Financial Data and Key Metrics Changes - The company has raised its revenue guidance, implying a growth rate of 22% to 23%, with two-thirds of this increase attributed to the core long-term continuous monitoring business [22][26] - The company reported that over 50% of its recent growth has come from new account openings, indicating strong momentum in its core business [6][16] Business Line Data and Key Metrics Changes - The core LTCM business, ZioMonitor, has accelerated growth over the last three quarters, driven by clinical evidence and new hardware platform transitions [3][4] - New accounts opened in 2024 are expected to contribute significantly to growth in 2025, with record new account openings reported [6][18] Market Data and Key Metrics Changes - The company holds over 70% market share in long-term continuous monitoring, with significant opportunities to capture more from traditional Holter and event monitors [18][19] - The company is expanding into primary care, targeting areas with limited access to cardiologists, which presents a substantial growth opportunity [20] Company Strategy and Development Direction - The company is focused on integrating EHR systems to enhance prescriber workflows, which is expected to drive further growth [12][14] - The launch of Zio MCT is anticipated to close competitive gaps and increase market share, with a goal of achieving 20% to 30% share in the MCT segment over time [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth due to the ongoing shift from traditional monitoring methods to long-term continuous monitoring [19][22] - The company is actively working on regulatory compliance and quality management improvements, which are critical for future product launches and market expansion [62][64] Other Important Information - The company is in the final stages of submitting Zio MCT for FDA approval, with a typical review process expected to take around 90 days [28][29] - The company is also addressing ongoing DOJ investigations, with no clear timeline for resolution [68] Q&A Session Summary Question: What factors contributed to the revenue guidance increase? - Management attributed two-thirds of the guidance increase to the core long-term continuous monitoring business, with strong account launches and EHR integration efforts [22][26] Question: How significant are new account additions to guidance? - Guidance incorporates both new account growth and same-store sales growth, with good visibility into both segments [27] Question: What is the market share expectation for Zio MCT? - Management expects to grow market share in the MCT segment, aiming for 20% to 30% within a few years post-launch [30][34] Question: What is the status of the quality remediation plan? - The company has completed its remediation activities and is awaiting FDA feedback, with ongoing audits to ensure compliance [62][64] Question: How is the innovative channel pipeline progressing? - Management noted that momentum is building with 40 innovative channel entities in discussions, but they are cautious about setting expectations until more clarity is achieved [41][46]

Financial Data and Key Metrics Changes - The company raised its revenue guidance for FY 2025, implying a growth rate of 22% to 23%, with two-thirds of this increase attributed to the core long-term continuous monitoring business [21][22][24] - The company reported that over 50% of its recent growth has come from new account openings, indicating strong momentum in its core business [5][14] Business Line Data and Key Metrics Changes - The core LTCM business, ZioMonitor, has accelerated growth over the last three quarters, driven by clinical evidence and new hardware platform feedback [2][3][4] - New accounts opened in 2024 are contributing significantly to growth, with a notable performance from the Zio AT product line [6][7][14] Market Data and Key Metrics Changes - The company holds over 70% market share in long-term continuous monitoring, with significant opportunities to capture more from traditional Holter and event monitors [17][20] - The company is expanding into primary care, targeting areas with limited cardiology access, which presents a substantial growth opportunity [18][19] Company Strategy and Development Direction - The company is focused on integrating EHR systems to enhance prescription ease and volume within existing accounts [10][12] - The strategy includes expanding into innovative channels, with 40 potential partnerships in active discussions, aiming to accelerate growth in this segment [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth from new accounts and highlighted the importance of primary care in capturing more patients [21][24] - The company is committed to improving its quality management system and is actively engaging with the FDA regarding its remediation plan [58][60] Other Important Information - The company is preparing for the submission of Zio MCT for FDA approval, with expectations of a typical 90-day review process [26][27] - The company is also addressing reimbursement challenges in Japan and the UK, with ongoing efforts to secure national reimbursement [66][70] Q&A Session Summary Question: What factors contributed to the revenue guidance increase? - Management attributed two-thirds of the guidance increase to the core long-term continuous monitoring business, with strong account launches and EHR integration efforts [21][22][24] Question: How significant are new account additions to growth? - New accounts opened in the last twelve months have driven over 50% of growth, with same-store sales also contributing positively [14][15] Question: What is the market share outlook for Zio MCT? - Management indicated a potential for significant share growth in the MCT segment, although they do not expect to reach 70% market share as seen in long-term continuous monitoring [32][34] Question: What is the status of the FDA remediation plan? - The company has completed its remediation activities and is awaiting feedback from the FDA, maintaining a positive and collaborative relationship [60][62] Question: How is the innovative channel strategy progressing? - Management noted that momentum is building with 40 potential partnerships, but they are cautious about setting expectations until more visibility is gained [39][40]

Core Insights - iRhythm Technologies, Inc. (IRTC) has released results from the AMALFI trial, indicating that its Zio long-term continuous monitoring (LTCM) service significantly enhances atrial fibrillation (AFib) detection rates and reduces diagnosis time compared to standard methods [1][4] Company Performance - Following the announcement, IRTC shares closed flat at $169.98, with an 88.5% increase year-to-date, outperforming the industry growth of 21.7% and the S&P 500's 9.9% increase during the same period [3] - IRTC currently has a market capitalization of $5.46 billion and reported an earnings surprise of 39.6% in the last quarter [5] Clinical Trial Findings - The AMALFI trial involved 5,040 participants across 27 UK practices, demonstrating that Zio monitoring led to a 26% higher AF detection rate (6.8% in the intervention group vs. 5.4% in the control group) and significantly shorter time to diagnosis (median of 103 days vs. 530 days) [8][11] - Participants using Zio were more likely to receive oral anticoagulation treatment, averaging 1.63 months of exposure compared to 1.14 months in the control group [11] Technology and Market Position - The Zio LTCM service, available in the U.S. since 2008 and the UK since 2014, combines a 14-day wearable ECG patch with a deep-learning algorithm capable of detecting 13 arrhythmia types, facilitating streamlined diagnosis and treatment [12] - The trial results validate IRTC's competitive edge in the cardiology field, potentially leading to broader physician adoption, favorable reimbursement decisions, and expanded partnerships with healthcare systems [4]

Core Insights - iRhythm Technologies, Inc. announced positive results from the AMALFI clinical trial, indicating that home-based screening with the Zio long-term continuous monitoring (LTCM) service significantly improved atrial fibrillation (AFib) detection and reduced time to diagnosis [1][5][6] Study Design and Population - The AMALFI trial was a randomized controlled trial involving 5,040 participants aged 65 and older with moderate to high stroke risk, comparing home-based screening using the Zio XT LTCM device to usual care over a follow-up period of 2.5 years [2][5] - Participants were identified through an automated search of electronic health records in 27 primary care practices in the UK, and the study was conducted entirely remotely without physical sites [2][6] Key Findings - The intervention group showed a higher rate of new AFib diagnoses (6.8%) compared to the control group (5.4%), with a statistically significant difference (p=0.03) [3][4] - The median time to diagnosis for the intervention group was 103 days, significantly shorter than the 530 days for the control group [3][4] - Participants in the intervention group had a longer average exposure to oral anticoagulation (1.63 months) compared to the control group (1.14 months), indicating improved treatment initiation [3] Implications for Healthcare - The study supports the feasibility of primary care-initiated, home-based diagnostic monitoring, aligning with the NHS's focus on disease prevention and early detection [4][6] - The findings suggest that the Zio LTCM service can be effectively implemented at scale, enhancing the identification of undiagnosed arrhythmias and enabling timely therapeutic interventions [7][8] Technology and Methodology - The Zio LTCM service utilizes a wearable ECG patch that captures continuous data for up to 14 days, processed by a deep-learned algorithm to detect various arrhythmias [6][7] - The service has been available in the US since 2008 and was introduced in the UK in 2014, demonstrating a commitment to improving patient outcomes through innovative technology [6][14]

Core Viewpoint - Spruce Point Capital Management issued a report projecting a long-term downside risk of 40% to 70% for iRhythm Technologies' stock, highlighting regulatory, competitive, and management challenges that could undermine the company's market position [1]. Company Overview - iRhythm Technologies is a medical technology firm known for its Zio line of wearable cardiac monitors, with its first device, the Zio XT, launched in 2009. The Zio Monitor records heart activity for up to 14 days and has secured approximately 70% of the extended wear monitoring market [2]. - In 2019, iRhythm introduced the Zio AT, which features cellular transmission capabilities for near real-time alerts to doctors regarding potential cardiac events [2]. Regulatory and Competitive Challenges - The Zio product has faced regulatory scrutiny due to safety concerns, and despite its reliance on this core product, iRhythm has proposed new growth avenues, including targeting asymptomatic patients and expanding internationally. However, Spruce Point questions the viability of these opportunities due to limited physician enthusiasm and increased competition [3]. - A forensic review by Spruce Point, including a survey of 100 cardiologists, raised concerns about the safety and competitiveness of iRhythm's products, as well as issues related to profitability and management credibility [4]. Regulatory Findings and Management Actions - The FDA identified multiple device deficiencies in iRhythm's analysis that could endanger patients' lives, yet the company allegedly did not act on these findings for several years. During this period, insiders reportedly sold between $90 million to $160 million worth of stock [5]. - Spruce Point argues that investors have been overly optimistic about iRhythm's growth narrative, noting that the company's shares have increased by 141% in the past year, while risks related to regulation and management credibility remain unresolved [6]. Financial Performance - In the second quarter, iRhythm reported an adjusted loss of $0.32, which was better than the consensus loss of $0.48. Sales reached $186.7 million, exceeding the consensus of $173.94 million [7]. - The company raised its fiscal 2025 sales guidance from $690 million-$700 million to $720 million-$730 million, compared to the consensus of $695.74 million [7]. - iRhythm published results from the AVALON study, indicating that its Zio long-term monitoring service outperforms other methods in arrhythmia diagnosis, speed, cardiovascular outcomes, and overall costs, based on real-world data from 428,707 patients [7].

Core Insights - The AVALON study published in the American Journal of Managed Care reinforces the clinical superiority of iRhythm Technologies' Zio long-term continuous monitoring (LTCM) service among commercially insured patients, demonstrating its effectiveness compared to other ambulatory cardiac monitoring (ACM) modalities [1][2][3] Study Findings - AVALON is the largest real-world study of its kind, involving 428,707 commercially insured patients, and shows that the Zio LTCM service has the highest diagnostic yield, fastest time to diagnosis, and lowest total healthcare costs compared to other monitoring modalities [4][6][11] - The Zio LTCM service was associated with a 2.04 times higher likelihood of new arrhythmia diagnosis within 90 days compared to Holter monitors, and 1.69 times compared to ambulatory event monitors (AEM) [8][12] - The median time from end-of-wear to arrhythmia diagnosis for the Zio LTCM service was 9 days, significantly faster than Holter (12 days) and AEM (30 days) [12] - The Zio LTCM service demonstrated the lowest total medical and pharmacy costs at $10,476 per patient-year, compared to Holter ($11,042), AEM ($11,492), and non-iRhythm LTCM services ($11,293) [12] Clinical Implications - The findings indicate that the Zio LTCM service leads to lower healthcare resource utilization, including fewer emergency department visits and hospitalizations, and a lower likelihood of cardiovascular events [11][12] - The study confirms that the Zio LTCM service's advantages extend across diverse patient populations and payer segments, building on previous findings from the Medicare-focused CAMELOT study [6][13] Company Commitment - iRhythm Technologies emphasizes its commitment to delivering clinically meaningful innovations that drive value across the healthcare system, as highlighted by the results of the AVALON study [3][10][14]

iRhythm Technologies (IRTC) came out with a quarterly loss of $0.32 per share versus the Zacks Consensus Estimate of a loss of $0.53. This compares to a loss of $0.61 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +39.62%. A quarter ago, it was expected that this company would post a loss of $0.89 per share when it actually produced a loss of $0.95, delivering a surprise of -6.74%. Over the last four quarters, the company ha ...

Financial Data and Key Metrics Changes - iRhythm reported Q2 2025 revenue of $186.7 million, reflecting a year-over-year growth of over 26% [7][21] - Adjusted EBITDA margin improved by 500 basis points to 8.4% compared to the previous year [19][24] - Adjusted net loss decreased to $10.2 million, or $0.32 per share, from an adjusted net loss of $18.8 million, or $0.61 per share in the prior year [23][24] Business Line Data and Key Metrics Changes - The core long-term continuous monitoring business saw significant growth, with record new account openings and strong performance from the Zio AT product line [7][10] - New store growth accounted for approximately 68% of year-over-year volume growth, with home enrollment for Zio Services in the U.S. at about 23% of volume [22] Market Data and Key Metrics Changes - International markets showed strong demand, particularly in the UK and Japan, with a broad commercial launch in Japan contributing positively [7][17] - The company has 12 partners under contract covering approximately 2 million potential patients, with a robust pipeline of 40 active discussions for future partnerships [11] Company Strategy and Development Direction - iRhythm's strategic focus is on moving prescribing to primary care physicians, which has increased capacity for specialists and enabled proactive monitoring [7][8] - The company is investing in partnerships and technology, including a recent collaboration with Lusim Health to enhance early detection of arrhythmias using AI [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing strong performance across core business and innovative channels [32] - The company anticipates continued momentum in the second half of 2025, despite a slight expected decline in Q3 revenue due to seasonality [25][71] Other Important Information - iRhythm is raising its full-year 2025 revenue guidance to $720 million to $730 million, reflecting first-half outperformance [25] - The company expects to remain slightly free cash flow negative for 2025 but anticipates becoming free cash flow positive in 2026 [28] Q&A Session Summary Question: Guidance and Drivers of Growth - Management acknowledged strong momentum across the business, with the core business being the primary driver of outperformance in Q2 [40][41] Question: Volume Contribution from Innovative Channel Partners - Management indicated that innovative channel partners contributed positively, with a significant increase in prescribing physicians [46] Question: Integration with Epic Accounts - Management reported a 20% increase in prescribing patterns post-integration with Epic accounts, indicating strong potential for future growth [53][54] Question: Impact of Innovative Partnerships - Key partnerships with Signify and CenterWell were highlighted as significant contributors to growth, with expectations for repeat monitoring opportunities [63][65] Question: Seasonality Impact on Q3 Revenue - Management explained that Q3 revenue is expected to decline slightly due to seasonality, but overall momentum remains strong [72][74] Question: Market Growth and Share Gains - Management noted that growth is driven by a combination of market expansion, share gains, and increased prescribing in primary care settings [81][84]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, show revenue growth and an improved net loss compared to the prior year. Total assets increased to **$964.0 million**, driven by a significant rise in marketable securities, while total liabilities grew to **$860.4 million**, primarily due to long-term convertible notes. Cash flow from operations turned positive, reflecting improved operational performance and working capital management [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $309,105 | $419,597 | | Marketable securities | $236,435 | $115,956 | | Total current assets | $663,917 | $645,819 | | Total assets | $964,030 | $931,449 | | **Liabilities & Equity** | | | | Total current liabilities | $132,211 | $110,920 | | Long-term senior convertible notes | $648,007 | $646,443 | | Total liabilities | $860,370 | $840,541 | | Total stockholders' equity | $103,660 | $90,908 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $186,687 | $148,047 | $345,364 | $279,976 | | Gross profit | $132,857 | $103,471 | $242,073 | $190,987 | | Loss from operations | $(18,708) | $(22,981) | $(51,264) | $(61,119) | | Net loss | $(14,218) | $(20,107) | $(44,918) | $(65,774) | | Net loss per share | $(0.44) | $(0.65) | $(1.41) | $(2.12) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $19,768 | $(40,189) | | Net cash (used in) provided by investing activities | $(139,054) | $54,510 | | Net cash provided by financing activities | $8,823 | $508,429 | | **Net (decrease) increase in cash** | **$(110,492)** | **$522,737** | - The significant increase in cash from financing activities in 2024 was primarily due to the issuance of the 2029 Notes, which generated proceeds of **$661.3 million**[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's principal business is providing ambulatory cardiac monitoring services using its proprietary Zio System, which combines a wearable biosensor with cloud-based data analytics[31](index=31&type=chunk)[32](index=32&type=chunk) Revenue by Payor Type (Six Months Ended June 30) | Payor Type | 2025 Revenue (in thousands) | % of Revenue | 2024 Revenue (in thousands) | % of Revenue | | :--- | :--- | :--- | :--- | :--- | | Contracted third-party payors | $181,522 | 52% | $151,027 | 54% | | Centers for Medicare and Medicaid | $82,593 | 24% | $68,041 | 24% | | Healthcare institutions | $58,503 | 17% | $41,808 | 15% | | Non-contracted third-party payors | $22,746 | 7% | $19,100 | 7% | | **Total** | **$345,364** | **100%** | **$279,976** | **100%** | - The company is involved in multiple legal proceedings, including a securities class action lawsuit, DOJ subpoenas related to FDA communications, and patent infringement lawsuits filed by Welch Allyn and Bardy Diagnostics[95](index=95&type=chunk)[98](index=98&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - In March 2024, the company issued **$661.3 million** of 1.50% Senior Convertible Notes due 2029. Net proceeds were used for debt repayment, capped call transactions, and share repurchases[111](index=111&type=chunk)[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **26% year-over-year revenue growth** in Q2 2025 to increased service volume, particularly from the Zio AT product. The company's net loss narrowed due to higher gross profit, which outpaced the growth in operating expenses. Operating expenses rose from increased headcount, legal fees, and a **$2.5 million impairment charge** related to the Zio Watch project. The company reported **positive Adjusted EBITDA of $15.7 million** for the quarter. Liquidity remains strong with over **$545 million in cash and marketable securities**, deemed sufficient for at least the next 12 months, following significant financing activities in early 2024 [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Comparison of Results for the Three Months Ended June 30 (in thousands) | Line Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $186,687 | $148,047 | $38,640 | 26% | | Gross profit | $132,857 | $103,471 | $29,386 | 28% | | Total operating expenses | $151,565 | $126,452 | $25,113 | 20% | | Loss from operations | $(18,708) | $(22,981) | $4,273 | (19)% | | Net loss | $(14,218) | $(20,107) | $5,889 | (29)% | - Revenue growth for Q2 and H1 2025 was primarily driven by an increase in the volume of iRhythm Services, with significant growth in Zio AT as a proportion of total revenue[170](index=170&type=chunk) - Selling, general and administrative expenses increased by **18% in Q2 2025**, mainly due to higher headcount-related costs, legal and professional fees (including **$3.0 million in IP litigation costs**), and provisions for credit losses[174](index=174&type=chunk) - A **$2.5 million impairment charge** was recorded in Q2 2025 related to capitalized internal-use software for the Zio Watch project, which the company does not intend to commercially launch[175](index=175&type=chunk) [Key Business Metric](index=33&type=section&id=Key%20Business%20Metric) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(14,218) | $(20,107) | $(44,918) | $(65,774) | | Adjustments | $29,914 | $25,098 | $57,979 | $58,644 | | **Adjusted EBITDA** | **$15,696** | **$4,991** | **$13,061** | **$(7,130)** | - The company uses Adjusted EBITDA as a key non-GAAP measure to assess financial performance. Adjustments include stock-based compensation, impairment charges, business transformation costs, and certain litigation expenses[144](index=144&type=chunk)[146](index=146&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$309.1 million** in cash and cash equivalents and **$236.4 million** in marketable securities. Management believes current liquidity is sufficient to meet requirements for at least the next 12 months[182](index=182&type=chunk)[183](index=183&type=chunk) - Net cash provided by operating activities was **$19.8 million** for the first six months of 2025, a **$60.0 million improvement** from the same period in 2024, driven by lower net loss and improved working capital management[188](index=188&type=chunk) - In Q1 2024, the company raised approximately **$643.8 million** in net proceeds from its 2029 Notes offering, which was used to repay existing debt (Braidwell and SVB loans), purchase capped calls, and repurchase **$25.0 million** of its common stock[191](index=191&type=chunk)[192](index=192&type=chunk)[196](index=196&type=chunk)[200](index=200&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk on its cash, cash equivalents, and marketable securities, and to a lesser extent, foreign currency exchange risk. A hypothetical **10% change in interest rates** would impact interest income by approximately **$0.5 million** for the second quarter of 2025. The company's **$661.3 million in convertible notes** carry a fixed interest rate, mitigating direct economic interest rate exposure on the debt itself, though its fair value is subject to market interest rate changes - The company's primary market risk is interest rate sensitivity on its **$545.5 million** of cash, cash equivalents, and marketable securities as of June 30, 2025[205](index=205&type=chunk)[206](index=206&type=chunk) - A hypothetical **10% change in interest rates** would have resulted in a **$0.5 million impact** on interest income for the three months ended June 30, 2025[207](index=207&type=chunk) - The outstanding **$661.3 million** of 2029 Notes have a fixed interest rate, so the company does not have economic interest rate exposure on this debt, although its fair market value is sensitive to interest rate changes[208](index=208&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2025, and concluded that they were effective at a reasonable assurance level. There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[212](index=212&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected or are likely to materially affect internal controls[213](index=213&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several significant legal matters. These include a putative securities class action lawsuit alleging violations of the Exchange Act, related stockholder derivative actions, and an ongoing response to subpoenas from the U.S. Department of Justice regarding communications with the FDA. Additionally, the company is defending against two separate patent infringement lawsuits filed by Welch Allyn, Inc. and Bardy Diagnostics, Inc., both subsidiaries of Baxter International. The company believes these lawsuits are without merit and intends to defend itself vigorously - A putative class action lawsuit filed in February 2024 alleges violations of the Exchange Act. A motion to dismiss was partially granted in June 2025, and the case is now in discovery[218](index=218&type=chunk) - The company received subpoenas from the U.S. Attorney's Office and the DOJ's Consumer Protection Branch regarding its products, services, and communications with the FDA, and is cooperating fully[221](index=221&type=chunk) - The company is defending against patent infringement lawsuits from Welch Allyn, Inc. and Bardy Diagnostics, Inc. (subsidiaries of Baxter International) related to its Zio devices and has asserted counterclaims in the BardyDx case[224](index=224&type=chunk)[225](index=225&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, with significant emphasis on reimbursement, regulatory compliance, and legal challenges. Key risks include potential reductions in Medicare reimbursement rates, which constitute **24% of revenue**, and the complex, highly regulated billing process. The company is subject to extensive FDA oversight, as evidenced by a recent warning letter and Form 483 observations, which could lead to enforcement actions. Competition in the remote cardiac monitoring market is intense, and the company's reliance on its sole iRhythm Services offering creates concentration risk. Other major risks include ongoing legal proceedings, cybersecurity threats to patient data, and the complexities of international expansion - **Reimbursement Risk:** The company's revenue is highly dependent on Medicare (**24% of total revenue**) and commercial payors. Changes in coding, coverage, or pricing, particularly by CMS, could significantly harm the business[230](index=230&type=chunk)[231](index=231&type=chunk)[234](index=234&type=chunk) - **Regulatory and Compliance Risk:** The company is subject to extensive FDA regulations for its medical devices and has recently received a warning letter and Form 483 observations, indicating heightened scrutiny that could lead to recalls or other enforcement actions[263](index=263&type=chunk)[264](index=264&type=chunk)[273](index=273&type=chunk) - **Legal and Investigation Risk:** The company is subject to ongoing legal proceedings, including a securities class action lawsuit, and government investigations by the DOJ, which could result in substantial costs, penalties, and diversion of management's attention[344](index=344&type=chunk)[346](index=346&type=chunk) - **Cybersecurity Risk:** The company handles sensitive patient health information, making it a target for cyber-attacks. A breach could lead to significant liability under HIPAA, remediation costs, and reputational damage[366](index=366&type=chunk)[367](index=367&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the reporting period, the company did not have any unregistered sales of equity securities, nor were there any updates on the use of proceeds from registered offerings. There were also no issuer purchases of equity securities - There were no unregistered sales of equity securities or issuer purchases of equity securities during the period[407](index=407&type=chunk)[408](index=408&type=chunk) [Other Information](index=86&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, several Section 16 officers and directors, including the CEO Quentin Blackford and directors Abhijit Talwalkar and Mark Rubash, adopted Rule 10b5-1 trading arrangements. These plans were established in accordance with the company's insider trading policy, which includes a 90-day cooling-off period Adoption of Rule 10b5-1 Trading Arrangements | Name | Title | Action Date | Aggregate Shares to be Sold | Expiration Date | | :--- | :--- | :--- | :--- | :--- | | Abhijit Talwalkar | Director | May 12, 2025 | 24,230 | May 12, 2027 | | Mark Rubash | Director | May 5, 2025 | 15,000 | May 5, 2026 | | Quentin Blackford | President and CEO | May 5, 2025 | 30,000 | May 5, 2026 | | Sumi Shrishrimal | EVP, Chief Risk Officer | May 23, 2025 | 653 | May 23, 2026 | | Marc Rosenbaum | SVP, Chief Accounting Officer | May 12, 2025 | 506 | May 12, 2026 |

Financial Performance & Guidance - Second quarter 2025 revenue reached $186.7 million, a 26.1% increase compared to the second quarter of 2024[8] - The company updated its 2025 annual net revenue guidance to $720 - $730 million[45] - The adjusted EBITDA margin is expected to be 8.0% - 8.5% of revenue for 2025[45] Market Opportunity & Penetration - The potential market includes over 27 million patients in the United States who could benefit from ambulatory cardiac monitoring[11] - The company has achieved over 30% penetration in the core U S ambulatory cardiac monitoring market as of December 31, 2024[13] - The international market represents a $1+ billion total addressable market (TAM) with 5+ million tests in prioritized countries across EMEA and Asia Pacific[36] Expansion & Growth Strategies - The company is targeting over 5 million ambulatory cardiac monitoring (ACM) tests in prioritized countries across EMEA and Asia Pacific[17] - There are over 27 million potential patients presenting in primary care who may be symptomatic or at-risk for arrhythmias[17,24] - The company is addressing population health management through targeted monitoring for undiagnosed arrhythmias, leveraging AI[25,26] Technology & Innovation - The company has curated over 2.5 billion hours of ECG data since its inception through 2024[15] - The company's AI capabilities are used for prediction of atrial fibrillation and heart failure[39,40]