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Good afternoon. Thank you for attending today's iRhythm Technologies, Inc. Q2 2025 Earnings Conference Call. My name is Bethany, and I will be the moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Stephanie

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the second quarter ended June 30, 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 this 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 the 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, July 31, 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, everyone, and thank you for joining us today. Dan Wilson, our Chief Financial Officer, is with me on today's call. My remarks will cover our business performance during the second 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 financial results and updated guidance for 2025. We're excited to report strong second quarter results with $186.7 million in revenue, representing more than 26% year-over-year growth, driven by acceleration within our core long-term continuous monitoring business, continued progress with innovative channel partners and sustained strength in our

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. We delivered strong profitable growth in the second quarter of 2025 with revenue of $186.7 million, up 26.1% year-over-year, combined with an adjusted EBITDA margin of 8.4%. This marks our third consecutive quarter of 20% plus year-over-year revenue growth while driving 500 basis points of adjusted EBITDA margin improvement. Volume growth was robust across both product lines, driven by continued strength from our core business, strong

Thanks, Dan, and thank you all for your continued support of iRhythm today. The first half of 2025 demonstrated exceptional execution and the accelerating recognition of iRhythm's transformative value proposition across the health care ecosystem. We remain convinced that the ambulatory cardiac monitoring market represents a largely untapped opportunity with substantial growth potential validated by our momentum across our core business, including both

[Operator Instructions] We will begin with our first question from the line of Allen Gong with JPMorgan.

Congratulations on a really good quarter. So I guess my first question is really going to fall on the guide, right? You clearly saw a lot of upside in the quarter, came in a little over $10 million above consensus for second quarter, and you're raising your full year guide, basically pulling that kind of strength forward in the third quarter and fourth quarter. I know you said on the first quarter call, you wanted to maintain some conservatism around some of the innovative partnerships you are making. And clearly, that's starting to contribute. But when we think about the difference between the bottom of your new guidance of $720 million, the top at $730 million and then the potential for outperformance at the top above that, how should we think about the drivers of that?

Yes. Thanks, Allen. Appreciate the question and being on the call here. Look, clearly, there's a lot of momentum in the business right now that has us very excited. I think the one thing I do want to be really clear about is our approach to how we think about guidance has not changed at all. We continue to set expectations that we feel highly confident in being able to deliver. And this latest revision of that guidance reflects the same philosophy. So we're not thinking about it any differently. To your point, we raised guidance last quarter by roughly $15 million on the year. This quarter, we're raising roughly $30 million on the year. It's not about introducing incremental risk. I think it's more about acknowledging the strength that we see coming across the business really across all sectors of it. In Q2 alone, we beat by our numbers, roughly $12 million. We raised the back half of the year by, call it, $18 million, which is roughly $9 million in Q3 and Q4, which to us is a measured step-up from what we're already seeing. And if you look at Q2, the momentum within the quarter was really strong, particularly towards the back half of it. So just a lot of strength in the quarter itself and really accelerating over the course of the quarter. When you think about the drivers, the core business continues to be the biggest driver that's far and away. Yes, innovative channels did contribute -- contributed nicely, but the core business is where we saw the majority of the outperformance in the quarter itself. And when we think about the full year increase of $30 million, I would say roughly 2/3 of that is coming out of the core business, which is being fueled by both strong execution from our commercial team and our EHR integration teams, but onboarding of new accounts as well that are just meaningful in size and have quickly transitioned into some of our largest accounts. So the core business is performing incredibly well. I would tell you,

Our next question comes from the line of Joanne Wuensch with Citigroup.

This is actually Anthony on for Joanne. Just a quick follow-up on the previous question. Are you able to share what -- in the quarter, what the volume contribution was from those innovative channel partners? And then the 40 accounts that you're sort of in active discussions with, can you give any maybe timeline on when you expect those to come online?

Yes. We're not going to break out the actual contribution from the innovative channel partners. We gave you a peek into that last quarter. We said it was about 3% of total revenue. I can tell you that stepped up in Q2 and exited the quarter even higher as we continue to bring these folks on and they continue to prescribe more on a daily basis. Relative to the 40 accounts that are out there, I think it will be a nice steady cadence over the remainder of the year and into next year. I'm not going to guide in terms of how quickly and what number we expect within the next quarter itself. I think we want to continue to get some experience here and see how that comes together. I am excited by the Lucem announcement that we made relative to the AI partnership. I think it speaks directly to the innovative channel partners incredibly well, where we can get into those innovative channel partners medical data history sets of their patients, identify through algorithms, which ones are likely to have arrhythmias and then get patches on those folks. Early results coming out of some of these pilots with the Lucem algorithm, it's remarkable where we find yields of 80% to 90% hit rates in terms of patients who had no idea they might have had an arrhythmia do, in fact, have an arrhythmia that needs to be treated. So we're excited by it. We'll update you as we go, but I'm not going to give a specific number this quarter. I'll just tell you it stepped up from where it was at in Q1.

Our next question comes from the line of Brandon Vazquez with William Blair.

Congrats on a nice quarter here. Quentin, I was really intrigued by the comment that you had made about when you're getting into these Epic accounts, you're actually seeing increased volumes as you go and you integrate into the accounts. So maybe can you spend a minute just talking about what does that look like? Where are these incremental patients coming from? Why are you seeing increased volumes? And if possible, I'll stretch and try to ask, are there any numbers you can give us on how big that opportunity is and like what the incremental patients are. But any color around that would be helpful.

Yes. Look, we've been really pleased with the integrations around the Epic opportunity. They've been a terrific partner. We've got a team internally who's dedicated entirely to the Epic integrations, and we're moving as quickly as we can, and that team has done a phenomenal job. As I mentioned, we've got north of 40 accounts actively in integrations in that pipeline and continues to build. And so we're super excited by it. I would tell you the contribution in the second quarter from Epic didn't really lead to outperformance. We're still in the very early stages of getting these accounts onboarded. We really just started to open it up at the beginning of the year. But we see some really promising trends in those accounts that we're integrating. I would tell you, on average, we see north of 20% increase in prescribing patterns post integration, some accounts even as high as 40%. So we'll monitor it as we go. We're super bullish on the opportunity here with Epic. We understand the value of the streamlined workflow. What we like to see is when we get integrated with these accounts, not only are they integrating

Our next question comes from the line of Marie Thibault with BTIG.

I wanted to ask for a little bit more detail here. You told us a little bit about the drivers of the guidance raise going forward. I think I heard 2/3 from core and new accounts and 1/4 of it from increasing from innovative channels. What was a little bit of difference there? The

Yes. I would tell you the outperformance in Q2 is very similar to how we thought about the raise on the full year. So the core business drove the majority of that outperformance in the quarter.

Our next question comes from the line of Nathan Treybeck with Wells Fargo.

Congrats on a pretty strong quarter. Can you say if there are maybe 1 or 2 key innovative partnerships of the 12 that you disclosed that are kind of underpinning this growth outlook? And in terms of reorder rates in these accounts, what are you seeing? How sustainable is it?

Yes. I will tell you, Signify, we've talked quite publicly about. They've been an outstanding partner here. They certainly are contributing very nicely. CenterWell that I just announced in my prepared remarks has very quickly stepped up, is going to be a meaningful contributor in this innovative channel partners. We've talked about Oak Street in the past. They've been our longest partner in this innovative channel partner opportunity, but they continue to prescribe at very healthy rates. I think one of the things that's really encouraging to us as we continue to get closer to these partners of ours is just learning about their prescribing patterns. I think what we're learning is most of these folks expect this to be a repeat monitoring sort of opportunity into the future where whether they're retesting every single year, their patient population to try to stay ahead of the asymptomatic population that is just completely unaware and avoid those catastrophic downstream events or they're signing up new patients who are coming in all the time. There's going to be a continuous repeat sort of prescribing pattern with these innovative channel partners that excites us. And I think, again, just speaks to the optimism about the future here. When we talk about a 27 million patient opportunity, the majority of those are asymptomatic or symptom confused. Many of them are experiencing comorbid disease states, type 2 diabetes, COPD, CKD. A lot of times, they're confusing symptoms with true arrhythmias. We need to find those patients. And the way to find them is through innovative channel partners, which is why we've got a big bolus of targeted accounts that we're in conversations with, and we've got a whole list behind that, that we'll continue to step into as well. But I couldn't be more excited about the innovative channel opportunity as we move into the future.

Our next question comes from the line of David Roman with Goldman Sachs.

I know, Dan, you talked about the physician fee schedule and impact to direct reimbursement. But I was hoping maybe if you had any preliminary thoughts on the ambulatory specialty model proposal that came out that appears to have some incremental incentives associated with early detection. I know that is not expected to go into place until 2027, but maybe any early thoughts on that and how that might be a source of incremental demand on the forward?

Yes. David, good question. It's Dan here. We are aware of that. Our teams are certainly looking into that as we think about what's on our product road map, what those opportunities are for securing additional reimbursement. We'll see what ultimately gets finalized in the final rule. But it is something we're exploring. We're excited about those types of initiatives being brought forward on the fee schedule, and we'll be exploring those into the future.

I think ultimately, David, those create greater awareness in and around disease, disease state and prevalence of it. And the more we create awareness, I think the greater lead opportunity ends up being into our product ultimately.

Our next question comes from the line of David Saxon with Needham & Company.

Congrats on the quarter. I wanted to ask about guidance, and it's a 2-parter. So third quarter, I think, Dan, you said you're expecting it to be down sequentially due to seasonality, and that all makes sense. But I look back and except for last year, you were able to grow through that seasonality and last year, you were flat. Quentin, you talked about growth or strength accelerating into the second half of the quarter. So I guess it sounds like the momentum should continue. So why would third quarter be down sequentially? And if it, in fact, is, can you give us some guardrails around what that sequential growth might be? And then the second part of the question is just around that renewed partnership with the channel partner you saw in fourth quarter. If memory serves, that was a very lumpy partner with their monitoring. So is that how to think about their go-forward cadence? Or should it be smoother or more gradual going forward?

Yes. David, it's Dan. I'll take the first question there, and maybe Quentin will take the second one. So I did say Q3 revenue down slightly. You can think of that as, call it, down 1%. You're right to point out last year, down a little bit less than that 1% and growing through that in prior years. I do -- seasonality is real in our business, right, as physicians and patients do go on vacation and enjoy the summer months. So that is something we're mindful of. It is something we've seen in the business. And then I would also just point out with innovative channel being a bigger growing part of our business, those are kind of new prescribing patterns, new patients. And again, I want to make sure we're being thoughtful in terms of how we're thinking about guide. So I believe that's the right way to think about it, that down 1% for Q3. And then I'll let Quentin address the second question.

Yes. And I would just -- I would add to that. We're bringing that Q3 number up by, call it, roughly $9 million, right? So it's still a meaningful improvement in the Q3 guide and what that implies for Q4 when you think about $30 million on the full year, and you know what we outperformed in Q2. So obviously, we feel good about the momentum in the business. But to your point, I think it demonstrates some of the thoughtfulness around how we continue to think about our guide and set up the guide to make sure that we can ultimately deliver on it. Your question around the lumpiness of the partner in the fourth quarter, I think it's a little bit too early to identify exactly what their prescribing patterns are going to be. What they ran in the fourth quarter was a bit of an isolated program with a targeted population that they got through very quickly. This program is to go beyond that population now and go more broadly across their entire patient set. I suspect it's probably going to be a lot less lumpy than what it was in the fourth quarter. But until we really see prescribing patterns come from that partner, I think we're going to be a bit hesitant to really roll it into expectations. We just -- we want to have a bit of experience behind us before we get ahead of ourselves there.

Our next question comes from the line of Richard Newitter with Truist.

Congrats on the quarter. Maybe just the first, the underlying environment, this was a pretty significant step-up in growth or growth acceleration. Is there -- is this all underlying market growth picking up? And if so, what's behind that? And is there potentially some halo from just the PFA market and electrophysiology pickup there driving that? And to what extent is the share gains as well that might be [ growing ] your growth?

Yes, Rich, thanks for the comments. Look, I think it's a combination of all of it, to be honest with you. There's no question. PFA is having incredible success and those procedures need to be monitored, and I'm sure we're getting a bit of a benefit from that. I don't think it's the vast majority of it. When you look at PFA procedures, there's probably 300,000 to 400,000 being performed. There were ablations being monitored prior to PFA being introduced as well. So there's probably some benefit, but it's hard for us to measure that specifically, to be honest with you. We don't always know when our monitor is being used post PFA procedure or not. But I'm sure there's some contribution to it, and we'll continue to enjoy that benefit, and we want to be there to monitor those patients. I do think our market share position continues to improve even in long-term cardiac monitoring market. We have north of a 70% market share. Our latest data would tell you -- tell us it's probably close to 72%, which is an increase from where it was at coming into the year. So I do think we continue to take share. But importantly, I do think the overall market continues to expand. We have made a very concerted effort to push prescribing up the care pathway into primary care. And the reality is more patients are seen at the primary care physician's office, and they're more likely to get a patch in that setting than having to wait until they get referred on to Cardiology. What I love seeing in a lot of these large IDNs that we're working in is that many times now a cardiologist or an EP won't even want to see their patient unless they have a report in hand that's been prescribed earlier in the care pathway by primary care and then they show up with it or they look at the report before the patient ever gets there and makes a determination that they do or don't need to see the patient. That is -- that's a terrific sort of way for the product and our tool to be used as it becomes sort of a rule in and a rule out opportunity. And when we look at it down through our business, the amount of prescribing happening in primary care continues to grow in a meaningful way, both in the large IDNs that we're in today, where the cards and the EPs are moving prescribing to primary care, but also then in these innovative channel partners where they are predominantly primary care physician offices. So I think it's a combination of all 3 that you hit on. I think that it's overall market expansion. I definitely think we're taking market share in this space, both on the monitor and AT side. And yes, I think PFA is probably contributing a bit as well.

Our next question comes from the line of David Rescott with Baird.

Congrats on the really strong quarter here. I wanted to ask on the new store growth call out that you've been calling out. It's ticked up pretty meaningfully, not only on a quarter-over-quarter basis in the past couple of quarters, but also year-over-year. And first, I'm just wondering if the innovative channel partners are captured in that new store growth call out? And then if at all, is it something on the core business, the AT business, these innovative channel partners that are kind of pulling up the same-store growth broadly overall? And when you think about these, I guess, the same-store, our new store mix going forward as well as the innovative channel partners. Is there anything we should be thinking about from a margin contribution perspective in either of those kind of thought processes as it relates to that original, I think, 15% operating margin or EBITDA margin that you laid out for the 2027 time frame?

Yes. Thanks for the question, David. This is Dan. I can address those questions there. So you're right to point out new store growth ticking up slightly from what we saw in Q1 and really kind of historical patterns. That number does bounce around a little bit. We have been very successful in onboarding new accounts, but not only innovative channel partners, but also within the core business. And we called that out in our prepared remarks. So we've seen a lot of success recently launching large IDN customers across their entire prescriber base with EHR integration with

Our next question comes from the line of Suraj Kalia with Oppenheimer.

Quentin, Dan, can you hear me all right?

Yes.

Yes, Suraj.

Pardon the background noise, Quentin. So I'll be quick. Obviously, a fantastic quarter, Quentin. Maybe you could help us understand. Quentin, you guys are the de facto standard of care on long-term monitoring. For

Thank you, Suraj. We appreciate that. Look, we are very excited about the MCT category as a whole and our opportunity to continue to take share there. We know that we've got a long way to go to sort of get to parity in terms of market share position relative to long-term cardiac monitoring. I think there's a few things going on there. And as I look back over the last 1.5 years or so, I think we've learned a lot about our AT business. You look prior to the warning letter and the 483 observations that we were dealing with, that AT business was growing very healthy for us, 60%, 70% every single quarter. And then post that, it really dropped down to, call it, roughly around 20% there for a period of time. And yes, there was a competitive disruption that sort of opened the opportunity for customers to begin to look elsewhere, and we certainly took advantage of that opportunity and put our foot in that door with AT. But I think folks are beginning to realize very quickly that the AT product is actually a pretty good product. There's still many shortcomings relative to what the ideal product demands in that space. But when you look at

Our next question comes from the line of William Plovanic with Canaccord Genuity.

It's a good quarter. Everybody has asked a lot of the great questions. I'd really like to focus on the FDA. It looks like it's in the rearview mirror. I just want to clarify at this point, you've answered -- where are we in the process? It sounds like you've answered all the questions and you're just waiting for that final inspection in terms of the 483 and the warning letters. I want to be clear on that, kind of what's left there? And then secondly, given the commentary that the

Yes. Let me hit that last one, Bill, first on the MCT filing running in parallel. I presume you mean in parallel with sort of remediation or the FDA coming back to close down the warning letter. And if that is what you're referring to, you're absolutely right. They will run in parallel. There's nothing that's holding up our MCT submission and the FDA reviewing that. So that will get on file here in the third quarter. And yes, it will run in parallel. With respect to the FDA, I think it's important to note, I don't ever view it as it being in the rearview mirror. I think this is a new way of doing business for us. We have revamped our quality management system. We're doing things in a very different way than what we had historically, and that's the new way of doing business for iRhythm. And we've embraced that, and I think it ultimately becomes a competitive differentiator as we think about sort of how these IDTFs get utilized in this marketplace. I think our team has done a phenomenal job of addressing the concerns that were identified in the warning letter and the 483 observations. To your point, we have submitted all of our responses to them, and now we're waiting for them to respond to us up to and including an inspection to close out the warning letter. So everything we've committed to that had dates tied to it, obligations tied to it, we have completed that, and we have handed that back over to the hands of the FDA. Now keep in mind, we obligated ourselves to go above and beyond what the FDA was focused on. We took a holistic view of the entire quality management system and said we're going to revamp the entire thing as we get after this. There's still some work that we're doing there that went above and beyond what the FDA had focused on that will be completed in the back part of this year. Once that is completed, that is when we'll have the third-party firm come in and audit us just as if they were the FDA and frankly, probably with more of a scrutinizing eye than even the FDA would. And we've told the FDA, we'll share the outcome of those results once they're through it. So I feel really good about the progress we've made here. The tone, the communication, it's a 180 from what it was 2 years ago. I do think as we continue to innovate in this space at the pace that we want to, we're always going to be working very closely with the FDA, and that needs to be a very collaborative relationship. And that's what's been established now, and I'm really pleased with how the teams have handled that and the relationships they've been able to build. So I hope that answers your question. We're excited about the future. We still have a little bit of work here to do to close out the formal warning letter, which includes them coming on site. I can't tell you when that's going to happen, but we're ready for them when they're ready to be here.

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

Well, thank you. Thank you for your time today, and thank you to our outstanding iRhythm team. It's hard to imagine a time when we've been more optimistic about the future that sits ahead of us. The market opportunity is substantial. Our competitive position is strengthening, and our execution continues to deliver. We look forward to continuing to execute against our strategic plan and unlock the tremendous potential that sits before us. Thanks again for your time today, and we'll see you all soon on the road.