ZYXI - Zynex: Letter Indicates UnitedHealthcare Is Terminating Contract - An Undisclosed Loss Accounting For 50%+ EBITDA
- We uncover strong evidence that UnitedHealthcare is removing Zynex from its network effective February 15, a seemingly material event undisclosed to investors.
- Zynex will lose its largest payor and only national commercial network if so, a critical relationship that represented high margin revenue worth 50-100% of EBITDA.
- UHC’s aggressive decision signals major billing abuses and, if correct, a high probability it pursues Zynex for overpayments (potential liability of ~$40m), introducing profound downside for the stock.
- Considering the damage to cash flow, profitability, and impact on 2022 earnings which will likely fall short of consensus estimates – we believe the stock is uninvestable.
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Zynex: Letter Indicates UnitedHealthcare Is Terminating Contract - An Undisclosed Loss Accounting For 50%+ EBITDA