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Investing.com -- iRhythm Technologies (NASDAQ:IRTC) stock fell 2% Monday morning after the company was targeted in a short report from Spruce Point Capital Management.
The investment firm issued a detailed report titled "Investor Complacency is Off the Charts," estimating that iRhythm shares face 40%-70% potential long-term downside to approximately $43-$94 per share. Spruce Point cited concerns about the medical technology company’s cardiac monitoring products and management credibility.
According to the report, Spruce Point found evidence suggesting the Department of Justice is investigating a possible cover-up by iRhythm management related to potentially fatal product flaws. The firm highlighted FDA findings that iRhythm products put patients’ lives at risk, including issues with the Zio AT device that allegedly ceased transmitting patient data above certain limits.
The short seller also questioned iRhythm’s growth potential in the asymptomatic patient market, which the company has promoted as a significant opportunity. Spruce Point’s survey of 100 cardiologists indicated that testing asymptomatic patients "has not been adopted as a standard of care by any credible organization."
The report further claimed that iRhythm’s products are undifferentiated in a market facing increasing competition, including from consumer devices like Apple (NASDAQ:AAPL) and Samsung (KS:005930) smartwatches that can detect arrhythmias with "near-comparable sensitivity."
Spruce Point argued that iRhythm’s current valuation of approximately $5.4 billion, representing 7x 2026 estimated revenue, is unjustified for what it described as a "niche and commoditized single product company with a history of poor profitability."
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