BASIS OF PRESENTATION	6 Months Ended
Jun. 30, 2025
BASIS OF PRESENTATION
BASIS OF PRESENTATION	(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 June 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). ZMS has developed a fluid monitoring system which received approval by the U.S. Food and Drug Administration (“FDA”) during 2020 and is still awaiting CE Marking in Europe. ZMS has achieved no revenues to date. The Company’s inactive subsidiaries include Zynex Europe, Zynex NeuroDiagnostics, Inc. (“ZND,” a wholly-owned Colorado corporation) and Pharmazy, Inc. (“Pharmazy”, a wholly-owned Colorado Corporation). The Company’s compounding pharmacy operated as a division of ZMI dba as Pharmazy through January 2016. In December 2021, the Company acquired 100% of Kestrel Labs, Inc. (“Kestrel”), a laser-based, noninvasive patient monitoring technology company. Kestrel’s laser-based products include the NiCO^TM CO-Oximeter, a multi-parameter pulse oximeter, and HemeOx^TM, a total hemoglobin oximeter that enables continuous arterial blood monitoring. During the three months ended June 30, 2025, the Company submitted a 510(k) application to the FDA for its NiCO™ device. HemeOx has yet to be presented to the FDA for market clearance. All activities related to Kestrel flow through the ZMS subsidiary. Nature of Business 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 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 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 six months ended June 30, 2025 and 2024, the Company generated all of its revenue in North America from sales and supplies of its devices to patients and healthcare providers. Recent Events During the quarter ended March 31, 2025 the Company was notified that Tricare, one of our government payers, was temporarily suspending payments as they review prior claims. The suspension of Tricare payments is based on allegations of misrepresentation of supplies and equipment billed to the Tricare program and misrepresentation of diagnoses to justify a requirement for a TENS unit or lack of physician orders regarding the replenishment of supplies. We held a meeting with Tricare in April 2025 and believe we had good evidence to get payments reinstated. In June 2025, the Company was notified by Tricare that the temporary payment suspension will continue while they conduct further review. 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. As directed by Tricare, the Company continues to support both existing patients and new patients as prescriptions are received. The Company recognized revenue of approximately $0.6 million and $2.8 million for the three and six month periods ended June 30, 2025, respectively, related to Tricare which equaled the cash received from Tricare during the period. All other fulfillments and related revenue during the three and six months ended June 30, 2025 have been fully reserved and we have no receivables related to Tricare as of June 30, 2025. The Company maintains a constraint for third- party payer refund requests but does not have a specific constraint related to prior Tricare payments as Tricare has not submitted a refund request. Due to the temporary payment suspension and lack of clarity on the timing of a resolution, the Company restructured its workforce to align with its current revenue. During the quarter ended March 31, 2025 the Company decreased overall workforce by approximately 15%, which primarily affected employees in corporate departments. This staff reduction along with other expense reductions made during the second half of 2024 and the first quarter of 2025 will result in savings of approximately $35.0 million annually. On June 18, 2025, the Company executed an additional reduction in its workforce affecting 86 corporate roles, or 14% of the Company’s total number of employees. The Company anticipates this reduction will result in approximately $5.0 million in annualized cost savings. Affected employees were informed of the reduction in work force on or about June 18, 2025. The total costs and cash expenditures for the reduction in workforce are estimated to be approximately $0.2 million, substantially all of which are related to employee severance costs and were recognized in the second quarter of 2025. The Company expects to pay the majority of these reduction in workforce costs in the second and third quarter of 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, the Company received a second voluntary request for documents from the SEC requesting additional documents and confirming that the basis of the request is to determine whether any violations of federal securities laws have occurred. The Company is cooperating with the SEC in its investigation, and is, on a rolling basis, providing all responsive documents to both requests. Liquidity and Going Concern The Company has incurred net losses of $30.4 million for the six months ended June 30, 2025 compared with net income of $1.2 million during the same period in 2024. For the six months ended June 30, 2025, the Company had $17.5 in cash and cash equivalents and $10.3 million in accounts receivable. Based on the Company's cash and cash equivalents as of June 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 $60.0 million outstanding convertible senior notes which mature on May 15, 2026 or 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. The Company’s 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. There can be no assurance that we will be able to amend or refinance the convertible senior notes and if we are able to, that the terms will be acceptable or advantageous to us. If we are unable to redeem or refinance the convertible senior notes 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 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. 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. 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 Annual Report on Form 10-K for the year ended December 31, 2024. 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 June 30, 2025 and the results of its operations and its cash flows for the periods presented. The results of operations for the six months ended June 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.

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2025

(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 June 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). ZMS has developed a fluid monitoring system which received approval by the U.S. Food and Drug Administration (“FDA”) during 2020 and is still awaiting CE Marking in Europe. ZMS has achieved no revenues to date. The Company’s inactive subsidiaries include Zynex Europe, Zynex NeuroDiagnostics, Inc. (“ZND,” a wholly-owned Colorado corporation) and Pharmazy, Inc. (“Pharmazy”, a wholly-owned Colorado Corporation). The Company’s compounding pharmacy operated as a division of ZMI dba as Pharmazy through January 2016.

In December 2021, the Company acquired 100% of Kestrel Labs, Inc. (“Kestrel”), a laser-based, noninvasive patient monitoring technology company. Kestrel’s laser-based products include the NiCO^TM CO-Oximeter, a multi-parameter pulse oximeter, and HemeOx^TM, a total hemoglobin oximeter that enables continuous arterial blood monitoring. During the three months ended June 30, 2025, the Company submitted a 510(k) application to the FDA for its NiCO™ device. HemeOx has yet to be presented to the FDA for market clearance. All activities related to Kestrel flow through the ZMS subsidiary.

Nature of Business

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

Recent Events

During the quarter ended March 31, 2025 the Company was notified that Tricare, one of our government payers, was temporarily suspending payments as they review prior claims. The suspension of Tricare payments is based on allegations of misrepresentation of supplies and equipment billed to the Tricare program and misrepresentation of diagnoses to justify a requirement for a TENS unit or lack of physician orders regarding the replenishment of supplies.

We held a meeting with Tricare in April 2025 and believe we had good evidence to get payments reinstated. In June 2025, the Company was notified by Tricare that the temporary payment suspension will continue while they conduct further review. 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. As directed by Tricare, the Company continues to support both existing patients and new patients as prescriptions are received. The Company recognized revenue of approximately $0.6 million and $2.8 million for the three and six month periods ended June 30, 2025, respectively, related to Tricare which equaled the cash received from Tricare during the period. All other fulfillments and related revenue during the three and six months ended June 30, 2025 have been fully reserved and we have no receivables related to Tricare as of June 30, 2025. The Company maintains a constraint for third-

party payer refund requests but does not have a specific constraint related to prior Tricare payments as Tricare has not submitted a refund request.

Due to the temporary payment suspension and lack of clarity on the timing of a resolution, the Company restructured its workforce to align with its current revenue. During the quarter ended March 31, 2025 the Company decreased overall workforce by approximately 15%, which primarily affected employees in corporate departments. This staff reduction along with other expense reductions made during the second half of 2024 and the first quarter of 2025 will result in savings of approximately $35.0 million annually.

On June 18, 2025, the Company executed an additional reduction in its workforce affecting 86 corporate roles, or 14% of the Company’s total number of employees. The Company anticipates this reduction will result in approximately $5.0 million in annualized cost savings. Affected employees were informed of the reduction in work force on or about June 18, 2025. The total costs and cash expenditures for the reduction in workforce are estimated to be approximately $0.2 million, substantially all of which are related to employee severance costs and were recognized in the second quarter of 2025. The Company expects to pay the majority of these reduction in workforce costs in the second and third quarter of 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, the Company received a second voluntary request for documents from the SEC requesting additional documents and confirming that the basis of the request is to determine whether any violations of federal securities laws have occurred. The Company is cooperating with the SEC in its investigation, and is, on a rolling basis, providing all responsive documents to both requests.

Liquidity and Going Concern

The Company has incurred net losses of $30.4 million for the six months ended June 30, 2025 compared with net income of $1.2 million during the same period in 2024. For the six months ended June 30, 2025, the Company had $17.5 in cash and cash equivalents and $10.3 million in accounts receivable. Based on the Company's cash and cash equivalents as of June 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 $60.0 million outstanding convertible senior notes which mature on May 15, 2026 or 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. The Company’s 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.

There can be no assurance that we will be able to amend or refinance the convertible senior notes and if we are able to, that the terms will be acceptable or advantageous to us. If we are unable to redeem or refinance the convertible senior notes 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 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.

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. 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 Annual Report on Form 10-K for the year ended December 31, 2024.

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 June 30, 2025 and the results of its operations and its cash flows for the periods presented. The results of operations for the six months ended June 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.