• Revenue: $147.5 million, representing 18.4% year-over-year growth.
• Gross Margin: 68.8% for the third quarter.
• Adjusted Operating Expenses: $143.8 million, up 34.3% year-over-year.
• Adjusted Net Loss: Approximately $39.2 million or a loss of $1 per share.
• Adjusted EBITDA: Negative $19.9 million or negative 13.5% of revenue.
• Cash and Short-term Investments: Approximately $522 million.
• 2024 Revenue Guidance: $582.5 million to $587.5 million.
• 2024 Gross Margin Guidance: 68.5% to 69%.
• 2024 Adjusted EBITDA Margin Guidance: Negative 2% to negative 1.5% of full-year revenues.

• Warning! GuruFocus has detected 5 Warning Signs with IRTC.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• iRhythm Technologies Inc (NASDAQ:IRTC) reported $147.5 million in revenue for the third quarter of 2024, representing an 18.4% growth year over year.
• The company achieved record demand from existing accounts and a record number of new account openings, indicating strong market traction.
• iRhythm Technologies Inc (NASDAQ:IRTC) celebrated its one millionth patient registered for the ZO monitor, showcasing the product's widespread adoption.
• The company received FDA clearance for the first of two 510(k) submissions related to its Z system, indicating progress in regulatory compliance.
• International expansion efforts are underway, with commercial launches in Austria, the Netherlands, Switzerland, and Spain, as well as regulatory approval in Japan.

Negative Points

• iRhythm Technologies Inc (NASDAQ:IRTC) is facing significant challenges with ongoing and legacy quality and regulatory issues, including a 2023 FDA warning letter and recent 483 observations.
• The company is voluntarily delaying regulatory submissions for its ZCT system, pushing the expected filing to the third quarter of 2025.
• Incremental legal and consulting fees related to FDA remediation efforts and DOJ subpoena activities are expected to cost approximately $11 million to $13 million in 2024.
• Adjusted net loss for the third quarter of 2024 was approximately $39.2 million, compared to a loss of $24.1 million in the third quarter of 2023.
• The delay in the MCT product submission is expected to impact revenue growth, as it was anticipated to contribute significantly in 2025.

Q & A Highlights

Q: Can you provide more details on the decision to delay the ZAT or MCT approval and how much of this was influenced by the FDA? A: Quentin Blackford, President and CEO, explained that the decision was entirely proactive and voluntary by iRhythm. It was made to ensure a robust submission that aligns with the FDA's expectations, especially after the 483 observations. The company aims to bolster the submission to preemptively address potential questions from the FDA.

Q: With the guidance implying a strong step-up in the fourth quarter, what gives you confidence in achieving this despite a softer third quarter? A: Daniel Wilson, Executive Vice President, highlighted the strong momentum in the business, driven by record new account openings and balanced growth across both XT and AT products. This setup provides confidence in achieving the fourth-quarter guidance.

Q: Can you discuss the profile of new accounts and expectations for volume growth into 2025? A: Daniel Wilson noted that the profile of new accounts is consistent with past wins, with some large accounts requiring longer ramp-up times due to EHR integration. The company expects continued volume growth, although the MCT delay will impact the 2025 revenue outlook.

Q: Could you elaborate on the BioIntelliSense licensing agreement and its commercial aspirations? A: Quentin Blackford expressed excitement about the partnership, which aims to incorporate multisensor capabilities into iRhythm's products. This strategic move is expected to enhance the ACM space and potentially disrupt the hospital-to-home setting, although it is a few years out.

Q: How are the international expansions, particularly in the UK and Japan, expected to contribute to offsetting the MCT delay? A: Quentin Blackford highlighted the excitement around international markets, especially Japan, where commercial launch is anticipated in the first half of 2025. While these markets will contribute incrementally, the company is cautious about projecting immediate large-scale impacts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.