iRhythm(US:IRTC)2025-10-30 21:21Financial Performance - Revenue increased by $45.3 million, or 31%, to $192.9 million for the three months ended September 30, 2025, compared to $147.5 million for the same period in 2024[172]. - Adjusted EBITDA for the three months ended September 30, 2025, was $21.6 million, compared to a net loss of $5.2 million[150]. - The net loss for the nine months ended September 30, 2025, was $50.1 million, which included $2.3 million of acquired in-process research and development expense[150]. - Net loss decreased by $40.9 million, or 89%, to $5.2 million for the three months ended September 30, 2025, compared to a net loss of $46.2 million for the same period in 2024[172]. - Interest income decreased by $0.5 million to $5.9 million for the three months ended September 30, 2025, compared to $6.5 million for the same period in 2024[178]. - Other income, net decreased by $0.6 million to $0.6 million for the three months ended September 30, 2025, compared to $1.2 million for the same period in 2024[180]. - Income tax provision decreased by $0.2 million, or 87%, during the three months ended September 30, 2025, compared to $0.2 million for the same period in 2024[182]. - Acquired in-process research and development expenses decreased by $31.8 million, or 99%, to $0.3 million for the three months ended September 30, 2025, compared to $32.1 million for the same period in 2024[175]. Revenue Sources - For the three months ended September 30, 2025, revenue from contracted third-party payors was 51%, while revenue from healthcare institutions was 17%[146]. Cost and Expenses - Cost of revenue rose by $9.7 million, or 21%, to $55.8 million for the three months ended September 30, 2025, compared to $46.1 million for the same period in 2024[173]. - Gross profit increased by $35.6 million, or 35%, to $137.1 million for the three months ended September 30, 2025, compared to $101.5 million for the same period in 2024[172]. - Research and development expenses grew by $5.3 million, or 34%, to $21.0 million for the three months ended September 30, 2025, compared to $15.7 million for the same period in 2024[174]. - Selling, general and administrative expenses increased by $20.8 million, or 20%, to $124.2 million for the three months ended September 30, 2025, compared to $103.4 million for the same period in 2024[176]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 30, 2025, was $54.7 million, a significant increase of $70.5 million compared to cash used in operating activities of $15.8 million during the same period in 2024[190]. - Cash used in investing activities increased to $228.3 million for the nine months ended September 30, 2025, compared to $0.8 million in the same period in 2024, primarily due to a net increase in marketable securities purchases of $287.6 million[191]. - Cash provided by financing activities decreased to $9.6 million for the nine months ended September 30, 2025, down from $508.4 million in the same period in 2024, largely due to the absence of proceeds from the issuance of 2029 Notes[192]. Assets and Liabilities - As of September 30, 2025, the company had cash and cash equivalents of $255.6 million, marketable securities of $309.6 million, and accounts receivable of $76.2 million[184]. - As of September 30, 2025, the estimated fair value of the company's 2029 Notes was $895.6 million, with an outstanding principal amount of $661.3 million[208]. - The company had approximately $77.1 million of open purchase order commitments as of September 30, 2025, the majority of which are due within one year[200]. Research and Development - The company expects an increase in research and development costs as it hires additional personnel for new product development and enhancements[160]. - The company recorded an impairment charge of $2.5 million related to capitalized internal-use software in development for the Zio Watch in the second quarter of 2025[186]. Market and Economic Factors - Macroeconomic factors such as inflation and supply chain disruptions are impacting hospitals' financial conditions, potentially affecting the company's revenue[152]. - The gross margin improved from 2023 to 2024, with ongoing efforts to enhance annual gross margins despite macroeconomic challenges[159]. - The company anticipates increased costs of revenue due to rising material and labor costs, partially offset by volume purchase discounts and process improvements[159]. Strategic Initiatives - The company provided iRhythm Services to over 8 million patients and collected over 2 billion hours of curated heartbeat data since receiving FDA clearance[143]. - The company has adapted its services to increase home enrollment, allowing patients to use the Zio patch without visiting healthcare facilities[153]. - The company entered into a Technology License Agreement with BioIS, paying an upfront fee of $15.0 million and purchasing $40.0 million in convertible promissory notes[188]. - The company intends to use the remainder of the net proceeds from the 2029 Notes offering for general corporate purposes[194]. - The 2029 Capped Calls are expected to reduce potential dilution to common stock upon conversion of the 2029 Notes[209]. Interest Rate Sensitivity - A hypothetical 10% change in interest rates would have impacted interest income by $0.6 million for the three months ended September 30, 2025[207]. Foreign Currency Risk - As of September 30, 2025, there had not been a material change in foreign currency risk information disclosed in the Annual Report for the fiscal year ended December 31, 2024[210].