Aging Populations And FDA Moves Will Unlock New Markets

Key Takeaways

• Rising demand for non-opioid pain management and regulatory trends support Zynex's expansion into new markets and product lines.
  
• Operational restructuring and leadership changes are positioned to improve margins, cash flow, and drive future earnings growth.
  
• Ongoing payment suspensions, regulatory uncertainties, executive turnover, and cost-cutting measures threaten revenue recovery, innovation, and long-term competitive positioning.

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 positioned to benefit from increasing demand for non-opioid pain management solutions due to aging populations and the rising prevalence of chronic pain conditions, which should drive higher top-line revenue growth over time.
  
• Regulatory trends and policy focus on equity in patient outcomes-exemplified by FDA scrutiny of pulse oximeter accuracy and bias-favor the approval and adoption of Zynex's NiCO pulse oximeter, supporting both new product revenue streams and market share expansion as home-based device adoption accelerates.
  
• The upcoming launch of the NiCO laser pulse oximeter, which addresses known clinical and regulatory challenges with current products on the market, is a potential catalyst for significant revenue and gross margin growth in the hospital monitoring segment, once FDA clearance is received (expected within 6 months).
  
• The recent corporate restructuring and cost-reduction initiatives-including streamlining the sales force, right-sizing staff, outsourcing, and optimizing the payer mix-are expected to result in a $40M annualized reduction in costs, supporting improved net margins and positive cash flow.
  
• Leadership changes with the appointment of a new CEO experienced in medical technology, along with diversification into additional products and customer segments, are likely to further support earnings growth, improved operating leverage, and a return to a strong growth trajectory after near-term headwinds resolve.

Zynex Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Zynex's revenue will decrease by 5.9% annually over the next 3 years.
• Analysts are not forecasting that Zynex will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Zynex's profit margin will increase from -19.8% to the average US Medical Equipment industry of 12.4% in 3 years.
• If Zynex's profit margin were to converge on the industry average, you could expect earnings to reach $15.0 million (and earnings per share of $0.58) by about August 2028, up from $-28.7 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 6.8x on those 2028 earnings, up from -1.6x today. This future PE is lower than the current PE for the US Medical Equipment industry at 27.8x.
• Analysts expect the number of shares outstanding to decline by 4.86% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.04%, as per the Simply Wall St company report.

Zynex Future Earnings Per Share Growth

Risks

• The ongoing TRICARE payment suspension has resulted in a significant decline in revenue and remains unresolved, with no visibility on when payments will resume or if lost revenue can be recaptured, increasing long-term uncertainties around payer risk and reimbursement reliability, directly impacting top-line revenue and cash flows.
  
• The company reported a drastic revenue decline year-over-year (Q2 2025: $22.3 million vs. Q2 2024: $49.9 million) and a net loss ($20 million in Q2 2025), driven by sales force reductions and supply shipment adjustments, raising concerns about Zynex's ability to restore previous revenue levels and recover net margins and overall earnings.
  
• Heavy reliance on regulatory outcomes for new product launches (such as the NiCO pulse oximeter) introduces significant risk; any delay, additional FDA requests, negative guidance, or denial can push back commercialization, disrupt growth projections, and delay revenue streams from new markets.
  
• Frequent executive turnover-including the immediate need for a new CFO and onboarding of a new CEO-raises organizational execution risk, as interim leadership could lead to instability, impact strategic direction, and create lack of visibility in forward financial guidance, which may weigh on earnings recovery.
  
• Cost containment actions (headcount reductions, outsourced teams, supply chain shifts) and suspension of detailed guidance could inhibit future investment in innovation and sales infrastructure, potentially impeding Zynex's ability to compete with industry leaders amid rising competition and technological change, negatively impacting future topline growth and long-term profitability.

Valuation

• The analysts have a consensus price target of $2.85 for Zynex based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $3.7, and the most bearish reporting a price target of just $2.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $120.8 million, earnings will come to $15.0 million, and it would be trading on a PE ratio of 6.8x, assuming you use a discount rate of 11.0%.
• Given the current share price of $1.56, the analyst price target of $2.85 is 45.3% 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.