Stock Collapsed 51.3% After Largest Customer Halted Payments
Zynex's market value began to unravel on March 11, 2025, when the company disclosed a significant revenue shortfall. It revealed that Tricare, the U.S. military's health insurance program and its largest customer accounting for 20-25% of revenue, had temporarily suspended all payments to review prior claims. The market reaction was severe and immediate. On March 12, 2025, Zynex's stock price cratered by 51.3%, or $3.59 per share, closing at $3.41 on unusually high trading volume. This event marked the first public signal of the underlying issues that would ultimately lead to the company's downfall.
Firm Forfeited $85M Over Fraudulent Billing Allegations
The lawsuit filed against Zynex alleges that the company's revenue growth was built on a deceptive and predatory practice. The complaint details a systemic "oversupplying" scheme where Zynex shipped patients excessive medical supplies, such as up to 128 electrode pairs per month, far exceeding medical necessity to inflate billings. This practice drew scrutiny from multiple payors. Insurer Travelers had already filed a suit in August 2023 seeking over $23 million in damages for fraudulent claims. The scheme culminated in Zynex agreeing to forfeit over $85 million to resolve federal fraud allegations. Following these revelations, the company was delisted from the Nasdaq and filed for Chapter 11 bankruptcy, wiping out nearly all value for common stockholders.
The allegations suggest that Zynex’s purported growth was not the result of legitimate demand, but was instead driven by a predatory ‘oversupplying’ scheme that targeted patients and defrauded payors.
— Reed Kathrein, Partner, Hagens Berman
Former CEO Indicted as Investors Face April 21 Deadline
The fallout from the alleged fraud extended to Zynex's executive leadership. On January 21, 2026, former CEO Thomas Sandgaard and former COO Anna Lucsok were indicted for health care and securities fraud, leading to their immediate removal from the company. As the legal consequences mount for the company and its former executives, law firms Hagens Berman and Faruqi & Faruqi are reminding investors of their rights. A securities class-action lawsuit has been filed, and shareholders who purchased Zynex securities between February 25, 2021, and December 15, 2025, have until April 21, 2026, to petition the court to be appointed as a lead plaintiff.
