8-K: Zynex Files for Chapter 11, Secures DIP Financing

Zynex, Inc. and its subsidiaries have filed for Chapter 11 bankruptcy, secured $22.3 million in debtor-in-possession financing, and face delisting from Nasdaq.

Summary

• Zynex, Inc. and certain subsidiaries filed voluntary petitions for Chapter 11 bankruptcy on December 15, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas.
• The company entered into a restructuring support agreement with certain holders of its 5.00% Convertible Senior Notes due 2026 and DIP Lenders.
• A $22.3 million delayed draw senior secured debtor-in-possession (DIP) term loan facility was approved on an interim basis on December 17, 2025, with the initial draw of $10.15 million received on December 18, 2025.
• The DIP facility includes three draws: $10.15 million (initial), $5.0 million (second), and $7.15 million (third), subject to Chapter 11 case milestones.
• The DIP loan bears interest at 10.0% per annum, paid-in-kind and capitalized monthly, and includes various fees such as an agent fee ($25,000), upfront fee ($669,000), exit fee ($669,000), and a backstop fee ($5,000,000).
• The DIP facility has a minimum return on invested capital of 2.00x.
• Nasdaq notified Zynex on December 17, 2025, of its determination to delist the company's common stock due to the Chapter 11 cases, with trading suspension effective December 24, 2025.
• Zynex does not intend to appeal the delisting and anticipates its common stock will commence trading on one of the OTC Markets Group markets.
• The company cautions that trading in its securities during Chapter 11 is highly speculative and expects equity holders to experience a significant loss on their investment.

Sentiment

Score: 1

Explanation: The company has filed for Chapter 11 bankruptcy, is being delisted from Nasdaq, and explicitly warns equity holders of a 'significant loss on their investment.' This indicates an extremely negative outlook for current shareholders.

Positives

• Secured $22.3 million in debtor-in-possession (DIP) financing to fund working capital needs and Chapter 11 related expenses, ensuring continued operations during the bankruptcy process.
• The DIP facility provides a clear path for restructuring and a potential sale of assets, with specific milestones outlined.
• The company does not intend to appeal the Nasdaq delisting, indicating a pragmatic approach to its current situation and a focus on the restructuring process.

Negatives

• Filed for Chapter 11 bankruptcy, indicating severe financial distress and inability to meet obligations.
• Nasdaq has determined to delist the company's common stock, leading to a loss of exchange listing and potential reduced liquidity.
• Equity holders are explicitly warned to expect a 'significant loss on their investment' if the restructuring transactions are implemented.
• The DIP facility carries a high interest rate of 10.0% per annum, paid-in-kind, and includes substantial fees (upfront, exit, backstop), increasing the debt burden.
• The CEO, Steven Dyson, is an 'Affiliated Lender' in the DIP facility, which could raise corporate governance concerns regarding potential conflicts of interest.

Risks

• Uncertainties and risks relating to obtaining Court approval for motions in the Chapter 11 Cases and confirmation of the chapter 11 plan.
• Potential adverse effects of the Chapter 11 Cases on the company and its various constituents, including liquidity.
• Impact of Court rulings in the Chapter 11 Cases and the ultimate outcome of the proceedings.
• The length of time the company will operate under the Chapter 11 Cases and attendant restrictions on pursuing business strategies.
• Risks associated with third-party motions in the Chapter 11 Cases.
• Likelihood of the cancellation of the company's common stock in the Chapter 11 Cases.
• Uncertainty regarding the company's ability to retain key personnel and management.
• Uncertainty and continuing risks associated with the company's ability to achieve its goals and continue as a going concern.
• Trading in the company's securities during Chapter 11 is highly speculative and may bear little relationship to actual recovery for holders.
• Potential for undisclosed private litigation or threatened litigation against the company or its assets.

Future Outlook

The company anticipates that its common stock will commence trading on one of the markets operated by OTC Markets Group following its delisting from Nasdaq. The company expects its equity holders to experience a significant loss on their investment if the restructuring transactions are implemented. The restructuring process involves a potential sale of all or substantially all assets or equity interests, subject to Bankruptcy Court approval and specific milestones.

Management Comments

• John Bibb, Chief Legal Officer, signed the 8-K filing on behalf of Zynex, Inc.
• Vikram Bajaj, Chief Financial Officer, signed the Senior Secured Debtor-In-Possession Credit Agreement on behalf of Zynex, Inc. and its guarantor subsidiaries.

Industry Context

The filing indicates a company undergoing significant financial distress, leading to Chapter 11 bankruptcy. This situation is typically a result of operational challenges, market shifts, or unsustainable debt levels. The move to OTC markets is common for delisted companies, often resulting in reduced liquidity and investor interest compared to major exchanges like Nasdaq. The involvement of existing noteholders in the DIP financing suggests a 'creditor-in-possession' type of restructuring, where existing creditors take a more active role in the company's future.

Comparison to Industry Standards

• NA The company's current situation of Chapter 11 bankruptcy and delisting places it outside typical industry performance benchmarks. Its focus is on restructuring and survival rather than competitive performance against peers.
• The terms of the DIP financing, including a 10% PIK interest rate and significant fees, reflect the high-risk nature of lending to a company in bankruptcy, which is standard for distressed financing but significantly higher than typical corporate borrowing rates for healthy companies.

Corporate Governance

Legal Proceedings

• Voluntary petitions filed under Chapter 11 of the U.S. Bankruptcy Code on December 15, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas.
• The company is working to pursue settlement negotiations with the Department of Justice and the Securities Exchange Commission regarding claims and causes of action against the Loan Parties.

Related Party Transactions

• Steven Dyson, the company's chief executive officer (or an entity controlled by Mr. Dyson), is an 'Affiliated Lender' and part of the DIP Lenders providing the $22.3 million facility. This constitutes a related party transaction.

Stakeholder Impact

• Shareholders: Expected to experience a significant loss on their investment, and common stock will be delisted from Nasdaq, moving to OTC markets, likely resulting in reduced liquidity and value.
• Creditors (Convertible Noteholders): Certain noteholders are participating as Consenting Noteholders in the restructuring support agreement and as DIP Lenders, indicating a shift in their position and potential for recovery through the restructuring.
• Employees: Uncertainty regarding retention of key personnel and management is noted as a risk, implying potential job insecurity or changes.
• Customers/Suppliers: The company aims to fund working capital needs and expenditures, suggesting an intent to continue operations, but the bankruptcy process could still impact relationships and continuity of service/supply.

Next Steps

• Obtain Court approval for motions in the Chapter 11 Cases and confirmation of the chapter 11 plan.
• Deliver list and copies of all Operating Permits and identification of Permit Approval Requirements (by 10 Business Days post-Petition Date).
• Deliver detailed workplan for Permit Approval Requirements (by 25 Business Days post-Petition Date).
• Bankruptcy Court to enter Final Order, Bidding Procedures Order, and KEIP/KERP Order (by 30 days post-Petition Date).
• File motion seeking approval of a Disclosure Statement and solicitation procedures for the plan of reorganization (by 30 days post-Petition Date).
• Bankruptcy Court to enter order approving Disclosure Statement and solicitation procedures (by 60 days post-Petition Date).
• Bid Deadline for asset sale to expire (by 75 days post-Petition Date).
• Auction for assets/equity to occur, if any (by 90 days post-Petition Date).
• Bankruptcy Court to enter Confirmation Order approving Plan of Reorganization, Sale, or Sale Order (by 95 days post-Petition Date).
• Consummate the Sale of all or substantially all assets/equity (by 105 days post-Petition Date).
• Work diligently to pursue settlement negotiations with the Department of Justice and Securities Exchange Commission.

Key Dates

Recommendation

The company has filed for Chapter 11 bankruptcy, indicating severe financial distress and a high probability of equity value impairment. The explicit warning that 'equity holders will experience a significant loss on their investment' combined with the Nasdaq delisting and move to OTC markets, which typically results in reduced liquidity and investor interest, makes the stock a strong sell. The future of the company's equity is highly uncertain, with a high likelihood of being wiped out or significantly diluted in the restructuring process.

Keywords

Zynex, Chapter 11, Bankruptcy, DIP Financing, Debtor-in-Possession, Nasdaq Delisting, Restructuring, Corporate Reorganization, Convertible Notes, OTC Markets, Financial Distress, SEC Filing