[10-Q] ZYNEX INC Quarterly Earnings Report

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Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

​

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the quarterly period ended: September 30, 2025

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OR

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☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the transition period from                      to

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Commission file number 001-38804

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Zynex, Inc.

(Exact name of registrant as specified in its charter)

​

	​
NEVADA		90-0275169
(State or other jurisdiction of	​	(IRS Employer
incorporation or organization)	​	Identification No.)
	​
9655 Maroon Cir.	​	​
Englewood, CO	​	80112
(Address of principal executive offices)	​	(Zip Code)

​

(800) 495-6670

(Registrant’s telephone number, including area code)

​

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

​

Securities registered pursuant to Section 12(b) of the Act:

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Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.001 per share	​	ZYXI	​	NASDAQ Stock Market LLC

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

​

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

​

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

Large accelerated filer	☐	Accelerated filer	☒
​	​	​	​
Non-accelerated filer	☐	Smaller reporting company	☒
​	​	​	​
		Emerging growth company	☐

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐    No ☒

​

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

​

	​	​
Class		Shares Outstanding as of November 11, 2025
Common Stock, par value $0.001	​	30,388,635

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Table of Contents

ZYNEX, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

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			Page
PART I—FINANCIAL INFORMATION			3
​	​	​	​
Item 1.	​	Financial Statements	3
	​
​	​	Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024	3
​	​		​
​	​	Unaudited Condensed Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2025 and 2024	4
​	​
​	​	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	5
​	​
​	​	Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2025 and 2024	6
​	​
​	​	Unaudited Notes to Condensed Consolidated Financial Statements	7
​	​
Item 2.	​	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	​
Item 3.	​	Quantitative and Qualitative Disclosures About Market Risk	32
	​
Item 4.	​	Controls and Procedures	33
​			​
PART II—OTHER INFORMATION			34
​	​	​	​
Item 1.	​	Legal Proceedings	34
	​
Item 1A.	​	Risk Factors	35
	​
Item 2.	​	Unregistered Sales of Equity Securities and Use of Proceeds	38
	​
Item 3.	​	Defaults Upon Senior Securities	39
	​
Item 4.	​	Mine Safety Disclosures	39
	​
Item 5.	​	Other Information	39
	​
Item 6.	​	Exhibits	40
​			​
SIGNATURES			42

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2

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Table of Contents

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ZYNEX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

​

​	​	​	​	​	​	​	​
​	​	September 30, 2025		​	December 31,		​
​		(unaudited)			2024
ASSETS	​	​	​	​	​	​	​
Current assets		​			​
Cash and cash equivalents	​	$	13,259	​	$	39,631	​
Accounts receivable, net	​		6,695	​		18,022	​
Inventory, net	​		11,991	​		13,919	​
Prepaid expenses and other	​		5,071	​		3,607	​
Total current assets	​		37,016	​		75,179	​
​	​	​	​	​	​	​	​
Property and equipment, net	​	​	1,287	​		3,084	​
Operating lease asset	​	​	5,788	​	​	9,820	​
Finance lease asset	​	​	921	​	​	1,141	​
Deposits	​	​	310	​		408	​
Intangible assets, net of accumulated amortization	​	​	—	​	​	7,247	​
Goodwill	​	​	—	​	​	20,401	​
Deferred income taxes	​	​	—	​		4,799	​
Total assets	​	$	45,322	​	$	122,079	​
​	​	​	​	​	​	​	​
LIABILITIES AND STOCKHOLDERS’ EQUITY	​			​			​
Current liabilities	​			​			​
Accounts payable and accrued expenses	​	$	12,523	​	$	7,091	​
Operating lease liability	​	​	4,153	​		4,030	​
Finance lease liability	​	​	283	​		287	​
Current portion of convertible senior notes, less issuance costs	​	​	59,334	​	​	—	​
Accrued payroll and related taxes	​	​	2,553	​		5,456	​
Total current liabilities	​	​	78,846	​	​	16,864	​
​	​	​	​	​			​
Convertible senior notes, less issuance costs	​	​	—	​	​	58,567	​
Operating lease liability	​	​	7,208	​		10,151	​
Finance lease liability	​	​	640	​	​	789	​
Total liabilities	​	​	86,694	​	​	86,371	​
​	​	​	​	​	​	​	​
Commitments and contingencies (Note 16)	​		​	​		​	​
Stockholders’ equity (deficit)	​			​			​
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2025 and December 31, 2024	​		—	​		—	​
Common stock, $0.001 par value; 100,000,000 shares authorized; 42,439,614 issued and 30,336,201 outstanding as of September 30, 2025, 42,233,415 issued and 31,878,512 outstanding as of December 31, 2024	​		30	​		32	​
Additional paid-in capital	​		94,290	​		93,088	​
Treasury stock of 11,556,758 and 9,856,758 shares at September 30, 2025 and December 31, 2024, respectively, at cost	​		(92,123)	​		(87,186)	​
Retained (deficit) earnings	​		(43,569)	​		29,774	​
Total stockholders’ equity (deficit)	​	​	(41,372)	​	​	35,708	​
Total liabilities and stockholders’ equity	​	$	45,322	​	$	122,079	​

​

The accompanying notes are an integral part of these condensed consolidated financial statements.

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3

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Table of Contents

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(unaudited)

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

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For the Three Months Ended September 30,

​

For the Nine Months Ended September 30,

​

​

2025

2024

2025

2024

NET REVENUE

​

​

​

​

​

​

Devices

​

$

7,057

​

$

14,858

​

$

29,989

​

$

44,803

​

Supplies

​

6,303

​

35,108

​

32,239

​

101,577

​

Total net revenue

​

13,360

​

49,966

​

62,228

​

146,380

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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COSTS OF REVENUE AND OPERATING EXPENSES

​

​

​

​

​

​

​

Costs of revenue - devices and supplies

​

5,281

​

10,177

​

20,705

​

29,446

​

Sales and marketing

​

9,479

​

20,713

​

39,230

​

67,319

​

General and administrative

​

​

11,822

​

15,274

​

​

38,895

​

​

43,062

​

Impairment charges

​

​

30,740

​

​

—

​

​

30,740

​

​

—

​

Total costs of revenue and operating expenses

​

57,322

​

46,164

​

129,570

​

139,827

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Income (loss) from operations

​

(43,962)

​

3,802

​

(67,342)

​

6,553

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other income (expense)

​

​

​

​

​

Gain on disposal of assets

​

​

—

​

—

​

​

—

​

​

19

​

Interest expense, net

​

(890)

​

(625)

​

(2,427)

​

(1,767)

​

Other income (expense), net

​

(890)

​

(625)

​

(2,427)

​

(1,748)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Income (loss) from operations before income taxes

​

(44,852)

​

3,177

​

(69,769)

​

4,805

​

Income tax (benefit) expense

​

(1,938)

​

795

​

3,574

​

1,196

​

Net income (loss)

​

$

(42,914)

​

$

2,382

​

$

(73,343)

​

$

3,609

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income (loss) per share:

​

​

​

​

​

​

​

​

​

Basic

​

$

(1.42)

​

$

0.07

​

$

(2.39)

​

$

0.11

​

Diluted

​

$

(1.42)

​

$

0.07

​

$

(2.39)

​

$

0.11

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average basic shares outstanding

​

30,314

​

31,775

​

30,721

​

31,960

​

Weighted average diluted shares outstanding

​

30,314

​

32,088

​

30,721

​

32,340

​

​

The accompanying notes are an integral part of these condensed consolidated financial statements.

​

4

​

Table of Contents

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

(unaudited)

​	​	​	​	​	​	​	​
​	​	For the Nine Months Ended September 30,					​
​		2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:		​			​	​
Net income (loss)	​	$	(73,343)	​	$	3,609	​
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	​		​	​		​	​
Depreciation	​	​	1,697	​	​	1,967	​
Amortization	​		1,454	​		1,402	​
Impairment charges	​	​	30,740	​	​	—	​
Stock-based compensation	​		1,453	​		2,345	​
Non-cash lease expense	​		(873)	​		(750)	​
Provision (benefit) for deferred income taxes	​	​	4,799	​	​	(664)	​
Gain on disposal of assets	​	​	—	​	​	(19)	​
Change in operating assets and liabilities:	​		​	​		​	​
Accounts receivable	​		11,327	​		5,215	​
Prepaid and other assets	​		(1,495)	​		106	​
Accounts payable and other accrued expenses	​		57	​		1,161	​
Inventory	​		1,174	​		(4,096)	​
Deposits	​		(1)	​		—	​
Net cash provided by (used in) operating activities	​		(23,011)	​		10,276	​
​	​	​	​	​	​	​	​
CASH FLOWS FROM INVESTING ACTIVITIES:	​			​			​
Purchase of property and equipment	​	​	(215)	​	​	(362)	​
Net cash used in investing activities	​		(215)	​		(362)	​
​	​	​	​	​	​	​	​
CASH FLOWS FROM FINANCING ACTIVITIES:	​			​			​
Payments on finance lease obligations	​		(153)	​		(203)	​
Cash dividends paid	​		—	​		(9)	​
Purchase of treasury stock	​		(4,939)	​		(15,625)	​
Excise tax payments on net treasury stock purchases	​	​	—	​	​	(473)	​
Net borrowings under accounts receivable financing	​	​	2,153	​	​	—	​
Proceeds from the issuance of common stock on stock-based awards	​	​	7	​	​	13	​
Taxes withheld and paid on equity awards	​	​	(214)	​	​	(566)	​
Net cash used in financing activities	​		(3,146)	​		(16,863)	​
​	​	​	​	​	​	​	​
Net decrease in cash	​		(26,372)	​		(6,949)	​
Cash and cash equivalents at beginning of period	​		39,631	​		44,579	​
Cash and cash equivalents at end of period	​	$	13,259	​	$	37,630	​
​	​	​	​	​	​	​	​
Supplemental disclosure of cash flow information:	​			​			​
Cash paid on interest, net	​	$	(1,677)	​	$	(1,017)	​
Cash paid for rent	​	$	(3,514)	​	$	(3,358)	​
Cash paid for income taxes	​	$	(189)	​	$	(2,098)	​
Supplemental disclosure of non-cash investing and financing activities:	​		​	​		​	​
Right-of use assets obtained in exchange for new operating lease liabilities	​	$	218	​	$	—	​
Right-of use assets obtained in exchange for new finance lease liabilities	​	$	—	​	$	831	​
Finance lease liabilities removed for cancelled leases	​	$	—	​	$	(73)	​
Right-of use assets obtained in exchange for lease incentive	​	$	260	​	$	—	​
Excise tax accrual	​	$	(44)	​	$	(10)	​
Inventory transferred to property and equipment under lease	​	$	754	​	$	1,494	​
Capital expenditures not yet paid	​	$	4	​	$	16	​
Prepaid expenses not yet paid	​	$	271	​	$	168	​
Non-cash dividend adjustment	​	$	—	​	$	(3)	​

The accompanying notes are an integral part of these condensed consolidated financial statements.

​

5

​

Table of Contents

ZYNEX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

(unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

​

​

​

​

Total

​

​

Common Stock

​

Paid-in

​

Treasury

​

Retained

​

Stockholders’

​

Shares

Amount

Capital

Stock

Earnings

Equity

Balance at December 31, 2023

​

32,933,776

​

$

33

​

$

90,878

​

$

(71,562)

​

$

26,780

​

$

46,129

Exercised and vested stock-based awards

​

70,992

​

—

​

13

​

—

​

—

​

13

Stock-based compensation expense

​

—

​

—

​

734

​

—

​

—

​

734

Warrants exercised

​

20,000

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Shares of common stock withheld to pay taxes on employees' equity awards

​

(23,041)

​

​

—

​

​

(240)

​

​

—

​

​

—

​

​

(240)

Purchase of treasury stock

​

(1,121,835)

​

​

(1)

​

​

—

​

​

(13,419)

​

​

—

​

​

(13,420)

Excise tax on net treasury stock purchases

​

—

​

​

—

​

​

(126)

​

​

—

​

​

—

​

​

(126)

Net income

​

—

​

​

—

​

​

—

​

​

—

​

​

10

​

​

10

Balance at March 31, 2024

​

31,879,892

​

$

32

​

$

91,259

​

$

(84,981)

​

$

26,790

​

$

33,100

Exercised and vested stock-based awards

​

47,071

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

841

​

​

—

​

​

—

​

​

841

Shares of common stock withheld to pay taxes on employees’ equity awards

​

(11,342)

​

​

—

​

​

(119)

​

​

—

​

​

—

​

​

(119)

Purchase of treasury stock

​

(189,879)

​

​

—

​

​

—

​

​

(2,205)

​

​

—

​

​

(2,205)

Excise tax on net treasury stock purchases

​

—

​

​

—

​

​

(18)

​

​

—

​

​

—

​

​

(18)

Net income

​

—

​

​

—

​

​

—

​

​

—

​

​

1,217

​

​

1,217

Balance at June 30, 2024

​

31,725,742

​

$

32

​

$

91,963

​

$

(87,186)

​

$

28,007

​

$

32,816

Exercised and vested stock-based awards, net of tax

​

97,458

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

770

​

​

—

​

​

—

​

​

770

Shares of common stock withheld to pay taxes on employees’ equity awards

​

60,000

​

​

—

​

​

3

​

​

—

​

​

—

​

​

3

Purchase of treasury stock

​

(43,108)

​

​

—

​

​

(207)

​

​

—

​

​

—

​

​

(207)

Excise tax on net treasury stock purchases

​

—

​

​

—

​

​

9

​

​

—

​

​

—

​

​

9

Net income

​

—

​

​

—

​

​

—

​

​

—

​

​

2,382

​

​

2,382

Balance at September 30, 2024

​

31,840,092

​

$

32

​

$

92,538

​

$

(87,186)

​

$

30,389

​

$

35,773

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

​

​

​

​

Total

​

​

Common Stock

​

Paid-in

​

Treasury

​

Retained

​

Stockholders’

​

Shares

Amount

Capital

Stock

Earnings (Deficit)

Equity (Deficit)

Balance at December 31, 2024

​

31,878,512

​

$

32

​

$

93,088

​

$

(87,186)

​

$

29,774

​

$

35,708

Exercised and vested stock-based awards

​

71,698

​

​

—

​

​

7

​

​

—

​

​

—

​

​

7

Stock-based compensation expense

​

—

​

—

​

577

​

—

​

—

​

577

Shares of common stock withheld to pay taxes on employees’ equity awards

​

(19,690)

​

​

—

​

​

(137)

​

​

—

​

​

—

​

​

(137)

Purchase of treasury stock

​

(1,700,000)

​

​

(2)

​

​

—

​

​

(4,937)

​

​

—

​

​

(4,939)

Excise tax on net treasury stock purchases

​

—

​

​

—

​

​

(46)

​

​

—

​

​

—

​

​

(46)

Net loss

​

—

​

—

​

—

​

—

​

(10,396)

​

(10,396)

Balance at March 31, 2025

​

30,230,520

​

$

30

​

$

93,489

​

$

(92,123)

​

$

19,378

​

$

20,774

Exercised and vested stock-based awards

​

75,692

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

559

​

​

—

​

​

—

​

​

559

Shares of common stock withheld to pay taxes on employees’ equity awards

​

(18,815)

​

​

—

​

​

(40)

​

​

—

​

​

—

​

​

(40)

Excise tax on net treasury stock purchases

​

—

​

​

—

​

​

1

​

​

—

​

​

—

​

​

1

Net loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(20,033)

​

(20,033)

Balance at June 30, 2025

​

30,287,397

​

$

30

​

$

94,009

​

$

(92,123)

​

$

(655)

​

$

1,261

Exercised and vested stock-based awards

​

65,265

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

—

​

​

—

​

​

317

​

​

—

​

​

—

​

​

317

Shares of common stock withheld to pay taxes on employees’ equity awards

​

(16,461)

​

​

—

​

​

(37)

​

​

—

​

​

—

​

​

(37)

Excise tax on net treasury stock purchases

​

—

​

​

—

​

​

1

​

​

—

​

​

—

​

​

1

Net loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(42,914)

​

​

(42,914)

Balance at September 30, 2025

​

30,336,201

​

$

30

​

$

94,290

​

$

(92,123)

​

$

(43,569)

​

$

(41,372)

​

The accompanying notes are an integral part of these condensed consolidated financial statements.

​

​

6

​

Table of Contents

ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)   BASIS OF PRESENTATION

Organization

Zynex, Inc. (a Nevada corporation) has its headquarters in Englewood, Colorado. The term “the Company” refers to Zynex, Inc. and its active and inactive subsidiaries. The Company operates in one primary business segment, medical devices which include electrotherapy and pain management products. As of September 30, 2025, the Company’s only active subsidiaries are Zynex Medical, Inc. (“ZMI,” a wholly-owned Colorado corporation) through which the Company conducts most of its operations, and Zynex Monitoring Solutions, Inc. (“ZMS,” a wholly-owned Colorado corporation).

Nature of Business

Zynex Medical

Through ZMI, the Company designs, manufactures, and markets medical devices that treat chronic and acute pain, as well as activate and exercise muscles for rehabilitative purposes with electrical stimulation. The Company’s devices are intended for pain management to reduce reliance on medications and provide rehabilitation and increased mobility through the utilization of non-invasive muscle stimulation, electromyography technology, interferential current (“IFC”), neuromuscular electrical stimulation (“NMES”) and transcutaneous electrical nerve stimulation (“TENS”). All of the Company’s medical devices are designed to be patient friendly and designed for home use. The devices are small, portable, battery operated, and include an electrical pulse generator which is connected to the body via electrodes. All of the medical devices are marketed in the U.S. and are subject to FDA regulation and approval. All of the products require a physician’s prescription before they can be dispensed in the U.S. The Company’s primary product is the NexWave device. The NexWave device is marketed to physicians and therapists by the Company’s field sales representatives. The NexWave requires consumable supplies, such as electrodes and batteries, which are shipped to patients on a recurring monthly basis, as needed. The Company also distributes private labeled complementary rehabilitation products such as back, knee and wrist braces, cervical and lumbar traction, and hot/cold therapy (“private labeled rehabilitation products”).

During the nine months ended September 30, 2025 and 2024, the Company generated all of its revenue in North America from sales of its devices and supplies to patients and healthcare providers.

Zynex Monitoring Solutions

Through ZMS, the Company has developed a laser-based, noninvasive monitoring technology (acquired through Kestrel Labs, Inc.) and previously submitted a 510(k) application for its NiCO™ CO-Oximeter (“NiCO”) to the U.S. Food and Drug Administration. In light of the Company’s revised commercialization strategy for NiCO, discussed below, the Company is seeking a commercialization partner to pursue market entry rather than commercializing the device independently.

Recent Events

Zynex Monitoring Solutions

On October 1, 2025, the Company announced a change to the commercialization strategy for its ZMS subsidiary, which develops noninvasive, laser-based patient-monitoring technologies acquired through the December 2021 purchase of Kestrel Labs, Inc. The Company determined it would no longer independently commercialize NiCO. Instead, the Company plans to pursue commercialization through one or more strategic partners.

As part of this initiative, the Company implemented a workforce reduction within ZMS on October 1, 2025, eliminating substantially all positions and ceasing most internal R&D and manufacturing activities. On November 1, 2025, the Company eliminated all remaining positions within ZMS and ceased independent operations. As a result, the Company expects to incur aggregate pre-tax cash severance charges of approximately $0.7 million in the fourth quarter of 2025. The Company recognized pre-tax non-cash asset impairment charges of $30.7 million, during the quarter ended September 30, 2025, primarily related to goodwill, definite-lived intangible assets and certain fixed assets associated with the ZMS business (See Note 7 – Impairment).

​

7

​

Table of Contents

ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tricare and workforce reductions

During the quarter ended March 31, 2025 the Company was notified that the Defense Health Agency (“DHA”) was temporarily suspending Tricare claims processing and payments to the Company pursuant to 32 C.F.R. § 199.9(h). DHA informed the Company that the suspension is based on allegations that the Company misrepresented claims for supplies and equipment billed to the Tricare program, that the Company misrepresented diagnoses to justify a requirement for TENS units, and that the Company lacked physician orders supporting the medical need for the replenishment of TENS supplies.

​

In response to the ongoing temporary suspension of payments and the related uncertainty regarding the timing of resolution, the Company implemented a workforce reduction of approximately 15% of the Company’s total number of employees during the quarter ended March 31, 2025, to align its operating expenses with current revenue levels.

​

In April 2025, the Company met with DHA to present evidence in opposition to the temporary Tricare payment suspension. In June 2025, DHA notified the Company that the temporary Tricare payment suspension would continue pending completion of DHA’s investigation. Also in June 2025, the Company executed a further workforce reduction affecting 86 corporate roles, representing approximately 14% of its total employees. During the quarter ended September 30, 2025, the Company determined that the prior workforce reduction had negatively impacted device orders and corresponding supplies, new patients onboarding and order completion and, as a result, rehired certain previously impacted employees to support service levels.

​

Tricare historically represented approximately 20-25% of the Company’s annual revenue and cash collections from Tricare were $48.8 million and $38.8 million during the years ended December 31, 2024 and 2023, respectively. Because DHA informed the Company that any participation agreement with its patients remains in full force and effect, the Company continues to support both existing patients and new patients as prescriptions are received.

​

During the nine months ended September 30, 2025, the Company received $2.2 million in payments from TriWest Healthcare Alliance (“TriWest”), the contractor for the Tricare West Region, and $0.6 million in payments from Humana Military, the contractor for the Tricare East Region. TriWest and Humana Military have sought repayment of these amounts. The Company reduced its revenue by $2.8 million during the quarter ended September 30, 2025 related to Tricare payments it received from TriWest and Humana Military during the time period of the Company’s Tricare payment suspension. During the nine months ended September 30, 2025, as a result of the adjustment, the Company did not recognize any revenue from Tricare, all other fulfillments and related revenue have been fully reserved and we have no reported receivables related to Tricare as of September 30, 2025.

​

SEC request for documents

​

On June 11, 2025, the Company received a voluntary (non-subpoena) request for documents from the Securities and Exchange Commission (the “SEC”) in connection with an investigation that it is conducting into the Company to determine whether violations of federal securities laws have occurred.  Subsequently, on June 30, 2025 and September 4, 2025, the Company received additional voluntary requests for documents from the SEC.  The Company is cooperating with the SEC in its investigation, and is, on a rolling basis, providing all responsive documents to the requests.

​

Liquidity and Going Concern

​

The Company has incurred net losses of $73.3 million for the nine months ended September 30, 2025 compared with net income of $3.6 million during the same period in 2024. As of September 30, 2025, the Company had $13.3 million in cash and cash equivalents and $6.7 million in accounts receivable. As discussed herein, the Company is also subject to an ongoing suspension of payments from Tricare and is subject to various refund demands from payers, which may materially impact the Company’s liquidity. During 2025 and through the third quarter of 2025, changes to certain payers’ claim submission and review practices have resulted in unanticipated denials and payment delays, which has negatively impacted our revenue. Based on the Company's cash and cash equivalents as of September 30, 2025 and the Company's current and forecasted level of operations and cash flows, management believes that our existing cash resources are not sufficient to support planned operations for the next year from the issuance of these unaudited condensed consolidated financial statements.

​

8

​

Table of Contents

ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s ability to continue as a going concern is dependent upon its ability to obtain the consent from creditors or terminating, amending or refinancing the agreements governing the Company’s $60.0 million outstanding 2023 Convertible Senior Notes (as defined herein) which mature on May 15, 2026 and to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, and to generate profitable operations in the future (such alternatives, a

“Restructuring”). The Company has retained Province, LLC as its financial advisor to assist the Company in preparing for, analyzing, evaluating and arranging discussions with its creditors, including the holders of our 2023 Convertible Senior Notes, and other stakeholders to explore several alternatives for a Restructuring. The Company has recently begun discussions with certain creditors holding the 2023 Convertible Senior Notes and anticipates beginning discussions with other stakeholders and investors with respect to a Restructuring. While certain discussions are ongoing, the Company has not reached an agreement with respect to such a Restructuring and there can be no assurances that an agreement with respect to a Restructuring will be reached in the future.

​

The Company has elected to not make an interest payment in the amount of approximately $1.5 million (the “Interest Payment”) due on November 15, 2025 (and payable on November 17, 2025, as November 15, 2025 is a non-business day) with respect to the 2023 Convertible Senior Notes. Under the indenture governing 2023 Convertible Senior Notes, the Company has a 30-day grace period to make the Interest Payment before such non-payment constitutes an “event of default” with respect to the 2023 Convertible Senior Notes. The Company may elect to make the Interest Payment on or prior to the expiration of the 30-day grace period. However, the failure of the Company to make the Interest Payment on or prior to the expiration of the 30-day grace period would result in an event of default with respect to the 2023 Convertible Senior Notes which may result in the acceleration of the 2023 Convertible Senior Notes and the Company filing for bankruptcy.

​

The Company’s unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern. The Company is subject to various demands from payers, the amount cannot be quantified and the outcome is unknown.

There can be no assurance that we will be able to amend or refinance the 2023 Convertible Senior Notes and if we are able to, that the terms will be acceptable or advantageous to us or that we will satisfactorily resolve the payment suspension and refund demands referenced above. If we are unable to redeem or refinance the 2023 Convertible Senior Notes and/or resolve the payment suspension and refund demands referenced above, this could have a material adverse impact on our operations. In addition, there can be no assurance that the Company will be able to raise additional capital to fund operations with terms acceptable to the Company, or at all. Because certain elements of management’s plans to mitigate the conditions that raised substantial doubt about the Company’s ability to continue as a going concern are outside of the Company’s control, including the ability to raise capital through an equity or other financing, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors. As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date the unaudited condensed consolidated financial statements are issued.

If we are not successful in improving our liquidity position, we may be required to significantly scale back our operations or pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders, or file for bankruptcy or cease operations altogether. Any of these events could have a material adverse effect on our business, operating results and prospects.

​

Unaudited Condensed Consolidated Financial Statements

The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. A description of the Company’s accounting policies and other financial information is included in the audited consolidated financial statements as filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (as amended, the “2024 Form 10-K”). Amounts as of December 31, 2024, are derived from those audited consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with the annual audited financial statements, accounting policies and notes thereto, included in the Company’s 2024 Form 10-K.

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2025 and the results of its operations and its cash flows for the periods presented. The results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be achieved for a full fiscal year and cannot be used to indicate financial performance for the entire year.

​

(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Zynex, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements are associated with the allowance for billing adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, stock-based compensation, assumptions related to the valuation of long-lived assets, realizability of deferred tax assets and valuation allowances, and the evaluation of transfer and financing arrangements involving receivables.

Cash, Cash Equivalents, and Short-Term Investments

Cash equivalents consist of highly liquid investments with maturities of three months or less at the date of purchase. The Company classifies investments with maturities of greater than three months but less than one year as short-term investments. Short-term investments are classified as held-to-maturity as the Company has the positive intent and ability to hold the investments until maturity. Held-to-maturity investments are carried at amortized cost. Due to the short-term nature, the carrying amounts reported in the condensed consolidated balance sheet approximate fair value. As of September 30, 2025 and December 31, 2024, the Company had no short-term investments.

Accounts Receivable, Net

The Company’s accounts receivable represent unconditional rights to consideration and are generated when a patient receives one of the Company’s devices, related supplies, or complementary products. In conjunction with fulfilling the Company’s obligation to deliver a product, the Company invoices the patient’s third-party payer and/or the patient. Billing adjustments represent the difference between the list price and the reimbursement rates set by third-party payers, including Medicare, commercial payers, and amounts billed directly to the patient. Specific amounts, if uncollected over a period of time, may be written-off after several appeals, which in some cases may take longer than twelve months. Primarily all of the Company’s receivables are due from patients with commercial or government health plans and worker’s compensation claims, with a smaller portion related to private pay individuals, attorney, and auto claims. The Company maintains a constraint for third-party payer refund requests, deductions, and adjustments. See Note 15 – Concentrations for discussion of significant customer accounts receivable balances.

Inventory, Net

Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard costs, which approximates actual costs on an average cost basis.

The Company monitors inventory for turnover and obsolescence and records losses for excess and obsolete inventory, as appropriate. The Company provides reserves for estimated excess and obsolete inventories based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory write-downs may be required.

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Long-lived Assets

The Company records intangible assets based on estimated fair value on the date of acquisition. Long-lived assets consist of net property and equipment and intangible assets. The finite-lived intangible assets are patents and are amortized on a straight-line basis over the estimated lives of the assets.

The Company assesses impairment of long-lived assets when events or changes in circumstances indicates that the carrying value amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: (i) significant decreases in the market price of the asset; (ii) significant adverse changes in the business climate or legal or regulatory factors; (iii) or, expectations that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life (See Note 7 – Impairment).

If the estimated future undiscounted cash flows, excluding interest charges, from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value.

Useful lives of finite-lived intangible assets, prior to September 30, 2025 are summarized below:

​

​	​	​
​	​	Estimated
​	​	Useful Lives
​		in years
Patents		11

​

Goodwill

Goodwill is recorded as the difference between the fair value of the purchase consideration and the estimated fair value of the net identifiable tangible and intangible assets acquired.

Goodwill is not subject to amortization but is subject to impairment testing. The Company utilizes the simplified test for goodwill impairment. The amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The valuation methods used in the quantitative fair value assessment was a discounted cash flow method and required management to make certain assumptions and estimates regarding certain industry trends and future profitability of our reporting units. The Company tests more frequently if indicators are present or changes in circumstances suggest that impairment may exist. These indicators include, among others, declines in sales, earnings, or cash flows, or the development of a material adverse change in the business climate. During the quarter ended September 30, 2025, the Company transitioned to an updated methodology for estimating the fair value of its reporting unit for goodwill impairment testing. See Note 6 – Goodwill for additional details regarding this change in accounting estimate under ASC 250-10. The Company assesses goodwill for impairment at the reporting unit level. The estimates of fair value and the determination of reporting units requires management judgment (See Note 7 – Impairment).

Revenue Recognition

Revenue is derived from sales and leases of the Company’s electrotherapy devices and sales of related supplies and private labeled rehabilitation products. Device sales can be in the form of a purchase or a lease. Supplies needed for the device can be set up as a recurring shipment or ordered through the customer support team or online store as needed. The Company recognizes revenue when the performance obligation has been met and the product has been transferred to the patient, in the amount that reflects the consideration the Company expects to receive. In general, revenue from sales of devices and supplies is recognized once the product is delivered to the patient, which is when the performance obligation has been met and the product has been transferred to the patient.

Sales of devices and supplies are primarily shipped directly to the patient, with a small amount of revenue generated from sales to distributors. In the healthcare industry there is often a third party involved that will pay on the patients’ behalf for purchased or leased devices and supplies. The terms of the separate arrangement impact certain aspects of the contracts, with patients covered by third party payers, such as contract type, performance obligations and transaction price, but for purposes of revenue recognition the contract with the customer refers to the arrangement between the Company and the patient. The Company does not have any material deferred revenue in the normal course of business as each performance obligation is met upon delivery of goods to the patient. There are no substantial costs incurred through support or warranty obligations.

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a breakdown of disaggregated net revenues for the three and nine months ended September 30, 2025 and 2024 related to devices accounted for as purchases subject to Accounting Standards Codification (“ASC”) 606 – “Revenue from Contracts with Customers” (“ASC 606”), leases subject to ASC 842 – “Leases” (“ASC 842”), and supplies (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the Three Months Ended September 30,					​	For the Nine Months Ended September 30,
​		2025			2024			2025			2024
Device revenue		​			​		​	​			​
Purchased	​	$	2,477	​	$	7,299	​	$	11,405	​	$	21,851
Leased	​		4,580	​		7,559	​		18,584	​		22,952
Total device revenue	​	$	7,057	​	$	14,858	​	$	29,989	​	$	44,803
Supplies revenue	​	​	6,303	​	​	35,108	​	​	32,239	​	​	101,577
Total net revenue	​	$	13,360	​	$	49,966	​	$	62,228	​	$	146,380

​

Revenues are estimated using a portfolio approach that includes two distinct portfolios. The first portfolio is based upon contracted rates, which have been minimal to date. The second portfolio approach is by third-party payer type based upon historical rates of collection, aging of receivables, trends in historical reimbursement rates by third-party payer types, and current relationships and experience with the third-party payers, which includes estimated constraints for third-party payer refund requests, deductions, allowance for uncollectible accounts, and billing allowance adjustments. Inherent in these estimates is the risk they will have to be revised as additional information becomes available and constraints are released. If initial estimates are updated, these changes are accounted for as increases or decreases in the transaction price. Assuming the underlying performance obligation to which the change in price relates has already been satisfied, those changes in transaction price are immediately recognized as increases or decreases in revenue (not credit losses (bad debt expense)) in the period in which the estimate changes. Additionally, the complexity of third-party payer billing arrangements, the uncertainty of reimbursement amounts for certain products from third-party payers, or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Settlements with third-party payers for retroactive revenue adjustments due to audits, reviews, or investigations are considered variable consideration and are included in the determination of the estimated transaction price using the expected amount method. These adjustments to transaction price are estimated based on the terms of the payment agreement with the payer, correspondence from the payer, and historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Due to continuing changes in the healthcare industry and third-party payer reimbursement, it is possible the Company’s forecasting model to estimate collections could change, which could have an impact on the Company’s results of operations and cash flows. Any differences between estimated and actual collectability are reflected in the period in which payment is received.

The Company monitors the variability and uncertain timing over third-party payer types in the portfolios. If there is a change in the Company’s third-party payer mix over time, it could affect net revenue and related receivables. The Company believes it has a sufficient history of collection experience to estimate the net collectible amounts by third-party payer type. However, changes to constraints related to billing adjustments and refund requests have historically fluctuated and may continue to fluctuate significantly from quarter-to-quarter and year-to-year.

Financing Receivables

The Company may, from time to time, enter into arrangements to sell or pledge certain trade receivables to third-party financial institutions. These transactions are evaluated to determine whether they qualify for sale accounting under ASC 860, Transfers and Servicing. Transfers that do not meet the criteria for sale accounting are accounted for as secured borrowings.

Under secured borrowing arrangements, the receivables remain on the condensed consolidated balance sheet, and the cash proceeds received are recorded as a financing liability. The Company continues to carry the receivables and recognizes interest expense over the term of the related borrowing. Cash proceeds from these arrangements are presented as financing activities in the consolidated statements of cash flows.

Leases

The Company determines if an arrangement is a lease at inception or modification of a contract.

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company recognizes finance and operating lease right-of-use assets and liabilities at the lease commencement date based on the estimated present value of the remaining lease payments over the lease term. For leases, the Company uses the implicit rate to determine the present value of future lease payments. For leases that do not provide an implicit rate, the Company uses incremental borrowing rates to determine the present value of future lease payments. The Company includes options to extend or terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial term of 12 months or less as lease expense over the lease term and those leases are not recorded on the Company’s condensed consolidated balance sheets. For additional information on the leases where the Company is the lessee, see Note 14 - Leases.

A significant portion of device revenue is derived from patients who obtain devices under month-to-month lease arrangements where the Company is the lessor. Revenue related to devices on lease is recognized in accordance with ASC 842. Using the guidance in ASC 842, the Company concluded the transactions should be accounted for as operating leases based on the following criteria below:

● The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term.

● The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

● The lease term is month to month, which does not meet the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease.

● There is no residual value guaranteed and the present value of the sum of the lease payments does not equal or exceed substantially all of the fair value of the underlying asset.

● The underlying asset is expected to have alternative uses to the lessor at the end of the lease term.

Lease commencement occurs upon delivery of the device to the patient. The Company retains title to the leased device and those devices are classified as property and equipment on the balance sheet. Since the leases are month-to-month and can be returned by the patient at any time, revenue is recognized monthly for the duration of the period in which the patient retains the device.

Debt Issuance Costs

Debt issuance costs are costs incurred to obtain new debt financing. Debt issuance costs are presented in the accompanying condensed consolidated balance sheets as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method.

Stock-based Compensation

The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during the period. The stock-based compensation expenses are recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For awards subject to the achievement of performance metrics, stock-based compensation expense is recognized when it becomes probable that the performance conditions will be achieved over the respective performance period.

Impairment and Restructuring Charges

​

During the quarter ended September 30, 2025, management identified indicators of impairment for the ZMS subsidiary under ASC 350-20 Intangibles – Goodwill and Other and ASC 360-10 Property, Plant and Equipment. The indicators included the decision to seek a commercialization partner for NiCO, the decision to terminate substantially all ZMS personnel, and ceased independent operations. The Company recorded an impairment of all goodwill and other assets associated with the ZMS business based on a valuation analysis of the ZMS asset group to determine fair value less cost to sell. The valuation uses a discounted cash-flow model and market approach inputs as appropriate.

​

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Information

The Company currently operates as one operating segment which includes two revenue types: Devices and Supplies. While the Company discloses device and supply revenue separately, management does not consider these to be separate segments, as they are sold through the same sales channel, and supplies are contingent upon device orders. Management’s analysis and determination for allocation of resources is not analyzed or broken out by revenue streams, but as one reporting unit. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODMs are the Chief Executive Officer, Chief Financial Officer and Chief Legal Officer who review and evaluate consolidated net income for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. For financial information related to the Company’s one segment, see the condensed consolidated financial statements and related notes herein.

Income Taxes

The Company records deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheets, as well as operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that these benefits will not be realized. “Naked credits” are deferred tax liabilities that have an indefinite reversal pattern, such as a deferred tax liability that relates to an asset with an indefinite useful life (e.g., land, goodwill, indefinite-lived intangible asset). Naked credits would not ordinarily serve as a source of income for the realization of deferred tax assets with a finite loss carryforward period. In situations when another source of taxable income is not available, a valuation allowance on deferred tax assets is necessary even though an entity may be in an overall net deferred tax liability position. In a situation when the deductible temporary difference is indefinite in nature, it may be appropriate to use a deferred tax liability related to an indefinite-lived asset as a source of income to support realization of a deferred tax asset in a jurisdiction with unlimited carryforward. This assumes that they are within the same jurisdiction, of the appropriate character, and that the deferred tax asset is realizable if the taxable income were to become available. Tax benefits are recognized from uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

​

On July 4, 2025, President Donald Trump signed into law the reconciliation tax bill, commonly referred to as the “One Big Beautiful Bill Act” (OBBBA), which constitutes the enactment date under U.S. GAAP. Key corporate tax provisions of the OBBBA include the restoration of 100% bonus depreciation, the introduction of the new Section 174A permitting immediate expensing of domestic research and experimental (R&E) expenditures, modifications to Section 163(j) interest expense limitations, updates to the rules governing global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII), amendments to energy credit provisions, and the expansion of Section 162(m) aggregation requirements.

​

Under U.S. GAAP, the effects of changes in tax laws are recognized in the period in which the new law is enacted. Accordingly, the impact of the OBBBA is reflected in the Company’s unaudited condensed consolidated financial statements for the quarter ended September 30, 2025. The OBBBA did not have a material impact on the Company’s reported results, cash flows, or financial position during the period ended September 30, 2025.

​

Recent Accounting Pronouncements

In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU (“Accounting Standards Update”) 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” (“ASU 2023-06”). This ASU incorporates certain SEC disclosure requirements into the FASB ASC. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of ASC topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the ASC with the SEC’s regulations. The ASU has an unusual effective date and transition requirements since it is contingent on future SEC rule setting. If the SEC fails to enact required changes by June 30, 2027, this ASU is not effective for any entities. Early adoption is not permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its condensed consolidated financial statements.

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In November 2024, the FASB issued ASU 2024-03 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.” This ASU requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion) included in certain expense captions presented on the face of the income statement. The ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. The ASU may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements and early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its condensed consolidated financial statements.

​

Management does not believe that any other recently issued accounting pronouncements will have a material impact on the Company’s consolidated financial statements.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”) to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. This ASU applies to all entities subject to income taxes. This ASU was adopted in the quarter ended March 31, 2025 and the corresponding disclosures will be presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

(3)   FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments include cash, accounts receivable, accounts payable and accrued liabilities. The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to their short maturities. The Company measures its debt at fair value which approximates book value as the debt bears market rates of interest. The valuation policies are determined by management, and the Company’s Board of Directors is informed of any policy change.

​

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in

measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows:

​

Level I: Inputs that reflect unadjusted quoted prices in active markets that are accessible to Zynex for identical assets or liabilities;

Level II: Inputs include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or liability either directly or indirectly; and

Level III: Unobservable inputs that are supported by little or no market activity.

The Company’s assets and liabilities, which are measured at fair value, on a recurring basis, are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s policy is to recognize transfers in and/or out of fair value hierarchy as of the date in which the event or change in circumstances caused the transfer.

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(4)   INVENTORY

The components of inventory are as follows (in thousands):

​

​	​	​	​	​	​	​
​		September 30, 2025			December 31, 2024
Raw materials	​	$	5,114	​	$	5,525
Work-in-process	​		-	​		143
Finished goods	​	​	6,790	​	​	7,085
Inventory in transit	​		241	​		1,320
​	​	​	12,145	​	​	14,073
Less: reserve	​	​	(154)	​	​	(154)
​	​	$	11,991	​	$	13,919

​

​

(5)   PROPERTY AND EQUIPMENT

The components of property and equipment are as follows (in thousands):

​

​	​	​	​	​	​	​
​		September 30, 2025			December 31, 2024
Property and equipment	​	​			​
Office furniture and equipment	​	$	2,766	​	$	3,210
Assembly equipment	​		154	​		425
Vehicles	​		75	​		75
Leasehold improvements	​		1,131	​		1,893
Leased devices	​	​	725	​	​	815
Capital projects	​		4	​		182
Total property and equipment at cost	​	​	4,855	​	​	6,600
Less accumulated depreciation	​		(3,568)	​		(3,516)
Total property and equipment, net	​	$	1,287	​	$	3,084

​

During the quarter ended September 30, 2025 the Company recorded an impairment charge of $1.3 million on property and equipment associated with its ZMS subsidiary (See Note 7 – Impairment).

Total depreciation expense related to property and equipment was $0.2 million and $0.3 million for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense for the nine months ended September 30, 2025 and 2024, was $0.8 million and $0.7 million, respectively.

Total depreciation expense related to devices out on lease was $0.3 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense related to devices out on lease was $0.9 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. Depreciation on leased units is reflected on the income statement as cost of revenue.

(6)   GOODWILL AND OTHER INTANGIBLE ASSETS

During the year ended December 31, 2021, the Company completed the acquisition of Kestrel Labs, which resulted in Goodwill of $20.4 million.

During the quarter ended September 30, 2025, the Company transitioned to an updated methodology for estimating the fair value of its reporting units for purposes of goodwill impairment testing. Previously, the Company used market capitalization as a proxy for reporting-unit fair value. The Company now estimates fair value at the reporting-unit level using discounted cash flows that incorporate the Company’s new managements’ business expectations. This refinement represents a change in accounting estimate under ASC 250-10 and was applied prospectively. The change affects goodwill impairment testing in the current and future periods.

During the quarter ended September 30, 2025 the Company recorded an impairment charge of $20.4 million on goodwill associated with ZMS (See Note 7 - Impairment).

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table provides the summary of the Company’s intangible assets as of September 30, 2025.

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	Weighted-
​	​	​	​	​	​	​	​	​	​		Average
​		Gross		​	​	​	​	​	​		Remaining
​		Carrying			Accumulated			Net Carrying			Life (in
​		Amount			Amortization			Amount			years)
Acquired patents at December 31, 2024	​	$	10,000	​	$	(2,753)	​	$	7,247	​	8.00
Amortization expense	​	​	​	​	​	(679)	​	​	(679)	​	​
Impairment charges	​	​	(10,000)	​	​	3,432	​	​	(6,568)	​	​
Acquired patents at September 30, 2025	​	$	—	​	$	—	​	$	—		—

​

​

​

​

(7) IMPAIRMENT ASSESSMENT

​

During the three months ended September 30, 2025, the Company decided to seek a commercialization partner for NiCO, a multi-parameter pulse oximeter developed by ZMS, rather than pursue commercialization independently.

​

The assets associated with the change in commercialization strategy include property and equipment, right-of-use assets for leased facilities, definite-lived intangible assets, and goodwill associated with the ZMS business. While the Company will continue to pursue commercialization opportunities for NiCO with potential commercialization partners, this impairment reflects a change in direction for the acquired business as no assurance can be provided that the Company will be successful in attracting a commercialization partner.

​

During the quarter ended September 30, 2025, management identified indicators of impairment for the ZMS subsidiary under ASC 350-20 Intangibles – Goodwill and Other and ASC 360-10 Property, Plant and Equipment. The indicators included the decision to seek a commercialization partner for NiCO, the decision to terminate substantially all ZMS personnel, and the cessation of independent operations. The Company recorded an impairment of all goodwill and other assets associated with the ZMS business based on a valuation analysis of the ZMS asset group to determine fair value less cost to sell. The valuation uses a discounted cash flow model and market approach inputs as appropriate.

​

Based on this analysis, the Company recognized total impairment charges of $30.7 million during the quarter ended September 30, 2025, as summarized below:

​

​	​	​	​
​	​	Impairment
​	​	Charge
​		(in thousands)
Asset category		​
Prepaid expenses and other	​	$	34
Property and equipment, net	​		1,294
Operating lease asset	​	​	2,344
Deposits	​	​	99
Intangible assets, net of accumulated amortization	​	​	6,568
Goodwill	​	​	20,401
Total impairment charge	​	$	30,740

​

The impairment charges are reflected in “Impairment charges” in the unaudited condensed consolidated statements of operations. The impairment is non-cash in nature and does not impact the Company’s liquidity or compliance with debt covenants. The recorded impairment represents a full impairment of the affected asset group, and no additional write-downs are expected. No additional impairment indicators were identified for the Company’s other asset groups as of September 30, 2025. Future charges will be incurred for employee severance and facility exit costs as those actions are finalized.

​

(8)    EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net (loss) income by the weighted-average

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

number of common shares outstanding and the number of dilutive potential common share equivalents during the period. Dilution resulting from stock-based compensation plans is determined using the treasury stock method and dilution resulting from the 2023 Convertible Senior Notes is determined using the if-converted method. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential common shares outstanding would be anti-dilutive.

The calculation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2025 and 2024 are as follows (in thousands, except per share data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended September 30,

​

For the Nine Months Ended September 30,

​

2025

2024

2025

2024

Basic earnings (loss) per share

​

​

​

​

Net income (loss)

​

$

(42,914)

​

$

2,382

​

$

(73,343)

​

$

3,609

Basic weighted average shares outstanding

​

30,314

​

31,775

​

30,721

​

31,960

Basic earnings (loss) per share

​

$

(1.42)

​

$

0.07

​

$

(2.39)

​

$

0.11

​

​

​

​

​

​

​

​

​

​

​

​

​

Diluted earnings (loss) per share

​

​

​

​

Net income (loss)

​

$

(42,914)

​

$

2,382

​

$

(73,343)

​

$

3,609

Weighted average shares outstanding

​

30,314

​

31,775

​

30,721

​

31,960

Effect of dilutive securities - options and restricted stock

​

—

​

313

​

—

​

380

Diluted weighted-average shares outstanding

​

30,314

​

32,088

​

30,721

​

32,340

Diluted earnings per share (loss)

​

$

(1.42)

​

$

0.07

​

$

(2.39)

​

$

0.11

​

For the three and nine months ended September 30, 2025, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential common shares outstanding would be anti-dilutive. For the three and nine months ended September 30, 2024, equity grants of 54,000 and 13,000 shares of common stock, respectively, were excluded from the dilutive stock calculation because their effect would have been anti-dilutive.

​

For both the three and nine months ended September 30, 2025, and 2024 conversion options to purchase 5.6 million shares resulting from the 2023 Convertible Senior Notes, were excluded from the dilutive stock calculation because their effect would have been anti-dilutive (see Note 10 – Convertible Senior Notes).

​

(9) FINANCING RECEIVABLES

​

The Company entered into a receivable funding agreement during the third quarter of 2025 to provide near-term liquidity from medical lien receivables. Under the arrangement, the funding counterparty advances approximately 21% of billed charges for eligible receivables and will fund 18% on future receivables. The funding counterparty retains collections up to specified multiples of the advance, which range from 120% to 270%, depending on the time between funding and collection. Any amounts collected in excess of these retention thresholds are remitted back to the Company.

​

The agreement also contains a recourse provision that requires the Company, under certain circumstances (including disputes, litigation, or billing-related errors), to replace affected receivables or allow the counterparty to offset such amounts against future funding or distributions.

​

Management concluded that the transfers do not qualify for sale accounting under ASC 860, Transfers and Servicing, primarily because the recourse and offset provisions expose the Company to potential losses. Accordingly, the arrangement is accounted for as a secured borrowing, with proceeds received recorded as a liability and the related receivables remaining on the balance sheet.

​

As of September 30, 2025, the Company received total cash advances of $2.2 million which were recorded as a secured borrowing and included within accounts payable and accrued liabilities on the balance sheet. The underlying receivables related to billed charges of approximately $10.3 million, a significant portion of which had previously been written down or derecognized under the Company’s portfolio level accounts receivable valuation approach. Due to these prior adjustments, the carrying value of the related receivables on

18

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Company’s condensed consolidated balance sheet is substantially lower than the gross billed amount. The recognition of these cash advances and secured borrowings had no material impact on the Company’s condensed consolidated statements of operations.

​

(10)   CONVERTIBLE SENIOR NOTES

In May 2023, the Company issued $52.5 million aggregate principal amount of 5.00% Convertible Senior Notes due May 15, 2026 (the “2023 Convertible Senior Notes”). In May 2023, the Company issued an additional $7.5 million aggregate principal amount of the 2023 Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option. As of September 30, 2025 and December 31, 2024, unamortized issuance costs of $0.7 million and $1.4 million, respectively, were included on the Company’s condensed consolidated balance sheets.

Interest on the 2023 Convertible Senior Notes is payable semiannually in arrears, beginning November 15, 2023. The 2023 Convertible Senior Notes will mature on May 15, 2026, unless earlier converted or repurchased. The Company may redeem for cash all, but not less than all, of the notes, at the Company’s option, on or after May 20, 2025 if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The 2023 Convertible Senior Notes are direct, unsecured, and unsubordinated obligations of the Company, ranking equally with all of the Company’s other unsecured and unsubordinated indebtedness from time to time outstanding, and are effectively subordinated to all secured indebtedness of the Company.

​

The Company has elected to not make an interest payment in the amount of approximately $1.5 million (the “Interest Payment”) due on November 15, 2025 (and payable on November 17, 2025, as November 15, 2025 is a non-business day) with respect to the 2023 Convertible Senior Notes. Under the indenture governing 2023 Convertible Senior Notes, the Company has a 30-day grace period to make the Interest Payment before such non-payment constitutes an “event of default” with respect to the 2023 Convertible Senior Notes. The Company may elect to make the Interest Payment on or prior to the expiration of the 30-day grace period. However, the failure of the Company to make the Interest Payment on or prior to the expiration of the 30-day grace period would result in an event of default with respect to the 2023 Convertible Senior Notes which may result in the acceleration of the 2023 Convertible Senior Notes and the Company filing for bankruptcy.

​

Holders could have converted their 2023 Convertible Senior Notes at their option prior to the close of business on the business day preceding September 30, 2023, but only under the following circumstances: during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least twenty trading days (whether or not consecutive) during the period of thirty consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day as determined by the Company; during the five business day period after any ten consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of 2023 Convertible Senior Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or upon the occurrence of certain corporate events specified in the indenture governing the 2023 Convertible Senior Notes.

On or after February 15, 2026, a holder may convert all or any portion of its 2023 Convertible Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

The Company will settle conversions of the 2023 Convertible Senior Notes by paying cash up to the aggregate principal amount of the 2023 Convertible Senior Notes to be converted and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in respect of the remainder, if any, of the Company's conversion obligation in excess of the aggregate principal amount of the 2023 Convertible Senior Notes being converted. The 2023 Convertible Senior Notes are initially convertible at a rate of 92.8031 shares of common stock per $1,000 principal amount converted, which is approximately equal to $10.78 per share of common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change, which includes certain change in control transactions, the approval by Zynex’s stockholders of any plan or proposal for the liquidation or dissolution of Zynex and certain de-listing events with respect to Zynex’s common stock, the

19

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for conversions in connection with the make-whole fundamental change.

Upon the occurrence of a fundamental change, holders of the 2023 Convertible Senior Notes may require the Company to purchase all or a portion of their 2023 Convertible Senior Notes, in principal amounts equal to $1,000 or an integral multiple thereof, for cash at a price equal to 100% of the principal amount of the 2023 Convertible Senior Notes to be purchased plus any accrued and unpaid interest.

​

The following table summarizes the minimum interest payments over the remainder of 2025 and next fiscal year until maturity in May 2026.

​

​	​	​	​
​		(In thousands)
2025	​	$	1,500
2026	​	$	1,500

​

​

(11)   STOCK-BASED COMPENSATION PLANS

In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5,500,000 shares reserved for issuance. Awards permitted under the 2017 Stock Plan include: Stock Options and Restricted Stock. Awards issued under the 2017 Stock Plan are at the discretion of the Board of Directors. As applicable, awards are granted with an exercise price equal to the closing price of our common stock on the date of grant and generally vest over four years. Restricted Stock Awards are issued to the recipient upon grant and are not included in outstanding shares until such vesting and issuance occurs.

During both the three and nine months ended September 30, 2025 and 2024 no stock option awards were granted under the 2017 Stock Plan. At September 30, 2025, the Company had 0.3 million stock options outstanding and exercisable under the following plans:

​

​	​	​	​	​
​		​		​
​	​	​	​	​
​	​	Outstanding Number of Options	​	Exercisable Number of Options
​	​	(in thousands)	​	(in thousands)
Plan Category
2005 Stock Option Plan		1	​	1
2017 Stock Option Plan		328	​	328
Total		329	​	329

​

During the three and nine months ended September 30, 2025, 0.2 million and 0.4 million shares of restricted stock were granted under the 2017 Stock Plan, respectively. During the three and nine months ended September 30, 2024, 0.1 million and 0.2 million shares of restricted stock were granted to the Board of Directors and management under the 2017 Stock Plan, respectively. The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on the date of grant. The vesting on restricted stock awards typically occur quarterly over three years for the Board of Directors and quarterly or annually over two to four years for management.

​

The following summarizes stock-based compensation expenses recorded in the condensed consolidated statements of income (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
​		2025			2024			2025			2024
Costs of revenue - devices and supplies	​	$	8	​	$	10	​	$	29	​	$	27
Sales and marketing	​		(31)	​		125	​		125	​		492
General and administrative	​	​	340	​	​	635	​	​	1,299	​	​	1,826
Total stock-based compensation expense	​	$	317	​	$	770	​	$	1,453	​	$	2,345

​

The Company did not receive any proceeds related to option exercises during the three months ended September 30, 2025 and received proceeds of $0.1 million related to option exercises during the nine months ended September 30, 2025. The Company did not

20

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

receive any proceeds related to option exercises during the three months ended September 30, 2024 and received proceeds of $0.1 million related to option exercises during the nine months ended September 30, 2024. No stock option awards were granted by the Company during either the three or nine months ended September 30, 2025 and 2024.

A summary of stock option activity under all equity compensation plans for the nine months ended September 30, 2025, is presented below:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Weighted-	​	​	​
​	​	​	​	Weighted-		​	Average	​	Aggregate
​	​	Number of	​	Average		​	Remaining	​	Intrinsic
​	​	Shares	​	Exercise		​	Contractual	​	Value
​		(in thousands)		Price			Term (Years)		(in thousands)
Outstanding at December 31, 2024		335	​	$	1.78	​	3.09	​	$	2,086
Granted		—	​	​	—	​	—	​	​	—
Forfeited	​	(4)	​	​	3.13	​	—	​	​	—
Exercised		(2)	​	​	3.36	​	—	​	​	—
Outstanding and exercisable at September 30, 2025		329	​	$	1.76	​	2.37	​	$	146
​	​	​	​	​	​	​	​	​	​	​

​

A summary of restricted stock award activity under all equity compensation plans for the nine months ended September 30, 2025, is presented below:

​

​	​	​	​	​	​
​	​	Number of	​	​
​	​	Shares		Weighted Average
​		(in thousands)		Grant Date Fair Value
Outstanding at December 31, 2024	​	499	​	$	10.28
Granted	​	368	​	​	2.47
Forfeited	​	(109)	​	​	7.81
Vested	​	(211)	​	​	9.63
Outstanding at September 30, 2025		547	​	$	5.77
​	​	​	​	​	​

​

As of September 30, 2025, the Company had approximately $2.6 million of unrecognized compensation expense related to stock options and restricted stock awards that will be recognized over a weighted average period of approximately 2.4 years.

(12)   STOCKHOLDERS’ EQUITY

Treasury Stock

On November 1, 2023, the Company announced that its Board of Directors approved a program to repurchase up to $20.0 million of the Company’s common stock at prevailing market prices either in the open market or through privately negotiated transactions through October 31, 2024. From the inception of the plan through December 31, 2023, the Company purchased 1,012,200 shares of its common stock for $9.6 million or an average price of $9.47 per share. During the quarter ended March 31, 2024, the Company purchased 887,820 shares of common stock for $10.4 million or an average price of $11.73, which completed this program.

On March 4, 2024, the Company announced that its Board of Directors approved a program to repurchase up to $20.0 million of the Company’s common stock at prevailing market prices either in the open market or through privately negotiated transactions through March 4, 2025. From the inception of the plan through March 31, 2024, the Company purchased 234,015 shares of its common stock for $3.0 million or an average price of $12.83 per share. From the inception of the plan through March 4, 2025, the Company purchased 423,894 shares of its common stock for $5.2 million or an average price of $12.29 per share. The repurchase plan expired on March 4, 2025.

On March 13, 2025, the disinterested members of the Board of Directors and Audit Committee approved the purchase of 1,700,000 shares of the Company’s common stock from Thomas Sandgaard, the Company’s Chairman and then-serving President,

21

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Chief Executive Officer and Principal Executive Officer, at the closing market price on March 13, 2025, of $2.905 per share for $4.9 million.

​

(13)   INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, primarily related to excess tax benefits or expense from the tax impact of restricted stock vestings, true ups related to the filed tax return, and valuation allowance charges. Discrete items adjusted for the three and nine months ended September 30, 2025, primarily related to the valuation allowance charge, were ($2.0) million and $3.5 million, respectively. For both the three and nine months ended September 30, 2024 discrete items adjusted were $0.2 million related to the tax impact of restricted stock vestings. At September 30, 2025 and 2024, the Company is estimating an annual effective tax rate of approximately 0% and 24%, respectively. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to various factors.

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was (5%) and 25% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in the Company's effective tax rate for the nine months ended September 30, 2025, compared to the same period in 2024, primarily relates to the valuation allowance related to the Company's deferred tax assets and changes in income (loss) from operations before income tax. For the three and nine months ended September 30, 2025, the Company recorded an income tax expense of approximately ($1.9) million and $3.6 million, respectively. For the three and nine months ended September 30, 2024, the Company recorded an income tax expense of approximately $0.8 million and $1.2 million, respectively.

The Company establishes valuation allowances for deferred income tax assets in accordance with U.S. GAAP, which provides that such valuation allowances shall be established unless realization of the income tax benefits is more likely than not. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At each reporting period, the Company considers the scheduled reversal of deferred tax liabilities and assets, available taxes in carryback periods, tax planning strategies and projected future taxable income in making this assessment. As of September 30, 2025, the Company determined that it was more likely than not that certain deferred tax assets would not be realized due to reductions in estimates of future profitability and disclosure related to substantial doubt about the Company's ability to continue as a going concern.

Taxes of $0.2 million and $2.1 million were paid during the nine months ended September 30, 2025 and 2024, respectively.

(14)   LEASES

The Company categorizes leases at their inception as either operating or financing leases. Leases include various office and warehouse facilities which have been categorized as operating leases while certain equipment is leased under financing leases.

During February 2023, the Company entered into a lease agreement for approximately 41,427 square feet of office space for the operations of ZMS in Englewood, CO. The lease commenced on July 1, 2023 and runs through December 31, 2028. At the expiration of the lease term the Company has the option to renew the lease for one additional five-year period. The Company is entitled to rent abatements for the first six months of the lease and tenant improvement allowances. Payments based on the initial rate of $24.75 per square foot began in January 2024. The price per square foot increases by an additional $0.50 during each subsequent twelve-month period of the lease after the abatement period. Upon lease commencement, the Company recorded an operating lease liability of $4.2 million and a corresponding right-of-use asset for $2.8 million. During the three months ended September 30, 2025, the Company recorded a $2.3 million impairment charge on right-of-use assets associated with the vacated facilities (See Note 7 – Impairment). The fair value was determined under ASC 360 using discounted cash flows of sublease income.

The Company’s operating leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company’s weighted average borrowing rate was determined to be 4.93% for its operating lease liabilities. The Company’s equipment lease agreements have a weighted average rate of 4.83% which was used to measure its finance lease liability.

22

​

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The weighted average remaining lease term was 2.66 years and 3.51 years for operating and finance leases, respectively, as of September 30, 2025.

​

As of September 30, 2025, the maturities of the Company’s future minimum lease payments were as follows (in thousands):

​

​	​	​	​	​	​	​
​		Operating Lease Liability			Finance Lease Liability
October 1, 2025 through December 31, 2025		$	1,176		$	145
2026		​	4,509		​	312
2027		​	4,319		​	264
2028		​	2,193		​	171
2029		​	—		​	121
Thereafter	​	​	—	​	​	—
Total undiscounted future minimum lease payments	​	$	12,197	​	$	1,013
Less: difference between undiscounted lease payments and discounted lease liabilities:	​		(836)	​		(90)
Total lease liabilities	​	$	11,361	​	$	923

​

The components of lease expenses were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Nine Months Ended

​

​

September 30,

​

September 30,

​

2025

2024

​

2025

​

2024

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating lease expense

​

​

​

​

​

​

​

​

​

​

​

Cost of revenue - devices and supplies

​

$

96

$

94

$

304

$

284

General and administrative

​

​

589

​

​

563

​

​

1,726

​

​

1,715

Sales and marketing expense

​

​

215

​

​

221

​

​

630

​

​

656

Total operating lease expense

​

$

900

​

$

878

​

$

2,660

​

$

2,655

​

​

​

​

​

​

​

​

​

​

​

​

​

Finance lease expense

​

​

​

​

​

​

​

​

​

​

​

​

Total amortization of leased assets

​

$

73

​

$

54

​

$

220

​

$

149

Interest on lease liabilities

​

​

11

​

​

8

​

​

37

​

​

17

Total finance lease expense

​

$

84

​

$

62

​

$

257

​

$

166

​

​

(15)   CONCENTRATIONS

For the three months ended September 30, 2025, the Company sourced approximately 76% of the supplies for its electrotherapy products from five significant vendors. For the same period in 2024, the Company sourced approximately 57% of the supplies for its electrotherapy products from four significant vendors. Significant vendors provided at least 10% of the total value spent on the Company’s electrotherapy products during the period.

For the nine months ended September 30, 2025, the Company sourced approximately 44% of supplies for its electrotherapy products from three significant vendors. For the same period in 2024, the Company sourced approximately 56% of supplies for its electrotherapy products from four significant vendors.

At September 30, 2025 and December 31, 2024, the Company had no gross receivables from any third-party payers that made up over 10% of the net accounts receivable balance.

(16)   COMMITMENTS AND CONTINGENCIES

See Note 14 for details regarding commitments under the Company’s long-term leases.

From time to time, the Company may become party to various legal, regulatory, administrative proceedings and other claims in the ordinary course of business. To the extent that such claims, proceedings and/or litigation arise, management would accrue the

23

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ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

estimated exposure for such events when losses are determined to be both probable and estimable. On occasion, the Company engages outside counsel related to a broad range of topics including employment law, third-party payer matters, intellectual property, and regulatory and compliance matters.

Other than described below, the Company is currently not a party to any pending legal proceedings that would give rise to potential loss contingences that would be material to the financial statements.

Certain Investigations and Other Matters

​

The Company regularly receives requests for information, including subpoenas, from regulators and governmental authorities such as the Securities and Exchange Commission (“SEC”), the Department of Justice (“DOJ”), and various local, state, and federal agencies. The ongoing requests for information include topics such as operations, compliance, finance, data privacy, and other matters related to the Company’s business, its personnel, and related parties. The Company routinely cooperates with such formal and informal requests for information, investigations, and other inquiries. The Company cannot predict the outcome or impact of any ongoing matters. Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on the Company’s business, results of operations, prospects, cash flows, financial position or brand.

​

Heid

​

On March 4, 2023, a class action complaint was filed against the Company in the California Superior Court, San Diego County, captioned Heid v. Zynex Medical, Inc., No. 37-2023-11832, alleging violations of the California Invasion of Privacy Act (“CIPA”), California Unfair Competition Law, invasion of privacy, intrusion upon seclusion, and seeking class certification. The complaint seeks class certification, damages and restitution, statutory damages, and costs. The Company has reached a preliminary settlement with the plantiffs that is pending court approval. The Company recorded an accrual related to this matter which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets as of September 30, 2025.

​

(17)   RELATED PARTIES

​

On March 13, 2025, the disinterested directors of the Board of Directors and Audit Committee approved the purchase of 1,700,000 common shares of ZYXI from Mr. Sandgaard, the Company’s Chairman and then-serving President, Chief Executive Officer and Principal Executive Officer, at the closing market price on March 13, 2025 of $2.905 per share, resulting in a total transactional value of $4,938,500.

At the time of the aforementioned transaction, the disinterested directors of the Board of Directors and Audit Committee members deemed it to be in the best interest of the Company to purchase the shares as they believe the current market price for the Company’s stock is undervalued and the Company’s cash position was such that the purchase of shares from Mr. Sandgaard was a good use of the Company’s funds at the time of each transaction. For the transaction, the following impacts were discussed before approval of the sale:

(i) the Company’s cash position and capital needs for its continuing operations; (ii) the alternative uses for the cash used to purchase the Sandgaard Shares, including repayment of outstanding indebtedness; (iii) the possible effect on earnings per share and book value per share; and (iv) and the potential effect of the trading of the Company’s shares, if Mr. Sandgaard were to sell the shares in the open market.

​

(18)   SUBSEQUENT EVENTS

ZMS

On October 1, 2025, the Company announced a change to its commercialization strategy for its ZMS subsidiary, which develops noninvasive, laser-based patient-monitoring technologies acquired through the December 2021 acquisition of Kestrel Labs, Inc. The Company determined it would no longer independently commercialize NiCO. Instead, the Company plans to pursue commercialization through one or more strategic partners.

24

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Table of Contents

ZYNEX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As a result of the actions described above, the Company incurred pre-tax asset impairment charges of $30.7 million during the three months ended September 30, 2025, primarily related to the impairment of goodwill and other assets associated with the ZMS business (See Note 7 – Impairment). As part of this initiative, the Company implemented a workforce reduction within ZMS on October 1, 2025, eliminating substantially all positions and ceasing most internal R&D and manufacturing activities. On November 1, 2025, the Company eliminated all remaining positions within ZMS and ceased independent operations. The Company also expects to incur pre-tax cash charges of approximately $0.7 million associated with severance payments to former ZMS employees in the fourth quarter of 2025.

​

Policy Change

​

Effective October 1, 2025, the Company initiated a phased implementation of a resupply policy that requires patient confirmation of current need for supplies prior to initiating shipment and billing. The Company anticipates that the policy, which is effective October 1, 2025, for a majority of payers, including all public payers, will be rolled out to all remaining payers by the end of the quarter ending December 31, 2025.

​

Other Subsequent Events

Other than disclosed above, there were no additional subsequent events identified through November 17, 2025.

​

​

​

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Notice Regarding Forward-Looking Statements

This quarterly report includes statements of our expectations, intentions, plans, and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Nonetheless, it is important for an investor to understand that these statements involve risks and uncertainties. These statements relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity, and capital resources, potential outcomes of the evaluation of the strategic alternatives, and our ability to continue as a going concern as well as analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. We have used words such as “may” “will” “should” “expect” “intend” “plan” “anticipate” “believe” “think” “estimate” “seek” “expect” “predict” “could” “project” “potential” and other similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements. These interim financial statements and the information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the annual audited consolidated financial statements, and notes to consolidated financial statements, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 11, 2025, as subsequently amended on July 24, 2025 (the “2024 Form 10-K”) and subsequently filed reports, which have previously been filed with the Securities and Exchange Commission (the “SEC”).

Such risks and other factors also include those listed in Part II, Item 1A. “Risk Factors” and in Part I, Item 1A. “Risk Factors” in our 2024 Form 10-K, Part II, Item 1A. “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 filed with the SEC on July 31, 2025, Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q, and our other filings with the SEC. When considering these forward-looking statements, you should keep in mind the cautionary statements in this report and the documents incorporated by reference. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by applicable laws and regulations.

The information and financial data discussed below is derived from our condensed consolidated financial statements for the quarterly period ended September 30, 2025, and 2024. The condensed consolidated financial statements of the Company were prepared and presented in accordance with generally accepted accounting principles in the United States. The information and financial data discussed below is only a summary and was prepared to provide a historical and narrative discussion of our financial condition and results of operations through the eyes of management and should be read in conjunction with the historical financial statements and related notes of the Company contained elsewhere in this Quarterly Report on Form 10-Q and with the annual audited consolidated financial statements, and notes to consolidated financial statements, included in the 2024 Form 10-K and subsequently filed reports, which have previously been filed with the SEC.

General

Zynex, Inc. (a Nevada corporation) has its headquarters in Englewood, Colorado. We operate in one primary business segment, medical devices which include electrotherapy and pain management products. As of September 30, 2025, the Company’s only active subsidiaries are Zynex Medical, Inc. (“ZMI,” a wholly-owned Colorado corporation) through which the Company has historically conducted most of its operations, and Zynex Monitoring Solutions, Inc. (“ZMS,” a wholly-owned Colorado corporation).

When used in this quarterly report, the terms the “Company,” “Zynex”, “we,” “us,” “ours,” and similar terms refer to Zynex, Inc., a Nevada corporation, and our wholly-owned active subsidiaries, ZMI and ZMS.

Recent Developments

Zynex Monitoring Solutions

On October 1, 2025, the Company announced a change to the commercialization stategy for its ZMS subsidiary, which develops noninvasive, laser-based patient-monitoring technologies acquired through the December 2021 acquisition of Kestrel Labs, Inc. The

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Company determined it would no longer independently commercialize its NiCO™ CO-Oximeter (“NiCO”). Instead, the Company plans to pursue commercialization through one or more strategic partners.

As part of this initiative, the Company implemented a workforce reduction within ZMS on October 1, 2025, eliminating substantially all positions and ceasing most internal R&D and manufacturing activities. On November 1, 2025, the Company eliminated all remaining positions within ZMS and ceased independent operations. As a result, the Company expects to incur aggregate pre-tax cash severance charges of approximately $0.7 million in the fourth quarter of 2025. The Company recognized pre-tax non-cash asset impairment charges of $30.7 million, during the quarter ended September 30, 2025, primarily related to goodwill, definite-lived intangible assets and certain fixed assets associated with the ZMS business.

New Leadership

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Effective August 18, 2025, the Company appointed Steven Dyson to serve as the Chief Executive Officer, Vikram Bajaj to serve as the Chief Financial Officer and John Bibb to serve as the Chief Legal Officer.

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Chief Commercial Officer Departure

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On October 8, 2025, Anna Lucsok notified the Company of her decision to resign from her position as Chief Commercial Officer of the Company, effective as of October 10, 2025.

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Director Appointments

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Effective October 7, 2025, the Board of Directors (the “Board”) elected Bret W. Wise to serve as a member of the Board and appointed Mr. Wise to serve as Chair of the Audit Committee of the Board and as a member of the Compensation Committee and the Nominating and Governance Committee. Effective November 11, 2025, the Board appointed Mr. Wise as a member of the Special Committee (defined below).

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Effective November 11, 2025, the Board elected Paul S. Aronzon to serve as a member of the Board and appointed Mr. Aronzon to serve as the Chair of the Special Committee. Refer to Part II, Item 5. “Other Information” for additional information on the appointment of Mr. Aronzon to the Board. The Company has not yet identified a strategic transaction and there can be no assurance any such transaction will result from the Special Committee's evaluation of strategic alternatives, or the timing, terms and conditions of any such transaction.

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Special Committee Formation

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On November 11, 2025, the Board established a Special Committee (the “Special Committee”), with delegated authority from the Board to, among other things, review, evaluate, negotiate, and, if appropriate, approve and implement on behalf of the Board and the Company, any strategic restructuring and/or financing transactions available to the Company.

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Tricare and workforce reductions

During the quarter ended March 31, 2025 the Company was notified that the Defense Health Agency (“DHA”) was temporarily suspending Tricare claims processing and payments to the Company pursuant to 32 C.F.R. § 199.9(h). DHA informed the Company that the suspension is based on allegations that the Company misrepresented claims for supplies and equipment billed to the Tricare program, that the Company misrepresented diagnoses to justify a requirement for TENS units, and that the Company lacked physician orders supporting the medical need for the replenishment of TENS supplies.

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In response to the ongoing temporary suspension of payments and the related uncertainty regarding the timing of resolution, the Company implemented a workforce reduction of approximately 15% of the Company’s total number of employees during the quarter ended March 31, 2025, to align its operating expenses with current revenue levels.

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In April 2025, the Company met with DHA to present evidence in opposition to the temporary Tricare payment suspension. In June 2025, DHA notified the Company that the temporary Tricare payment suspension would continue pending completion of DHA’s investigation. Also in June 2025, the Company executed a further workforce reduction affecting 86 corporate roles, representing approximately 14% of its total employees. During the quarter ended September 30, 2025, the Company determined that the prior

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workforce reduction had negatively impacted device orders and corresponding supplies, new patients onboarding and order completion and, as a result, rehired certain previously impacted employees to support service levels.

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Tricare historically represented approximately 20-25% of the Company’s annual revenue and cash collections from Tricare were $48.8 million and $38.8 million during the years ended December 31, 2024 and 2023, respectively. Because DHA informed the Company that any participation agreement with its patients remains in full force and effect, the Company continues to support both existing patients and new patients as prescriptions are received.

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During the nine months ended September 30, 2025, the Company received $2.2 million in payments from TriWest Healthcare Alliance (“TriWest”), the contractor for the Tricare West Region, and $0.6 million in payments from Humana Military, the contractor for the Tricare East Region. TriWest and Humana Military have sought repayment of these amounts. The Company reduced its revenue by $2.8 million during the quarter ended September 30, 2025 related to Tricare payments it received from TriWest and Humana Military during the time period of the Company’s Tricare payment suspension. During the nine months ended September 30, 2025, as a result of the adjustment, the Company did not recognize any revenue from Tricare, all other fulfillments and related revenue have been fully reserved and we have no reported receivables related to Tricare as of September 30, 2025.

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SEC request for documents

On June 11, 2025, the Company received a voluntary (non-subpoena) request for documents from the Securities and Exchange Commission (the “SEC”) in connection with an investigation that it is conducting into the Company to determine whether violations of federal securities laws have occurred. Subsequently, on June 30, 2025 and September 4, 2025, the Company received additional voluntary requests for documents from the SEC. The Company is cooperating with the SEC in its investigation, and is, on a rolling basis, providing all responsive documents to the requests. Consistent with its cooperation with the SEC, the Company has voluntarily agreed to toll the statute of limitations applicable to matters that are the subject of the SEC’s inquiry.

RESULTS OF OPERATIONS

Summary

Net revenue was $13.4 million and $50.0 million for the three months ended September 30, 2025 and 2024, respectively, and $62.2 million and $146.4 million for the nine months ended September 30, 2025 and 2024, respectively. Net revenue decreased $36.6 million or 73% for the three months ended September 30, 2025 from the same period in 2024. For the nine months ended September 30, 2025, net revenue decreased $84.2 million or 57% compared to the same period in 2024. For the three and nine months ended September 30, 2025, device orders decreased 35% and 20%, respectively, from the same periods in 2024.

Net loss was $42.9 million for the three months ended September 30, 2025 compared with net income of $2.4 million during the same period in 2024. Net loss was $73.3 million for the nine months ended September 30, 2025 compared with net income of $3.6 million during the same period in 2024. Cash used in operating activities was $23.0 million during the nine months ended September 30, 2025 compared to cash provided by operating activities of $10.3 million during the same period in 2024. Working capital deficit was $41.8 million as of September 30, 2025 and working capital was $58.3 million as of December 31, 2024. The change in working capital primarily reflects the reclassification of the Company’s $60 million of outstanding 2023 Convertible Senior Notes (as defined herein) to current liabilities (see Note 10), cash used in operations during the nine months ended September 30, 2025, and the repurchase of $4.9 million of treasury stock.

Net Revenue

Net revenues are comprised of device and supply sales, constrained by estimated third-party payer reimbursement deductions. The reserve for billing allowance adjustments and allowance for uncollectible accounts are adjusted on an ongoing basis in conjunction with the processing of third-party payer insurance claims and other customer collection history. Product device revenue is primarily comprised of sales and rentals of our electrotherapy products and also includes private labeled rehabilitation products such as our bracing, cervical traction, lumbar support and hot/cold therapy products.

Supplies revenue is primarily comprised of sales of our consumable supplies to patients using our electrotherapy products, consisting primarily of surface electrodes and batteries. Revenue related to both devices and supplies is reported net, after adjustments for estimated third-party payer reimbursement deductions and estimated allowance for uncollectible accounts. The deductions are known throughout the healthcare industry as billing adjustments whereby the healthcare insurers unilaterally reduce the amount they reimburse for our products as compared to the sales prices charged by us. The deductions from gross revenue also take into account

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the estimated denials, net of resubmitted billings of claims for products placed with patients which may affect collectability. See our Significant Accounting Policies in Note 2 to the condensed financial statements for a more complete explanation of our revenue recognition policies.

We occasionally receive, and expect to continue to receive, refund requests from insurance providers relating to specific patients and dates of service. Billing and reimbursement disputes are very common in our industry. These requests are sometimes related to a few patients and other times include a significant number of refund claims in a single request. We review and evaluate these requests and determine if any refund is appropriate. We also review claims that have been resubmitted or where we are pursuing additional reimbursement from that insurance provider. We frequently have significant offsets against such refund requests which may result in amounts that are due to us in excess of the amounts of refunds requested by the insurance providers. Therefore, at the time of receipt of such refund requests we are generally unable to determine if a refund request is valid.

Net revenue decreased $36.6 million to $13.4 million for the three months ended September 30, 2025, from $50.0 million for the same period in 2024. Net revenue decreased $84.2 million or 57% to $62.2 million for the nine months ended September 30, 2025 from $146.4 million for the same period in 2024. For the three and nine months ended September 30, 2025, the decline in net revenue from the same period in 2024 is related to the Company’s temporary Tricare payment suspension, along with a $2.8 million reduction in revenue related to payments received from Tricare during the suspension period. During the pendency of the temporary Tricare payment suspension, we continue to fulfill orders related to new prescriptions for Tricare patients as well as continue to serve existing patients with needed supplies. During 2025 and through the third quarter of 2025, changes to certain payers’ claim submission and review practices have resulted in unanticipated denials and payment delays, which has negatively impacted our revenue. Additionally, workforce reductions in the first and second quarters of 2025 have negatively impacted device orders and corresponding supplies, new patients onboarding and order completion, contributing to the overall decline in net revenue during the three months ended September 30, 2025.

Device Revenue

Device revenue is related to the sale or lease of our electrotherapy or private-labeled products. Device revenue decreased $7.8 million or 53% to $7.1 million for the three months ended September 30, 2025, from $14.9 million for the same period in 2024.

Device revenue decreased $14.8 million or 33% to $30.0 million for the nine months ended September 30, 2025, from $44.8 million for the same period in 2024.

For the three and nine months ended September 30, 2025, approximately $2.0 million and $4.8 million, respectively, of the decline in device revenue from the same period in 2024 is related to the Company’s temporary Tricare payment suspension, along with the reduction in revenue related to payments received from Tricare during the suspension period. During the third quarter of 2025, changes to certain payers’ claim submission and review practices have resulted in unanticipated denials and payment delays, which has negatively impacted our revenue. Additionally, workforce reductions in the first and second quarters of 2025 have negatively impacted device orders and corresponding supplies, new patients onboarding and order completion, contributing to the overall decline in device revenue during the three and nine months ended September 30, 2025, respectively.

Supplies Revenue

Supplies revenue is related to the sale of supplies, primarily electrodes and batteries, for our electrotherapy products. Supplies revenue decreased $28.8 million or 82% to $6.3 million for the three months ended September 30, 2025, from $35.1 million for the same period in 2024.

Supplies revenue decreased $69.3 million or 68% to $32.2 million for the nine months ended September 30, 2025, from $101.6 million for the same period in 2024.

Approximately $13.3 million and $32.9 million of the decrease in supplies revenue during the three and nine months ended September 30, 2025, respectively, is related to the Company’s temporary Tricare payment suspension, revenue reduction related to payments received from Tricare during the suspension period, payer policy changes, payer prepayment reviews, along with a revised resupply process that is resulting in fewer shipments and bills submitted. Additionally, workforce reductions in the first and second quarters of 2025 have negatively impacted device orders and corresponding supplies, new patients onboarding and order completion, contributing to the overall decline in supplies revenue during the three and nine months ended September 30, 2025, respectively.

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Operating Expenses

Cost of Revenue – Devices and Supplies

Cost of revenue – devices and supplies consist primarily of device and supply costs, facilities, operations labor and overhead, shipping and depreciation. Cost of revenue for the three months ended September 30, 2025 decreased $4.9 million or 48% to $5.3 million from $10.2 million from the same period in 2024. As a percentage of revenue, cost of revenue – devices and supplies increased to 40% from 20% for the three months ended September 30, 2025 and 2024, respectively.

Cost of revenue for the nine months ended September 30, 2025 decreased $8.7 million or 30% to $20.7 million from $29.4 million for the same period in 2024. As a percentage of revenue, cost of revenue – device and supplies increased to 33% from 20% for the nine months ended September 30, 2025 and 2024.

The decrease in cost of revenue – device and supplies in the three and nine months ended September 30, 2025 and 2024 is due to lower orders and fewer products shipped. The increase in cost of revenue – devices and supplies as percentage of revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 is due to the decrease in revenue, decreased revenue related to the Tricare revenue adjustment which had no corresponding decrease to cost of revenue, and less volume in our production facility to absorb fixed costs.

Sales and Marketing Expense

Sales and marketing expenses primarily consist of employee-related costs, including commissions and other direct costs associated with these personnel including travel expenses, marketing, and related expenses.

Sales and marketing expense for the three months ended September 30, 2025 decreased $11.2 million or 54% to $9.5 million from $20.7 million for the same period in 2024. The decrease in sales and marketing expense is primarily due to lower employee compensation expenses related to decreased headcount in the sales force. As a percentage of revenue, sales and marketing expense increased to 71% from 41% for the three months ended September 30, 2025 and 2024, respectively, primarily due to the decreased revenue during the period.

Sales and marketing expense for the nine months ended September 30, 2025 decreased $28.1 million or 42% to $39.2 million from $67.3 million for the same period in 2024. The decrease in sales and marketing expense is primarily due to lower employee compensation expenses related to decreased headcount in the sales force and associated expenses. As a percentage of revenue, sales and marketing expense increased to 63% from 46% for the nine months ended September 30, 2025 and 2024, respectively. The increase as a percentage of revenue is primarily due to the decrease in revenue during the period.

General and Administrative Expense

General and administrative expenses primarily consist of employee-related costs, and other direct costs associated with these personnel including facilities, travel expenses, professional fees, depreciation, and amortization. General and administrative expense for the three months ended September 30, 2025 decreased $3.5 million or 23% to $11.8 million from $15.3 million for the same period in 2024. As a percentage of revenue, general and administrative expense increased to 88% for the three months ended September 30, 2025 from 31% for the same period in 2024.

General and administrative expense for the nine months ended September 30, 2025 decreased $4.2 million or 10% to $38.9 million from $43.1 million for the same period in 2024. As a percentage of revenue, general and administrative expense increased to 63% for the nine months ended September 30, 2025 from 29% for the same period in 2024.

The decrease in general and administrative expense for the three and nine months ended September 30, 2025 compared to the same periods in 2024 are primarily due to lower headcount within the Company’s billing and corporate departments, partially offset by increased professional fees. The increase as a percentage of revenue is primarily due to decreased revenue.

Impairment charges

During the quarter ended September 30, 2025, the Company identified indicators of impairment related to its ZMS subsidiary following management’s decision to discontinue internal commercialization efforts for NiCO and to pursue strategic commercial partnership opportunities for those technologies. As a result, the Company recorded non-cash impairment charges totaling $30.7 million during the three months ending September 30, 2025. The impairment primarily related to the write-down of goodwill and

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intangible assets recognized in connection with the December 2021 acquisition of Kestrel Labs, Inc., and other long-term assets held at ZMS. Management does not expect further material impairment related to the ZMS business at this time.

Income Taxes

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 4% and (5)% the three and nine months ended September 30, 2025, respectively. Discrete items adjusted, primarily related to the valuation allowance charge, were ($2.0) million and $3.5 million, for the three and nine months ended September 30, 2025, respectively. Discrete items adjusted, primarily related to the tax impact of restricted stock vestings, were $0.2 million for both the three and nine months ended September 30, 2024. The Company recorded income tax expense of $1.9 million and $3.6 million for the three and nine months ended September 30, 2025, respectively. For the three and nine months ended September 30, 2024, the Company recorded an income tax expense of approximately $0.8 million and $1.2 million, respectively.

Liquidity and Capital Resources

Our future results are subject to substantial risks and uncertainties. We have historically financed operations through cash flows from operations, debt and equity transactions. At September 30, 2025, our principal source of liquidity was $13.3 million in cash and cash equivalents and $6.7 million in net accounts receivable, less amounts sold under our Secured Borrowing (see Note 9). See “— Liquidity and Going Concern” below.

Net cash used in operating activities for the nine months ended September 30, 2025 was $23.0 million compared with net cash provided by operating activities of $10.3 million for the nine months ended September 30, 2024. The decrease in our cash provided by operating activities for the nine months ended September 30, 2025 was primarily due to lower net income as result of the Company’s temporary Tricare payment suspension and reduced revenue, partially offset by a decrease in accounts receivable for the nine months ended September 30, 2025 compared to the same period in 2024.

Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $0.2 million and $0.4 million, respectively. Cash used in investing activities for the nine months ended September 30, 2025 and 2024 was primarily related to the purchases of property and equipment related to ZMS.

Net cash used in financing activities for the nine months ended September 30, 2025 was $3.1 million compared with net cash used in financing activities of $16.9 million for the same period in 2024. Net cash used in financing activities for the nine months ended September 30, 2025 was primarily due to purchases of $4.9 million in treasury stock. Net cash used in financing activities for the nine months ended September 30, 2024 was primarily due to purchases of treasury stock of $15.6 million.

During the third quarter of 2025, the Company entered into a receivable funding program designed to enhance liquidity by monetizing a portion of its medical lien receivables. The program provides cash advances of approximately 21% of billed charges, with the funding counterparty retaining a share of future collections based on the timing of recovery. Because the arrangement includes limited recourse and offset provisions, it is accounted for as a financing rather than a sale of receivables.

At September 30, 2025, total advances outstanding under the arrangement were approximately $2.2 million, secured by receivables with aggregate billed charges of about $10.3 million. A significant portion of the receivables had already been written down through the Company’s accounts receivable valuation process prior to funding. The effective cost of the arrangement will vary with the timing of collections, and longer collection cycles are expected to result in higher implied financing rates.

Liquidity and Going Concern

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The Company has incurred net losses of $73.3 million for the nine months ended September 30, 2025 compared with net income of $3.6 million during the same period in 2024. As of September 30, 2025, the Company had $13.3 million in cash and cash equivalents and $6.7 million in accounts receivable. As discussed herein, the Company is also subject to an ongoing suspension of payments from Tricare and is subject to various refund demands from payers, which may materially impact the Company’s liquidity. During 2025 and through the third quarter of 2025, changes to certain payers’ claim submission and review practices have resulted in unanticipated denials and payment delays, which has negatively impacted our revenue. Based on the Company's cash and cash equivalents as of September 30, 2025 and the Company's current and forecasted level of operations and cash flows, management believes that our existing cash resources are not sufficient to support planned operations for at least the next year from the issuance of the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

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The Company’s ability to continue as a going concern is dependent upon its ability to obtain the consent from creditors or terminating, amending or refinancing the agreements governing the Company’s $60.0 million outstanding 2023 Convertible Senior Notes (as defined herein) which mature on May 15, 2026 and to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, and to generate profitable operations in the future (such alternatives, a “Restructuring”). The Company has retained Province, LLC as its financial advisor to assist the Company in preparing for, analyzing, evaluating and arranging discussions with its creditors, including the holders of our 2023 Convertible Senior Notes, and other stakeholders to explore several alternatives for a Restructuring. The Company has recently begun discussions with certain creditors holding the 2023 Convertible Senior Notes and anticipates beginning discussions with other stakeholders and investors with respect to a Restructuring. While certain discussions are ongoing, the Company has not reached an agreement with respect to such a Restructuring and there can be no assurances that an agreement with respect to a Restructuring will be reached in the future.

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The Company has elected to not make an interest payment in the amount of approximately $1.5 million (the “Interest Payment”) due on November 15, 2025 (and payable on November 17, 2025, as November 15, 2025 is a non-business day) with respect to the 2023 Convertible Senior Notes. Under the indenture governing 2023 Convertible Senior Notes, the Company has a 30-day grace period to make the Interest Payment before such non-payment constitutes an “event of default” with respect to the 2023 Convertible Senior Notes. The Company may elect to make the Interest Payment on or prior to the expiration of the 30-day grace period. However, the failure of the Company to make the Interest Payment on or prior to the expiration of the 30-day grace period would result in an event of default with respect to the 2023 Convertible Senior Notes which may result in the acceleration of the 2023 Convertible Senior Notes and the Company filing for bankruptcy.

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The Company’s unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern. The Company is subject to various demands from payers, the amount cannot be quantified and the outcome is unknown.

There can be no assurance that we will be able to amend or refinance the 2023 Convertible Senior Notes and if we are able to, that the terms will be acceptable or advantageous to us or that we will satisfactorily resolve the payment suspension and refund demands referenced above. If we are unable to redeem or refinance the 2023 Convertible Senior Notes and/or resolve the payment suspension and refund demands referenced above, this could have a material adverse impact on our operations. In addition, there can be no assurance that the Company will be able to raise additional capital to fund operations with terms acceptable to the Company, or at all. Because certain elements of management’s plans to mitigate the conditions that raised substantial doubt about the Company’s ability to continue as a going concern are outside of the Company’s control, including the ability to raise capital through an equity or other financing, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors. As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date the unaudited condensed consolidated financial statements are issued.

If we are not successful in improving our liquidity position, we may be required to significantly scale back our operations or pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders, or file for bankruptcy or cease operations altogether. Any of these events could have a material adverse effect on our business, operating results and prospects.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

Please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” located within our 2024 Form 10-K and Note 2 to the unaudited condensed consolidated financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as amended, or the Exchange Act, as of September 30, 2025. Based on management’s review, with participation of our Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the quarter ended September 30, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness in internal control over financial reporting as described below.

Material Weakness in Internal Control

As previously disclosed, we identified a material weakness related to Information Technology General Controls (“ITGCs”) that were not designed and operating effectively to ensure IT program and data changes affecting the Company’s financial IT applications and underlying accounting records, are identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate. Business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted.

The material weakness identified above did not result in any material misstatements in our financial statements or disclosures, and there were no changes to previously released financial results. Our management concluded that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.

The effectiveness of our internal control over financial reporting as of December 31, 2024, was audited by Marcum LLP as stated in their report, which is included in Item 8 of the Annual Report on Form 10-K.

Remediation Plan

Our management is committed to maintaining a strong internal control environment. In response to the identified material weakness above, management will take comprehensive actions to remediate the material weakness in internal control over financial reporting. The Company has implemented new systems for enterprise resource planning (ERP), accounts payable processing, and warehouse management, and intends to develop a remediation plan to address the remaining material weakness described above.

Changes in Internal Control over Financial Reporting

Except for the actions referred to above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

​

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company intends to vigorously defend itself in the following matters; however, we cannot predict the outcome or impact. We are unable to reasonably estimate the possible loss or range of loss, if any, associated with the following claims, unless noted.

Putative Class Action Complaint

​

On March 20, 2025, a putative Zynex shareholder filed a securities fraud class action against the Company, its Chairman and former CEO Thomas Sandgaard, and former CFO Daniel Moorhead, in the U.S. District Court for the District of Colorado, captioned Tuncel v. Zynex Inc. et al., No. 25-cv-913 (the “Securities Class Action”). The complaint alleges that Zynex and the individual defendants made materially misleading statements that failed to disclose the Company’s participation in an alleged oversupply scheme that artificially inflated the Company’s revenue and exposed the Company to adverse consequences, including scrutiny from insurers, including Tricare, removal from insurance networks and government penalties. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Securities and Exchange Commission Rule 10b-5 thereunder. The complaint seeks class certification and unspecified damages.

​

Shareholder Derivative Complaints

​

On July 9, 2025, a shareholder derivative action was filed against the Company’s Chairman and former CEO Thomas Sandgaard, the Company’s former CFO, Daniel Moorhead, and outside directors Joshua Disbrow, Michael Cress, and Barry Michaels, in the U.S. District Court for the District of Colorado, captioned Ayers v. Sandgaard et al, No. 25-cv-2117. The Company is a nominal defendant. The complaint alleges breaches of fiduciary duties, the aiding and abetting thereof, waste of corporate assets, unjust enrichment, gross mismanagement, and/or the aiding and abetting thereof, as well as violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks damages, including restitution and disgorgement of all profits – including benefits, performance-based, valuation-based, other compensation, and insider proceeds – obtained by the individual defendants due to their allegedly wrongful conduct and breach of fiduciary duties, and an order directing defendants to take necessary steps to reform the Company’s corporate governance and internal control procedures.

​

On August 12, 2025, a second shareholder derivative action was filed against the same set of defendants, in the U.S. District Court for the District of Colorado, captioned Graziano v. Sandgaard et al, No. 25-cv-2499, alleging substantially the same claims as in the Ayers action and seeking similar damages. On October 3, 2025, plaintiff filed an unopposed motion to consolidate the Graziano action with the Ayers action. Also on October 3, 2025, plaintiff and the Company filed an agreed motion to temporarily stay the derivative actions in favor of the pending Securities Class Action.

​

On November 14, 2025, a third shareholder derivative action was filed against the same set of defendants, in the District Court for the County of Arapahoe, Colorado, captioned Arbel v. Sandgaard et al, No. 2025CV032793, alleging substantially the same claims as in the Ayers and Graziano actions described above and seeking similar damages.

​

Allstate

​

On September 4, 2025, Allstate Insurance Company and affiliated entities filed an action against Thomas Sandgaard, Dan Moorhead, and Anna Lucsok, former officers of the Company, and the Company, in the U.S. District Court for the Eastern District of New York, No. 25-cv-4915, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Colorado Organized Crime Control Act, fraud, and unjust enrichment. On October 8, 2025, an amended complaint was filed. The amended complaint references allegations made in the shareholder class action complaint and the shareholder derivative complaints. The amended complaint seeks declaratory relief, injunctive relief, actual damages, treble damages, punitive damages, and costs.

​

Hunt

​

On April 25, 2025, Christian Hunt filed an action against Thomas Sandgaard, Chairman and former CEO of the Company, the Company and its affiliates, in the Colorado District Court, Denver County, No. 2024CV31257, alleging breach of fiduciary duties, fraudulent nondisclosure and concealment, and false representation relating to Mr. Hunt’s alleged $20,000 investment in OR Surgical, Inc. in 1999. OR Surgical, Inc. is an entity unaffiliated with the Company that was dissolved in 2008. The complaint seeks compensatory and punitive damages and costs. The parties have reached a settlement in principle regarding this dispute and are currently working to finalize the terms.

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​

Maloney

​

On September 15, 2025, Raelynn Maloney filed an action against Thomas Sandgaard, Chairman and former CEO of the Company, the Company and its affiliates, and unaffiliated entities Sandgaard Capital, LLC and Sandgaard Holdings LLC, in the Colorado District Court, Douglas County, No. 2025CV30988, alleging unjust enrichment, false representation, and negligent and intentional infliction of emotional distress. The complaint seeks judgment against defendants, damages, and costs.

​

Heid – (already accrued)

​

On March 4, 2023, a class action complaint was filed against the Company in the California Superior Court, San Diego County, captioned Heid v. Zynex Medical, Inc., No. 37-2023-11832, alleging violations of the California Invasion of Privacy Act (“CIPA”), California Unfair Competition Law, invasion of privacy, intrusion upon seclusion, and seeking class certification. The complaint seeks class certification, damages and restitution, statutory damages, and costs. The Company has reached a preliminary settlement with the plantiffs that is pending court approval. The Company recorded an accrual related to this matter which is included in accounts payable and accrued expenses in the condensed consolidated balance sheets as of September 30, 2025.

​

Ramirez

​

On May 30, 2024, a class action complaint was filed against the Company in the California Superior Court, Santa Clara County, captioned Melissa Ramirez v. Zynex Medical, Inc., No. 24CV440194, alleging failure to pay earned wages, timely pay wages, reimburse for business expenses, and derivative claims under California law and seeking to pursue claims under the California Private Attorneys General Act (“PAGA”). The complaint seeks class certification, unpaid wages, statutory penalties, compensatory, consequential, general, and special damages, and costs.

​

Other Legal Proceedings

​

Other than disclosed above, we are not a party to any other material pending legal proceedings.

​

ITEM 1A. RISK FACTORS

The imposition of new duties, tariffs, trade barriers and retaliatory countermeasures implemented by the U.S. and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations.

​

The implementation of significant changes to U.S. trade policies, sanctions, legislation, treaties and tariffs, including, but not limited to, significant new tariffs on goods imported into the U.S., have introduced uncertainty to our business and will increase the cost of our manufactured products and components sourced outside of the U.S., which will result in an increase to our cost of revenue and a reduction in our gross margin. In response, China announced additional tariffs on U.S. goods and new export control restrictions. The imposition of additional tariffs or other trade barriers by countries outside of the U.S. may increase our costs in these markets, and to the extent these increased costs will impact our cost of revenue and our gross margin.

​

The extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. U.S. and foreign policy changes and uncertainty about such changes has resulted in increased market volatility and currency exchange rate fluctuations.

​

As a result of these dynamics, we may find it difficult to predict the impact to our business of these and future changes to the trading relationships between the U.S. or other countries or the impact on our business of new laws or regulations adopted by the U.S. or other countries.

​

The Tricare Payment Suspension has, and may in the future, have a material adverse impact on our revenues and profits and overall liquidity position. 

​

During the quarter ended March 31, 2025 the Company was notified that the Defense Health Agency (“DHA”) was temporarily suspending Tricare claims processing and payments to the Company pursuant to 32 C.F.R. § 199.9(h). DHA informed the Company

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that the suspension is based on allegations that the Company misrepresented claims for supplies and equipment billed to the Tricare program, that the Company misrepresented diagnoses to justify a requirement for TENS units, and that the Company lacked physician orders supporting the medical need for the replenishment of TENS supplies.

​

In April 2025, the Company met with DHA to present evidence in opposition to the temporary Tricare payment suspension. In June 2025, DHA notified the Company that the Tricare payment suspension will continue pending completion of DHA’s investigation. Tricare historically represented approximately 20-25% of the Company’s annual revenue and cash collections from Tricare were $48.8 million and $38.8 million during the years ended December 31, 2024 and 2023, respectively. Because DHA informed the Company that any participation agreement with its patients remains in full force and effect, the Company continues to support both existing patients and new patients as prescriptions are received.

​

During the nine months ended September 30, 2025, the Company received $2.2 million in payments from TriWest Healthcare Alliance (“TriWest”), the contractor for the Tricare West Region, and $0.6 million in payments from Humana Military, the contractor for the Tricare East Region. TriWest and Humana Military have sought repayment of these amounts. The Company reduced its revenue by $2.8 million during the quarter ended September 30, 2025 related to Tricare payments it received from TriWest and Humana Military during the time period of the Company’s Tricare payment suspension. During the nine months ended September 30, 2025, as a result of the adjustment, the Company did not recognize any revenue from Tricare, all other fulfillments and related revenue have been fully reserved and we have no reported receivables related to Tricare as of September 30, 2025.

​

There can be no assurance that we will satisfactorily resolve the Tricare payment suspension, which has resulted and may in the future result in a material adverse impact on our revenues and profits and overall liquidity position.

​

Our management has concluded that we may not be able to continue as a going concern if we are not able to raise sufficient capital, reduce expenditures and/or execute on its business plan.

We have incurred net losses of $73.3 million for the nine months ended September 30, 2025 compared with net income of $3.6 million during the same period in 2024. As of September 30, 2025, we had $13.3 million in cash and cash equivalents and $6.7 million in accounts receivable. The Company is also subject to an ongoing suspension of payments from Tricare and is subject to various refund demands from payers, which may materially impact the Company’s liquidity. During 2025 and through the third quarter of 2025, changes to certain payers’ claim submission and review practices have resulted in unanticipated denials and payment delays, which has negatively impacted our revenue. Based on the Company's cash and cash equivalents as of September 30, 2025, the Company's current and forecasted level of operations and cash flows, the Company’s ability to continue as a going concern is dependent upon its ability to obtain the consent from creditors or terminating, amending or refinancing the agreements governing the Company’s 2023 Convertible Senior Notes and to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, and to generate profitable operations in the future (such alternatives, a “Restructuring”).

​

The Company has retained Province, LLC as its financial advisor to assist the Company in preparing for, analyzing, evaluating and arranging discussions with its creditors, including the holders of our 2023 Convertible Senior Notes, and other stakeholders to explore several alternatives for a Restructuring. The Company has recently begun discussions with certain creditors holding the 2023 Convertible Senior Notes and anticipates beginning discussions with other stakeholders and investors with respect to a Restructuring. While certain discussions are ongoing, the Company has not reached an agreement with respect to such a Restructuring and there can be no assurances that an agreement with respect to a Restructuring will be reached in the future.

​

The Company has elected to not make an interest payment in the amount of approximately $1.5 million (the “Interest Payment”) due on November 15, 2025 (and payable on November 17, 2025, as November 15, 2025 is a non-business day) with respect to the 2023 Convertible Senior Notes. Under the indenture governing 2023 Convertible Senior Notes, the Company has a 30-day grace period to make the Interest Payment before such non-payment constitutes an “event of default” with respect to the 2023 Convertible Senior Notes. The Company may elect to make the Interest Payment on or prior to the expiration of the 30-day grace period. However, the failure of the Company to make the Interest Payment on or prior to the expiration of the 30-day grace period would result in an event of default with respect to the 2023 Convertible Senior Notes which may result in the acceleration of the 2023 Convertible Senior Notes and the Company filing for bankruptcy.

​

Our unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

​

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There can be no assurance that we will be able to amend or refinance the 2023 Convertible Senior Notes and if we are able to, that the terms will be acceptable or advantageous to us or that we will satisfactorily resolve the Tricare payment suspension and payer refund demands. If we are unable to redeem or refinance the 2023 Convertible Senior Notes and/or resolve the payment suspension and refund demands it could have a material adverse impact on our operations. In addition, there can be no assurance that the Company will be able to raise additional capital to fund operations with terms acceptable to the Company, or at all. Because certain elements of management’s plans to mitigate the conditions that raised substantial doubt about the Company’s ability to continue as a going concern are outside of the Company’s control, including the ability to raise capital through an equity or other financing, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors. As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date the unaudited condensed consolidated financial statements are issued.

If we are not successful in improving our liquidity position, we may be required to significantly delay, scale back, or discontinue the development or commercialization of our product candidates, pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders, or file for bankruptcy or cease operations altogether. Any of these events could have a material adverse effect on our business, operating results and prospects.

​

We may incur substantial costs and receive adverse outcomes in litigation, regulatory investigations, and other legal matters.

​

Our business, financial condition and results of operations could be materially adversely affected by unfavorable results in pending or future litigation, regulatory investigations, and other legal matters. In March 2025, a securities fraud class action was filed against us, our Chairman and former Chief Executive Officer, Thomas Sandgaard, and Chief Financial Officer, Daniel Moorhead, which alleges in part that we and the individual defendants made materially misleading statements that failed to disclose the Company’s participation in an alleged oversupply scheme that artificially inflated its revenue and exposed the Company to adverse consequences, including scrutiny from insurers, including Tricare, removal from insurance networks and government penalties. The complaint alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In addition, on July 9, 2025 and August 12 2025, shareholder derivatives actions were filed against Messrs. Sandgaard, and Moorhead and our directors alleging breaches of fiduciary duties, and/or the aiding and abetting thereof, waste of corporate assets, unjust enrichment, gross mismanagement, as well as violations of Section 14(a) and 20(a) of the Securities Exchange Act of 1934. We intend to vigorously defend the claims made in these lawsuits; however, the ultimate resolution cannot be predicted, and the claims raised in these lawsuits may result in further legal matters or actions against us, including, but not limited to, government enforcement actions or additional private litigation.

​

Also, beginning in June 2025, we received a series of voluntary (non-subpoena) requests for documents from the SEC in connection with an investigation that it is conducting into the Company to determine whether violations of federal securities laws have occurred. We are cooperating with the SEC in its investigation, and are, on a rolling basis, providing all responsive documents to the requests. We cannot predict the outcome of any particular proceeding, or whether the SEC investigation will be resolved favorably or ultimately result in charges or material damages, fines or other penalties, enforcement actions, or civil proceedings against us or members of our senior management.

​

We are also currently responding to investigative demands, subpoenas and formal document and records requests from various government organizations, including the Department of Justice, Department of Health and Human Services-Office of Inspector General, California Department of Insurance, and Colorado Attorney General. To date, we continue to cooperate with these requests and submit responsive documents. These investigations and requests can lead to government actions, resulting in the assessment of damages, civil or criminal fines or penalties, or other sanctions, including restrictions or changes in the way we conduct business, loss of licensure, or exclusion from participation in Medicare, Medicaid, or other government programs. Additionally, as a result of these investigations, we may face litigation or have to agree to settlements that can include monetary penalties and onerous compliance and reporting requirements as part of a consent decree or Corporate Integrity Agreement.

​

Litigation matters and regulatory investigations, regardless of their merits or their ultimate outcomes, are costly, divert management’s attention and may materially adversely affect our reputation and demand for our products. We cannot predict with certainty the eventual outcome of pending or future legal matters. An adverse outcome of litigation or legal matters could result in us being responsible for significant damages. Any of these negative effects resulting from litigation, regulatory investigations and other legal matters could materially adversely affect our business, financial condition and results of operations.

​

Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results and adversely affect our financial condition.

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​

We are subject to taxes by the U.S. federal, state, and local tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions. We record tax expense based on our estimates of future payments, which may include reserves for uncertain tax positions in multiple tax jurisdictions, and valuation allowances related to certain net deferred tax assets. At any one time, many tax years may be subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. We expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur and exposures are evaluated. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

​

● changes in the valuation of our deferred tax assets and liabilities;

● expected timing and amount of the release of any tax valuation allowance;

● changes in tax laws, regulations, or interpretations thereof; or

● future earnings being lower than anticipated in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates.

​

In addition, our effective tax rate in a given financial statement period may be materially impacted by a variety of factors including but not limited to changes in the mix and level of earnings, varying tax rates in the different jurisdictions in which we operate, fluctuations in the valuation allowance, or by changes to existing accounting rules or regulations. Further, tax legislation may be enacted in the future which could negatively impact our current or future tax structure and effective tax rates. We may be subject to audits of our income, sales, and other transaction taxes by U.S. federal, state, and local taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

​

Our strategic decision to discontinue internal commercialization efforts and pursue strategic commercial partnership opportunities for NiCO has, and may in the future, impact results of operations and growth strategy.

​

In December 2021, ZMS acquired Kestrel Labs Inc. and completed its integration into the ZMS organization in early 2022. Through ZMS, we have been developing noninvasive, laser-based patient-monitoring technologies, including NiCO acquired in our acquisition of Kestrel. On October 1, 2025, we announced our determination that we would no longer independently commercialize NiCO and would instead pursue commercialization through one or more strategic partners. In connection with this determination, we implemented a workforce reduction within ZMS, eliminating all positions and ceased independent operations. As a result, we recorded non-cash impairment charges totaling $30.7 million during the three months ending September 30, 2025 primarily related to the write-down of goodwill and intangible assets recognized in connection with our acquisition of Kestrel Labs, Inc., and other long-term assets held at ZMS.

​

Further, there can be no assurance that we will be able to find a third-party commercialization partner for these technologies or enter into a strategic partnership on acceptable terms to us or at all. We may face significant competition in seeking appropriate strategic partners, and the negotiation process may be time-consuming and complex. In addition, we may not be successful in our efforts to establish a strategic partnership or other collaboration or license arrangements for NiCO because such technologies may be deemed to be at too early of a stage of development or regulatory approval for collaborative effort, and third parties may not view such technologies as having the requisite potential to demonstrate safety and efficacy to obtain marketing approval and economic viability.

​

Even if we are successful in establishing a strategic partnership, licensing agreement or other collaboration, the terms that we agree upon may not be as favorable as expected and we cannot be certain that we will achieve expected revenue or strategic benefit that justifies such an arrangement. In addition, we may not be able to maintain such strategic partnership or realize the expected benefits thereof if, for example, development or regulatory approval of a device is delayed or sales of an approved device are disappointing. Any delay in entering into strategic partnership agreements could delay the development and commercialization of these devices and reduce their competitiveness even if they reach the market. Each of the foregoing factors could adversely affect our business, financial condition and results of operations.

​

Other than disclosed above, there have been no other material changes from the risk factors previously disclosed in our 2024 Form 10-K.

​

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

​

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

​

ITEM 4. MINE SAFETY DISCLOSURES

N/A

​

ITEM 5. OTHER INFORMATION

(a)

​

Non-Payment of Interest

​

The Company has elected to not make an interest payment in the amount of approximately $1.5 million (the “Interest Payment”) due on November 15, 2025 (and payable on November 17, 2025, as November 15, 2025 is a non-business day) with respect to the Company’s 5.00% Convertible Senior Notes due May 15, 2026 (the “2023 Convertible Senior Notes”). Under the indenture governing 2023 Convertible Senior Notes, the Company has a 30-day grace period to make the Interest Payment before such non-payment constitutes an “event of default” with respect to the 2023 Convertible Senior Notes. The Company may elect to make the Interest Payment on or prior to the expiration of the 30-day grace period. However, the failure of the Company to make the Interest Payment on or prior to the expiration of the 30-day grace period would result in an event of default with respect to the 2023 Convertible Senior Notes which may result in the acceleration of the 2023 Convertible Senior Notes and the Company filing for bankruptcy.

Director Appointment and Formation of Special Committee

​

On November 11, 2025, the Board approved an increase in the number of directors constituting the full Board from six to seven and elected Paul S. Aronzon to fill the vacancy created by such increase, effective November 11, 2025, to serve for a term expiring at the Company’s 2026 annual meeting of stockholders and until his successor is duly elected and qualified or until the earlier of his resignation or removal. Effective November 11, 2025, Mr. Aronzon was also appointed to serve as the Chair of the newly constituted Special Committee of the Board, discussed further below.

​

Mr. Aronzon, age 70, has served as the managing member of PSA Consulting, LLC, a consulting firm, since 2019. Previously, Mr. Aronzon served as co-managing partner at the Los Angeles office of Milbank, Tweed, Hadley & McCloy LLP’s (“Milbank”), an international law firm, and co-leader of Milbank’s global financial restructuring group from 2008 to 2019, and executive vice president and managing director at Imperial Capital LLC, an investment banking firm, from 2006 to 2008. With more than 40 years of experience, he has worked as a leading consultant in corporate restructurings and reorganizations, with extensive experience in advising companies, boards of directors and advisory committees to boards of directors, independent directors, sponsors, debtors, creditors, debt acquirers, assets or companies and other parties in cases of reorganization and recapitalization operations. He received a Bachelor of Arts in Political Science from California State University at Northridge and a Juris Doctor from Southwestern University School of Law.

​

The selection of Mr. Aronzon to serve as a director of the Company was not pursuant to any arrangement or understanding with any other person. There are no family relationships between Mr. Aronzon and any director or executive officer of the Company and there are no transactions between Mr. Aronzon and the Company that would be required to be reported under Item 404(a) of Regulation S-K.

​

In connection with his appointment to the Board, Mr. Aronzon entered into a director agreement with the Company, dated as of November 11, 2025, pursuant to which the Company agreed to pay Mr. Aronzon (a) $45,000 per month, (b) a per diem amount of $5,000 under certain specified limited, non-ordinary course circumstances, and (c) reimbursement of all reasonable and documented expenses incurred in connection with his service to the Company as a director, until the termination of his service as a director. For the duration of Mr. Aronzon’s service on the Special Committee, the foregoing compensatory arrangement for Mr. Aronzon will replace any compensation for which a non-employee director would otherwise be eligible under the Company’s currently applicable non-employee director compensation plan.

​

Mr. Aronzon has also entered into the Company’s standard form indemnification agreement in the form filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on July 2, 2025.

​

On November 11, 2025, the Board established the Special Committee, with delegated authority from the Board to, among other things, review, evaluate, negotiate, and, if appropriate, approve and implement on behalf of the Board and the Company, any strategic restructuring and/or financing transactions available to the Company. Effective November 11, 2025, Bret Wise was also appointed as a

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member of the Special Committee. The Company has not yet identified a strategic transaction and there can be no assurance any such transaction will result from the Special Committee's evaluation of strategic alternatives, or the timing, terms and conditions of any such transaction.

(c)

​

Rule 10b5-1 Trading Arrangement

​

During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

​

​

ITEM 6. EXHIBITS

​

Exhibit Number		Description
3.1	​	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on October 7, 2008)
​	​	​
3.2	​	Amended and Restated Bylaws (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on October 7, 2008)
​	​	​
10.1*	​	Employment Agreement, dated August 18, 2025, between Zynex, Inc. and Vikram Singh Bajaj
​	​	​
10.2*	​	Employment Agreement, dated August 18, 2025, between Zynex, Inc. and John T. Bibb
​	​	​
10.3*	​	Independent Contractor Agreement, dated September 1, 2025, between Zynex, Inc. and Daniel Moorhead
​	​	​
10.4*	​	Separation Agreement, dated October 27, 2025, between Zynex Medical, Inc. and Anna Lucsok
​	​	​
31.1*		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
​	​	​
31.2*		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
​	​	​
32.1**		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
​	​	​
32.2**		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
​	​	​
101.INS*		Inline XBRL Instance Document
​	​	​
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
​	​	​
101.CAL*		Inline XBRL Taxonomy Calculation Linkbase Document
​	​	​
101.LAB *		Inline XBRL Taxonomy Label Linkbase Document
​	​	​
101.PRE *		Inline XBRL Presentation Linkbase Document
​	​	​
101.DEF *		Inline XBRL Taxonomy Extension Definition Linkbase Document
​	​	​
104	​	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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*Filed herewith

**Furnished herewith

​

The agreements filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements themselves, and you should not rely on them other than for that purpose. In particular, any representations and warranties made by us in these agreements were made solely within the specific context of the relevant agreement and may not describe the actual state of affairs as of the date they were made or at any other time.

​

​

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

		ZYNEX, INC.
​	​	​
	​	/s/ Vikram Bajaj
Dated: November 17, 2025	​	Vikram Bajaj
	​	Chief Financial Officer
	​	(Principal Financial and Accounting Officer)

​

​

​

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