iRhythm(US:IRTC)2021-05-08 15:34Financial Data and Key Metrics Changes - Revenue for Q1 2021 was $74.3 million, representing a year-over-year growth of 17% despite a negative impact of $13 million from updated Novitas rates [32][38] - Gross margins were 68.4%, down 6.3% year-over-year and 5.6% quarter-on-quarter [38][40] - Adjusted EBITDA was negative $5.2 million, an increase of $2.2 million year-on-year but down $11.7 million quarter-on-quarter [38][42] - Cash and short-term investments were $262 million at quarter end, down $73 million from Q4 2020 [39][42] - Net loss for Q1 2021 was negative $27.8 million or a loss of $0.95 per share compared to a net loss of $9.1 million or $0.34 per share in the same period of the prior year [44] Business Line Data and Key Metrics Changes - Zio XT volume in the U.S. drove the majority of growth in Q1, while Zio AT in the U.S. and Zio XT in the U.K. outpaced overall company growth on a percentage basis [39][33] - New account onboarding increased by 11% compared to Q4 2020, reaching historically high levels [39] - Zio AT has seen significant traction as a best-in-class mobile cardiac telemetry service, with strong volume growth exceeding initial expectations [32][35] Market Data and Key Metrics Changes - The U.K. market showed very strong volume growth, outpacing overall company growth, driven by the AI award and NICE recommendation [34] - The company estimates it is near 20% penetrated in its core market, with continued growth driving toward becoming the new standard of care in cardiac arrhythmia monitoring [33] Company Strategy and Development Direction - The company is committed to achieving pricing that reflects the benefits of its technology and is actively pursuing multiple paths for revised Medicare pricing [10][12] - There is a focus on operational efficiencies to support profitability and growth, with initiatives in manufacturing, clinical operations, and revenue cycle management [12][46] - International expansion and expanding indications for use are seen as substantial opportunities for sustainable growth and value creation [13][35] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the strong demand for Zio XT and the clinical and economic value it provides [50][51] - The company acknowledges the need to adapt to lower reimbursement levels while continuing to invest in growth areas [52] - There is a commitment to ensuring access to Zio XT for Medicare patients until all paths for appropriate pricing have been fully explored [51][31] Other Important Information - The company is holding discussions with Novitas and other MACs to establish more appropriate rates for long-term continuous ECG monitoring [20][21] - Advocacy efforts are ongoing to highlight the clinical value of long-term continuous monitoring, with over 140 letters sent to Novitas [24][25] Q&A Session Summary Question: Can you provide insights into conversations with payors and upcoming contract renewals? - Management reported constructive discussions with payors, with 90% of negotiations completed and a focus on addressing Medicare pricing concerns [55][56] Question: What has changed in Novitas's approach to pricing? - The methodology used by Novitas is based on direct product costs, and management is working to include broader variable costs in discussions [61][62] Question: What factors influenced the Q2 guidance? - The guidance reflects a conservative approach due to the need for staffing to meet demand, despite strong performance in Q1 [68] Question: What are the next steps for national coverage decisions? - The process involves comment periods and decision-making phases, with key milestones expected in July/August and November/December [86][89]