About Zynex

Zynex, Inc. provides medical devices, which include electrotherapy and pain management products. As of December 31, 2022, the company’s active subsidiaries were Zynex Medical, Inc. (‘ZMI,’ a wholly-owned Colorado corporation) and Zynex Monitoring Solutions, Inc. (‘ZMS,’ a wholly-owned Colorado corporation). The company’s compounding pharmacy operated as a division of ZMI dba as Pharmazy through January 2016. Subsidiaries Zynex Medical, Inc. (ZMI) ZMI 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 of the company’s medical devices are designed to be patient friendly and designed for home use. The company’s devices are small, portable, battery operated and include an electrical pulse generator, which is connected to the body via electrodes. All of the company’s medical devices are marketed in the U.S. and are subject to FDA regulation and clearance. The company’s 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. ZMI distributes complementary products, such as lumbar support, cervical traction, knee bracing, and hot/cold therapy. These complement the company’s pain management products and are critical for physicians and therapists. These products require a prescription and are covered by most insurance plans and Medicare. ZMI designs, manufactures, and markets the NeuroMove product. The NeuroMove contains electromyography and electric stimulation technology that is primarily used for stroke, spinal cord and traumatic brain injury rehabilitation (‘SCI’), by reaching parts of the brain to re-connect with muscles, also known as neuroplasticity. The NeuroMove product is primarily marketed to medical clinics. ZMI also designs, manufactures, and markets the InWave product, an in-home electrical stimulation device used to treat female urinary incontinence. The device requires a prescription and is covered by most insurance plans and Medicare. Zynex Monitoring Solutions (ZMS) ZMS develops and markets medical devices for non-invasive patient monitoring beginning with the company’s Zynex Monitoring System. The monitor is a non-invasive medical device for monitoring relative fluid volume changes used in operating and recovery rooms to detect fluid loss during surgery and internal bleeding during recovery. The CM-1500 received 510(k) clearance from the FDA in February 2020. The Zynex Monitoring System has been tested in several Institutional Review Board (‘IRB’) approved clinical studies, both in well-controlled healthy volunteer settings, as well as in clinical use environments. In 2022, the clinical trials were expanded to include the next generation CM-1600. Enrollment was completed in the apheresis blood donation study with Vitalant Research Institute (the research arm of Vitalant, the nation’s largest independent, nonprofit blood services provider) to track changes in the device’s patented Relative Index (‘RI’) during apheresis blood donation procedures. Multiple studies were also completed at Yale University where volunteer study subjects underwent simulated hemorrhage using a lower body negative pressure chamber while wearing the device. Finally, enrollment was initiated in a large-scale multi-site study to measure the sensitivity and specificity of the CM-1600 at detecting minor blood loss, which is anticipated to finish recruitment and data collection in the first half of 2023. The company has built a number of commercial devices in pilot-production and continue to refine the algorithms for the patented Relative Index. The company has received two U.S. utility patents for this unique application, the first in the fourth quarter of 2018 and the second in the first quarter of 2021, and this product could serve a unmet need in the market for safer surgeries and safer monitoring of patients during recovery. In addition to FDA clearance, the company is pursuing European Union (‘EU’) Certificate European (‘CE’) Marking. CE Marking is a certification that a product meets the standards established by the 27 nations of the EU and qualifies for sale in the EU and 4-nation European Free Trade Association. In early 2022, the integration of Kestrel and their pulse oximetry products into the ZMS organization was completed. Pulse oximetry is a commonly used noninvasive monitoring method for estimation of oxygen saturation in arterial blood. The inaccuracies of traditional Light Emitting Diode (‘LED’)-based pulse oximeters have recently been highlighted specific to skin pigmentation bias and the inability to accurately measure blood oxygen levels in the presence of other conditions, such as in cases of carbon monoxide poisoning or methemoglobinemia. ZMS’s investigational laser-based products are designed to address these inaccuracies and include the novel NiCO CO-Oximeter, and HemeOx, a total hemoglobin oximeter that is designed to enable continuous noninvasive arterial blood monitoring. NiCO is anticipated to be submitted to the FDA for clearance in the third quarter of 2023. ZMS’ products are still in development. In addition to the fluid volume monitor, ZMS filed for a provisional patent for a non-invasive sepsis monitor in December 2020 and an updated utility patent filed in December 2021. Sales and Growth Strategies The company focuses on expanding its sales force to address an untapped market for electrotherapy products for pain management. As of December 31, 2022, the company had approximately 450 field sales representatives on staff or in the hiring process. Distribution and Revenue Streams Substantially all of the company’s revenue is generated through the company’s ZMI subsidiary from its electrotherapy products. The company sells through a direct sales force in United States. The company’s field sales representatives are engaged to sell in predefined geographic markets and are compensated with a base salary and incentives based on the type of product sold and insurance. The company’s efforts had been focused on the United States market as of December 31, 2022. The company’s revenue is derived from several sources, including patients with insurance plans held by commercial health insurance carriers or government payers who pay on behalf of their insureds. The remaining portion of revenue is primarily received from workers’ compensation claims and attorneys representing injured patients, hospitals, clinics, and private-pay individuals. Electrodes and batteries are consumable items that are considered an integral part of the company’s products. Private Labeled Distributed Products In addition to the company’s own products, the company distributes, through its sales force, a number of private labeled supplies and complementary products from other domestic manufacturers. These products generally include patient consumables, such as electrodes and batteries plus cervical traction, lumbar support, knee braces and hot/cold therapy. Products The company markets and sells Zynex-manufactured products and distributes complementary products and private labeled supplies for Zynex products, as indicated below: Zynex Medical Products: Include NexWave, a dual channel, multi-modality IFC, TENS, NMES device; NeuroMove, an electromyography triggered electrical stimulation device; InWave, an electrical stimulation for the treatment of female urinary incontinence; and E-Wave, a NMES device. Private Labeled Supplies: Include electrodes, which are supplies, re-usable for the delivery of electrical current to the body; and batteries, which are supplies for use in electrotherapy products. Distributed Complementary Products: Include Comfortrac/Saunders for cervical traction; JetStream for hot/cold therapy; LSO Back Braces for lumbar support; and knee braces for knee support. Zynex Monitoring Solutions Products (Products in Development, Not Yet Available for Sale): Include CM-1500, a Zynex fluid monitoring system; CM-1600, a Zynex wireless fluid monitoring system – submitted to the FDA, December 2021, not yet FDA cleared; NiCO CO-Oximeter, a laser-based noninvasive co-oximeter (not yet FDA cleared); and HemeOx tHb Oximeter, a laser-based total hemoglobin pulse oximeter (not yet FDA cleared). Product Uses Pain Management and Control The company’s primary electrotherapy device, the NexWave, has received FDA 510(k) clearance. The NexWave is a digital IFC, TENS and NMES device that delivers pain-alleviating electrotherapy. Stroke and Spinal Cord Injury Rehabilitation The company’s proprietary NeuroMove product is a Class II medical device that has been cleared by the FDA for stroke rehabilitation. Stroke and SCI usually affect a survivor’s mobility, functionality, speech, and memory, and the NeuroMove is designed to help the survivor regain movement and functionality. Hemodynamic Monitoring The Zynex Fluid Monitoring System CM-1500 and the Zynex Wireless Fluid Monitoring System CM-1600 are noninvasive monitoring devices designed to measure relative changes in fluid volume in adult patients. Fluid status is determined using Zynex’s proprietary algorithm and expressed as the patented Relative Index, a simple value designed to accurately trend patient vital signs and alert clinicians for early intervention. The CM-1500 was cleared by the FDA in 2020. The CM-1600 has been submitted to the FDA and is pending clearance. Pulse Oximetry Monitoring The NiCO Noninvasive CO-Oximeter, the first laser-based photoplethysmographic patient monitoring technology, is designed to noninvasively measure and monitor four crucial species of hemoglobin with unprecedented accuracy. The HemeOx Total Hemoglobin Pulse Oximeter is designed to noninvasively measure total hemoglobin and oxygen saturation, two critical parameters that typically require invasive arterial blood sampling for measurement. Total hemoglobin is a very commonly ordered blood test in healthcare, and HemeOx measures it with the continuous and noninvasive ease of a pulse oximeter at the patient bedside. The NiCO Noninvasive CO-Oximeter and the HemeOx Total Hemoglobin Pulse Oximeter have not yet been cleared by the FDA. Markets Zynex Medical (ZMI) As of December 31, 2022, the majority of the company’s revenue had been generated by its ZMI electrotherapy products and private labeled supplies. The company is uniquely positioned to help reduce the amount of opioids prescribed for the treatment of chronic and acute pain symptoms. The company also distributes complementary products, such as JetStream Hot/Cold Therapy, Knee bracing, LSO Back bracing and Comfortrac and Saunders cervical and lumbar traction units, all products targeted at treating acute, as well as chronic pain with minimal side-effects. Zynex Monitoring Solutions (ZMS) ZMS is focused on developing products within the non-invasive multi-parameter patient-monitoring marketplace. ZMS is focusing on its fluid monitoring system, the sepsis monitor and the pulse oximetry products acquired in its acquisition of Kestrel. Intellectual Property Zynex has received two U.S. utility patents, as well as a utility patent in Europe, for the company’s fluid monitoring system. Zynex is trademarked in the U.S. Government Regulation All of the company’s ZMI products are classified as Class II (Medium Risk) devices by the FDA, and clinical studies with the company’s products are considered to be NSR (Non-Significant Risk Studies). The company’s business is regulated by the FDA, and all products typically require 510(k) market clearance before they can be put into commercial distribution. The company is also regulated by the FDA’s Quality System Regulation (QSR), which sets forth current Good Manufacturing Practice (GMP) requirements for devices. Zynex has received ISO13485: 2016 certification for its compliance with international standards in quality management systems for design, development, manufacturing and distribution of medical devices. In addition, most healthcare providers who are expected to prescribe the company’s products and from whom the company obtains patient health information, are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology and Clinical Health Act, or HIPAA. Research and Development During 2022, the company incurred approximately $7.1 million in expenses related to the company’s ZMS operations. Competition The company’s principal competitors include International Rehabilitative Sciences, Inc. d/b/a RS Medical, EMSI, and H-Wave. History Zynex, Inc., a Nevada corporation, was founded in 1996 by Thomas Sandgaard.