty twenty four. As Thomas mentioned, included in our net loss is a noncash charge of $10,300,000 or $0.34 per share related to an allowance on our deferred tax assets.

Adjusted EBITDA loss for the three months ended 06/30/2025, was $8,900,000 as compared to adjusted EBITDA of $3,500,000 in the quarter ended 06/30/2024. On the balance sheet, we had $17,500,000 of cash on hand at 06/30/2025, and were able to reduce our cash burn significantly in Q2. We expect it to be even less in Q3. Our convertible debt of $60,000,000 is due in May 2026, so you’ll notice it’s now a current liability. We are currently working with our advisers to refinance this liability.

With that, I’ll now turn it back over to Thomas.

Thomas Sandgaard, Chairman of the Board, Zynex: Yes. Thank you, Dan. In terms of forward looking guidance, we have decided to suspend quarterly guidance while we are onboarding our new CEO and looking to appoint a new CFO following Dan’s announced departure. Stephen Dyson, the incoming CEO, will lead a review of the company’s forecasting procedures and will provide an update to investors on the potential resumption of guidance in the coming quarters. Our mission is to improve the quality of life for patients suffering from debilitating pain and illness by providing the highest technology and service standards.

In pain management, we do this by providing a non opioid alternative to pain management. And our monitoring division aims to measure data more accurately across patients and provide a more equitable healthcare outcome. We continue to adjust the cost structure as needed and will soon get back to a strong growth trajectory. Looking forward, we believe we have additional call points and revenue streams that can drive further growth. We have always shown an ability to adjust to market, customer and reimbursement changes and continue investing and refocusing our business.

With that, let’s open the call up for questions.

Conference Operator: Thank you, sir. And if you’re using a speakerphone, please lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. And your first question will be from Jeffrey Cohen at Ladenburg Thalmann. Please go ahead, Jeffrey.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Oh, hello, folks. How are doing? Few questions from our end. I guess, firstly, I just wanna review and recap with, Don on Nico. So the initial submission was May.

August is when you expect to return questions back to the FDA, or is August when you expect to hear back from them again and remind us on anticipated approval. Would it be closer to October or December?

Don Gregg, President of Zynex Monitoring, Zynex: Yeah. Thanks for the question. I we’ve been in dialogue with FDA in what’s called an interactive review. We’ve received multiple discussion questions and dialogue with them. We’re expecting an AI, which should be in August.

And then we are anticipating six months from then clearance. Depending on what is in the AI based on what we’ve already had discussions with FDA regarding, I would expect that clearance would be closer to that December time frame.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Okay. And you feel confident that there won’t be a second AI iteration?

Don Gregg, President of Zynex Monitoring, Zynex: Well, nobody really knows exactly what the FDA might do in that case, but we have forecasted AI questions. We’ve got responses ready for those, and we feel pretty confident in our submission to the FDA given all the work that we’ve done over the past several years.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Okay. Got it. Perfect. And then secondly, could you talk about TRICARE a little further as far as next steps and timelines as far as the next iteration when you may meet or have some news about the relationship there. And then maybe talk a little bit about those patients and their patients and referrals.

So TRICARE still referring patients to you that flows continued or perhaps diminished, and are those patients going on therapy or alternatively going elsewhere?

Anna Loxock, Chief Operating Officer, Zynex: So we don’t have any information about TRICARE payment suspension next steps at this point and when and if it’s going to get resolved. But we continue to service TRICARE patients, existing and new patients. The inflow of patients has reduced a little bit just as a result of reduced sales rep headcount by about half.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Got it. And then lastly for Dan, perhaps talk a little bit about the sales and more or sales and marketing line and or the G and A line as far as the back half of the year and how those in the last two quarters may compare with q two and where you ended up q two?

Dan Moorhead, Chief Financial Officer, Zynex: Yes. I think, you know, you’ll see continued reductions. We made, you know, the second of our cost reductions were done in June, and so you didn’t really get the full effect of those. So on the sales side, I think you’re gonna continue to see a decrease probably down another 15 to 20% in q three, and then I think it probably flattens out for the rest of the year. And then on the g and a side, it’s probably closer to a 10 to 12% decrease from q two to ’3 and then again flattening out.

But you’ll really start to see the full effect of the cost reductions starting in Q3.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Okay. Perfect. That does it for us. Thanks for taking the questions. Thank

Conference Operator: you. Next question will be from Yi Chen at H. C. Wainwright. Please go ahead.

Eduardo, Analyst, H.C. Wainwright: Hi there. This is Eduardo on for Yi. Thanks for taking the question. Do have you any more details on the nature of the data request from the FDA? You mentioned that you’ve done some preparation already to anticipate those questions.

Just kind of get some color on any hesitations they might have or whether they’re looking for more detail in the technology.

Don Gregg, President of Zynex Monitoring, Zynex: You know, I think that the FDA, Yuchen, is definitely concerned about LED technology. They wanna ensure that our technology and our clinical trial performs as good as or or or better than LED technology. They’ve also you know, we’ve had a lot of dialogue on claims positioning of it because it is a different light source technology, things like that. And I’m anticipating that, you know, they’re they will continue to review our clinical data. They will continue to review our claims to ensure where this is positioned properly for those claims, etcetera, etcetera.

And so we are well prepared to talk through this with them and to respond in a very quick manner around that because we’d like to get clearance as soon as possible.

Eduardo, Analyst, H.C. Wainwright: Thanks. That’s really helpful. And I guess curious, I know it might be a little early. Any conversations with the new CEO and possible initiatives or strategies either on the commercial side or the reimbursement side, that you guys might have moving forward?

Thomas Sandgaard, Chairman of the Board, Zynex: Yes. Obviously, I’ve had a close dialogue with Steven Dyson. And the rest of the leadership team is also engaged in basically making sure that things that come up at this point in time that we’re all aligned, all these initiatives to refocus on the pain management side, we’re fully aligned on. And it it fits well what, what he’s good at, sorting sorting out a difficult situation and make sure that the valuation of the company over the next several years will will be much better than it is today.

Conference Operator: Next question will be from Shagun Singh at RBC Capital Markets.

Shagun Singh, Analyst, RBC Capital Markets: I guess just a couple of questions for me. Could you touch on why revenue came in below the recently provided guidance? I understand it was due to TRICARE and some of the sales force reduction. But beyond that, was there anything incremental that drove the sort of low visibility coming into the quarter? Thank you.

Thomas Sandgaard, Chairman of the Board, Zynex: Yes. That’s the third component in that we shipped less supplies in the second quarter than we had in prior quarters, simply as a result of the insurance companies that we are now servicing the allowable and the initiatives we have to have even closer contact with patients as to their the actual needs of supplies. I don’t know if you have anything to add.

Anna Loxock, Chief Operating Officer, Zynex: Well, we’ve continued to we continue to implement a utilization management control program in place to ensure better patient outcome that continues to impact our supply shipments to patients.

Shagun Singh, Analyst, RBC Capital Markets: Got it. Thank you very much. And maybe on TRICARE, you talked about how, you know, you’re still servicing some of these patients when you know that payments aren’t necessarily gonna be coming in at this time. Is is there a reason why you’re still servicing them? And and perhaps have you thought about perhaps reallocating resources elsewhere?

And maybe can you help us think about what Zynex could look like at TRICARE? Thank you.

Thomas Sandgaard, Chairman of the Board, Zynex: Yeah. TRICARE specifically or DHA with TRICARE has specifically asked us in during this process here to to continue to service the patients and and new patients as well. So annoying and hostile of a situation as it is, we’re obviously doing our best to try to play ball and take good care of patients as as we receive those prescriptions. So that’s that’s that’s part of basically dealing dealing with this situation here. It’s it’s it’s something that’s obviously costing us some money with no revenue, and we we will continue to evaluate whether we do that.

But as Anna mentioned earlier, the the number of new orders we are getting has dropped significantly as a result of refocusing our sales force, And that that helps a little bit on that equation.

Shagun Singh, Analyst, RBC Capital Markets: Got it. Thank you very much. And, yeah, this was Movan Sur on for Ashish.

Conference Operator: Thank you. And at this time, Mr. Sandgaard, we have no further questions registered. Please proceed.

Thomas Sandgaard, Chairman of the Board, Zynex: Yes. Thank you for joining us today. We obviously didn’t see the performance that we had expected here this past quarter. However, I’m very pleased with our plan of improvement and the actions that we have already taken. We appreciate your time and interest in Sinax, and have a great day.

Conference Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

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