ZYNEX INC Files for Chapter 11 Bankruptcy: Key Investor Information

This summary provides essential details regarding ZYNEX INC's recent Chapter 11 bankruptcy filing and its implications for investors. ZYNEX, a medical device company specializing in pain management and neurological monitoring products, has entered a critical phase of financial restructuring.

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The Big News: Chapter 11 Filing and Delisting

ZYNEX INC, along with some of its subsidiaries, filed for Chapter 11 bankruptcy protection on December 15, 2023. This action signals severe financial distress, as the company could not meet its debt obligations. It now seeks court supervision to reorganize its business and finances, aiming to avoid liquidation.

Consequently, on December 24, 2023, Nasdaq delisted ZYNEX's common stock (ticker ZYXI). Trading was suspended, and the stock then moved to the Pink Limited Market, a less regulated over-the-counter market, where it now trades as ZYXIQ.

To maintain essential operations during this complex process, ZYNEX secured $22.3 million in "debtor-in-possession" (DIP) financing on December 17, 2023. This emergency loan is vital for liquidity, paying critical vendors, and funding ongoing operations, typically taking priority over many existing debts. ZYNEX amended the loan's terms on January 14, 2024. On that same date, the company also filed its initial plan for reorganization, detailing its strategy to emerge from bankruptcy.

Why Did This Happen? Understanding the Context

Companies typically file for Chapter 11 when facing overwhelming financial difficulties, such as heavy debt, ongoing operational losses, or severe cash shortages that prevent them from paying creditors. While the initial filing doesn't fully detail the reasons for ZYNEX's distress, it's clear the company needed legal protection to restructure its finances. Chapter 11 allows ZYNEX to continue operating while negotiating with creditors and developing a court-approved plan to restructure its debts and business. Nasdaq delisting is a standard consequence, as major exchanges enforce strict listing requirements that bankruptcy usually violates.

What This Means for Everyone Involved

This development carries significant implications for ZYNEX INC and its stakeholders.

• For the Company: ZYNEX now operates under immense financial pressure and strict court supervision. Its future remains highly uncertain, and the company must undertake significant operational and financial restructuring to survive. The $22.3 million DIP financing provides a lifeline, but it comes with stringent conditions and ZYNEX must repay it.
• For Investors: This is a critical warning. ZYNEX has explicitly stated that "its equity holders will experience a significant loss on their investment if the Restructuring Transactions are implemented." This often means existing common shareholders could lose most, if not all, of their investment, as reorganization plans frequently propose canceling existing equity shares. The move to the Pink Limited Market reduces transparency, lowers reporting requirements, and significantly decreases liquidity, making the stock harder to trade and inherently riskier.
• For Customers: While not directly detailed, a company in bankruptcy may face disruptions in service, product availability, or long-term support, leading to uncertainty.
• For Employees: Bankruptcy often leads to job cuts, changes in benefits, and general job insecurity as the company seeks to reduce costs and streamline operations.
• For Lenders and Suppliers: Existing creditors will face significant impacts, as their claims become subject to the bankruptcy process and the reorganization plan's terms. This may involve renegotiating or reducing debt obligations. The new DIP financing typically holds a super-priority claim over many other debts.

What Happens Next? The Road Ahead

ZYNEX INC is now navigating a complex legal and financial process. The bankruptcy court will oversee the reorganization plan, which typically involves:

• Debt Restructuring: Negotiating with creditors to reduce or reschedule debt payments.
• Potential Asset Sales: Selling non-core assets to generate cash.
• New Capital Infusion: Seeking a "Plan Sponsor" or new investors to inject fresh capital into the reorganized company.
• Operational Changes: Implementing cost-cutting measures and strategic shifts.

The company will continue to operate, but every major decision, from asset sales to executive compensation, will require court approval. The Nasdaq delisting will become final, and ZYNEX will also proceed with deregistering its common stock with the SEC. This means ZYNEX will no longer need to file regular, detailed financial reports with the SEC, significantly reducing public information and transparency for investors. The entire Chapter 11 process, from filing to plan confirmation, can span several months to over a year, depending on its complexity and creditor agreements.

Practical Takeaways for Investors

For investors, here are the practical takeaways:

• Extreme Risk of Total Loss: The company itself issues a stark warning that existing shareholders will likely face "significant loss" and potentially have their common stock canceled. Do not underestimate this serious warning.
• Highly Speculative Trading: Trading ZYXIQ on the Pink Limited Market is now extremely risky and speculative. The stock price may not reflect any fundamental value, and volatility can be extreme.
• Reduced Transparency: With the move to the Pink Limited Market and eventual SEC deregistration, public information about ZYNEX's financial health and operations will become significantly scarcer.
• Do Your Homework: If you own shares or are considering them, you must read the official court filings and the company's reorganization plan. Do not rely on rumors or forum chatter. The company's official bankruptcy information website is https://dm.epiq11.com/Zynex.
• Consider Your Strategy: Given the high likelihood of losing your investment, you need to seriously evaluate if holding these shares aligns with your risk tolerance and investment goals. A quick rebound or recovery for common shareholders is highly improbable in Chapter 11 scenarios.

Key Takeaway: ZYNEX INC is in Chapter 11 bankruptcy, a dire situation where the company explicitly warns existing shareholders to expect significant, if not total, loss of their investment. Trading this stock is now extremely risky, speculative, and lacks transparency.