iRhythm(US:IRTC)2022-11-02 03:07Financial Data and Key Metrics Changes - Revenue for Q3 2022 increased by 22% year-over-year, reaching $103.9 million, and was up 2% sequentially [11][31] - Adjusted EBITDA was negative $2.6 million, an improvement of $2.3 million compared to Q2 2022 and $6.1 million compared to Q3 2021 [36] - Net loss for the quarter was $21.5 million, or a loss of $0.71 per share, compared to a loss of $23.9 million or $0.80 per share in Q2 2022 [35] Business Line Data and Key Metrics Changes - Registration volumes increased by 22% year-over-year, marking the strongest registration growth of the year [11] - Received device rate was 1 to 2 percentage points lower than historical averages, impacting revenue realization [12][23] - New store accounts opened accounted for approximately half of the year-over-year growth, with home enrollment making up about 20% of volume [32] Market Data and Key Metrics Changes - The company anticipates a reduction in revenue guidance for the full year to a range of $407 million to $411 million, reflecting a growth of approximately 26% to 27% year-over-year, down from prior guidance of 29% to 30% [22] - The company is seeing strong demand for its Zio service, with healthy registration rates despite staffing challenges [13][28] Company Strategy and Development Direction - The company is focused on enhancing its Zio AT product to grow market share in the MCT space and is committed to developing innovative solutions [42][28] - The company continues to invest in mid and long-term initiatives leveraging its technology platform and expanding into new geographies and markets [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory of the ACM market and the company's ability to capture market share [28] - Despite a reduction in revenue expectations, management remains encouraged by the underlying momentum in the business and the demand for the Zio service [41][27] Other Important Information - The company issued a customer advisory notice related to the Zio AT product, which is expected to impact growth in the fourth quarter [25] - The gross margin for Q3 was 68.3%, a slight decrease from the previous quarter but an improvement from the same period last year [33] Q&A Session Summary Question: Guidance and impacts on revenue - Management attributed the revenue guidance reduction to staffing and capacity challenges, with a significant impact from the lower returned device rate [44][46] Question: Changes since Analyst Day - Management noted that while they were optimistic at the time of the Analyst Day, the received device rate did not recover as expected, leading to the revised guidance [52][55] Question: Device return rates and Home Enrollment - Management clarified that the received device rate for Home Enrollment is typically 2 to 3 times lower than in-clinic rates, and they plan to implement strategies to improve this [60][62] Question: Commercial payer negotiations - Management indicated that there are no significant changes expected in commercial payer negotiations for 2023, maintaining a low single-digit pricing pressure outlook [72] Question: New product launches - Management expects the Zio monitor to launch more fully in mid-2023, with enhancements to the Zio AT product anticipated for early 2024 [88][89]