Non-opioid Therapies Will Capture Demand From An Aging Population

Key Takeaways

• Accelerating adoption of drug-free pain management and new product launches position the company for sustained growth and improved margins amid societal and regulatory shifts.
  
• Expanded sales efforts and strategic cost reductions are expected to diversify revenue streams and restore profitability, enhancing resilience against payer-specific risks.
  
• Heavy reliance on traditional devices and third-party reimbursement exposes Zynex to revenue risks from regulatory, competitive, and pricing pressures that threaten long-term profitability.

Catalysts

Designs, manufactures, and markets medical devices to treat chronic and acute pain, and activate and exercise muscles for rehabilitative purposes with electrical stimulation.

• The company is poised to benefit from the increasing preference among healthcare providers and patients for non-opioid, drug-free pain management solutions, as Zynex’s core pain therapy devices directly address regulatory pressures and societal shifts away from prescription opioids, supporting above-market revenue growth as adoption accelerates and driving long-term earnings potential.
  
• Approval and commercialization of the NiCO pulse oximeter, which offers objective advantages over existing devices (unbiased readings across all skin types and detection of multiple hemoglobin species), positions Zynex to capture share in a multi-billion dollar hospital and home monitoring market, delivering a new, high-margin revenue stream starting in 2026 and supporting gross margin expansion.
  
• A rapidly aging global population with a rising burden of chronic diseases such as arthritis and musculoskeletal disorders will continue to enlarge the addressable market for Zynex’s electrotherapy and monitoring solutions, underpinning sustained long-term revenue and EBITDA growth as healthcare systems require scalable, home-based rehabilitation offerings.
  
• Ongoing reallocation and expansion of the direct sales force—focused on targeting non-TRICARE segments, new insurers, and underpenetrated geographies—are expected to drive increased product adoption and recurring supply revenues regardless of individual payer outcomes, accelerating total revenue while creating a more diversified, resilient earnings base.
  
• Strategic restructuring to streamline costs, including a 15 percent reduction in staff and targeted productivity initiatives, is anticipated to yield $35 million in annual savings, bolstering net margins and enabling the company to return to sustainable profitability even prior to full recovery of suspended TRICARE payments.

Zynex Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Zynex compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Zynex's revenue will grow by 2.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -4.3% today to 7.5% in 3 years time.
• The bullish analysts expect earnings to reach $13.9 million (and earnings per share of $0.44) by about May 2028, up from $-7.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 19.4x on those 2028 earnings, up from -10.1x today. This future PE is lower than the current PE for the US Medical Equipment industry at 33.4x.
• Analysts expect the number of shares outstanding to decline by 4.74% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.08%, as per the Simply Wall St company report.

Zynex Future Earnings Per Share Growth

Risks

• Zynex’s heavy dependence on third-party reimbursement and government payers like TRICARE exposes it to heightened risk from future restrictive coverage decisions or reimbursement suspensions, which could cause recurring volatility in revenue and threats to long-term revenue growth.
  
• Intensifying payer scrutiny and broader trends in healthcare cost containment may lead to further pressure on medical device reimbursement rates, which can both limit Zynex’s addressable market and compress net margins over time.
  
• Zynex’s limited product diversification, with the majority of revenue still tied to traditional electrotherapy and prescription-based devices, exposes the company to outsized risk if technology shifts, regulatory scrutiny, or commoditization erode its main business line and impact future earnings.
  
• Increased competition from low-cost international suppliers and a broader industry trend toward commoditization of electrical stimulation devices could exert downward price pressure, which would negatively impact Zynex’s profit margins.
  
• Regulatory hurdles—including stricter FDA compliance for devices like its forthcoming NiCO pulse oximeter and ongoing payer audits—could slow product launches, increase legal and R&D expenses, and ultimately weigh on both net margins and earnings predictability in the long term.

Valuation

• The assumed bullish price target for Zynex is $8.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Zynex's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $4.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $184.8 million, earnings will come to $13.9 million, and it would be trading on a PE ratio of 19.4x, assuming you use a discount rate of 9.1%.
  
• Given the current share price of $2.48, the bullish analyst price target of $8.0 is 69.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.