iRhythm Holdings, Inc. Q3 FY2024 earnings call

• Remediation efforts: Committed to quality culture, rebuilding quality management system, increased resources in regulatory and quality, hired new quality leader, engaged consulting firm for audits. Received FDA clearance for first Zio AT 510(k), voluntarily delaying Zio MCT submission to Q3 2025 to address FDA concerns.
• Business performance: Q3 revenue $147.5M, 18.4% Y/Y growth. Strong demand from existing and new accounts, traction in primary care and value-based care. Pilot programs expanding into commercial launch. Milestones include 1 millionth Zio monitor patient, 2 million EHR integrated registrations, and first health system on Epic's Aura.
• International expansion: Over 10,000 Zio registrations in UK in a quarter, commercial launches in 4 European countries, Japanese PMDA approval for Zio monitor with plan to launch in 2025.
• Product innovation: Entered technology licensing agreement with BioIntelliSense for multi-sensor capabilities, aiming to expand product platform and enter adjacent indications like sleep apnea.
• External recognitions: Recognized on Newsweek's World's Best Digital Health Companies, America's Greenest Companies, and finalist for Fierce Life Sciences Innovation Awards.

iRhythm achieved $147.5 million in revenue in the third quarter of 2024, representing 18.4% growth year-over-year. This growth was driven by record demand from existing accounts and new account openings. Volume growth came from both Zio XT and Zio AT, with Zio AT having the largest quarter of registrations ever in Q3 2024. Zio monitor demonstrated superior real-world performance with fewer early wear terminations, longer wear duration, etc. Zio has 1 millionth patient registered and 2 million registrations through EHR integrated accounts. International expansion saw over 10,000 registrations in the UK in a quarter, commercial launches in 4 European countries, and Japanese PMDA approval for Zio monitor.

• 2024 revenue outlook narrowed to $582.5M to $587.5M.
• Full-year gross margin guidance 68.5% to 69%.
• Adjusted EBITDA margin for 2024 expected to range from negative 2% to negative 1.5% of revenues.
• Acquired IPR&D charge expected $32.5M to $33.5M full year. Legal and consulting fees for FDA remediation expected $11M to $13M in 2024, $15M run rate in 2025.
• Zio MCT submission delayed to Q3 2025.

• Regulatory risks associated with FDA remediation efforts, including potential delays in submissions and ongoing scrutiny. Uncertainty around meeting FDA expectations for quality management system remediation. Impact of regulatory challenges on product launches and market entry.

Q: Alan Gong asked about MCT submission and second 510(k) clearance.

A: Quentin Blackford said they got FDA clearance for second Zio AT 510(k) and voluntarily delayed MCT submission to address FDA concerns around qualified technicians.

Q: Macauley Kilbane asked about new account profile and 2025 outlook.

A: Dan Wilson said new accounts have a consistent profile, selling cycle extended for large accounts, and 2025 will be impacted by MCT delay, international expansion, etc.

Q: Kallum Titchmarsh asked about BioIntelliSense deal commercial aspirations.

A: Quentin Blackford said it's a long-term strategic investment for multi-sensing capabilities, with inpatient opportunity in the future.

Q: Marie Thibault asked about remediation processes and MCT wear time.

A: Quentin Blackford explained remediation processes involve internal documentation and workflow, and MCT will have longer wear duration to address market needs.

Q: David Ryman asked about MCT submission timeline and $10M impact.

A: Quentin Blackford said MCT submission delay is due to including technicians in the product, and 2025 outlook needs to account for this delay.

Q: Richard Newitter asked about remediation timelines and spend.

A: Quentin Blackford said remediation spend is $15M, going beyond FDA concerns to rebuild quality management system, with third parties auditing progress.

Q: William Plovanic asked about MCT filing milestones.

A: Quentin Blackford said they're focused on demonstrating commitment to FDA remediation, but can't speculate on FDA actions.

Q: Suraj Kalia asked about Zio MCT trigger thresholds and multi-parameter sensing.

A: Quentin Blackford said MCT has reduced trigger thresholds and multi-parameter sensing enriches data for physicians, with applications in sleep analysis and cost avoidance.