Summary of iRhythm Technologies FY Conference Call (December 04, 2025) Company Overview - **Company**: iRhythm Technologies (NasdaqGS: IRTC) - **Industry**: Life Science Diagnostics and Medical Devices - **Key Products**: - **Zio Monitor**: Long-term continuous cardiac monitoring device, capable of monitoring for 14 days and collecting an average of 1.5 million heartbeats [3][4] - **Zio AT**: Mobile cardiac telemetry product launched in 2019, providing near real-time monitoring [5] Market Insights - **Market Size**: 6.7 million ambulatory cardiac monitoring tests in the U.S. annually, with long-term continuous monitoring being the largest and fastest-growing segment [6] - **Market Growth**: Long-term continuous monitoring is growing at a high teens percentage year-over-year [6] - **Market Share**: iRhythm holds over 70% market share in long-term continuous monitoring and approximately 15% in mobile cardiac telemetry [5][30] Competitive Landscape - **Key Competitors**: Traditional Holter monitors and event monitors, which still account for 2 million tests annually [6] - **Differentiation**: iRhythm emphasizes clinical and operational superiority, with a focus on AI tools for data analysis and high physician agreement rates (99%) on reports generated [8][9] Regulatory Environment - **NCD and LCD**: iRhythm has a National Coverage Determination (NCD) that is 20 years old, with recent concerns regarding proposed Local Coverage Determinations (LCDs) that may affect service level requirements [10][11] - **Industry Support**: The Heart Rhythm Society and other industry partners have provided feedback supporting iRhythm's position on the differentiation between long-term continuous monitoring and mobile cardiac telemetry [14] Financial Performance - **Revenue Growth**: Fiscal 2025 saw a revenue acceleration of 500 basis points over fiscal 2024, with growth attributed to the success of Zio AT, innovative channels, and EHR integration [18][19] - **Future Guidance**: Preliminary outlook for fiscal 2026 is 16%-18% growth, reflecting a step down from the previous year's performance due to difficult comparisons [65][66] Product Development - **Next-Gen MCT**: A new mobile cardiac telemetry product is in development, expected to extend monitoring to 21 days, which is anticipated to enhance market share [30][32] - **FDA Submission**: A traditional 510(k) submission was made for the new product, with ongoing discussions with the FDA regarding cybersecurity [32][34] Innovative Channels - **Strategy**: Focus on proactive monitoring for patients at risk of undiagnosed arrhythmias, with a target market of 27 million patients [46] - **Partnerships**: Currently working with 18 partners, with plans to expand to 40, emphasizing the importance of data-driven decision-making in identifying at-risk patients [45][51] EHR Integration - **Volume Uplift**: Accounts with EHR integration have seen a 25% increase in volume, with over 50% of orders now processed through EHR systems [58][61] - **Integration Benefits**: Streamlined workflows for clinicians, allowing for more efficient patient monitoring and report generation [58][60] Margin and Profitability - **Gross Margin Targets**: Long-term gross margin target of 72%-73% by 2027, with expectations for initial neutrality in margins from the new MCT product [40][41] - **EBITDA Expansion**: Aiming for 300-400 basis points of EBITDA expansion annually, with a target of 15% adjusted EBITDA by 2027 [68] Conclusion - **Overall Outlook**: iRhythm Technologies is positioned for continued growth in the cardiac monitoring market, with strong product offerings, a focus on innovation, and strategic partnerships aimed at capturing a larger share of the market while maintaining profitability [19][68]

Core Insights - iRhythm Technologies Inc. reported a third-quarter loss of 6 cents per share, significantly better than the analysts' expectation of a 31-cent loss [1] - The company achieved sales of $192.88 million, representing a 30.7% year-over-year increase, surpassing the consensus estimate of $184.74 million [1] Financial Performance - The third quarter of 2025 saw record quarterly revenue driven by strong performance in the core long-term continuous monitoring business, sustained demand for Zio AT, and contributions from international markets [2] - Gross profit reached $137.1 million, up 35.1%, with a gross margin of 71.1%, reflecting a 230-basis point improvement [2] Demand and Operational Efficiency - The increase in gross profit was primarily due to higher demand for Zio services, leading to greater volume [3] - The improvement in gross margin was attributed to volume leverage and operational efficiencies, although partially offset by higher blended costs per unit from a greater Zio AT product mix [3] Guidance and Future Outlook - iRhythm raised its fiscal 2025 sales guidance from a range of $720 million-$730 million to $735 million-$740 million, compared to the consensus of $726.42 million [4] - The adjusted EBITDA margin for the full year 2025 is expected to be approximately 8.25% to 8.75% of revenues [4] Analyst Sentiment - William Blair noted that the company is demonstrating strong growth and has a durable growth outlook, with positive expectations for future integrations and product launches [5] - BTIG and Needham analysts maintained a Buy rating on iRhythm, with price forecasts raised to $215 and $244, respectively [6] - Following these developments, IRTC stock increased by 3.19% to $190 [6]

Financial Data and Key Metrics Changes - For Q3 2025, revenue was $192.9 million, reflecting a year-over-year growth of 31% [5][19] - Adjusted EBITDA margin was 11.2%, compared to a negative 13.5% in Q3 2024 [22][24] - Adjusted net loss decreased to $2 million, or $0.06 per share, from an adjusted net loss of $39.2 million, or $1.26 per share in Q3 2024 [22][24] - Gross margin improved to 71.1%, an increase of 230 basis points year-over-year [20][24] Business Line Data and Key Metrics Changes - Record performance was noted in both Zio Monitor and Zio AT, contributing to overall revenue growth [5][13] - New store growth accounted for approximately 60% of year-over-year volume growth, with home enrollment for Zio services steady at around 23% [19][20] - The Zio AT business saw year-over-year unit growth more than double the corporate average [13] Market Data and Key Metrics Changes - The U.S. market continues to show strong adoption in both hospital and ambulatory settings, with 76 of the top 100 customers now EHR integrated [6][7] - In Japan, 13 systems are live, with positive feedback from physicians regarding Zio's capabilities [16] - The UK private market is experiencing strong growth, supported by clinical evidence and key opinion leader engagement [17] Company Strategy and Development Direction - The company is focusing on expanding into primary care and innovative health channels, leveraging EHR integrations to enhance clinician efficiency [6][8] - A partnership with Lusum Health aims to enhance clinical AI capabilities for identifying undiagnosed patients at risk of cardiac arrhythmias [12] - The company is transitioning from a device-enabled service to a comprehensive digital health platform powered by data and AI [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate positive free cash flow for the first time in its history, expecting to be free cash flow positive for the full year 2025 [24][25] - The outlook for full-year 2025 revenue has been raised to $735 to $740 million, indicating continued strong volume growth [23][24] - Management highlighted the importance of proactive monitoring and AI-driven risk stratification in reducing healthcare costs and improving patient outcomes [10][11] Other Important Information - The company is advancing development in sleep diagnostics, recognizing the overlap between cardiac arrhythmias and sleep apnea [15][49] - The FDA has requested to pause remediation efforts until after the government shutdown, which management views as a positive sign [38][40] Q&A Session Summary Question: What is driving the new account openings and volume growth? - Management noted that the ability to scale and absorb entire networks of new customers from day one has been a significant factor in growth [28] Question: What is driving the outperformance expected in Q4? - The outperformance is primarily attributed to the core monitor business, with healthy contributions from AT and innovative channels [31] Question: How should growth cadence for MCT be considered? - Management indicated that while they are optimistic about the AT business, they are cautious about forecasting MCT contributions until FDA approval is secured [33] Question: What is the sales cycle for innovative channel partners? - The sales cycle varies significantly by customer, with some partners scaling quickly while others take longer [36] Question: Any updates on FDA remediation efforts? - There has been limited communication from the FDA, but management is optimistic about resuming discussions post-shutdown [38][40] Question: What is the incremental patient pool in the innovative channel? - The focus is on monitoring asymptomatic, undiagnosed populations, with a significant opportunity identified among patients with comorbid conditions [41][43]

Financial Performance - iRhythm's revenue for Q3 2025 reached $192.9 million, a 30.7% increase compared to $147.5 million in Q3 2024[3, 5] - Gross profit for Q3 2025 was $137.1 million, up 35.1% from $101.5 million in Q3 2024, with a gross margin of 71.1%, a 230-basis point increase[6] - Net loss for Q3 2025 was $5.2 million, or a diluted loss of $0.16 per share, compared to a net loss of $46.2 million, or a diluted loss of $1.48 per share, in Q3 2024[8] - Adjusted EBITDA for Q3 2025 was $21.559 million, compared to $(19.886) million for Q3 2024[25] - Unrestricted cash, cash equivalents, and marketable securities totaled $565.2 million as of September 30, 2025[3, 9] Future Outlook - iRhythm projects full-year 2025 revenue between $735 million and $740 million[11] - The company anticipates an adjusted EBITDA margin for full-year 2025 ranging from approximately 8.25% to 8.75% of revenues[3, 11]

Core Insights - iRhythm Technologies reported a strong performance in Q3 2025, with revenue increasing by 30.7% year-over-year, reflecting the scalability of its platform and growing adoption of its technology across the healthcare ecosystem [3][4]. Financial Performance - Revenue for Q3 2025 was $192.9 million, up from $147.5 million in Q3 2024, driven by increased demand for Zio services [4]. - Gross profit for Q3 2025 was $137.1 million, a 35.1% increase from $101.5 million in Q3 2024, with a gross margin of 71.1%, improving by 230 basis points year-over-year [5]. - Operating expenses for Q3 2025 were $145.6 million, down from $151.8 million in Q3 2024, with adjusted operating expenses at $141.4 million compared to $143.8 million in the prior year [6]. - The net loss for Q3 2025 was $5.2 million, or a diluted loss of $0.16 per share, significantly improved from a net loss of $46.2 million, or a diluted loss of $1.48 per share, in Q3 2024 [7][8]. Cash Flow and Guidance - iRhythm achieved record free cash flow generation in Q3 2025 and anticipates being free cash flow positive for the entire year for the first time in its history [3]. - The company projects full-year 2025 revenue between $735 million to $740 million, with an expected adjusted EBITDA margin of approximately 8.25% to 8.75% [9]. Market Position and Innovations - The company continues to expand into primary care and population health programs, with progress in EHR integration and new clinical evidence supporting its leadership in proactive cardiac monitoring [3]. - iRhythm is advancing its innovation pipeline, including the submission of its next-generation Zio MCT solution to the FDA and early work in sleep diagnostics [3]. Research and Clinical Evidence - Recent publications, including the AVALON real-world evidence and AMALFI randomized clinical trial, reinforce the clinical value proposition of iRhythm's Zio long-term continuous monitoring service [7].

Core Insights - iRhythm Technologies, Inc. (NASDAQ:IRTC) is recognized as one of the top medical device stocks, with Freedom Capital Markets initiating coverage with a Buy rating and a price target of $205 [1] Market Position - iRhythm holds a 70% market share in long-term cardiac monitoring, with its Zio Monitor being described as a "category killer" that has disrupted traditional 48-hour Holter monitors [2] - The company has a 12% market share in continuous monitoring through its Zio AT product, which can be worn for up to 14 days, and is expected to increase its market share with the upcoming release of a 21-day device [2] Sales Growth and Strategy - iRhythm has expanded its sales channels into the primary care market and has secured larger accounts, exceeding expectations and increasing projections over the last two quarters [3] - The company specializes in the design and commercialization of device-based technologies for ambulatory cardiac monitoring [3]

iRhythm (NasdaqGS:IRTC) 2025 Conference Summary Company Overview - **Company**: iRhythm Technologies, Inc. - **Industry**: Medical Technology, specifically in cardiac monitoring Key Points and Arguments Business Performance - iRhythm has experienced significant momentum in its core business, with the second quarter showing substantial outperformance compared to expectations, marking one of the best quarters in five years excluding COVID impacts [3][4] - The outperformance is attributed to onboarding new accounts and increasing average volume per new account, particularly through converting entire networks at once rather than in stages [4][5] Clinical Data and Competitive Advantage - The company has invested in clinical data, with studies like Camelot (300,000 patients) and Avalon (400,000 patients) demonstrating that its Zio product outperforms competitors in terms of faster diagnosis, higher diagnostic yield, and lower healthcare costs [6][7] - The strategy includes expanding from cardiology and electrophysiology (EP) into primary care, which is seeing rapid growth in prescribing rates [8][10] Market Potential - The total addressable market is estimated at 27 million undiagnosed patients with cardiac arrhythmias, significantly larger than the current 6.5 million ambulatory cardiac monitoring tests performed annually in the U.S. [11][19] - The company aims to leverage primary care to identify and treat patients earlier in their care journey, which is expected to increase the volume of patients monitored [19][20] Innovative Channels and AI Integration - iRhythm is exploring innovative channels and AI to identify patients likely to have arrhythmias, achieving a diagnostic yield of approximately 92% in pilot studies [21][22] - The company is developing algorithms to integrate with electronic medical records (EMR) to flag potential arrhythmia patients, which could enhance patient identification and reduce emergency room visits [22][25] Product Development and Regulatory Engagement - The Zio MCT product is expected to launch in the second half of 2026, with a 21-day wear period, which is anticipated to capture market share from competitors [44][46] - The relationship with the FDA has improved significantly, allowing for more collaborative discussions regarding product development and regulatory submissions [47][49] Financial Outlook - iRhythm aims for a compound annual growth rate (CAGR) of 20% through 2027, with potential for higher growth based on recent performance and market opportunities [13][14] - The company is targeting a path to 15% adjusted EBITDA margins by 2027, with potential to reach mid-20s margins through operational efficiencies, particularly in general and administrative expenses [55][57] Strategic Partnerships - Currently, iRhythm has 12 partners under contract, covering approximately 2 million lives, with an additional 40 partners in the pipeline [36][37] - The pricing model for patches is between $250 to $300, translating to a potential annual revenue opportunity of $450 to $600 million [36] Additional Important Insights - The company is focused on transitioning to a direct-to-consumer model in the future, allowing patients to access Zio products more easily [27][28] - iRhythm is committed to improving its operational capacity, with plans to increase production from 4 million to 10 million units annually [40][41] - The company recognizes the importance of addressing the high costs associated with emergency room visits for undiagnosed arrhythmia patients, positioning its products as a cost-saving solution for payers [32][25] This summary encapsulates the key insights from the iRhythm conference, highlighting the company's growth strategies, market potential, and financial outlook.

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 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].