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Presentation

iRhythm Technologies, Inc. misses on earnings expectations. Reported EPS is $-0.95 EPS, expectations were $-0.89.

Operator: 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 Zhadkevich, Director of Investor Relations. You may proceed.

Stephanie Zhadkevich: 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.

Quentin Blackford: 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 Zio’s value proposition in national value-based care accounts, continued expansion into the undiagnosed arrhythmia market segment and strong demand in our international business.

Following record new account onboarding achieved during 2024, we were very pleased to observe significant volume demand throughout the first quarter of 2025 for both Zio Monitor and Zio AT. Demand within our Zio Monitor product line originated from cardiologists, electrophysiologists and primary care physicians, and we were encouraged to see another large national innovative health channel partner begin implementing the Zio Monitor for their population. Additionally, the strong Zio AT demand noted in the fourth quarter of last year continued throughout the first quarter, and we continue to welcome a substantial number of new accounts to the iRhythm family. Marking a momentous occasion in iRhythm’s history, during the first quarter, we surpassed 10 million cumulative patient reports since the company’s inception, underscoring our unwavering commitment to delivering superior patient care.

In our long-term continuous monitoring service line, momentum remains robust as we continue our strategic expansion into upstream care pathways, deepening our presence in existing cardiology and electrophysiology accounts and drive further ACM modality mix shift away from short-term and event monitoring. We estimate that there are approximately 27 million patients in the United States who either present to their primary care provider with cardiac palpitations or are at a high risk to have cardiac arrhythmias due to patient-specific risk factors but remain unaware that an arrhythmia may be present. Many of these patients have comorbid chronic diseases and frequently misattribute arrhythmia symptoms. By implementing Zio long-term continuous monitoring earlier in the care pathway, we can reduce time to diagnosis, eliminate unnecessary specialist referrals where capacity is limited and facilitate timely patient care.

Furthermore, recent scientific evidence demonstrates that these improvements lead to reductions in hospitalizations, enhanced clinical outcomes and decreased health care system costs. At large integrated delivery networks, our upstream expansion into primary care has been facilitated by our land-and-expand strategy of creating awareness, education and clinical champion engagement to drive earlier monitoring in the care journey and enabling better targeting of patients in need of further referral to specialists. By enabling more efficient workflow and an earlier accurate diagnosis, we have the potential to drive additional capacity for specialists like cardiologists and electrophysiologists to see better qualified patients, which in time also may result in additional monitoring.

Fueling this focus to move more broadly across large integrated delivery networks is the advancement of our Epic Aura partnership, which is in the very early innings and demonstrating success with our first health systems on the platform already realizing the expected IT and operational efficiency gains and dozens more health systems either in progress or planning to kick off an Aura integration this quarter. Furthermore, our progress with large value-based innovative channel partners who understand the importance of upstream identification of clinically actionable arrhythmias continues to advance successfully. The majority of these organizations focus on earlier detection within targeted at-risk populations, recognizing that earlier identification often results in lower downstream cost of care and contributes to improved patient outcomes.

Based upon recent real-world retrospective claims analysis performed by our partner, EVERSANA, for every 1,000 patients with certain comorbid conditions who are diagnosed with an arrhythmia earlier in the care pathway, it may result in over $10 million in downstream cost avoidance by preventing events that could increase health care resource utilization, such as emergency department visits or hospitalizations. During the first quarter of 2025, we drove the strongest revenue contribution to date from these innovative channel partners originating from undiagnosed arrhythmia monitoring. Our pipeline of interest from these accounts remains robust, and we are uniquely positioned to capture this emerging market opportunity due to our leadership in long-term continuous monitoring, our scalability, our industry-leading AI that contributes to superior clinical reporting and our extensive repository of clinical evidence demonstrating improved outcomes.

The execution of our multipronged approach to move further up the care pathway and open the primary care channel by implementing our land and expand strategy and partnering with value-based innovative channel partners has resulted in tremendous progress. Coming out of the first quarter, nearly one third of our long-term continuous monitoring volumes now originate from primary care physician channels, where health care providers continue to recognize the value that iRhythm is uniquely positioned to deliver. In addition to the strong demand for long-term continuous monitoring, iRhythm’s mobile cardiac telemetry service achieved its strongest quarter in our history with our commercial teams driving continued Zio AT momentum in accounts acquired during the fourth quarter of last year, as well as another strong quarter of new account additions in Q1.

Zio AT as a proportion of revenue volume reached its highest level to date and the year-over-year revenue growth rate continued to significantly outpace our overall corporate average. The sustained momentum in Zio AT represents a good portion of our improved revenue outlook for 2025, and we continue to look forward to submitting our new Zio MCT with the FDA in the third quarter of this year. Beyond our core U.S. business, we continue to make steady progress in bringing the Zio service to potentially millions more patients globally. In Europe, our commercial team in the United Kingdom has achieved another quarter of record volume while we continue to navigate reimbursement dynamics with the National Health Service. In Switzerland, Austria, the Netherlands and Spain, our commercial teams continue to make progress with a solid pipeline of account activations and increasing clinician appreciation for Zio across an expanding hospital footprint.

Additionally, we announced today our commercial launch in Japan as the first ambulatory cardiac monitoring solution to utilize a 14-day PMDA-cleared artificial intelligence in arrhythmia detection. As the demand for effective long-term monitoring grows, we believe the introduction of Zio in Japan represents an opportunity to enhance patient care and support evolving clinical needs in cardiac monitoring, an impact also recognized by our esteemed partners at the Japanese Heart Rhythm Society. Our entry into the second largest ambulatory cardiac monitoring market globally follows a recent decision by the Japanese Ministry of Health, Labor and Welfare to reimburse Zio at the established Holter monitoring rate. While this initial reimbursement decision is not ideal, we understand the necessity of demonstrating superiority against existing market products, which are predominantly Holter style monitors.

With this launch, we intend to generate additional clinical evidence through real-world studies and local IRB-approved research to support future reimbursement applications that better reflect Zio long-term continuous monitoring value proposition. We look forward to continuing our collaboration with clinicians and working alongside Senko Medical Instruments, our distribution partner to expand access to advanced cardiac monitoring services. In support of these efforts, we have continued to expand our already substantial repository of clinical evidence demonstrating the benefits of Zio ambulatory cardiac monitoring for improved patient outcomes, enhance clinician efficiency and optimize health care resource utilization. At the American College of Cardiology Conference in March, our scientific evidence teams presented 2 large real-world studies encompassing over 1 million patients, demonstrating that short-term Holter duration monitoring frequently fails to detect actionable arrhythmias and that patient-reported symptoms are unreliable predictors of arrhythmic events.

Specifically, among patients with daily or more frequent symptoms who are diagnosed with actionable arrhythmias, nearly two thirds remained undetected through the first 48 hours of monitoring, indicating that 24 to 48-hour monitoring, such as with Holter, would have failed to identify these conditions. In the U.S. market, approximately 1.5 million 24 to 48-hour monitors or nearly $400 million of market value continue to be prescribed annually, representing a significant opportunity to continue to improve patient care within the current ambulatory cardiac monitoring market. More recently, at the Heart Rhythm Society Conference this past week, data was presented from the AVALON study of more than 400,000 patients showing that real-world claims within a commercially insured patient population demonstrated once again that Zio long-term continuous monitoring resulted in the highest diagnostic yield, lowest retest rate and lowest risk of cardiovascular events during a 1-year follow-up period compared to alternative ambulatory cardiac monitoring modalities in competitor brands.

These results confirmed our earlier CAMELOT study, but within a younger, healthier and commercially insured population. Collectively, these studies have now examined both Medicare and commercially insured real-world claims of more than 700,000 patients and provide important evidence of the clinical superiority of 14-day cardiac monitoring with Zio and contribute to the growing body of evidence supporting guideline updates and improved market access. Fundamental to delivering these results has been our continued transformation toward becoming a best-in-class organization committed to quality, integrity and operational excellence. This dedication was recognized through several recent third-party awards for Zio Monitor, including the 2025 Red Dot Award and a Bronze Edison Award in the cardiovascular health diagnostics and monitoring category.

We also reaffirm this commitment to excellence in our latest corporate sustainability report, which details our progress across four key pillars of corporate impact: quality and sustainable technology innovation, access and health equity, workforce and inclusion and environmental matters. An essential component of our commitment to excellence is our organizational focus on quality systems. Throughout the first quarter of 2025, regulatory and quality matters have remained our highest corporate priority, and we continue to make significant progress on our remaining remediation and compliance activities. These initiatives will remain our priority throughout the year, and we are progressing well against the time lines we have committed regarding the warning letter and 483 observations.

We remain dedicated to exceeding the FDA’s expectations and are on track to complete these additional compliance efforts by the end of 2025. As previously communicated, we will allocate all necessary resources to ensure best-in-class quality standards and are committed to addressing the FDA’s warning letter and observations to their complete satisfaction. Finally, I want to address the topics of tariffs. iRhythm is well positioned to navigate this uncertainty. Our number one priority remains our patients and physicians, and we are fully committed to ensuring uninterrupted access to our critical products and services. Our teams have implemented robust mitigation strategies that address potential supply chain concerns and cost implications. Importantly, iRhythm’s unique value proposition aligns perfectly with health care’s current focus on upstream intervention.

Our ability to identify cardiac issues earlier in the care pathway directly supports reduced downstream costs and improved outcomes. This positioning becomes even more valuable in an environment where health care systems are seeking cost-effective solutions that deliver meaningful clinical impact. We remain confident in our ability to execute our growth strategy while managing these external challenges. With that, I’ll turn the call over to Dan to discuss our recent financial performance.

Daniel Wilson: 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 Zio AT and volume growth from new account launches.

New store growth with new store defined as accounts that have been open for less than 12 months accounted for approximately 65% of our year-over-year volume growth. Home enrollment for Zio Services in the U.S. was approximately 23% of volume in the first quarter. Moving down the P&L. Gross margin for the first quarter was 68.8%, slightly ahead of our expectations. Compared to the first quarter of 2024, the improvement to gross margin was driven by volume leverage as well as the realized benefits from operational efficiencies that we have been driving over the prior year, partially offset by higher blended cost per unit from an increased Zio AT product mix. First quarter adjusted operating expenses were $140.4 million, an 11.8% increase year-over-year, primarily driven by our ongoing remediation activities and funding of innovation and commercial growth initiatives.

These purposeful investments were enabled by savings generated from operational excellence initiatives, which demonstrate our ability to deliver top line growth while generating meaningful operating leverage. Adjusted net loss in the first quarter of 2025 was $30.3 million or an adjusted net loss of $0.95 per share compared to an adjusted net loss of $38.1 million or an adjusted net loss of $1.23 per share in the first quarter of 2024. Adjusted EBITDA in the first quarter of 2025 was negative $2.6 million or negative 1.7% of revenue compared to an adjusted EBITDA margin of negative 9.2% in the first quarter of 2024. This 750 basis point improvement in adjusted EBITDA profitability is the direct result of thoughtful and intentional initiatives that our teams have implemented to drive sustainable efficiency at scale.

As noted in prior quarters, we continue to incur incremental legal and consulting fees as well as other company expenses related to FDA remediation efforts and DOJ subpoena activities. We continue to expect these incremental remediation expenses to be approximately $15 million for the full year. Beginning in the first quarter of 2025, we have excluded third-party attorneys fees and expenses associated with the patent litigation with Baxter from our non-GAAP results, including adjusted EBITDA. In the quarter, we incurred approximately $0.8 million of IP litigation expenses associated with the Baxter litigation. Turning to guidance. We are raising full year 2025 revenue guidance to $690 million to $700 million to account for our outperformance during the first quarter and the durable volume growth we are seeing across both Zio Monitor and Zio AT.

This outlook continues to contemplate significant U.S. volume growth along with low single-digit percentage pricing headwind. For the second quarter 2025, we expect revenue to be consistent with historical averages with approximately 25% of full year revenue generated during the second quarter. We continue to expect that gross margin will be flat for the full year 2025 with improvements from clinical operations and manufacturing efficiencies largely offset by proposed tariffs of global imports. As a reminder, we contemplated approximately 50 to 75 basis points of negative impact from tariffs in our original guidance. Based on current tariff rates, we anticipate the impact to continue to be within that range, and we are actively exploring potential opportunities to offset a portion of this impact through various supply chain strategies.

As a reminder, our ZO devices are manufactured and assembled at our facility in California, and we have a widely distributed supplier base, including suppliers in Mexico, China and other APAC countries. Our highest priority is ensuring continued supply to meet the growing demand for our Zio services. Accordingly, we have begun to invest to strategically build up our inventory of raw materials for future finished goods and expect a slight headwind to free cash flow while we ensure that we have sufficient inventory to mitigate any potential unforeseen supply chain disruptions. On adjusted EBITDA margin, we are raising our full year 2025 guidance range to between 7.5% and 8.5% of full year revenues, inclusive of assumed acquired IP R&D charges and the impact of tariffs noted previously.

We continue to anticipate normal seasonality in our adjusted operating expense profile with higher expenses coming through in the earlier half of the year due to spend associated with corporate activities and payroll expenses. We expect adjusted EBITDA margin in the second quarter of 2025 to range between 6% and 7%. Finally, we ended the first quarter in a strong financial position with $520.6 million in unrestricted cash on hand. For full year 2025, we continue to anticipate being slightly free cash flow negative and anticipate becoming free cash flow positive for full year 2026. This expectation takes into consideration the cash flow impact from the inventory buildup of raw materials as discussed previously, as well as prioritized investments into the build-out of next-generation technology platforms.

In closing, we are pleased with our financial results to begin 2025 and our updated outlook for the remainder of the year. The resiliency of our end markets, a balanced set of near- and long-term growth drivers and a focus on operational excellence that yields sustainable profitability is positioning iRhythm to continue to grow our business and serve millions more patients into the future. I will now turn the call back to Quentin for closing remarks.

Quentin Blackford: 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. Zio’s clinically validated physician-trusted platform uniquely positions us to transform cardiac care through earlier detection that enables truly preventative interventions before serious cardiac events occur. Our technology empowers health care providers to deliver proactive care by identifying subtle rhythm abnormalities that might otherwise go undetected, while our AI-powered analytics enable precision care pathways tailored to individual patient needs.

This approach has the potential to substantially reduce health care costs by shifting diagnosis earlier in the care journey, preventing costly emergency interventions and hospitalizations while also addressing the capacity challenges that plague our system today. We’re expanding into new channels and international markets with capabilities to incorporate additional vital signs monitoring over time. Our technology foundation enables scalability that will support future clinical insights and ultimately allow iRhythm to contribute to value-based population health management, the direction health care is evolving toward in the coming decade. We are accomplishing this with an efficient operating model, featuring strong and improving gross margins, improving adjusted EBITDA performance and a path to sustainable free cash flow.

This combination of elements creates long-term shareholder value while advancing health care quality, and we’re grateful to you and our global partners for your ongoing support. Operator, we’re now ready for questions.

Operator: 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.

Allen Gong: 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?

Daniel Wilson: 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 Zio AT grow really nicely now for two quarters in a row and have high confidence that, that’s going to sustain for the remainder of the year. So we’ve baked that into guidance. I would say from an overall approach standpoint, no change as we think about how to set guidance. We want to continue to be thoughtful. We don’t want to get ahead of ourselves and want to make sure we’re putting something out there that’s well balanced.

In terms of upside drivers, you heard us talk about undiagnosed monitoring and our innovative channel partners that is contributing nicely to the business. We see a really nice pipeline of potential contribution there on the horizon. But at the same time, that is a new business that’s emerging for us. There’s kind of different selling cycles, different prescribing patterns. And until we have higher visibility into that, we’re going to hold back from baking too much of that into the guide. So again, overall approach to guidance hasn’t changed. A lot of momentum in the business, which is reflected in the updated guide.

Quentin Blackford: 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.

Allen Gong: 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.

Daniel Wilson: 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.

Quentin Blackford: 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 Zio into that market.

And we’ve got studies sort of designed in a way that’s going to allow us to show that head-to-head analysis. And if we look back at any of the data that’s come out of the CAMELOT study or the recent AVALON study where we show Zio specifically head-to-head against competitor brands or Holter monitors, we know that we’re going to show a superior result. So we need some time to build that in the local market, but we will be back with the reimbursement agency to argue for a higher rate that reflects the value that we’re going to bring into that market. So we’re excited about it, second largest market in the world, a tremendous opportunity, but we’re going to need to work through sort of that process to ultimately get to the right rate.

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

Kallum Titchmarsh: 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.

Quentin Blackford: Yeah. I don’t want to get ahead in terms of expectations around the new Zio MCT product just yet, but we’re certainly very excited by the new features that, that product is going to bring and believe it’s a superior product to Zio AT. But clearly, Zio AT is having success in the market. And I think what you saw play out over the back part of last year and certainly in the first quarter here is that we’re in the vast majority of these accounts already with our Zio Monitor, our long-term continuous monitor. And we have our MCT or Zio AT product on the shelf already. So it’s very easy for our customers to try the Zio AT product. And I think in that process of trying Zio AT, they realize just how good of a product it is.

The reality is there are some features to that Zio AT product that are superior to even products that are in the market today. As an example, having 14 days of continuous wear on an MCT product is really unlike any other product that’s out there today. You’re wearing multiple patches even to get to 14 days with most competitors. So I think there are aspects that customers began to learn around Zio AT, realizing that maybe it was better than what they initially anticipated or hadn’t tried it yet. Once they tried it, they’ve decided to stick with it. And I think what’s encouraging to me is that we saw that momentum from accounts that we’re already in. We know there’s tremendous opportunity having 70% of the long-term cardiac monitoring market, yet only having, call it, 10% to 12% of the MCT market, but being in those accounts already.

So when our own MCT or enhanced MCT product does come to market, I think there’s going to be a real right to win in that opportunity, but we’ll wait to get that to market and talk about the expectations at that point.

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

Macauley Kilbane: 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?

Quentin Blackford: 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.

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

Unidentified Analyst: 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.

Quentin Blackford: 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.

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

Unidentified Analyst: 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?

Quentin Blackford: 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.

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

Nathan Treybeck: Hi. Thanks for taking the question. Congrats on a good quarter. So you said that you still assume you’re going to file for Zio MCT in Q3. I guess, can you talk about the conversations that you’ve had with the FDA? And have they given you any indication that they would do the facility reinspection as part of the approval process? Thanks.

Quentin Blackford: 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.

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

David Rescott: 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.

Daniel Wilson: 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 Zio AT. We do see contribution from undiagnosed monitoring and our innovative channel partners as we’ve been talking about. But really, that performance – the outperformance in Q1, we would tie that to, primarily to Zio AT. And I’ll say that’s kind of how we thought about updated guidance as well in terms of the raise of guidance that is mostly reflective of Zio AT and that performance that we’ve seen now for the last two quarters with the expectation that, that will continue and that will sustain for the remainder of the year.

Yes, undiagnosed monitoring is part of that mix as well and is contributing to the guide. But again, that’s something that’s early. It’s a little less predictable in terms of how and when these new accounts come on. When they come on, they can come on in a big way. But again, I want to make sure that plays through before baking that into the guide and make sure we’re not getting ahead of ourselves.

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

David Saxon: 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 Zio AT. So can you give us a sense for like how much of the AT strength is driven by that competitor being off the market and that dynamic? Or are you seeing traction in accounts that weren’t with that player? Thanks so much.

Quentin Blackford: 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 Zio AT product and folks are trying it, learning that it’s quite good and they’re sticking with it. One thing that’s interesting, while the MCT category is typically prescribed for up to 30 days of monitoring, you can see in the data very clearly, our competitors’ MCT products are worn on average about 12.8 days out of 30 days.

We know that when they get a single Zio AT put on, they’re going to wear it for 13.8 days. They’re going to wear it nearly 14 days. So we’re giving folks something that’s very comparable, if not better, than what they’re currently experiencing. And I think once they try it and see it, they stick with it and then we see the nice growth. So we’re excited by it. Obviously, we get the new Zio MCT product into the market. I think the success that we’re having with Zio AT currently is only going to give us a higher degree of confidence that Zio MCT is going to be just as successful in the market as well.

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

Suraj Kalia: Quentin, can you hear me all right?

Quentin Blackford: Yeah, yeah. Hi, Suraj.

Suraj Kalia: 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 Zio XT versus Zio AT. The second bucket is growth in the legacy channel versus PCP. And the third bucket is large IDNs versus the non-IDNs. Can you quantify for us, just help us dissect a bit more what are the moving parts? How is relative growth in these three buckets, it would be greatly appreciated. Thank you for taking my questions.

Daniel Wilson: Yeah, Suraj, let me see if I can be helpful to that. So just to clarify, legacy XT, I’m assuming you mean Zio Monitor as well. We’ve moved most of that long-term continuous monitoring business now to XT. And again, maybe a couple of comments that are helpful. AT has outpaced overall company growth fairly meaningfully in the last two quarters. So that is now, call it, 14% of overall revenue. Quentin made a couple of remarks in his prepared comments. Primary care is now over a third of our prescriber base in terms of percent of volume. And I think that gives you an appreciation for how that segment has grown for us. We gave that number, call it a year and a half ago when it was in the low 20s. So that’s been a nice contributor to us.

The undiagnosed monitoring, that innovative channel, we referred to it as value-based care group, we commented earlier, that is, call it, low single digits in terms of percent of volume in Q1 ’25. And that really was kind of zero — 18 months ago. So that has been a nice grower for us. And as Quentin noted, we’re really in the very, very early innings for that. So I would expect that to continue to grow as a percent of our revenue. So hopefully, those comments kind of help you get a little better visibility into the sources of growth for us.

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

Jon Young: 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.

Quentin Blackford: 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 Zio long-term continuous monitoring in and then getting the opportunity with the Zio AT product.

In terms of the overall category, I tend to believe that, that MCT category is going to be slightly flat over time. I think that there continues to be a nice healthy market there, but we know that price has been under a bit of pressure from CMS for the last 2 years. I suspect that will continue to be the case, but it’s going to continue to be a nice attractive market for a player like us where we only have, call it, 10% to 12% market share and have, call it, 70% market share in the long-term continuous monitoring segment. I don’t think we ever replicate the 70% market share. Most of our competitors are entrenched in that MCT category. But I think our recent success demonstrates we can have success taking share in the existing accounts we’re already in.

And for every 10 points of market share gain, that’s, call it, $80 million to $100 million of incremental revenue. So if we could get our market share position to 25%, 30%, 40%, it’s tremendous growth for the company over the next few years here.

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

Sam Eiber: 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?

Daniel Wilson: 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.

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

Richard Newitter: 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.

Quentin Blackford: 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.

Richard Newitter: 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.

Quentin Blackford: 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.

Operator: 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.

Quentin Blackford: 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.

Operator: That concludes the iRhythm Technologies, Inc. first quarter 2025 earnings conference call. Thank you for your participation, and enjoy the rest of your day.