iRhythm at 45th Annual William Blair Conference: Strategic Growth Insights

On Wednesday, 04 June 2025, iRhythm Technologies (NASDAQ:IRTC) presented at the 45th Annual William Blair Growth Stock Conference, showcasing its strategic growth initiatives. The company highlighted its robust expansion plans, driven by its innovative Zio cardiac monitoring technology. While iRhythm reported strong financial growth, it also faces challenges such as FDA warning letter remediation and reimbursement issues in Japan.

Key Takeaways

• iRhythm is focused on durable, profitable, and scaled growth through its Zio technology.
• The company reported Q1 2025 revenue of $158.7 million, a 20% increase year-over-year.
• iRhythm is expanding into international markets, including Western Europe and Japan.
• Strategic priorities include FDA remediation and primary care market expansion.
• iRhythm is investing in AI and technology to enhance clinical insights and workflow efficiency.

Financial Results

• Q1 2025 revenue reached $158.7 million, marking a 20% increase from Q1 2024.
• The company has issued new revenue guidance for 2025, expecting between $690 million and $700 million.
• Gross margin improved to 68.8%, with an adjusted EBITDA margin of -1.7%.
• iRhythm is targeting profitability expansion in line with top-line growth.

Operational Updates

• iRhythm serves over 2 million patients annually, capturing 30% of its core market.
• Holds over 70% market share in long-term continuous monitoring and 10% in mobile cardiac telemetry.
• International expansion includes entry into Switzerland, Spain, Austria, Netherlands, and Japan.
• Over 40% of volume is through EHR integrations, with Epicora partnerships boosting volume by 20% post-integration.
• FDA warning letter remediation is 80% complete, focusing on 483 observations.

Future Outlook

• iRhythm is prioritizing the completion of FDA warning letter remediation.
• The company plans to expand into primary care, targeting 27 million potential cardiac monitoring candidates.
• Efforts are underway to secure NHS-wide reimbursement in the UK and improve reimbursement rates in Japan.
• iRhythm is developing algorithms to enhance diagnostic yield and integrating multi-vital signs into the Zio platform.

Q&A Highlights

• The DOJ subpoena requires iRhythm to submit three documents; the company does not foresee significant impact on outcomes.
• Innovative channel opportunities are not included in current guidance due to limited predictability.

In conclusion, iRhythm Technologies continues to pursue strategic growth through innovation and market expansion. For more detailed insights, please refer to the full conference call transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Margaret Kayser Andrew, Med Tech Analyst, William Blair: Still waiting for the clock to tick too. Alright. We’re good. Perfect. Good afternoon, everyone.

Thanks for joining us at the William Blair Growth Stock Conference. My name is Margaret Kayser Andrew. I am the, med tech analyst here at William Blair that covers iRhythm. For a complete list of research disclosures and conflicts of interest, please go to williamblair.com. Now before we kick off the presentation, apologies for for those that don’t wanna hear from me, but you’re gonna hear from me anyways, you know, just a brief comment on on iRhythm.

We named iRhythm as the topic of the year. And while it’s done really, really well, for us, there’s a lot of, strong reasons for continued fundamental momentum in not only their core markets, but we view it as one of the strongest names in our universe that can benefit from the next evolution of health care, and that’s really personalized medicine. And everyone talks about AI changing the landscape of, frankly, the world. Some people are believers. Some people, frankly, aren’t believers, and that’s okay.

But iRhythm is actually one of those companies that has already figured out a way to monetize, and create a tremendous amount of value with AI. As we look at the next vector of growth, with AI, I would actually take it to the next level, and that’s personalized medicine, and asymptomatic care. And that’s the way to to be able to, tailor, treatment and disease disease prevention, excuse me, to to patients. In our view, this is not a maybe. This is not you know, that it’s not happening.

It’s actually actively happening. And these guys are seeing it, in their volumes and what I would argue meaningful volumes, just in a matter of of, you know, four to six quarters probably with value based care contracts and any symptomatic growth. So, watch this space, watch this name. And with that, I’m gonna turn it over to Dan.

Dan, Unspecified, iRhythm: Appreciate it, Margaret. No pressure with that kind of introduction, but good to be here with you all. Appreciate you all taking an interest in iRhythm. This is a growth conference. We do believe iRhythm is a growth story, so do believe this is a good fit for us.

I’m gonna add three adjectives to the word growth to start, which is durable growth, profitable growth, and scaled growth. And I hope those elements come through in the presentation today. Before I jump in, quick note, I will be making forward looking statements here. Please refer to our quarterly and annual filings for more information on risk factors and other important information for you. So iRhythm is a digital health care company.

We started, or commercially launched a little more than a decade ago, have really changed the standard of care in cardiac monitoring. Not done there, which we’ll talk about where we’re going from here. But changing that standard of care away from traditional short term Holter monitors has been our effort over the last decade or so. That has been enabled by a technology platform that is highly scalable, proprietary to iRhythm that combines really the power of wearable biosensors, sophisticated AI tools, and then a digital platform on the back end to deliver it all seamlessly to clinicians. Prior to our introduction, the standard of care for patients in cardiac monitoring were, short term Holter monitors.

This is capital equipment, wires everywhere, very inconvenient for a patient to wear these monitors, and most importantly, only monitoring patients for up to forty eight hours. Cardiac arrhythmias are intermittent by nature. And when you’re monitoring for a short period of time, you’re gonna miss miss important arrhythmias or not find the most critical arrhythmia that’s that’s present there in the patient. So monitoring out to fourteen days, which is enabled by, the wearable biosensor that we’ve developed here, picture there of Zio Monitor, our latest generation hardware, allows a patient to wear this comfortably for up to fourteen days. They can go about their normal day to day activities, shower, sleep, exercise, and really let this kind of fade into the background of of their lives.

Over those fourteen days, we’re collecting on average one and a half million heartbeats. So a lot of data coming, off of the patient. It really does require very powerful, sophisticated a AI tools to draw out the most important insights of of, the data coming from the patient. We’ve invested from the very beginning on the AI in the back end. It’s embedded in our product.

It’s core to everything that we do, and it’s critical for the the future success of the company as well. And I mentioned the digital platform. Don’t underestimate that part of it. It is critical to be easy to do business with. We have to provide those insights really at the point of care for clinicians, make it easy for them to access the most critical aspects of, the patient data, and we make that easy, for clinicians right at the point of care.

Few numbers here that I think highlights iRhythm in terms of where we are in our journey. So starting with revenue from our most recent reported quarter, a hundred and 58,700,000.0 in revenue in our first quarter of twenty twenty five. That was an increase of over 20% year over year compared to the first quarter of twenty twenty four. That was the second consecutive quarter of annual growth over 20%, which speaks to the growing momentum that we’re seeing in the business. In fact, we saw growth kind of accelerate as we move through 2024, eclipsing that 20% number in Q4 last year and Q1 this year.

I mentioned scale early on, so we’re now serving over 2,000,000 patients a year and able to do that efficiently. Our our core market, we characterize that today as 6,500,000 tests. That over 2,000,000 patients we’re serving represents approximately 30% of our core market today, but that isn’t how we believe or how we view our market longer term. It’s more in line with this 27,000,000 patients. I’m gonna dig into that.

That’s a number you’re gonna hear quite a bit as I go through the presentation. Another big opportunity for us is international. There’s 5,000,000 tests outside The US, Ambulatory Cardiac Monitoring Tests. We have the same opportunity outside The US in terms of changing the standard of care, and that’s something that we’re we’re getting after. And in terms of the evidence that has been critical to our success as well, we have over a 25 clinical papers demonstrating the clinical superiority of our technology of Zio, and that’s been fundamental to changing the standard of care in The US.

And then 2 and a half billion hours of curated ECG data. So from the very beginning of the company, we have been collecting every one of those heartbeats that we’ve monitored that has driven this two point five billion hours of data, that is critically important to train and develop the AI tools that are critical to our business. As you think about the problem that we’re trying to solve, so the burden of cardiac arrhythmias in The US is is immense, both from a clinical standpoint as well as a financial standpoint. So over eleven million patients with arrhythmias. You have a forty percent lifetime risk of developing atrial fibrillation, the most common cardiac arrhythmia once you’re over the age of 55.

So highly prevalent disease, and the consequences are are quite severe. So five times increased risk of stroke for patients that have atrial fibrillation and over a hundred and sixty thousand deaths per year associated with atrial fibrillation. Financial burden is is just as problematic, but, obviously, the clinical impact is quite devastating. Margaret alluded to this. If you think about where the health care is moving or should be moving to more preventative, proactive care, we are perfectly positioned to enable that shift and make a positive impact on millions of patients’ lives and have an impact on these numbers.

Again, if you think about our core market today, six and a half million ACM tests being done every year in The US, that’s segmented further. There’s long term continuous monitoring, which is where we operate with our Zio monitor device. We have over 70% market share in that category. That is a category, a segment that we pioneered. This didn’t exist before we came to market over a decade ago.

There continues to be an opportunity to shift away from short term traditional Holter monitors that I mentioned earlier. There’s still despite all of our success, there’s still 1,500,000 short term holder tests being done every year in The US that continues to decrease every year and and benefit or shift to long term continuous monitoring where we have over over 70% share with Zio Monitor. The other opportunity for us within the core market of six and a half million tests is the mobile cardiac telemetry segment with our Zio AT products. So we have just over 10% market share there, have been growing that share nicely since we introduced Zio AT back in 2019. I’ve seen really good momentum with with AT recently in the last two quarters, which has contributed to that growth that I mentioned.

But a meaningful opportunity to grow our share of the MCT segment more in line with that 70% share that we have on the long term continuous monitoring side. Importantly, often high overlap and correlation in terms of the prescriber base for both long term continuous and MCT. So we have a real opportunity to grow our share in that MCT segment. In terms of TAM expansion opportunity, so two that I’d point to, again, international, 5,000,000 tests outside The US. I’ll talk about the countries that we’re prioritizing and have entered into recently.

That is a meaningful opportunity for us. And then within The US, again, 27,000,000 patients that we believe are candidates for cardiac monitoring with Zio. These are patients that are showing up in primary care today with cardiac palpitations noted in their medical records, yet only six and a half million tests are being done. So a real opportunity as we shift as we move into primary care, to capture those 27,000,000 patients. Starting with international.

So international really has not been a contributor to growth for the company historically. Over really, 98% of our revenue is from within The US. We have a small business outside The US in The U in The UK. We’ve seen volumes grow there nicely. We are trying to secure NHS wide reimbursement.

That is a an effort that it’s been ongoing for for several years now and and hopefully, breakthrough there in in terms of getting NHS wide reimbursement. We have a nice business today in the in the private sector within The UK, but ultimately wanna be able to serve that entire market. Late last year, we entered into four Western European countries, Switzerland, Spain, Austria, and The Netherlands. That that was stood up in late twenty twenty four, so really just getting started. And then France and Germany are also on the list longer term.

Those are big market opportunities. Take a little longer to turn on for us, but those are on the road map as well. Japan, Second biggest market outside The US, 1,600,000 ACM tests done per year there. Received regulatory approval in Japan late last year, and a reimbursement decision, just a couple months ago. We have now launched in Japan.

Initially, we will be operating under the local Holter rate in Japan, which was somewhat disappointing outcome for us, to be honest. We do believe we are bringing more value, to the patients there than traditional Holter monitors. The feedback is very clear. We need to generate end market evidence of Zio relative to, Holter monitors on the market in Japan. That will be our effort over the next, year or two to develop that evidence, get back in the reimbursement process, and ultimately secure higher reimbursement.

Now back to The US. I’ve mentioned this 27,000,000 number a couple times now. Break breaking that down. So over fifteen million patients are showing up today in primary care, again, with symptoms suggestive of an underlying arrhythmia, yet only six and a half million tests are being done per year. So a real opportunity as we’re pushing upstream in into primary care to capture those fifteen million patients.

Those are all candidates for Zio and and really should be monitored with Zio. In addition to that, another sixteen million that have risk factors suggestive of an underlying arrhythmia. These patients may not necessarily been showing up showing up in primary care with symptoms, could be masked by other diseases, whether it be diabetes, hypertension, another another disease that essentially masks the symptoms of the arrhythmias. We’ve been generating a lot of clinical evidence that I’ll I’ll, hit here in a minute that show there are significant undiagnosed arrhythmias in these populations. And, again, our view is these patients should be proactively monitored.

I mentioned before, easy to do business with. It’s critical for us to make Zio easy to get on patients, easy for clinicians to adopt into their workflows to make, this 27,000,000 patient opportunity a reality for us. We’re we’re approaching this in two kind of a two pronged strategy. First, we have a land and expand strategy. This has always been kind of fundamental to to our business where we open an account typically through cardiology or electrophysiology as the clinical champion.

They they introduce Zio into the account, and then we quickly look to expand into other departments across across that account. Primary care is one opportunity for expansion. Neurology, nephrology, emergence emergency room, or other opportunities, and and we try to get after all of those. That’s that’s one strategy. And that’s been really at work for several years now, and we’ve we’ve organized our sales team, organized our commercial strategies to really drive this land and expand model.

The second approach here is the top down focus on this, what we call innovative channel. And there’s some logos noted on the page here. These are value based entities, primary care entities that own the risk of the patient. These are often big, you know, big accounts that are have an nationwide presence in a very powerful kinda one to many selling model here. Early in the effort here, but seeing really good signs that this is opening up in a meaningful way for us.

There’s a data point on the slide here Across these five accounts represented on the page here, over 30,000 patients monitored eighty percent of those patients, and these were both symptomatic and asymptomatic patients. But over eighty percent came back with an arrhythmia diagnosed in the report. So, it is clear that there is undiagnosed arrhythmias out in these patient populations, and there’s real benefit in the proactively monitoring these groups. Primary care, again, has been an effort we’ve been getting after for several years. We mentioned on our q one call, over thirty percent of our volume is now being prescribed out of the primary care channel.

So, really making good progress there. That is not the stopping point. Right? We will continue to see a meaningful shift, upstream into primary care. As it relates to the innovative channel, the second second channel here, that’s a subset of this over 30%, and and think of that as kind of low single digits in terms of current volume.

That was essentially zero, you know, two years ago, if not eighteen months ago. So this is a new emerging segment for us. Very encouraging. This is our opportunity to get to that 27,000,000 patient population that I mentioned. And related to that, Margaret mentioned, I think you said personal medicine, or targeted medicine.

So we are absolutely approaching that with that mindset. We are developing algorithms that will essentially work with our innovative channel partners to say, target this patient population, and you will get an eighty percent, you know, die diagnostic yield. We could broaden that and take it down to forty percent. We can tighten it and take it to ninety percent, really kinda dialing in that fidelity of monitoring these patient populations and finding those undiagnosed arrhythmias in the patient population ultimately to prevent downstream health care costs. Right?

So the pitch to these entities are these patients will get diagnosed sometime and somewhere, and you kinda have the choice. You can proactively monitor these patients, diagnose them, you know, at at home through, with Zio, low cost, Or you can leave these patients to be, and they’re gonna show up in the emergency room with a clinical event, and, you know, that will cost you thousands of dollars. So, again, the ROI is very clear here. We believe we’re just getting started and really excited about the opportunity. In terms of our kind of competitive advantage, to essentially secure the the opportunities that I just laid out, I I would say it’s multifaceted.

AI, again, is a big component of our of our business. It’s been a critical enabler. You really cannot deliver the scale and the volumes that we deliver without utilizing AI tools. And that’s together with the IDTF, the clinical operations back back end allows us to serve, again, over 2,000,000 patients and really scale with with our accounts. We have a first mover advantage.

I mentioned we were the pioneer in this segment. We have a great brand reputation, in in the market. We are the market leader. There is high confidence, and physician agreement with the clinical report that we’re delivering, over 99% agreement with the clinical report that we deliver at the end of the wear, so clear provider preference there. And, again, I mentioned workflow a few times now.

That is critically important. EHR integration is something that we have been pursuing for several years. Over 40% of our volume is now through EHR integrations. We have an Epicora partnership that I’ll mention here in a minute, but that is again, that that is as important as being clinically superior. You gotta be easy to easy to do business with, particularly as you’re looking to move upstream into primary care and capture those 27,000,000 patients.

I mentioned our collaboration with Epicora. So this is something we announced about a year ago. Really excited I mentioned EHR integrations across all EHR providers, not just Epic, now represents about, over 40% of our volume today. The benefits are twofold.

One, again, we’re embedding Zio within the clinical workflows of our of our clinicians, of our physicians, making it easier to prescribe Zio and ultimately to read the report at the end of the end of the service. Epicora kinda takes that even further, and really lowers the amount of resources required to get to EHR integration. Today, with a traditional integration, it can sometimes be a six month effort with with an account, a heavy burden on their IT resources. Epic Aura significantly reduces that. This is something that we announced over a year ago.

We now have a little bit less than ten ten customers integrated from an Epic Aura standpoint, seeing really good early results there. Small numbers, again, less than 10 accounts, but on average, kind of a 20% uptick in volume pre and post integration. And, it makes our business very sticky once a once an account kind of invests with us into EHR integration. So this is something we’re gonna continue to lean in lean into. In terms of where we go from here.

So today, our our Zio monitor really just collects ECG data. We see a real opportunity to start developing additional vital signs, onto our platform. We announced a a technology licensing agreement with BioIntellisense, about a year ago, a little more than a year ago to start to bring other parameters onto onto our monitor. So PPG based vital signs, accelerometry derived vital signs that can be respiration rate, heart rate variability, s p o two. A lot of opportunity that this this affords us.

One, it will deepen our competitive moat within our existing business, within our core business. The more insight, the more clinical value we can deliver, the the more, you know, we’ll we’ll remain the provider preferred device. And then it starts to open up other opportunities for us. Right? The more information you’re gathering from patients, the more insights you can ultimately deliver.

This will open up opportunities in sleep, hypertension, heart failure. This is something we’re really excited about. Near term, Zio MCT is our next generation device. That remains our focus, and our priority. Next generation after that, we’ll start to incorporate these multivital signs, and we’re excited about what that can do for us.

Of course, all of that data only matters if you can make sense of it. So, again, this is where the AI capabilities are core to everything that we we do. We will continue to invest in the AI part of our business. We have a second generation deep learned FDA cleared algorithm. We are working on our third, and real opportunity to continue to draw out more and more clinical insights, for the patients that we serve today.

And then just maybe a quick quick comment here. You know, iRhythm has been on a journey to kinda professionalize and mature the company over the last several years. We had a new CEO join us, Quentin Blackford, about four years ago. He has revamped our leadership team and have really a a leadership team that is ready and capable to go execute on everything that you just heard. So excited about what we’re doing there.

We’re also building out the operational infrastructure of the company. This has been an important part of everything that we do to make sure that we’re enabled enabling ourselves to get after those opportunities that I went through. I think most of you are familiar. We’re we’re working through FDA warning letter. That is our number one corporate priority in terms of remediation.

Remain on making very good progress there. Excuse me. From a warning letter standpoint, we’ve completed a % of the activities related to warning letter remediation. 80% complete on the four eighty three observations that we received in August. 80% complete, hitting every timeline and commitment that we laid out to the FDA at that time and look to be wrapping those activities up in the midpoint of this year.

One other update. I know investors sometimes ask about the DOJ subpoena. We received that two years ago. We have been complying with that, providing documents to the DOJ. There was a motion to compel, for three documents, a handful of documents, summer of last year, asking us to waive attorney client privilege.

We, we did hear from a judge recently that, they ruled in favor of the DOJ asking us to turn over those documents. That’s a recent update. I know that’s a question we get from investors, so I wanted to provide that update. Do not believe that materially changes anything in terms of potential outcomes here, but, again, it’s a question we get, and full transparency wanted to provide that update. As I wrap here, maybe quickly back on the financial performance of the company.

Again, hundred and 58,700,000.0 of revenue in the first quarter. Again, second consecutive quarter of over 20% growth. So, again, seeing really nice building momentum in the company and excited about the setup for the year. On a profitability standpoint, a big mention of the start, profitable growth. That has been a a bigger and bigger focus for the company to make sure we continue to grow the company, but continue to do it in a profitable way.

So we wanna see that profitability margin expand, you know, consistent with the top line as well. So gross margin saw 68.8%, two hundred and fifty basis point improvement year over year relative to the quarter first quarter of twenty twenty four, and then negative 1.7 adjusted EBITDA margin, a 750 basis point improvement relative to q one twenty twenty four. So seeing really good leverage in the business. We will continue to see really good leverage in the business. And importantly, the opportunity is really in the g and a part of our business.

If you were to break that leverage down, really, really getting after the g and a portion, continuing to invest in r and d and sales and marketing to really drive near and long term growth for the company. From a a guidance standpoint, we did take the opportunity to update guidance on our following our q one call early in the year, but we were seeing very positive signs in the business and have confidence to raise revenue and and profitability guidance despite being just a quarter into the year. So new guidance for the year, $690,000,000 to $700,000,000 of revenue, 7.5% to 8.5% adjusted EBITDA. Maybe just a couple of comments in terms of our how we approach guidance. We do.

We wanna be thoughtful with guidance. We wanna wanna bake in essentially what we have high confidence in and really hold back things that are maybe emerging in the business. Right? So we’ve talked about innovative channel as a kinda early early opportunity for us, seeing really good indicators that that is opening up for us in a meaningful way, has contributed to some of the the performance more recently in the last two quarters. It’s still early enough, though, where our predictability or visibility into that segment is is not high enough where we have confidence to really bake that in in a meaningful way in guidance.

So that’s something we will leave, you know, leave outside of guidance. I will wrap here just with a a synopsis of kinda how we how we view our opportunity to create long term shareholder value creation. Right? We have a clear set of opportunities. I hope hopefully, that was clear in the in the talk today.

And we’re investing in both innovation from an r and d standpoint, from a technology standpoint, but also that operational infrastructure to support support that growth. And we wanna do that profitably. That is a a big big focus for us. We wanna be good stewards of the business and really bring some discipline into the fiscal discipline into the company. So with that, I will wrap there.

Really appreciate everyone’s time today, and our breakout room is

Margaret Kayser Andrew, Med Tech Analyst, William Blair: The Adler Room.

Dan, Unspecified, iRhythm: Adler Room. Thank you so much.

Margaret Kayser Andrew, Med Tech Analyst, William Blair: Thank you. This presentation has now finished. Please check back shortly for the archive.

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