A class action lawsuit was filed against Zynex, Inc. (ZYXI) by Levi & Korsinsky on March 20, 2025. The plaintiffs (shareholders) alleged that they bought ZYXI stock at artificially inflated prices between March 13, 2023 and March 11, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Zynex stock during that period can click here to learn about joining the lawsuit.
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Zynex is a medical device company focused on developing advanced, non-invasive medical technology for pain management. Zynex makes its proprietary medical devices available through three subsidiaries: Zynex Medical, Zynex Monitoring Solutions, and Zynex NeuroDiagnostics.
The company’s errors such as over-shipping certain products and inflating revenues are at the heart of the current complaint.
Zynex’s Misleading Claims
According to the lawsuit, Zynex and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about certain shipping practices and effects on revenue from SEC filings and related material.
For instance, during the Class Period, the company stated that its revenue depended on reimbursement from third-party payers and therefore changes in insurance reimbursement policies or their application could result in decreased or delayed revenues.
Moreover, during the second and third quarters of fiscal 2023, the company reported that revenues increased because of growth in device orders and increased customer base. The CEO particularly highlighted that the company celebrated treating its 1 millionth patient since its inception during the third quarter.
However, subsequent events (discussed below) revealed that Zynex had misled investors about its shipping errors and resulting revenue implications.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the company’s faulty shipping practices and effects on revenue.
The information became clear after the market closed on March 11, 2025, when Zynex reported its Q4 and full year Fiscal 2024 results. The company’s quarterly revenues fell short of expectations due to “slower than normal payments from certain payers.” Zynex also stated that Tricare, the health insurance program for the U.S. military, had temporarily suspended payments for reviewing prior claims. All these factors had significantly impacted the company’s revenues in the fourth quarter. Following the news, ZYXI stock plunged 51.3% the next day.
To conclude, the defendants allegedly misled investors regarding the company’s shipping issues and related revenue impact. Owing to these issues, ZYXI stock has lost 72.9% so far this year, causing massive damage to shareholder returns.
