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Good afternoon. Thank you for attending today's iRhythm Technologies, Inc. Q3 2025 Earnings Conference Call. My name is Jemma, and I'll be your moderator for today. [Operator Instructions] At this time, I'd like to turn the conference over to our host, Stephanie

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the third quarter ended September 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 facts 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 noted, 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, October 30, 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, and good afternoon, everyone. We appreciate you joining us today. Dan Wilson, our Chief Financial Officer, is with me on today's call. My remarks will focus on our business performance during the third 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 the year. We're pleased to report another quarter of strong commercial momentum, reflecting our disciplined execution and differentiated platform technology. For the third quarter, revenue was $192.9 million, representing year-over-year growth of 31%. This result was driven by record performance in both

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 another quarter of strong profitable growth in the third quarter with revenue of $192.9 million, up 30.7% year-over-year, combined with an adjusted EBITDA margin of 11.2%. Volume growth was strong across both product lines, driven by continued execution in our core business, sustained

Thanks, Dan, and thank you all for your continued support of iRhythm today. In closing, the continued progress we've made this quarter is a testament to our accelerating momentum. We're expanding adoption, forging new partnerships and delivering innovative solutions that are transforming cardiac care. Our clinically proven platform, advanced AI analytics and seamless digital integration are driving real impact for patients, providers and shareholders. With each milestone, we're building toward a future where early actionable cardiac insights are the standard, and iRhythm is leading the way. Operator, we're now ready for questions.

[Operator Instructions] Our first question comes from Nathan Treybeck with the company, Wells Fargo.

Congrats on a very strong quarter. Just to kick it off, Q3 growth accelerated versus the first half and guidance implies over 20% in Q4. You didn't see the expected seasonal step down. So your core

Yes. I think -- Nathan, thanks for the question. It's good to be talking with you. I think there's a few things that are driving the growth in that core business. And I would point out, it was a record quarter for us in the monitor business, just like it was in the AT business, to be quite honest with you. And a lot of that is driven by new accounts onboarding. But one of the things that's unique about iRhythm in the last 12 months is we've developed the ability to scale and really absorb the entire network of these customers who are coming on board on day 1. And that's very appealing to these customers where historically, we might have to go in and convert an account at a time and work to ultimately convert the entire system over a period of time. Now we're able to do that out of the gate. The other thing that I would note in those new accounts is that we're seeing more than ever new accounts come into working with iRhythm, where they're bringing their entire long-term cardiac monitor business, so monitor, but also bringing their MCT business with AT as well, and that's fueling a lot of strength in the AT portfolio for us, which I think is just reflective of the value of that product line and these customers seeing that. So the quality of the new accounts has gotten stronger and stronger over the course of the year. The size of them has gotten stronger, and we're more bullish than ever on our ability to continue to take share, but also grow the overall market. There's no doubt that the move to primary care continues to expand. We're seeing it within the networks that we're already in. And of course, innovative channel partners continues to grow as well as it did from Q2 to Q3 and stepping up there. So quite a few drivers across the business, but I think it's a combination of market share shift as well as the overall market probably picking up a bit.

Our next question comes from Joanne Wuensch with the company, Citigroup.

This is actually [ Anthony ] on for Joanne. Sort of just piggybacking off of Nathan's question. You raised the full year by more than a beat. I think it implies like a $4 million and change over consensus for the fourth quarter. Could you maybe just pick apart what is driving that outperformance you're expecting this quarter?

Yes. Thanks for the question, Anthony. This is Dan. I can start and Quentin can fill in with anything. So as Quentin just spoke to, really the beat in Q3 was primarily attributable to monitor in the core business, but also saw a really healthy contribution from AT, record growth for both AT and Monitor and then growing contribution continued from innovative channel. And as we think about the fourth quarter, it's a very similar setup. I would point out the raise for the guidance for Q4 really primarily tied to

Our next question comes from Richard Newitter with the company, Truist.

Just wondering on AT, momentum seems to be holding strong. As we think about the launch of MCT next year or at least potential approval, I mean, how should we be thinking about growth cadence for MCT?

Yes. Thanks for the question. Look, we continue to be very encouraged by the performance in that AT business line. I think when you start to dissect it, what's really encouraging is that we're seeing it grow very well in our existing core monitor accounts that are now beginning to adopt AT, but also more than ever, the new accounts that are coming on board with us are coming on board using both Monitor and AT out of the gate. And I think that bodes well for our expectations into the future when we're seeing that these new accounts are willing to come on board with us using both product lines. In terms of MCT itself, I think that's a hard one for us to forecast exactly when it's going to ultimately make its way to the market. We're planning for that to be in the back half of next year. However, I think without clear visibility from an FDA perspective on what the timeline is from an approval perspective, you're probably going to see us set up expectations for 2026 that don't include MCT contribution until we have real clear line of sight into when that timeline is going to firm up for us. So I continue to be big believers in the AT business, super bullish on the opportunity to convert market share within that MCT category. I think we're probably around a 13% market share player today. I think there's a real path into 25%, 35%. But in terms of MCT itself, I think we want to see some clear line of sight to exactly when that approval might come before we start to really bake in expectations, at least for '26.

Our next question comes from David Saxon with the company, Needham & Company.

Congrats on the quarter. So I wanted to ask on the innovative partner channel. So I think it was last quarter, you talked about 100 potential partners in the U.S. I think in the script, you said you had 18 today. That's up 6 from last quarter, I believe. So can you just talk about the sales cycle there? Like how long does it typically take to onboard? And then what's a realistic penetration level for that channel over the next, call it, 1 to 2 years? And then can you also size that customer group at this point in terms of percentage of sales?

Yes. Maybe I'll hit that last point first. We continue to see that step up from where it was in Q2. We're not going to disclose it each and every quarter, but you can assume that it did continue to step up. And the overall dollar contribution from innovative channel partners was absolutely higher in Q3 than it was in Q2 as well. So we're seeing good progress there. To your point, we had 12 customers in Q2. We communicated in the prepared remarks, we're up to 18. I would say the size of those customers on average are about similar to what we saw in the initial 12, and we're excited about where that has the potential to go. In terms of the sales cycle, it's so different by customer right now. And I think that's a little bit of the hesitation that we have in putting forward specific expectations in our guidance. I could give you the example of Signify that took well over a year to sort of get to scale. Then I could give you an example of CenterWell that took about 90 days to get to scale. So it's just -- it's a different sales process. It's a different scaling process with each one of them. Some of these move very quickly when you can show the data that is coming together articulating the value of finding these arrhythmias, particularly in undiagnosed unaware populations and some of the economic data that's coming together that is quite compelling around the impact of finding these arrhythmias more proactively. So some move very quick, some take longer. I think as we get more experience here, we'll have more confidence to know exactly how to guide to it into the future. But for the time being, as Dan shared earlier, we're going to take a little bit of a wait-and-see approach on some of these without getting way ahead of ourselves.

Our next question comes from Marie Thibault with the company, BTIG.

This is Sam on for Marie. Maybe I can ask about the latest and any updates with the FDA on the remediation efforts for the warning letter and 483s?

No, it's a good question. There hasn't been a whole lot of communication through the shutdown with the FDA, particularly from a remediation perspective. As a matter of fact, I can share with you that the FDA has been clear with us that they've asked for that to more or less be put on hold and reengage with them on remediation after the shutdown is remediated or lifted, which I think is a good sign. Our understanding is through the shutdown, these folks are focused on the more critical sort of matters and the fact that we've been asked to pick it back up once the shutdown is through is encouraging. There's not been any communication with respect to MCT at this point in time. We are -- as we shared, we've submitted it. They have it, but there's been no communication around it, which is why I think for us, as we think about 2026, it's just prudent to think about that as a year where we'll wait for some more clarity around MCT before we would put it into any expectations out there in the new year. So that's where things sit at this point in time. Obviously, if things change with respect to any communication or feedback, we'll let you know. I think it's important to recognize we're not changing anything from our continued efforts to remediate our internal systems. As you might recall, we agreed and made the decision that we were going to go above and beyond what the FDA had asked us to remediate as part of the warning letter and the 483s. We've been doing that. All of those efforts will be complete here by the end of the year. The other thing we committed to, and this has already started, is we've launched the external review/audit of our quality systems by an independent third party that we were doing on our own. We communicated that to the FDA, and we've also communicated we'd be willing to share those things with the FDA. That's gotten started. It's off to a good start. It's early, but it's demonstrating the good progress we've made, and that will continue on through the remainder of the year.

Our next question comes from Suraj Kalia with the company, Oppenheimer.

Quentin, can you hear me all right?

Yes, yes.

Perfect. Gentlemen, congrats on a fantastic quarter. Quentin, many calls going on. So forgive me if you've already touched on this. The innovative channels, the 100 or so, I thought I heard that, that you cited. Quentin, this question comes up with clients and maybe you can articulate it. What is the incremental patient pool you see in this cohort, the types of patients, symptomatic, asymptomatic, how should we think about it and the durability of this channel so that we can sort of size what is the incremental pull-through? Once again, gentlemen, congrats on a great quarter.

Thanks, Suraj. I appreciate it. One of the most encouraging things in this innovative channel effort has been the realization that these folks are monitoring more and more of the asymptomatic, undiagnosed, unaware population. There are a few partners who have targeted symptomatic patients, but we've even seen a few of those move from symptomatic into asymptomatic after recognizing the success that they're having with it. So that's encouraging, and I think it's a great data point that validates that the asymptomatic population is ultimately going to be monitored here. We believe there's roughly 27 million patients in the U.S. alone who are unaware, certainly undiagnosed, maybe confusing their symptoms with other comorbid disease states like type 2 diabetics, COPD or CKD. One of the things that's interesting that we're discovering in a lot of the data that we're capturing in the research we're doing is that just looking retrospectively over the last 5 to 6 years, nearly 90%, this is an incredible stat. Nearly 90% of patients who are either a type 2 diabetic, have COPD or CKD and ultimately get diagnosed with an arrhythmia. Nearly 90% of them were never monitored prior to that diagnosis, which just speaks to the incredible opportunity to get out there and proactively monitor these unaware, undiagnosed populations, maybe even asymptomatic populations. And what's encouraging is with the innovative channel partners is most of these programs are focused on these comorbid disease states. It also leads into sort of what we're doing around Lucem that we talked about last quarter in terms of developing these algorithmic capabilities to look across large data sets, particularly these comorbid data sets and looking through the medical records, finding these patients who are likely to have an arrhythmia, get a patch on them and then with a high degree of accuracy, certainly diagnose arrhythmias. And some of these early pilots that we've run, we've seen those yields 80% to 90% in terms of who we think has an arrhythmia, get a patch on them and find out that they do, in fact, have the arrhythmia. It's important once we diagnose them that now we help reduce the cost of caring for those patients. But the majority of the cost that these partners are saving is a reduction in ER visits, hospital visits, reduction in length of stay in the hospital. These are all things that these partners understand very, very well, and I think speaks to the durability of the channel itself as they see the benefits that are going to continue to accrue for them.

Our next question comes from David Rescott with the company, Baird.

Congrats on the really good quarter here. I wanted to ask on the margin front, the profitability front. Obviously, you had really great progress on are now expecting to hit free cash flow profitability this year, and my guess is that extends into 2026. But when you think about some of the moving pieces around

Yes, David, thanks for the question. So you're right, there are a number of moving pieces there. I think maybe breaking it down first starting with gross margin. We do feel -- continue to feel good about the guidance that we had previously for 2027, where we called out 72% to 73% gross margin in 2027. Obviously, we haven't provided '26 guidance yet. You heard the comments for 2025 being slightly above 2024, so call that low 70%. So feel really good about that path to 72% to 73% with all the different moving pieces, right? There's benefits from manufacturing automation as we scale the business, as we get

Our next question comes from Stephanie Piazzola with the company, Bank of America.

Congrats on a good quarter. You talked about the early work you're doing in sleep diagnostics. So I just wanted to follow up if there's any more color you can provide about how you're thinking about that opportunity, any potential economics of a multi-sensing platform and some of the next steps that you're taking there?

Yes. Stephanie, thanks for the question. Sleep is something that we certainly have a lot of excitement around. I think the overlap of just cardiac arrhythmia and sleep is a natural one. We see it in our customer channel already. We see it in our patients as well. And it's a great deal of overlap in the customers we're already serving that are ordering these home sleep tests. And so I think there's a natural opportunity for us to step in here and really disrupt that space, but at the same time, really improve the workflow and the efficiency for our physician customers, but also for the patient who many times has a pretty cumbersome experience. So we're excited to be able to do that. I think you're going to see us step into it in a couple of different ways, and I'm not going to get into the real specific efforts that are going underway from a competitive perspective, but I think there's ability to see even within our patient population today and the EKG data that we're capturing where there's a likelihood of sleep disease likely being present. I think that's good information to help our physicians understand and ultimately leads into testing opportunities. And then ultimately, we want to get to where we can have a diagnostic capability right off of the platform on the chest, and that's the multi-sensing effort or opportunity that you mentioned, and that's enabled by some of the BioIntelliSense’s licensed IP that we made last year. So those development efforts are going on as we speak. I think that's a couple of years away in terms of having a diagnostic product, but I think there are a lot of things that we can do ahead of time that can really create some nice opportunity for us within the sleep channel. As a matter of fact, we've got pilots that are beginning to launch in the back part of this year and will run over the course of next year that we'll continue to learn from and help us get even better in this space and excited with where it can take us.

Our next question comes from Max Kruszeski with the company, William Blair.

Max on for Brandon. Congrats on a nice quarter here. Quentin, I think you had mentioned in your prepared remarks that 76 out of your top 100 customers have EHR integration and that these integrated accounts see an average increase in utilization of about 25% within the first 6 months. Can you just give us some color on, a, what's driving this? B, how durable is that 25% beyond the 6 months? And how is this 25% evolved compared to some of the earlier accounts you guys had EHR integration with?

Yes. Well, look, one of the things that's been unique with integrations is our announced relationship with Epic that we communicated a little over a year ago and really started to step into it in the first half of this year and is really hitting its stride now. And I think I mentioned we've got 30 accounts integrated, and there's another 65 that are in the pipeline that are specific to Epic itself. And when I made the comment around an increase of about 25% 6 months post integration, that's really around the Epic integrations. And so I want to be clear about that. But a lot of it comes down to workflow, making it as simple as the click of a button within their EMR system to be able to order a

Our next question comes from

Congrats on the quarter. On

Yes. Good question, and I appreciate it. As we think about sort of guidance, maybe let me just take a step back relative to that for a second. I'll tell you, we've never been more bullish around the business as we are right now. I think the structural growth drivers in the business are the strongest that we've ever seen. And I think it's demonstrated by the record quarter that we put up with Monitor with AT, innovative channels, even EHR integrated accounts. But when it comes to guidance, when it comes to next year, you're going to see us take an approach that, frankly, is very similar to the approach that we took this year. It's not going to be any different. I think that's one that is very thoughtful. It's going to be prudent. It's going to be calibrated and mindful of the tougher comps that come in, but also being mindful of those things that are really dependent on external timelines like MCT being dependent on the approval from the FDA. In that case, we're not going to put it into our expectations for 2026. And so we'll let that sort of play out as upside. I know where the Street is sitting at right now. I feel good with where the Street is sitting at 17%. I think you're probably going to see us come out and guide to 2026, probably somewhere around that 16% to 18% range that leaves upside with these external factors like MCT being dependent on FDA approval or innovative channels sort of making their decisions when they're going to adapt and when they're going to ultimately step into working together. So we're going to be thoughtful around guidance. We're going to not get ahead of ourselves here. We're going to be responsible and that's how we're going to set up the year. I have not been more excited heading into a new year than what I am right now as we look ahead to 2026. I think there are more drivers in the business, more new features that are going to be introduced into the commercial teams that are going to drive great momentum, but we're not going to get ahead of ourselves either as we head into the new year.

Our next question comes from Daniel Downes with the company, Goldman Sachs.

Just want to add to David's earlier question and how we should think about your reinvestment priorities as you transition to becoming a positive free cash flow business. Just noting your current cash position of almost $600 million. I guess as a follow-up to that, what level of investment do you expect will be required ahead of the

Yes. Thanks, Daniel. This is Dan. I can take that question, and Quentin could fill in anything he'd like. So really very similar to this year, we have been actively reinvesting back into the business. You just heard Quentin remark that next year is setting up really well from kind of an innovation standpoint, and that's through some of the investments that we've been making this year and we'll continue to make next year. Obviously,

Our next question comes from Gene Mannheimer with the company, Freedom Capital Markets.

Great quarter. I just wanted to follow up on the earlier point about your development in the sleep diagnostics. Just for my edification, are you suggesting that any new product for sleep would it be -- would it leverage the same or similar form factor as your

I think, Gene, thanks for the question. But I think, yes, you're thinking about that exactly the right way. The intent ultimately is for us to get to where we can identify, diagnose sleep right off of the exact same platform that we have today. And I think that provides with it a lot of economic benefit. You can almost imagine a future, if you will, where somebody might wear the cardiac -- or sorry, might wear the

Our next question comes from Nathan Treybeck with the company, Wells Fargo.

I just had one follow-up on something that was mentioned on this call. So I think

Yes, it's a great question, Nathan. Again, we're super excited with that MCT category. I think the biggest reason that we see folks choose not to work with iRhythm today is primarily around duration of report being 14 days and getting out to 21 days is going to be important for us, and I think it's going to close a lot of those gaps that the customers who are not working with us yet are requesting. There is the downgradable aspect. We're going to have that option. It's going to be at our option to enact that or not. How we commercialize that, I think, is something we're going to continue to work through. I'm not real certain yet exactly how we'll commercialize it. We don't have a lot of AT business that we're not capturing the revenue on, although we've been pretty intentional about not serving those customers that are looking to really downgrade the capability, but it does happen where MCT might get denied and then you're left with needing the downgrade or you just aren't able to recognize the revenue. So there is a little bit of that with us. We'll figure out how we're going to commercialize the downgrade aspect if we do, but the functionality will absolutely be there in what we submitted to the FDA, and it's going to be left to us in terms of how we decide to commercialize it. We're not certain just yet.

At this time, there are no more questions registered in queue. I'd like to pass the conference back over to the management team for closing remarks.

Well, thanks again for joining us today. We couldn't be more proud of what the iRhythm team continues to accomplish. We're executing with discipline. We're driving innovation. We're delivering profitable growth, all while staying true to our mission of transforming patient care. We're entering the final quarter of the year with strong momentum and a great confidence in the road that sits ahead of us. The future of our company has never been brighter than what it is today. So thank you for your support. Thank you for joining us today, and we'll see you on the road.