iRhythm(IRTC)2024-10-31 00:26Financial Data and Key Metrics - Revenue for Q3 2024 was 143.8 million, up 14.9% sequentially and 34.3% year-over-year, primarily driven by a 39.2 million, or a loss of 24.1 million, or 19.9 million, or negative 13.5% of revenue [56] Business Line Performance - Zio AT business saw accelerated momentum, with Q3 2024 being the largest quarter of Zio AT registrations ever [26] - Zio monitor demonstrated superior real-world performance compared to the legacy Zio XT device, with fewer early wear terminations, longer wear duration, and fewer patient complaints [29] - The company celebrated 1 million patients registered for the Zio monitor and 2 million registrations through EHR-integrated accounts [28][30] Market Performance - In the UK, the company achieved over 10,000 registrations in a single quarter for the first time and introduced the MyZio app to UK patients [35] - Commercial launches in Austria, the Netherlands, Switzerland, and Spain were completed in Q3 2024, marking a critical milestone in European expansion [36] - Japan received PMDA regulatory approval for Zio monitor in September 2024, with a commercial launch anticipated in 2025 [38] Company Strategy and Industry Competition - The company is undergoing a transformation to become a global growth company with a multi-sensing platform addressing multiple large end markets [11] - A technology licensing agreement with BioIntelliSense was signed to incorporate multi-sensor capabilities into future iterations of the Zio platform, aiming to expand product capabilities and enter adjacent markets like obstructive sleep apnea [39][43] - The company is focusing on FDA remediation efforts, including rebuilding the quality management system and hiring new leadership for the quality function [14][15] Management Commentary on Operating Environment and Future Outlook - Management emphasized the importance of addressing FDA regulatory issues and committed to a culture of quality and sustainability [13][17] - The company expects full-year 2024 revenue to range between 587.5 million, with gross margin guidance of 68.5% to 69% [57][58] - Adjusted EBITDA margin for 2024 is expected to range from negative 2% to negative 1.5% of full-year revenues [59] Other Important Information - The company received FDA clearance for the first of two 510(k)s related to the Zio AT system and is awaiting clearance for the second submission [18][19] - The company voluntarily delayed regulatory submissions for the Zio MCT system to ensure thoroughness and completeness, with an expected filing in Q3 2025 [20][21] - The company ended Q3 2024 with approximately 522 million in unrestricted cash and short-term investments [60] Q&A Session Summary Question: Zio MCT Approval Delay - The delay in Zio MCT approval was a proactive decision by the company to bolster the submission and address FDA concerns, particularly regarding the inclusion of technicians as part of the product [66][69] - The company received FDA clearance for the second 510(k) submission for Zio AT during the call, indicating progress in remediation efforts [64][65] Question: Revenue Guidance and Q4 Confidence - The company reiterated its full-year revenue guidance, citing strong momentum in new account openings and balanced growth across Zio XT and Zio AT [71] Question: New Account Profile and Future Growth - New accounts are consistent with past wins, with a focus on large accounts and primary care channels, though the selling cycle for large accounts is longer due to EHR integration requirements [75][76] - International expansion, particularly in Europe and Japan, is expected to contribute to growth in 2025 [77] Question: BioIntelliSense Licensing Agreement - The partnership with BioIntelliSense is a long-term strategic play to enhance the Zio platform with multi-sensor capabilities, potentially enabling entry into adjacent markets like sleep apnea [82][83] Question: Remediation Efforts and MCT Improvements - The company is addressing FDA concerns by integrating technicians into the quality management system and performing additional testing for the MCT submission [89][91] - The next-generation Zio MCT will feature longer wear duration, addressing market needs [93] Question: International Expansion and Contribution - The UK market is progressing well, with a dual approach to public and private reimbursement, while new European markets are in the early stages of commercial launch [96] - Japan is expected to launch in 2025, with international revenue projected to grow to 8%-9% of total revenue over the next few years [99] Question: MCT Submission Timeline and Financial Impact - The MCT submission delay is based on incorporating FDA feedback and ensuring a robust submission, with no changes to the product design [106][107] - The delay is expected to impact 2025 revenue by approximately 10 million [104] Question: Remediation Spend and Timeline Confidence - The company is confident in its remediation timeline and spending, with a focus on rebuilding the entire quality management system and engaging external experts for periodic audits [112][113] Question: Multi-Parameter Testing Strategy - The company sees multi-parameter sensing as a way to enrich data for physicians and potentially enter adjacent markets like sleep analysis, rather than focusing solely on remote patient monitoring [129][131] Closing Remarks - The company is pleased with its operational progress and remains focused on completing FDA remediation efforts while driving growth and profitability [135]