iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care company focused on creating trusted solutions that detect, predict, and prevent disease, today reported financial results for the three months ended March 31, 2024.

First Quarter 2024 Financial Highlights

  • Revenue of $131.9 million, a 18.4% increase compared to first quarter 2023
  • Gross margin of 66.3%, a 160-basis point decline compared to first quarter 2023
  • Unrestricted cash, cash equivalents and marketable securities of $569.1 million as of March 31, 2024
  • Increased fiscal year 2024 revenue guidance to a range of $578 million to $588 million

Recent Operational Highlights

  • Over half a million registrations during the first quarter driven by continued growth from primary care prescribers, further penetration within existing accounts, and expansion into near-record new account openings for Zio long-term continuous monitoring services
  • Announced collaboration with Epic’s Aura platform to drive efficiencies through EMR integration and enable streamlined access to Zio services through improved operational efficiency for clinicians
  • Presented heart failure prediction algorithm data at ACC in April, demonstrative of the scientific evidence our teams and academic partners are generating in support of EKG as a critical vital sign for predictive clinical insights
  • Upcoming data presentation at the Heart Rhythm Society (HRS) in Boston, MA, from May 16 - 19, 2024

"During the first quarter of 2024, we were very pleased with the continued momentum in our core markets that enabled record unit volumes as well as strong new account openings," said Quentin Blackford, president and chief executive officer of iRhythm. "First quarter revenue growth of 18.4% year-over-year was driven by sustained growth in our existing accounts but also significant contribution from accounts opened within the past twelve months. We have been very encouraged with the growing traction within the primary care channel, highlighting Zio's value proposition as a workflow efficiency tool to expand ambulatory cardiac monitoring capacity within large care networks. When combined with progress that we are making with electronic health integration and emerging clinical evidence on the potential for EKG data to provide future clinical insights, we could not be more excited about our positioning to create significant value for patients, clinicians, healthcare systems, and stakeholders."

First Quarter Financial ResultsRevenue for the first quarter of 2024 was $131.9 million, up 18.4% from $111.4 million during the same period in 2023. The increase was driven by growth in demand for Zio services.

Gross profit for the first quarter of 2024 was $87.5 million, up 15.6% from $75.7 million during the same period in 2023, while gross margin was 66.3%, down from 67.9% during the same period in 2023. The increase in gross profit was primarily due to increased volume of Zio services provided due to higher demand. The decrease in gross margin was primarily due to accelerated recognition of the cost of our legacy Zio XT components associated with our ongoing Zio monitor commercial launch as well as costs related to scaling and training newly onboarded clinical cardiac technicians at our San Francisco IDTF center of excellence.

Operating expenses for the first quarter of 2024 were $125.7 million, compared to $115.2 million for the same period in 2023. Adjusted operating expenses for the first quarter of 2024 were $125.7 million, compared to $109.5 million during the same period in 2023. This increase in adjusted operating expenses resulted primarily from increased headcount-related and third-party costs to support growth in operations and the further development, enhancement, and functionality of our current and future product offerings.

Net loss for the first quarter of 2024 was $45.7 million, or a diluted loss of $1.47 per share, compared with net loss of $39.1 million, or a diluted loss of $1.29 per share, for the same period in 2023. Adjusted net loss for the first quarter of 2024 was $38.1 million, or a diluted loss of $1.23 per share, compared with an adjusted net loss of $33.4 million, or a diluted loss of $1.10 per share, for the same period in 2023.

Unrestricted cash, cash equivalents, and marketable securities were $569.1 million as of March 31, 2024.

2024 Annual Guidance iRhythm projects revenue for the full year 2024 to grow approximately 17% to 19% compared to prior year results, ranging from approximately $578 million to $588 million. Gross margin for the full year 2024 is expected to range from 68% to 69% and adjusted EBITDA margin for the full year 2024 is expected to range from approximately 3% to 4% of revenues.

Webcast and Conference Call InformationiRhythm’s management team will host a conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET. Interested parties may access a live and archived webcast of the presentation on the “Events & Presentations” section of the company’s investor website at investors.irhythmtech.com.

About iRhythm Technologies, Inc.iRhythm is a leading digital health care company that creates trusted solutions that detect, predict, and prevent disease. Combining wearable biosensors and cloud-based data analytics with powerful proprietary algorithms, iRhythm distills data from millions of heartbeats into clinically actionable information. Through a relentless focus on patient care, iRhythm’s vision is to deliver better data, better insights, and better health for all.

Use of Non-GAAP Financial Measures We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted net loss, adjusted net loss per share and adjusted operating expenses. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. See the schedules attached to this press release for additional information and reconciliations of such non-GAAP financial measures. We have not reconciled our adjusted operating expenses and adjusted EBITDA estimates for full year 2024 because certain items that impact these figures are uncertain or out of our control and cannot be reasonably predicted. Accordingly, a reconciliation of adjusted operating expenses and adjusted EBITDA estimates is not available without unreasonable effort.

Adjusted EBITDA excludes non-cash operating charges for stock-based compensation, depreciation and amortization as well as non-operating items such as interest income, interest expense, impairment and restructuring charges, loss on extinguishment of debt, and business transformation costs.

We exclude the following items from non-GAAP financial measures for adjusted net loss, adjusted net loss per share and adjusted operating expenses:

  • impairment and restructuring charges,
  • loss on extinguishment of debt, and
  • business transformation costs to scale the organization.

Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements include statements regarding financial guidance, market opportunity, ability to penetrate the market, anticipated productivity improvements and expectations for growth. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled “Risk Factors” and elsewhere in our filings made with the Securities and Exchange Commission, including those on the Form 10-Q expected to be filed on or about May 2, 2024. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.

Investor Relations ContactStephanie Zhadkevich(919) 452-5430investors@irhythmtech.com

iRhythm Media ContactSaige Smith(262) 289-7065irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC.Condensed Consolidated Balance Sheets(unaudited)(In thousands, except par value)
 
  March 31, 2024   December 31, 2023
       
Assets      
Current assets:      
Cash and cash equivalents $ 520,421     $ 36,173  
Marketable securities   48,671       97,591  
Accounts receivable, net   89,712       61,484  
Inventory   14,873       13,973  
Prepaid expenses and other current assets   13,778       21,591  
Total current assets   687,455       230,812  
Property and equipment, net   112,274       104,114  
Operating lease right-of-use assets   48,073       49,317  
Restricted cash, long-term   8,358        
Goodwill   862       862  
Other assets   52,733       48,039  
Total assets $ 909,755     $ 433,144  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 8,440     $ 5,543  
Accrued liabilities   70,044       83,362  
Deferred revenue   3,068       3,306  
Operating lease liabilities, current portion   15,289       15,159  
Total current liabilities   96,841       107,370  
Long-term senior convertible notes   644,076        
Debt, noncurrent portion         34,950  
Other noncurrent liabilities   908       1,012  
Operating lease liabilities, noncurrent portion   77,640       79,715  
Total liabilities   819,465       223,047  
Stockholders’ equity:      
Preferred stock, $0.001 par value – 5,000 shares authorized; none issued and outstanding at March 31, 2024 and December 31, 2023          
Common stock, $0.001 par value – 100,000 shares authorized; 31,326 shares issued and 31,097 shares outstanding at March 31, 2024, respectively; and 30,954 shares issued and outstanding at December 31, 2023   31       31  
Additional paid-in capital   806,621       855,784  
Accumulated other comprehensive loss   (89 )     (112 )
Accumulated deficit   (691,273 )     (645,606 )
Treasury stock, at cost; 229 and 0 shares at March 31, 2024 and December 31, 2023, respectively   (25,000 )      
Total stockholders’ equity   90,290       210,097  
Total liabilities and stockholders’ equity $ 909,755     $ 433,144  
               

IRHYTHM TECHNOLOGIES, INC.Condensed Consolidated Statements of Operations(unaudited)(In thousands, except per share data)
 
    Three Months Ended March 31,
      2024       2023  
Revenue, net   $ 131,929     $ 111,436  
Cost of revenue     44,413       35,755  
Gross profit     87,516       75,681  
Operating expenses:        
Research and development     16,994       14,842  
Selling, general and administrative     108,660       100,343  
Total operating expenses     125,654       115,185  
Loss from operations     (38,138 )     (39,504 )
Interest expense     (2,860 )     (950 )
Interest and other income, net     2,952       1,432  
Loss on extinguishment of debt     (7,589 )      
Loss before income taxes     (45,635 )     (39,022 )
Income tax provision     32       87  
Net loss   $ (45,667 )   $ (39,109 )
Net loss per common share, basic and diluted   $ (1.47 )   $ (1.29 )
Weighted-average shares, basic and diluted     31,033       30,297  
                 

IRHYTHM TECHNOLOGIES, INC.Reconciliation of GAAP to Non-GAAP Financial Information(unaudited)(in thousands, except per share data)
 
    Three Months Ended March 31,
      2024       2023  
Adjusted EBITDA reconciliation        
Net loss   $ (45,667 )   $ (39,109 )
Interest expense     2,860       950  
Interest income     (3,057 )     (1,434 )
Income tax provision     32       87  
Depreciation and amortization     5,131       3,576  
Stock-based compensation     20,991       18,251  
Business transformation costs           5,686  
Loss on extinguishment of debt     7,589        
Adjusted EBITDA   $ (12,121 )   $ (11,993 )
                 
    Three Months Ended March 31,
      2024       2023  
Adjusted net loss reconciliation        
Net loss, as reported   $ (45,667 )   $ (39,109 )
Business transformation costs           5,686  
Loss on extinguishment of debt     7,589        
Adjusted net loss   $ (38,078 )   $ (33,423 )
         
Adjusted net loss per share reconciliation        
Net loss per share, as reported   $ (1.47 )   $ (1.29 )
Business transformation costs per share           0.19  
Loss on extinguishment of debt     0.24        
Adjusted net loss per share   $ (1.23 )   $ (1.10 )
Weighted-average shares, basic and diluted     31,033       30,297  
         
Adjusted operating expense reconciliation        
Operating expense, as reported   $ 125,654     $ 115,185  
Business transformation costs           (5,686 )
Adjusted operating expense   $ 125,654     $ 109,499  
                 
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