ZYXI - Zynex: Turnaround Nears Inevitable End - Largest Payor Cuts TENS Reimbursement May Eliminate Earnings
- We identify UnitedHealthcare as Zynex’s largest payor and estimate it was paying ~7x more per order relative to other commercial insurers, artificially sustaining the weak underlying business.
- We find UHC recently changed its TENS coverage policy which may lower its payments to Zynex by 80% - equivalent to 40-100% of 2021 EBITDA.
- Reimbursement pressure is evident in accounts receivable which ballooned in Q3, outpacing revenue growth. Days sales outstanding rose to highest level in over 4 years.
- Zynex could be forced to modify its revenue recognition and write-down accounts receivable to adjust for the new policy.
- At the same time, Zynex’s CEO will likely continue to tap his 43% stake to meet substantial personal cash flow needs.
For further details see:
Zynex: Turnaround Nears Inevitable End - Largest Payor Cuts TENS Reimbursement, May Eliminate Earnings