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Good afternoon. Thank you for attending the iRhythm Technologies, Inc. First Quarter 2025 Earnings Conference Call. My name is Cameron, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions]. I would now like to pass the conference over to your host, Stephanie

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the first quarter ended March 31, 2025. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. These are based upon our current estimates and various assumptions and reflect management's intentions, beliefs and expectations about future events, strategies, competition, products, operating plans and performance. These statements involve risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent annual and quarterly reports on Form 10-K and Form 10-Q, respectively, filed with the Securities and Exchange Commission. Also during the call, we will discuss certain financial measures that have not been prepared in accordance with U.S. GAAP with respect to our non-GAAP and cash-based results, including adjusted EBITDA, adjusted operating expenses and adjusted net loss. Unless otherwise noted, all references to financial metrics are presented on a non-GAAP basis. The presentation of this additional information should not be considered in isolation of, as a substitute for or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and 10-Q for a reconciliation of these measures to their most directly comparable GAAP financial measures. Unless otherwise indicated, all references to financial measures in this call other than revenue refer to non-GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 1, 2025. iRhythm disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I'll turn the call over to Quentin Blackford, iRhythm's President and CEO.

Thank you, Stephanie. Good afternoon, and thank you all for joining us today. Dan Wilson, our Chief Financial Officer, is joining me on today's call. My remarks will cover our business performance during the first quarter of 2025 and our outlook for the remainder of the year. I will then turn the call over to Dan to provide a detailed review of our first quarter financial results and updated guidance for 2025. iRhythm has begun 2025 in an exceptionally strong position with near record revenue unit volume despite what is typically a meaningful seasonal sequential decline, resulting in robust top line results of $158.7 million, representing more than 20% growth compared to the first quarter of 2024. This growth was driven by continued market penetration in our core U.S. business, increasing appreciation of

Thank you, Quentin. As a reminder, unless otherwise noted, the financial metrics that I discuss today will be presented on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release and on our IR website. Our first quarter 2025 results were once again reflective of our continued focus on profitable growth. We are pleased to have delivered a second consecutive quarter of greater than 20% year-over-year revenue growth while driving 750 basis points of improvement to adjusted EBITDA margin. On the top line, our teams continue to drive impressive momentum in our core markets as we achieved revenue of $158.7 million, representing 20.3% year-over-year growth. These results were driven by robust volume growth across both product lines with an especially strong mix contribution from

Thanks, Dan, and thank you all for your continued support of iRhythm today. As we begin 2025 amid economic uncertainty, I want to highlight iRhythm's compelling value proposition that benefits multiple health care stakeholders. While reaching our 10 million patient report milestone represents significant progress, the ambulatory cardiac monitoring market remains largely untapped with substantial growth potential.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Allen Gong with JPMorgan. You may proceed.

Hi, Quentin. Thanks for the question and congrats on a good quarter. I guess just the first question on the outlook. Clearly, you had a much stronger-than-expected quarter to start off the year. But when we look at the guide, especially in light of, as you yourself said, a bit of an uncertain macro backdrop, it's definitely good to see you kind of raising the outlook for the balance of the year in excess of the beat. So I guess what are you seeing in the quarter so far? What did you see in April that really gives you the confidence to kind of raise that kind of range? And how should we think about room for upside or like kind of what gets you to the high end of that range or the bottom end of that range in light of the ongoing macro environment?

Yeah. Thanks, Allen, for the comment there and for the question. This is Dan. I can start and Quentin can add anything he'd like to. So I think as we thought about the guide, obviously, you called out that we're raising guidance above the beat in Q1, and that's reflective of kind of the momentum we're seeing in the business. We've seen

The only thing I would add to that is, certainly, we don't want to get ahead of ourselves here, Allen. We're two quarters into growth north of 20%. As you think about the revised guide and a bit of an increase in the remaining three quarters beyond just the beat in Q1, it still has us growing roughly 15% to 17% in those three quarters compared to what we've seen in the last two quarters of north of 20%. So we feel really good about where we're at. As Dan said, a lot of really good momentum in the business, a lot of things that we're excited about, but also some things that we just want to see play out before we start to bake those into the expectations.

Thanks. And then a quick follow-up just on Japan. I think - so I'm sure you're disappointed that you didn't get kind of differentiated reimbursement from traditional Holters, especially since I think the kind of body language you were getting with the high medical needs designation seem to point to the potential for that. So when I think about in the near term, while you're working to hopefully improve upon that, how should we think about the contribution you had previously been contemplating for this year? And how confident are you in your ability to improve reimbursement? And what kind of time line will that take? Thank you very much.

Yes, Allen, I can take the first part of that question as it relates to what's incorporated in the guide. If you recall in our call back in February when we gave guidance initially, we did say Japan, we expected $2 million of contribution to growth for the full year. With the reimbursement rates where they landed, that will be a bit below that original $2 million expectation, and that's obviously reflected in the guide. But obviously, a strategically important market for us. We will be launching in there to generate the clinical evidence needed to ultimately land to that higher reimbursement rate. And I'll let Quentin add.

Yeah. I think without question, Allen, a bit disappointed in where the rate got set considering all the support around the high medical needs designation and I think the understanding from the Japanese Heart Rhythm Society, sort of the differentiation of our product relative to other products that are out in the market. But to be specific, we don't have head-to-head sort of comparable data in the local Japanese market. And it's clear that that's what they're looking for to differentiate sort of reimbursement. And so we're committed to moving down that path. We've got a great number of hospitals sort of that are right on the verge of contracting with us and getting started. We've got a great deal of reps that are dedicated to selling

The next question is from the line of Kallum Titchmarsh with Morgan Stanley. You may proceed.

Great. Thanks, guys for taking the question. Just on the AT momentum. And obviously, you kept a fair amount of the share you gained in the back half of 2024. Why do you think that was? Why don't you think they went back to your competitor? And then I guess, how do you think that frames you for the MCT launch? Do you now think that, that could be accelerating quicker than your expectations before given your AT customer base is broader? Thanks a lot.

Yeah. I don't want to get ahead in terms of expectations around the new

The next question is from the line of Macauley Kilbane with William Blair. You may proceed.

Hi, everyone. This is Macauley on for Margaret tonight. Thanks for taking our question. Congrats on the strong start to the year here. I want to ask on the Epic integration, which the feedback sounds quite positive so far and I understand we're still early in that rollout. But other than the natural workflow efficiencies you've talked to, can you just help quantify the impact those integrated accounts are seeing, whether that be volume growth versus non-integrated accounts, the cost reductions or other metrics you're tracking within these accounts?

Thanks, Macauley. Look, we've been very pleased with the early stages of the Epic integration. And I think it's met our expectations. Certainly, the workflow efficiencies, the IT efficiencies, reducing the amount of time for integration is all being realized. And I think we're only going to continue to get better in and around those opportunities and those efforts. The pipeline that sits out in front of us relative to the ability to bring new accounts on board is really, really strong. And frankly, when we look at the overall pipeline of new customer accounts that we're onboarding over the next several months, the vast majority are Aura accounts, some existing customers, some greenfield opportunities for us. It's early in terms of being able to speak with a high degree of confidence around what the incremental benefit might be from Epic. I will tell you in the handful of accounts that have been integrated now for multiple months, we've seen on average a high 20% increase in the prescribing pattern of those accounts on their daily averages post integration versus pre-integration with some of those pushing almost 40%. So we want to see that play out before we start to bake it into expectations. Our guide does not anticipate any incremental benefit from the Epic integrations in terms of post-integration uplift, but early signs are positive around that, and we're certainly encouraged by what we're seeing. But it's early.

Question is from the line of Joanne Wuensch with Citigroup. You may proceed.

Hey. Good afternoon. This is Anthony on for Joanne. Thanks for taking our question. Is there any way you could break out or quantify how much volume now is coming out of these volume-based accounts? It sounds like they're really starting to become a much bigger piece of the pie. Thank you.

We haven't disclosed that yet. I'll give you some color. It's in the low single digits as a percent of total volume in the quarter, but it's growing quite nicely. So - when you think about the stat that I put out there, nearly a third of our prescriptions in the quarter have now come through primary care. It's still a very small single-digit percent of total volume that's coming from the innovative channels, which ultimately means that a lot of the primary care move is coming from our existing IDNs where cardiologists and EPs are recommending prescribing earlier in the care pathway at their primary care physician's office, which is incredibly encouraging. We want to see that play out. But I do think the bigger opportunity long term is going to be in the innovative channels. And I mentioned we signed up one new innovative channel partner in the first quarter. We're certainly very excited to get them going. The partner that we had in the fourth quarter, while didn't prescribe a tremendous amount in the first quarter, did begin to patch again and will patch over the course of the year. So we're excited to see that go again. I think this is really how we expand the market from 6 million tests per year to, call it, 27 million patients showing up in primary care. This is going to be a big part of that lever and we're certainly very excited about it, but we're in the very, very early stages, right? We're in the top of the first inning here that just demonstrates the amount of runway that's in front of us.

The next question is from the line of David Roman with Goldman Sachs. You may proceed.

HI, guys. You've got Daniel here for David tonight. Thanks for taking the question. After attending HRS, something we observed was the number of companies that are pursuing the multi-parameter sensor opportunity, although none of them have the equivalent infrastructure that you guys have built up over time. So how do you think about that opportunity here, both with your own pipeline, but also potential M&A given your balance sheet capacity?

Well, I think you hit on something that's very important to us over our 3 to 5-year horizon. It's a big part of why we did the BioIntelliSense transaction in the mid part of last year. It brings some incremental capabilities onto our platform that we believe are truly differentiated, but ultimately gets us to that multi-parameter sensing platform off of a single device. That's really what we're ultimately building at the company. We're making great progress towards it. I think if we saw technology out there that really captured our attention, and I think we've got a good robust process to evaluate those sort of things. Look, we're in a good position to be able to bring that into the company. But we're going to be very thoughtful around those sort of opportunities. I'm bullish on what we have the opportunity to develop and innovate within our 4 walls. But if we could speed things up and if valuation was right, we certainly would look at those opportunities. But it would have to be right down the middle of the fairway from a strategic fit perspective for us to look that way because I'm very bullish on our ability to innovate within the 4 walls of the company.

The next question is from the line of Nathan Treybeck with Wells Fargo. You may proceed.

Hi. Thanks for taking the question. Congrats on a good quarter. So you said that you still assume you're going to file for

Nathan, thanks for the comments. With respect to the FDA around MCT, there's nothing at this point that gives us any concern around the ability to get that submitted in the third quarter. I have a high degree of confidence that we'll be able to make that happen. And frankly, the vast majority of that sits within our own control, and we control our own destiny from that sense. So I feel good about that based upon what we know right now. And there has been back and forth with the FDA, and there's been nothing that they've indicated to us that would give us any reason to think differently than that Q3 time frame. So I feel good about continuing to expect MCT on file in Q3. In terms of sort of their inspection of facilities to close out the warning letter, I can't give you any color around it. I don't know what to advise around that. I can tell you, we have good discussions with the FDA. We continue to make great progress on the remediation efforts. We are on time and on track with all of the remediation activities that we identified and committed to the agency, and we will continue to close those out. And I expect by the mid part of the year, we will have finished all of our remediation activities specific to the warning letter and specific to the 483s. And keep in mind, we're not going to stop there. We've committed ourselves to go above and beyond those efforts on our own doing to continue to rebuild and revamp that QMS that will take place in the back half of the year. So those things within our control, I feel very good about. What I can't tell you is when the FDA might get back out here. I think with all the turnover within the agency, it's a little bit difficult to predict exactly what that might look like. And I think we're just going to need some time and clearly some direction from them on what they expect. I don't see in any way, Nathan, that, that holds up anything that we're trying to do as a company. It doesn't hold up remediation efforts, doesn't hold up new innovation, doesn't hold up our ability to submit new submissions for new product approvals. We're going to continue to move down the pathway as we have, and they've given no indication at all of disruption there.

The next question is from the line of David Rescott with Baird. You may proceed.

Great. Thanks for taking the questions. And congrats on the quarter here. I wanted to ask on the upside in the quarter and then in the obviously raised guidance above the beat that you had so far. When we think about the Q4 number, I think maybe we assumed about half of the upside you had in Q4 was around these innovative channel partners coming online, maybe about half from the -- the share gain in MCT. When you think about the guide, what's baked in the guidance for the second half or Q2 through Q4 this year, is it still a similar mix where you have a maybe relatively split benefit of these newer innovative channel partners in the MCT kind of share gain? Or is one of those starting to become a bigger contributor into what you've baked into this upside for the rest of the year? Thanks for taking the question.

Yeah. Thanks for the question, David. This is Dan. So I think maybe a couple of comments that will be helpful for you. In terms of how we would characterize the beat in Q1, we would say that was primarily from

The next question is from the line of David Saxon with Needham & Company. You may proceed.

Great. Good afternoon. Thanks for taking my question and congrats on the quarter and strong guide. So just wanted to follow up on that last question around

David, I think it's a bit of the latter, to be honest with you. I mean we certainly see accounts that we onboarded in the fourth quarter continuing to grow nicely. But the number of new accounts being added to the company in the first quarter was right there near another record high. So I think what's happening is word of mouth within the local market is starting to be made around the value and the ability of the

Next question is from the line of Suraj Kalia with Oppenheimer. You may proceed.

Quentin, can you hear me all right?

Yeah, yeah. Hi, Suraj.

Gentlemen, congrats on a great quarter. So gentlemen, a lot of numbers have been thrown around. I was wondering if you could distill it for us and forgive me if I haven't gotten some of this. So Dan, let's - if I give you three buckets, legacy

Yeah, Suraj, let me see if I can be helpful to that. So just to clarify, legacy XT, I'm assuming you mean

The question is from the line of Jon Young with Canaccord Genuity. You may proceed.

Thanks for taking our questions and congrats a great quarter. I also wanted to ask on just the AT strength there you're continuing to see. Is the overall MCT market growing here pretty rapidly? And are you seeing just a benefit in MCT from the post-ablation monitoring, especially if PFA expands the number of catheter ablations here in the U.S.? Thanks.

I think the latter part of that question, it's very hard for us to identify sort of what volume benefits might be coming from PFA. We can't see it in the data. It's not as clear. There's no question, I think we're probably getting some benefit. But to be honest with you, PFAs aren't being done by primary care physicians. And to see the growth coming in the primary care channel the way that we are, we know that that's not specific to it. And I don't think that our MCT utilization is being driven by that either. I think it's much more competitive conversion, taking share in the existing accounts that we already have

Next question is from the line of Sam Eiber with BTIG. You may proceed.

Hi, good afternoon. This is Sam on for Marie. Thanks for taking the questions here. Maybe I can ask a tariff question. And Dan, you talked about some of the mitigation strategies and pulling forward inventory. But wondering if there's any opportunity also to pass along price to customers maybe as contracts come up for renegotiations here?

Yeah. Sam, thanks for the question. I would - referring to my prepared remarks, I was referring more to kind of supply chain strategies in terms of moving things around and other opportunities to offset a bit of that impact. From a pricing standpoint, we'll certainly look at that and evaluate that. I would say that's not the first place we will look. We do want to continue to drive volume and continue to grow our share of the overall market. So we'll look at those opportunities as they come, but also see supply chain strategies to really offset the tariff impact that we are guiding to.

The next question is from the line of Richard Newitter with Truist. You may proceed.

Hi. Thanks for taking the questions. And congrats on the quarter. I wanted to just ask going back to the FDA, Quentin, I appreciate that there's a lot of moving parts there going on in the backdrop. But I'm just curious if the people that you're dealing with at the FDA remain consistent with kind of who you were talking to, the guidance you were getting and kind of the benchmarks and the goals that were laid out where you were tracking towards what you think the FDA wanted. So just - are the players the same is the first question.

Yeah. Good question, Rich. The most senior leaders are absolutely the same folks. We have not seen turnover in that. That relationship continues to be the same. So no change there, which we view very favorably, and we're encouraged by that. We're hearing that deeper down in the agency, there are folks who may have been part of the review that maybe aren't with the agency any longer. I would tell you those aren't folks that we had direct access to necessarily on a daily basis. But those folks who we've been working with directly, the more senior folks at the agency in charge of our engagement, those are the same people, same faces, same names.

Okay. Thanks. And then just on primary care, where can that 30% percentage get to? Or maybe you've disclosed that in the past where your longer-term goal is, if you could just remind us.

Well, I don't think we've ever put out a specific goal. But Rich, I continue to be more bullish than ever that our market is not 6.5 million ACM tests being prescribed a year, which is predominantly coming out of cardiology and EP. I believe that there are 27 million folks who are presenting in the primary care channel today that either have cardiac palpitations already in their medical records. We can see it very clearly or they're unaware that they have an arrhythmia, many times confusing sort of comorbid disease states and symptoms with arrhythmias. And I think when you look at that total population, call it, somewhere around 27 million folks, you have to be up in primary care to look for those opportunities. And that's exactly where we're moving the business. And I have a high degree of confidence that's where it's going to go. I couldn't be more bullish on the opportunity to open that up. Some of the data that we're seeing coming out of our efforts to work with partners where we can look into their data sets, review medical history of their clients on a de-identified basis, identify markers and then put patches on those patients, take a diabetic population as an example, we've run some early trials here with a meaningful number of folks. The yield on actionable arrhythmias coming out of that trial on folks who had no idea they had an arrhythmia was north of 90%. And another one, it was north of 80%. So we know that we're able to dial in sort of through an AI approach exactly where these patients likely sit and then we just need to get patches on them. And that's going to happen through the primary care channel more so than anywhere else. So what the overall prescription pattern looks like in terms of PCP as a percent of total volume, I don't know. I think the market is much larger than what it is today. And if we can open up that 27 million patient market, the vast majority is going to be prescribed through primary care. So we'll watch it as we go. But I'm very encouraged by what we're seeing in these early days of building out capability to target patients who are at high risk of arrhythmias and then being able to find them.

There are no additional questions waiting at this time. I would like to pass the conference back over to the management team for any closing remarks.

Great. Well, thank you for your time, and thank you to our iRhythm team. It's a great start to the year, and it's hard to imagine a time when we've been more excited about the future that sits in front of us, and we look forward to continuing to execute against our strategic plan to unlock the tremendous potential that sits ahead. Thanks again for your time. Thanks again to the teams, and we'll see you all soon on the road. Take care.