iRhythm at Goldman Sachs Conference: Strategic Growth and Challenges

On Tuesday, 10 June 2025, iRhythm Technologies Inc (NASDAQ:IRTC) presented at the Goldman Sachs 46th Annual Global Healthcare Conference. CEO Quentin Blackford outlined the company’s strategic growth plans and addressed current challenges. While iRhythm boasts a strong market share in long-term cardiac monitoring, it faces delays in product development and regulatory hurdles. The company is optimistic about future growth, leveraging AI and expanding into new markets.

Key Takeaways

• iRhythm holds a 70% market share in long-term cardiac monitoring patches.
• The company aims to reach $1 billion in revenue by 2027, despite delays in new product launches.
• iRhythm is expanding into primary care and using AI to identify undiagnosed patients.
• The company anticipates being free cash flow positive by 2026.
• Disruption at Philips has allowed iRhythm to gain market share with its Zio AT product.

Financial Results

• Market Share and Revenue Growth:

- iRhythm holds a dominant 70% market share in long-term cardiac monitoring patches.

- The company experienced over 20% growth in Q4 and Q1, with a year-end growth target of 17% to 18%.

- The revenue goal is set at $1 billion by 2027.

• Gross Margin and Operating Expenses:

- Automation is expected to improve gross margins by 200 basis points, offset by tariffs and pricing headwinds.

- General and Administrative expenses are projected to decline by 300 basis points.

• EBITDA and Cash Flow:

- iRhythm expects an EBITDA margin of 7.5% to 8.5% for the current year, targeting 15% at the $1 billion revenue mark.

- The company plans to become free cash flow positive in 2026.

Operational Updates

• MCT Product Delays:

- The new MCT product is two years behind schedule, with plans to file in the third quarter of the current year.

• Innovative Channel Partnerships:

- iRhythm has 12 agreements in place and aims to expand to 100 partners in the U.S.

• FDA Remediation Efforts:

- The company is 85% through its remediation activities, with completion expected by mid-year.

• AI and Patient Identification:

- AI is being used to identify patients with a high likelihood of arrhythmias, with pilot programs showing an 80% to 90% success rate.

Future Outlook

• Growth Strategy:

- iRhythm plans to grow by 16% to 18% overall, with an internal goal of 20% growth.

- The company is focusing on primary care expansion and leveraging innovative channel partners.

• Market Expansion and Innovation:

- iRhythm aims to include the undiagnosed population in its market reach, using AI for patient identification.

- Investments in R&D and AI are expected to drive efficiency over the next two years.

• M&A Strategy:

- The company is open to strategic M&A opportunities that align with long-term financial goals and open new markets.

Q&A Highlights

• Competitive Landscape:

- iRhythm sees the market as moving up the care pathway, emphasizing primary care and population health programs.

• Regulatory Insights:

- The Department of Justice has not communicated in a year, with a recent ruling favoring the government’s stance on privilege.

Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Unidentified speaker: Okay, we’ll go ahead and get started here. Before we jump in, just need to remind everyone this event is not open to the press. Very pleased to welcome Quentin Blackford, President and CEO of iRhythm. I’ve opened in all of these sessions, happy to take questions from the audience. Please make sure to raise your hand and we’ll get a mic over to you in case there are folks listening in on the webcast as well.

So I thought we could want to spend a little bit time on market dynamics and then also kind of jump into some of the drivers of your business and the momentum that you’ve seen the past couple of quarters. But maybe we just sort of start kind of higher level. A big part of the story has been increased penetration of LTCM and kind of where do you think we are in that evolution? And how do you think that progresses here as we march through ’twenty five and beyond?

Quentin Blackford, President and CEO, iRhythm: So I think the overall ACM market, probably 6,500,000 tests or so. I would say roughly 50% of that, maybe not quite 50%, probably 3,000,000 of the $6,500,000 is coming through long term cardiac monitoring patches of some sort. We hold about 70% market share. I actually believe we probably took about two points of market share in 2024 within the patch segment itself, so not accounting for any sort of mixed dynamics out of short term monitoring into long term cardiac monitoring. But within long term itself, I think we regained some share position as we took share from competitors.

I think that you look outside of the 3,000,000 long term cardiac patches that are taking place, there’s probably a million and a half short term Holters that are still being prescribed. There’s probably another 600,000 event monitors that are still being prescribed. So in my mind, that leaves about two million between those two that really ought to move towards long term cardiac monitoring. There’s some incredible studies that have been published here recently that would demonstrate more than sixty four percent of all arrhythmias are found after forty eight hours of monitoring. So why we’re still monitoring in the short duration doesn’t make a tremendous amount of sense.

So I think you’re going to see long term cardiac monitoring, ourselves, by the virtue of that, shift out of short term monitoring towards long term continue to grow and fuel the market overall. I do think the overall market’s probably growing in that mid single digit range, although I view the market very differently. I know we’ll get into this. But I think when you start to look at the undiagnosed, unaware population, they’re not being tested at all today. I think the market has the potential to be twenty seven million plus patients who likely have an arrhythmia are just completely unaware of it.

We’ll talk about what we’re doing to open up that opportunity. But I think we’re on the very front end of seeing some of that

Unidentified speaker: play out. Why don’t we continue down that path? I think that has been one of the things that is, I think, really characterized not just this year, but the past four or five years just on cardiovascular volumes in general. Whether it’s people make fun of me for suggesting that the Apple Watch might have something to do with this or even ZioPatch or other monitoring technologies, whether it’s more consumer base like a LiveCore. But the flow of patients into cardiology clinics continues to grow at a very, very healthy pace for better or for us.

But maybe let’s continue down like the market growth path for a here and how you see that. A, do you agree with that assessment? And B, where do you think that goes?

Quentin Blackford, President and CEO, iRhythm: I would absolutely agree with it. I think the awareness around cardiac issues is growing, I think, for a couple of different reasons. I think wearables is a big part of that. I think the Apple Watch has been an incredible lead generator for folks like ourselves that bring patients in to see their cardiologist saying, look, I’ve got an alarm that’s going off here. Ultimately they have a patch that’s placed onto them.

I think you also have a younger population that’s just becoming more aware of their health. They’re wanting to do more to monitor their health. They care more for it. We also see a higher degree of prevalence around arrhythmias in the younger population. So I think there’s a lot here that’s leading into that aspect of it.

But at the same time, I do think it creates a challenge. I don’t think there’s enough cardiologists that are out there to see all of these patients, which is a big reason why we’ve made the push very aggressively. And this started probably really three and a half years ago, as soon as I got to the company, I believe that this device, being as easy as it is to apply, ought to be applied in the primary care physician’s office. Whether that’s a primary care physician prescribing it or sending the device directly to the patient’s home and they’re applying it in the home enrollment model, or the device is right there in the primary care physician’s office, it’s easy enough to use, it ought to be prescribed there. Some of what we run into is that the primary care physician will say, well, I’m not comfortable diagnosing.

I don’t have enough experience with it, haven’t been trained up on it. And I think that’s where we’re able to meet sort of the current issues within the cardiology space of not wanting to give up the diagnosis to primary care through a tool like ZeoSuite, where primary care can prescribe it, patient can wear it, the report gets posted right into ZeoSuite, and the cardiologist will go right in there and look at it. They’ll make the determination, do I want to see that patient or do I not? Right? And we start to think about it as a rule in, rule out capability.

I think that’s opened up cardiology or sorry, primary care tremendously sort of through cardiologist itself. But there’s a lot of room to go there yet, but we’ve seen a lot of momentum in our own networks leveraging our cardiologist, our EP relationships to have them push prescribing into primary care given the capacity challenges. And I think

Unidentified speaker: that also, I think, brings us sort one other dynamic. And we’ll talk about the business in more detail in short. But you go to any of these meetings, HRS, AF Symposium, ACC, and there’s just like a bevy of patch companies out there. But then you look at your business and you look at the amount of capital you’ve had to invest to get to where you are today, plus the ecosystem around Ziopatch. So how should we think about just the evolving competitive landscape, putting the two larger players maybe aside for a But there’s a lot of ankle biters out there.

But then at the same time, you’ve built this huge infrastructure.

Quentin Blackford, President and CEO, iRhythm: Look, I think it takes an incredible amount of capital to build these businesses. And I think iRhythm is a terrific example of that. It took us moving north of $500,000,000 in revenue before we could even start to scratch on the ability to be profitable. We’ll turn free cash flow positive in 2026 most likely. So it takes a lot of capacity or capital, a lot of patience to sort of invest into that capability that I think just creates a very high barrier to entry.

There are a tremendous amount of small players out there that are trying to creep into it, but I think the capital restrictions are going to be truly preventative. I mean, you’ve got some competitors in this space who have been at it for five, six, seven years. Maybe they’re $67,000,000 in revenue. They’re not yet profitable. They’re on their round of trying to raise capital.

It’s just a very tough go. And so I do think in many ways it creates a barrier to entry into the space that’s going to allow us to win. I also think that the regulatory requirements have elevated tremendously. We find ourselves navigating through FDA sort of matters for the last twenty four months that we hadn’t necessarily anticipated. But as we come out of that, I think we’ve rebuilt a quality management system.

We’ve got a foundation in place that’s going to allow us to be that much more successful into the future. One of the things we’ve learned here recently in some of the discussions with the FDA is that they’ve been very clear. This is not about iRhythm in particular. This is about us trying to define a set of requirements on how we’re going to regulate this entire industry in this MCT product category code. I don’t think they’ve yet moved into our competitors just yet.

But it’s going to be hard for these smaller players to meet those requirements, those objectives, find investors who are going to be willing to have the patience to let them work through that while they’re putting their capital to work without a sufficient return. So I think the barriers are high. I think that the large players who are here are going to continue to have success with it, but I think it’s going to be harder and harder for these small players to get in.

Unidentified speaker: And I think when you issued the 2027 LRP and a lot has changed since then, you did actually include in that market share loss in LTCM. I think as you introed, it’s actually going the other direction. What’s changed from when you issued that outlook to where we are today?

Quentin Blackford, President and CEO, iRhythm: Yeah, the monitor business, the XT monitor business, right? So just the fourteen day blinded product is actually I mean, it’s produced right in line with what we sort of expected it would, if not even a little bit ahead of what we thought it would. Where we’ve fallen short was on MCT, right, with the Zio AT product. And our long range plan, when we put those expectations out, we actually expected to have the new MCT product in the market about two years ago. So we’re almost twenty four months delayed from where we thought we were going to be.

And in that billion dollar mark, we expected MCT would contribute roughly $200,000,000 to us. Like I said, we’re two years behind that MCT. We’re probably a little bit behind delivering the billion dollar mark in 2027. I would say probably six months behind that. So we’ve offset it in success and progress in other areas.

But MCT has been the lone reason that we weren’t able to get all the way there or haven’t been able to get there. Although if you look at

Unidentified speaker: the share gains in LTCM and the recent benefits you’ve seen from the dynamics of Phillips and MCT, it actually looks like there’s a path to getting a whole lot closer than maybe if we were having this conference six months ago.

Quentin Blackford, President and CEO, iRhythm: I think that’s right. I think there’s a path into it. I don’t think you’re going to hear us talk about it that way at this point. I want to see the results continue to sort of stick in there. But I think if you look at Q4, Q1, two consecutive quarters of 20% plus growth, there’s a path into it.

We see it. We’ve sort of reset that expectation that’s probably six months behind where we thought, but there is a path into it. And I think a lot of it will come down to continued success in AT and the new MCT product, which we will get on file in the third quarter of this year. We’re excited to get that into the market. But also just the success in the undiagnosed, unaware population.

There is tremendous interest in that space. I think we’re doing a lot to point these innovative channel partners towards where the patients that they cover, where that arrhythmia probably exists and where we ought to be monitoring. It’s beginning to open it up. We’re now into 12 innovative channel partner agreements that continue to ramp. We’ve got a pipeline of about 40 that are in active discussions as we speak.

And there’s probably somewhere around 100 in The U. S. Alone that we ultimately want to get to. So as those things come together, yeah, I think there’s a clear path that can potentially be cratered into that $1,000,000,000 mark in ’twenty seven. But that’s probably not the way we’re going to be talking about it or guiding into it.

Unidentified speaker: Understood. And then on the past two quarters of 20% growth, I think there are a little bit different dynamics that influenced the performance in both quarters and probably some crossover. But maybe can you just help us unpack a little bit some of the underlying factors there that drove the sort of above resale trend performance?

Quentin Blackford, President and CEO, iRhythm: Well, think you look back at Q4, we talked pretty openly about it. We had a single customer that came to us sort of with a population health approach that said, look, we want to put a patch on tens of thousands of patients in a very short duration of time. As a matter of fact, there was two patch providers, ourselves being one and a competitor being the other, sort of right there at the table. They were going to split the pilot, run both of us through that pilot. And within about a week and a half, we were demonstrating our ability to scale more successfully produce the outcomes that they were looking for, that they eventually moved all of that over to us.

It was a great outcome in the fourth quarter. It helped drive the north of 20% growth in the fourth quarter. At the same time, we had VOAT that was sort of performing very, very well, coming off the disruption that Phillips had had in the third quarter. And so we were very happy with that, but we were a little bit uncertain on how much of that would stick. We felt like as Phillips sort of got things back in order, much of that business might move back over to Phillips, and therefore we were a little bit hesitant to sort of guide on that coming into the new year.

Same with the big customer accounts, the big bolus that came in the fourth quarter. We didn’t know how that would stick into the new year, so we didn’t roll that into any of our guidance. Coming into the first quarter, obviously we delivered north of 20% growth once again. A lot of that was Zio AT continuing to stick. We probably saw 10 to 15% of that business go back to Philips over the course of the fourth quarter, early Q1.

The rest has stuck in there really well. And I think ultimately that ended up being a terrific door opener for us and AT into those accounts. I think what you have to realize is that with 70% market share on long term cardiac monitoring, we’re in the majority of these accounts. And we try to integrate EHRs into the majority of these accounts. So when a competitor has a disruption like they did, it was very easy to bring AT in and let those customers try AT.

And I think they learned very quickly that AT was actually a pretty good product relative to the competition, and the majority have stuck with it. Like I said, 10% to 15% went back, the majority have stuck, we see new accounts coming on the board all the time with AT. It continues to perform very well. The innovative channels was a little bit lighter in the first quarter, although that’s begun to ramp quite nicely. We signed up several new innovative channel partners in the first quarter that will contribute into Q2, Q3 and Q4, the remainder of the year.

But we’re a little bit more cautious, I would say, on how we guide to that aspect of the business, just because we know how lumpy it might be. We don’t know what the patterns are going to look like. So we want some experience before we start to roll those in. But we’ve signed up some nice innovative channel partners, expect good contribution over the course of the year. We’ll let that play out, then we’ll address it as it does.

Unidentified speaker: And on the Philips dynamic, you sort of referenced it around the EHR piece. But once a account or whatever the nature is, hospital, physician’s office converts to a new player, in this case Philips to you, there’s got to be a really good reason to switch back, right? Because switching is, this is not like an on the shelf disposable where you just flip out one catheter for the other. They are also buying an infrastructure and a whole support process associated with that switch. Why, I get it they’re going be loyalists for whatever reason, the 10% to 15%, but the remaining 85% to 90%, why would they switch

Quentin Blackford, President and CEO, iRhythm: I think if the disruption was the impetus for the integration of the account, they most likely would stick because they would have sunk that cost into it. Most of these are accounts we’re already integrated with, right? So they might be integrated with Affiliates, just like they’re integrated with Zio, right, Suite as well. So it’s easy to go back and across those integrations. What I think happened over the course of the fourth quarter, we you’ve heard us talk about Zio AT not be sort of the competitive product we desire for it to be.

The majority of that is tied to the fact that it’s a fourteen day product and not after thirty days. What’s really interesting is competitive MCT products, if you go look at the data, the average amount of analyzable time on a thirty day competitive MCT product is twelve point eight days. The average amount of analyzable time on a Zio AT product that’s worn for fourteen days is thirteen point eight days of the fourteen. When these physicians had the opportunity to experience Zio AT and look at the data, they realized we actually got more analyzable time off of your AT product than we were getting off of our thirty day BioTel product, right? So I think they started to realize like, well, maybe this AT product is better than what we thought.

And that’s a bit of the word in the street, right, that’s going around right now, is AT is actually a pretty sufficient product. So there are some folks who still want up to thirty days. There’s some payers that still require up to thirty days. There’s some practices that require that. But I think we’ve demonstrated fourteen days is pretty significant.

Yeah.

Unidentified speaker: Yeah? I’ll just repeat the question. Are folks on the webcast. The question is why is there that delta between twelve point eight days of observable monitoring and the thirty day wear time?

Quentin Blackford, President and CEO, iRhythm: It’s a good question. So with competitive MCT products, again, the code requires sort of up to thirty days, so you’re not required to get to thirty days. But because you say up to thirty days, most folks are looking to get out to thirty days, or at least they believe they need that. You look at competitive MCT products, it’s generally multiple patches worn over a thirty day period. Most are five to seven day patches.

So you wear it five days, you put the next patch on, you put the next patch on next until you get out to six patches thirty days. Most physicians will see within that twelve point eight days what they’re for in the patch, and they’ll just tell the patient come back in, or they don’t prescribe, or they don’t have them put on patches three, four, five, and six. They’ve seen enough. So you start to find this in the data, and we can start to show this to these accounts. Hey, here’s your own data.

Here’s your average duration of monitoring with your prior product. Here it is with AT. Oh, by the way, the diagnostic yield with AT is far superior to any other competitive product that’s out there. Data would tell you it’s about 23% better than the next closest competitor. All of a sudden, the product starts to make a lot of sense in the hands of these physicians, so they stick with it.

Now, we will, in our new MCT product, submit for twenty one day wear, which our market intel, market research, we’ve done a ton of it, tells us we need to get beyond twenty days to truly address the entire market. There are still some folks who just can’t get over the idea of fourteen days being enough, and so we’ll go north of 20. If somebody wants to get to thirty days, we’re going to provide a patch. We’re going get you to thirty days. But I think the market is realizing that the Zio product is just a par superior product, even in the MCT space.

And if we talk about opportunities, I mean we probably have about 12% of that market share today. We hold 70% in long term cardiac monitoring. Every 10 points that we can pick up in MCT is 80,000,000 to $100,000,000 of incremental revenue to us. I think what Q4 and Q1 has demonstrated is we’re already in the vast majority of these accounts. Dropping an MCT competitive product like Zio MCT, I continue to be very bullish.

I think it’s going to have great success in these accounts.

Unidentified speaker: And on your point about the innovative channel partners, is the question that you have still to resolve like retention and reorder rates? Is it, what are some of the factors that influence the

Quentin Blackford, President and CEO, iRhythm: right? So let’s take a Signify that we launched almost a year and a half ago now. They were pretty thoughtful, calculated in how they rolled that out. Sort of went three states, went to seven states, sort of 13, up to 25. By the end of this year they’re going be across the entire nation.

But they’ve been very calculated in how they rolled that out. You take a center well that we just signed in the first quarter, late first quarter, they’re not waiting. They’re going nationwide out of the gate and they’re ready to roll. So every account is different. And then there’s the question of, Okay, once they get through their entire population, do they retest that population?

How often do they retest that population? There’s been discussions where some plans are saying, look, we think we want to retest every two years, every three years. We still got to figure those sort of things out. I think what’s encouraging is when you look at the 12 accounts that were right at the finish line with contracts or under contract with, most of them under contract with, that would cover, I believe, about almost three million folks who likely have arrhythmias of the twenty seven million that we need to get a patch on and find it. We’ve done some early work with defining and creating algorithms that can go into these innovative channel partners, be dropped across their medical data history at the patient level, and identify that patient likely has an arrhythmia that’s never been diagnosed with an arrhythmia.

The 1,000 patient pilot we dropped this into, we tied it to a comorbid disease state of diabetes, type two diabetes, out of the one thousand patients we put it on, nine twenty of them had an arrhythmia. We launched into the cohort, did our next one thousand. Of those, eight twenty had an arrhythmia. So out of the two thousand we put this on, we found between eighty percent to ninety percent success in identifying arrhythmias. I just had an update late last week on the pilot we just launched.

The 90 patients we put a patch on, every single one of those ninety patients had an arrhythmia. So I think we’re becoming very good from an AI perspective to go into these innovative channel partners and say, look, we can find with a high degree of prevalence that there’s an arrhythmia here, and when you put a patch on, you are in fact going to get that arrhythmia. Now we have to make sure that the downstream cost of care is being reduced so that they understand the value of this. But most of these commercial payers, they understand the value of early identification of these disease states. They understand their economics as well as anybody.

So it’s resonating quite well. And I think that’s how you open the market from six million tests a day to twenty seven million patients who likely have arrhythmias.

Unidentified speaker: So if I kind of put this together, you have a good market, strong market, improving market share, competitive share gain opportunity, incremental patients potentially coming off the sidelines. How do we put that against your guidance? You grew 20% in Q1, you’re saying 17% to 18% for the year, recognizing by Q4 you’ll have another 20% comp fine. We also are going into new market, your OUS business should be bigger this year than last year even if it’s a small percentage of revenue. You put this all together, what assumptions did you make in the guidance that drove the balance of the year?

Quentin Blackford, President and CEO, iRhythm: So when we put that guidance together, again, our goal is not to get ahead of ourselves when we set the expectations. We want to be thoughtful around it. But we don’t want to introduce unnecessary risk at this point in time. You’re probably going to continue to hear us talk about the company as sort of being a 16% to 18% grower overall. If we can drive 20%, you should know internally the company is motivated and driven to deliver 20%.

That’s what we drive to. But the way we set expectations is going to be in that sort of 16% to 18% range. Until we get more data, more experience in that undiagnosed patient segment, that could completely transform sort of our way of thinking about that. When we set the expectation coming out of Q1, we now had two quarters in a row where the ZOET business was pretty sticky. We felt really good about it.

We started to roll in sort of current performance over the remainder of the year. That was a good part of the guidance increase. And then we had some innovative channel partners that we had very clear daily prescribing trends that we had enough history we could look at that and feel really good about their trajectory and just the continuation of that business. We rolled that in. What we didn’t roll in are new innovative channel partners that we’ve signed up this year that we just, we’re still learning with them.

Right? We don’t know exactly what the behavior of prescribing patterns will look like, and so we want to give that some time, and we’ll roll it in when the time makes sense. But what I don’t want to do is get out there, set an expectation, all of a sudden the innovative channel partner starts a quarter later than what we thought. And I’m explaining why the quarter’s short, but we’re still bullish on the total picture. Didn’t seem prudent.

We want to be thoughtful. But I don’t want to introduce risk unnecessarily. Okay.

Unidentified speaker: Makes sense. I want to go over to the P and L. We’re remiss if we didn’t have you just to ask about updates on FDA and So maybe we just sort of tick through kind of the latest updates. And I know you provided this on the call in the queue, but maybe just for everyone’s benefit.

Quentin Blackford, President and CEO, iRhythm: Yeah. So I think on the FDA side, I would say good progress. I feel as good as I have with the FDA since the whole sort of ordeal of the 483s, the initial warning letter sort of came about. And this whole question of MCT and your clinical technicians, are they part of the product or are they not? We aligned with them very clearly in the mid part of last year, and I think from that point forward we’ve done a tremendous job of addressing their concerns.

We’re 85% of the way through everything we’ve committed to the FDA. We will be complete by the mid part of this year. So we’re talking thirty to forty five days away from really being complete with everything we committed to the FDA to address the remediation and warning letter concerns. We had a call just as recently as about four weeks ago. The tone, the tenor, the relationship is clearly very, very different than what it’s ever been.

And I couldn’t feel better about where that’s at. It doesn’t mean that there’s not challenges out there around the next corner we’re not anticipating, but we’re doing our very best to sort of bring them in, build a relationship, share very clearly where we want to take innovation on the platform. And we’ve had multiple pre sub meetings with them now where they’re helping us to really think through what sort of testing data they’re going to want to see, what they would expect the label to look like in these new products. That never happened historically. I mean, coming into the company, you couldn’t get a single name of somebody at the FDA that we could pick up the phone and talk to.

We just didn’t have a relationship. So I couldn’t feel better about the relationship that the team is building. That feels great. Like I said, we’ll be through our remediation activities by the mid part of the year. Keep in mind, we agreed to go above and beyond what the FDA asked us to do, which we’ll continue to work on that through the back part of the year.

And then we’re going to bring a party in that we committed to the FDA as well to do a full scale audit. And we’ll share those findings with the FDA. But we’ve committed to go above and beyond, and I feel good about where that’s at. The DOJ, look, between the companies, company and DOJ, there’s not been any communication for probably a year now. We did have a recent ruling last week on the attorney client privilege document matter.

The judge ruled in favor of the government, basically taking the position that we couldn’t assert privilege. We’ll most likely appeal that. I don’t think it changes the case at all. I think they’re very much aware of everything that’s in those documents. But it is a matter of privilege being asserted and protected.

And it has ramifications that go beyond just this case. I mean it could go outside the case. So we want to make sure that we assert privilege and that it’s upheld where it needs to be. But there’s really not an update there. There hasn’t been much back and with the DOJ at all in the last twelve months.

Unidentified speaker: And how do we tie or is there a link at all between the 43 remediation efforts and the filing of NextGen AT?

Quentin Blackford, President and CEO, iRhythm: Not in the sense that the FDA is requiring any activity for us to complete before we submit the MCT filing. However, we’ve made it very clear, and I’ve made it very clear internally to our team, our focus, and the FDA needs to understand our focus is addressing their concerns in the April before they start to deem us as trying to move on to the next product and just forget that, right? So we’ve made it a priority to get the 483s completed. As soon as they’re complete, get the MCT file on submitted, right? That will be submitted in the third quarter.

We’re tracking well to that. I have no question it will get submitted in the third quarter. But party one was remediation. Party two is MCT filing.

Unidentified speaker: Okay. That’s super helpful. Maybe we can just kind of go on you made the comment earlier about needing to get to $500,000,000 before you kind of bridge profitability. This year, you’re starting to see another kind of inflection point in adjusted EBITDA margins. Just kind of we could kind of start with gross margins and then walk through the opportunities that continue to support the uplift in profitability.

Quentin Blackford, President and CEO, iRhythm: Yes. So on the gross margin side, I think the teams have done a terrific job of identifying different ways to drive more efficiencies within the gross margin profile. You think about our gross margin profile, there’s really two pieces of it that are significant impacts within it. One is the product cost itself and the other is the service cost. On the product cost, we’ve introduced automation.

That will drive another 200 basis points of improvement this year in the gross margin profile. There’s the service side that we’re making investments into to address the service model that will reduce that side of the house into the future, primarily through system enhancements and efficiencies, improving sort of scan time per report that’s quite poured out. But you think about it in 2025, about 200 basis points of improvement in the product cost profile, offset by tariffs. And there’s about 50 to 75 basis points of tariffs. We’re assuming about 100 basis points of pricing headwinds as well, and then a little bit of mix as AT is just growing faster than XT.

So on the gross margin side, think about that as being roughly flat year over year, although there’s a lot going on underneath it to drive continued improvements that are just being offset with tariffs and a bit of mix. And do we still have a tariff impact? We still have 50 to 75 basis points modeled into it. I think that’s the right way to think about it for the time being. I mean, let’s see where it gets locked in.

It’s a little bit hard to predict, but we continue to build our models that way plan sort of our expectations around profitability as if that’s the range that it’s going to land within. On the OpEx side, I think as you look down through our P and L, you’re going see a little bit of leverage coming out of R and D. There’s been a tremendous amount of development work on MCT to get it ready for submission. Now that we get submitted, Some of that cost comes down a little bit. Sales and marketing, we’ll lever a bit there.

We had some big Epic Aura investments that we made in the last year that we’re starting to anniversary, so that’ll step down maybe a point. But you’re going to get about 300 basis points out of G and A that we continue to get really focused and turn the screws on in terms of where we think we can get that. All told, that’s going give you an EBITDA margin somewhere between 7.5 to 8.5 this year. But when you think about that, G and A still sits in the low 40s. Not selling general and administrative, it’s just pure G and A is about 42% of revenue in that model.

We know most peers will operate with G and A sitting down in the low 20s. I don’t think we can ever get our business model to the low 20s, to be honest with you. I do believe we can get in the low 30s. When we think about taking EBITDA margins from 15% that we’ve guided to at that $1,000,000,000 mark, I truly believe this model can get into the mid-20s. G and A is going to be one of the biggest enablers to get there.

And we’re making a lot of investments in enabling that as we speak. But that’s where you’re to see the majority leverage continue to come from.

Unidentified speaker: And when you make the comment about the business model doesn’t necessarily lend itself to that low-20s G and A, is that because of the IT investments you have to

Quentin Blackford, President and CEO, iRhythm: It’s a little bit of IT. There’s a little bit of the aspect that we bill a lot of payers. So the revenue cycle management piece is a higher component than what I’m used to seeing in other places where maybe you’re billing hospitals or private practices here. We have a lot of payers. There’s a lot of back and denials you’ve got to kind of work through.

And then you have the IDTF, right? And then just the overhead required to manage the IDTF, which for us is 600, 700 people, right? There’s a good amount of management layer that’s required in that that just weighs on the G and A profile. So I think those sort of things probably create a model that doesn’t let us get to low 20s, but there’s no reason we can’t get to low 30s in time.

Unidentified speaker: Okay. And some of that depends, of course, on the level of revenue growth. I mean, the growth in G and A should be pretty fixed, or is it like worth it connected to revenue?

Quentin Blackford, President and CEO, iRhythm: The RCM piece is a little bit connected to revenue. Because right now it’s so much of a hand to hand battle, if you will, trying to navigate through that. So we have to throw a lot of people resources. I think in the next two years you’re actually going to see, in this space, a tremendous amount of AI that is likely going to drive tremendous efficiency. Investing in, we’re already investing in.

But until we see how that shows up, I think the part of Centimeters is sort of scaling. But that’s just a piece of G and A. Overall, it should scale well.

Unidentified speaker: Outside of profitability, mean, obviously, you talk about turning free cash flow positive next year, although you do have a very strong balance sheet position that enables both reinvestment in the business as well as any of their other strategic paths you choose to go down. But how are you thinking about M and A? The one thing that we hear sometimes is a multi parameter monitor would have a huge amount of incremental differentiation. Now no one else has one, but it would further position the company in an advantageous way, both competitively and from a clinical value proposition standpoint. How are you thinking about M and A?

And I know you have the BioIntellisense partnership, where does that fall in kind of your priority scheme?

Quentin Blackford, President and CEO, iRhythm: I think the multi parameter sensor, I absolutely agree with that. It was a big part of the premise behind why IntelliSense licensing agreements. Further, the more we move into primary care and get earlier in the care pathway, I think the more we have a right to look for more matters, right? Whether that’s clearly it’s going start with cardiac arrhythmia. Sleep is going to be one that’s going to come very quickly behind it as we launch pilots later this year.

Hypertension, blood pressure is another one that I think you can see a path to get into. Multi vital sign monitoring I think is another one. There’s a real place as we get further up the care pathway to look for more things, given how easy we’ve been able to make it for the physician to prescribe the product and then diagnose these things. So it’s critical. I think from an M and A perspective, we’re going to be thoughtful around it.

We’ve got a strong balance sheet. Areas that we can really advance from a strategic perspective that fit well from a financial profile can help us drive leverage in the overall model and be accretive to the long term financial goals are going to be very important to us. Things that can open up new adjacent markets that maybe we want to get into, but organically is going to take us a little bit longer so it can speed us to market. Those things get interesting to us. I will tell you, I think we have a pretty robust corporate development function where we understand the landscape incredibly well.

We haven’t rushed to any transaction. We’re not going to rush into a transaction. But if we found one that made the right sense and fit for all the reasons I gave you, we wouldn’t be shy on pulling the trigger to do that. But it’s got to be strategically sort of a clear fit and accretive to what we’re doing or accelerating what we’re doing. I think that’s very important.

Unidentified speaker: Maybe in the last minute we have here, I’ll turn it back to you. So any kind of closing or wrap up comments you want to kind of leave folks in the audience or on the webcast Yeah.

Quentin Blackford, President and CEO, iRhythm: Just we couldn’t be more excited about where the company’s at, to be honest with you. I think the momentum in the company is as strong as it’s ever been. I think the market is very different than the way folks have thought about this market. I think it’s very different than the way our competitors even think about the market, to be honest with you. I think if you were to sit down with a Phillips, a Boston, a Baxter, a Vital Connect, smaller player but certainly having some success, they would define the market very, very differently.

The market’s not 6,500,000 ACM tests being performed each and every year. The market is further up the care pathway. It has to happen in primary care. You have to do this through population health programs, value based care. That’s right where we’re going.

I think we have a product that plays there better than anybody else. All of our competitors I’ve listed, they start with MCT. The only way they offer a long term cardiac monitor is when they downgrade into long term cardiac monitoring. There’s no way they’re making a profit. I if I took our AT product and downgraded into our long term cardiac and still provided the gateway, all the electronic componentry that MCT has the benefits of, you wouldn’t drive a profit.

And so I understand why they’re not pushing into this space. I love that fact. I think it leaves it for us to go get where the market is going to be. And that’s why I think the market’s 27,000,000 plus patients by the time we get it opened up. So we’re incredibly bullish about that and feel good about where the momentum is.

Unidentified speaker: Excellent. Well, think with that, we’re out of time, Quintin. Thank you for making the trip this year at the And look forward to continuing to follow all the progress this year.

Quentin Blackford, President and CEO, iRhythm: Terrific. Thanks for having us. We appreciate it.

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