iRhythm at Morgan Stanley Conference: Strategic Growth Insights

On Tuesday, 09 September 2025, iRhythm Technologies Inc. (NASDAQ:IRTC) participated in the Morgan Stanley 23rd Annual Global Healthcare Conference. The company highlighted its robust growth strategies and future prospects, while also addressing challenges in its international expansion. CEO Quentin discussed iRhythm’s strong Q2 performance, the launch of new products, and the company’s focus on data-driven healthcare solutions.

Key Takeaways

• iRhythm’s Q2 performance surpassed expectations, driven by core business strength and innovative channels.
• The company is set to launch Zio NCT, aiming to capture a larger share of the NCT market.
• Expansion into the asymptomatic market and international markets, particularly Japan, is a priority.
• iRhythm is leveraging AI-powered tools to enhance patient outcomes and expand its platform beyond cardiac monitoring.
• The company is focused on integrating with existing healthcare systems and expanding primary care coverage.

Financial Results

• Q2 results exceeded expectations, with significant contributions from the core business and the Zio AT line.
• Increased guidance for the full year, reflecting higher expectations for Q3 and Q4.
• Key performance indicators showed growth, with increased prescribing volume per new account.

Operational Updates

• Transitioning to converting entire networks at once, enhancing scalability.
• Focus on publishing clinical data to validate proactive monitoring’s value.
• Home enrollment now constitutes 23-24% of total volume.
• Filed for FDA approval of Zio NCT, aiming to increase market share in the NCT sector.

Future Outlook

• Targeting the U.S. asymptomatic market, focusing on patients with chronic conditions like type 2 diabetes and COPD.
• Developing AI tools to identify at-risk patients and exploring partnerships for wraparound care.
• Plans to expand primary care coverage to 60-65% in the U.S.
• Exploring sleep diagnostics and potential partnerships to increase average revenue per patch.

Q&A Highlights

• Asymptomatic monitoring is growing, with innovative channel partners playing a key role.
• Payers show interest in asymptomatic monitoring, with virtual cardiology partnerships addressing capacity constraints.
• Data from wearables like the Apple Watch is crucial for expanding the asymptomatic market.

In conclusion, iRhythm Technologies Inc. is poised for significant growth through strategic product launches and market expansion. For a detailed discussion, refer to the full transcript below.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Patrick, Runs the US MedTech team, Morgan Stanley: Thanks for everyone joining day two of the MS Global Healthcare Conference. I’m Patrick. I run the US MedTech team. For those of you who don’t know, disclosures, very exciting. MorganStanley.com/research disclosures. Not the most thrilling thing, but what is thrilling is that I’m here, thanks to Quentin, who’s CEO, and decided to join for some reason, probably because he doesn’t know me well enough to know this very well yet. Thanks for joining.

Quentin, CEO, iRhythm: Thanks for having us.

Patrick, Runs the US MedTech team, Morgan Stanley: I might just dive right in, in the core LTCM model. I think there was quite a lot of shock. I had one of my teammates open the door to my office on the Q2 and with deep surprise at the number you guys printed, given it’s so far above where people expected it to be. You flagged that two thirds of that beat was really the core base business. For those who are less familiar in the audience, maybe you could elaborate a little bit what drove that large LTCM?

Quentin, CEO, iRhythm: Yeah, I would love to. Certainly, we were very excited with the momentum that we saw sort of pick up a bit in that core business. You know, beyond that, we saw a lot of great momentum in the innovative channel business as well. The Zio AT business line performed incredibly well also. There was a lot of big drivers in that quarter. You’re right, two thirds of the beat came out of that core business. I think if you parse that apart, what was encouraging to us was we saw it coming out of really two aspects of it. When we think about the core business, we have our same store business line that we monitor very closely. We saw the momentum there actually pick up a bit. The real strength continued to come out of the new accounts that we were onboarding.

I think I call it the quality of the new account. It’s really not the quality, but it’s the size of the new account. The average prescribing volume per account has really stepped up in a meaningful way. I think there’s a couple of reasons for that. One, I think when you just think about our ability to convert these accounts, we’re now able to go into these large networks and flip an entire network at a single time. Historically, we would go into these large networks pitching for the business, but we would have to convert two, three accounts at a time and then convert the next two, three accounts. A lot of these networks have no interest really in working with multiple vendors for a period of time. If they’re going to convert, they want to convert the entire book of business.

We really built out the size, scale, capability to do that about a year ago. We’ve started to see the meaningful fruits of that. The size of the new account that we’re converting is higher or larger than what we’ve seen historically. I think that just speaks to our scale and capability. We continue to see a lot of those in the pipeline that are very intriguing to us and continue to have success in that. The size of the new account was much larger. I think that the data that we continue to publish, the clinical data, the Camelot data that’s out there, the Avalon data that’s out there, you just saw some recent data of the Amalfi study, continues to articulate the value of proactive monitoring, the value of monitoring with Zio relative to any of our competitive offerings. It just demonstrates that it’s a far superior product.

It’s a faster time to diagnosis. It’s a higher diagnostic yield. It’s a lower retest rate, and it’s also a much lower or lighter healthcare resource utilization cost associated with when you’re using Zio versus any of our competitive products. I think that’s resonating really well with this population. Finally, the last piece of it, the one that I probably get the most excited about, is just we are seeing a real move, even in our large established networks that we’re serving today, a move towards primary care within their practices. What’s happening in that situation is we’ve opened the door through cardiology. We’ve opened it through electrophysiology. We’ve leveraged that relationship to have them bring the primary care physician within their network to the prescribing table, if you will.

A lot of times, that primary care physician is not comfortable diagnosing, but the way we overcome that is with our integrated systems, we can put the report right into the system. Primary care can prescribe. The Cardiology EP can go in, interpret the report, diagnose, and the product almost starts to become used like a rule in and a rule out tool for these networks. If the Cardiologist EP sees something in that report and they want to see that patient, they go ahead and have them referred on to Cardiology or EP. If they don’t, then they go down a different pathway. It starts to address some of the capacity concerns that we’re seeing in our same store accounts.

What gets really, really encouraging about it is once that’s established and now the Card or the EP is seeing a better profile of candidates, they’re able to provide a better service to that patient, whether that’s more procedures for them as a practice, whatever it might be. Post-procedure monitoring actually starts to pick up again in terms of Zio. Now you see the overall account begin to really lift in ways that we hadn’t seen historically. That’s exciting. I think that’s got a lot of legs to it. We’re in the early innings of that, but that’s what’s really driving sort of that core business.

Patrick, Runs the US MedTech team, Morgan Stanley: How critical, I mean, you sort of alluded to that Camelot and Avalon. Was that the key to unlock this? Is it like a data-driven?

Quentin, CEO, iRhythm: It’s amazing to see how that is opening doors to have these conversations. We’re now at the point where folks are getting their hands on it. They’re proactively calling in saying, "Look, we’d like to have a discussion around this. We want to understand it better. What are you, what is this report telling us? Or what is this trial telling us?" We’re able to have that discussion. It certainly leads to the opportunity to open the doors, convert the business, whether it’s coming through the lens of the physician or if it’s coming from the top decision makers in these networks who are seeing the ability to get a better outcome. It’s coming from both angles.

Patrick, Runs the US MedTech team, Morgan Stanley: On the topic of trials, because you’re talking about trials, I have no idea how much people would pay attention, but I gave you Amalfi read out of the ESC. It was super interesting. Maybe for those who are less familiar with it or missed it because there was a lot going on there, a little bit of a background on that trial and roughly what your takes from it were.

Quentin, CEO, iRhythm: Yeah, so the Amalfi study was an important one for us. We ran it out of the UK where we’re trying to demonstrate the value of monitoring in a home enrollment setting, right? Avoiding the patient from ever having to come into the clinic. Can we find diagnosed arrhythmias at a rate comparable to those who are coming into the clinic? Is it a very different experience, right? This is particularly important in that UK market because the backlog to see a cardiologist in some cases is five, six, seven months. We’re just talking about one account right now. They got 3,000 patients in their backlog that they’re trying to work through. What we’re trying to prove is that the ability to find these arrhythmias is high in a home enrollment setting.

What we found over the thousands of patients that we were looking at, both in the one side of it that used the home enrollment approach with the Zio versus just traditional lines of care, which was going into the clinic, was that with Zio in a home enrollment setting, we actually found AFib at a rate of about 6.8% compared to just north of 5% in the traditional arm. Importantly, patients wore the device out to the 14 days. I think the average wear period is 13.9 days out of 14 days. They’re getting the full experience. We’re getting all of the heartbeat data that we need to find the arrhythmia. Importantly, we’re finding the arrhythmias a whole lot sooner. On average, we found them in about 100 days in the home enrollment side of the study compared to north of 500 days in the traditional care pathway.

That’s very important when you think about over a year of difference in terms of time frame to diagnose. What happens in that patient’s journey over the course of that year can be incredibly costly, both to the patient in terms of their health outcomes, but also to the system in terms of what episodes of care they might be dealing with, right? Very encouraging to us. I think it continues to demonstrate home enrollment as a place. We are seeing home enrollment continue to grow in our overall business. We’re up to about 23, 24% of our volume come through home enrollment. Interestingly, primary care, these innovative channel partners are leveraging home enrollment as well back here in the States. I think what we were able to show is that it’s a very attractive way to get after large populations of folks that need monitoring.

Patrick, Runs the US MedTech team, Morgan Stanley: I live in the U.S. now, but my father-in-law has amyloidosis, so I can definitely speak in the UK to the backlog.

Quentin, CEO, iRhythm: I’m seeing audiologists tell me this.

Patrick, Runs the US MedTech team, Morgan Stanley: It’s incredibly tough. It’s pretty bad. You know, the strength that we saw in Q2, just given the nature of what your business is and pulling new accounts on, why wouldn’t we expect that to continue to manifest through the bulk of the second half of the year? I mean, surely that should remain very strong.

Quentin, CEO, iRhythm: I think that it will. I don’t think there’s any reason that we wouldn’t expect to see it. Part of the increase to the guide that we passed through in the full year was certainly the Q2 beat, but then there was an increase in both our Q3 and Q4 expectation as well as we raised the full year well in excess of the Q2 beat. In part, part of that is coming from the core business, right? We do expect that momentum to continue to be strong. I think one thing that just philosophically we try to be very thoughtful about is we don’t want to get ahead of ourselves in some of these aspects of the business that are a little bit less predictable. The core business, I think we understand it well. I think those new accounts we understand well.

Where there’s a little bit less predictability is around the innovative channel partner. Our approach there is we’ll forecast what we see coming into the business that we’re doing and transacting business with today. Those new accounts that we expect they’re going to convert and come online in Q3 and Q4, we’re going to wait to see those come online and then we’ll talk about them. Same with Zio AT. We saw that momentum stick with us through Q1, Q2. We ended up passing some of that through in the back part of the year. We’ll continue to monitor it, but we’ve been really pleased with that AT business.

Patrick, Runs the US MedTech team, Morgan Stanley: We’ll definitely get on to NCT. Were you surprised by the Zio AT strength?

Quentin, CEO, iRhythm: Yeah, we were, to be honest with you. You know, what’s interesting about it is we’re sort of growing that AT business today at the rate that we used to grow it at prior to when the warning letter was issued, right? I think the warning letters certainly took a little bit of the air out of our sails at the time. I don’t think AT is the right product to truly go flip the majority of the market that I think we have a right to go with. I mean, we have 70% of the long-term cardiac monitoring market, yet we only have about 12% of the NCT market with our AT product. I think to really close that gap or catch up, we need NCT. I do think AT is back to growing at some of those prior rates.

We had a little bit of competitive pickup back in Q3 of last year that opened the door to let us bring AT back in, but it did perform and has performed better than what we thought. I think it also speaks to the opportunity that sits ahead of the Zio NCT because what we saw a lot of the AT success and what we continue to see is we place a large emphasis on integrating with our accounts. When we integrate, I’m not sure I could give you a single account that’s ever left working with iRhythm after going through the effort of integrating a system. We try to integrate more than 50% of our accounts. We’re working hard at getting there. We have 70% market share in the LTCM category, 12% in NCT.

With an integrated account, what we found through that competitive disruption was it was very easy to swap AT into that integration so that they could start to use a different product when the competitive product was not available. That bodes well for when we launch NCT because I think we can drop it right into a lot of these integrated accounts and have some quick early wins and success. The challenge with AT that we get from our customers is that it’s only 14 days of monitoring. We need to get closer to 30 days. NCT is going to close that gap. I’m bullish on what that can look like, but that’s another one. I think let’s get it in the market, let it play out, let’s see how it does, and then we’ll talk about the real potential of where it can go.

Patrick, Runs the US MedTech team, Morgan Stanley: We’re kind of on NCT now, so it sort of makes sense. I mean, 21 days is a big improvement. How much does the remaining nine matter?

Quentin, CEO, iRhythm: I think it’s meaningful. I think when you go out and you do the market research, and we’ve done a ton of effort and work around this, getting north of 20 days is sufficient. The feedback that we get is that it is. Most of the up to 30 days is sort of, it started with the CMS code around CMS or around the CPT code for NCT. It’s very clear it’s up to 30 days. It doesn’t require 30 days. It just says up to 30 days. A lot of the physician practices sort of look at that and say, "Okay, I got to be up to 30 days." When you really get into it, what you find out from most of them is we got to be north of 20, right? 21 days is something that we can do very easily off of a single patch.

We can do it off of a single gateway device that doesn’t have to be recharged, which we believe to be important. We think we really address that gap pretty meaningfully. If we launch NCT and a customer really wants 30 days, we’ll give them two patches, get them to 30 days, right? We’re not going to lose the opportunity. Our intel would tell us that we would get out, or we’re going to get after the majority of the market at 21 days.

Patrick, Runs the US MedTech team, Morgan Stanley: Not to put you on the spot, but timelines on NCT, my eyes are saying, I think you used the phrase imminent, maybe in some meetings.

Quentin, CEO, iRhythm: I’m excited to say it’s been filed. We are on file now, and it’s off and running with the FDA.

Patrick, Runs the US MedTech team, Morgan Stanley: That’s great news.

Quentin, CEO, iRhythm: That’s great news. Shout out to the team that got that done. We got that on file today, so well done.

Patrick, Runs the US MedTech team, Morgan Stanley: That’s great news. That’s awesome to hear. I mean, to your point on the LTCM share versus NCT, how do you think about the analog of the 70% there versus the 12%? To date on the other side, is 70% the right way to look at it, or is it a very different kind of a market in its own way? How should we think about peak share, whatever that means?

Quentin, CEO, iRhythm: We would love to have 70% of it, right? I mean, every 10% of share gains is potentially $100 million of incremental revenue for us on an annual basis. We are going to go after that as aggressively as we can. We also realize our biggest competitors, their primary market is the NCT market, right? They are going to protect that aggressively, as I would too. I think we have a real right to win there. We have 70% market share in long-term cardiac monitoring. We are in the vast majority of these accounts already. They know iRhythm. They know Zio. We are integrated with them in many system integrations. Epic Systems is only going to continue to build upon those integrations. It is very easy to put a Zio NCT product right into their offering and make it very seamless to use. I am bullish.

You hear us talk about getting to 25% and then 35%. That is a couple hundred million dollars of incremental annual revenue. I do not know that we ever get to 70% with these large competitors protecting their space, but we are going to go after it for sure. We will see where we get to.

Patrick, Runs the US MedTech team, Morgan Stanley: How much of their time and proportional amount of data upload is limited by the battery? How much engineering-wise is that the biggest?

Quentin, CEO, iRhythm: Yeah, that’s the biggest issue, but it resides primarily on the gateway, right? We have Bluetooth capability that takes you from the device to the gateway, and then we’re pushing to the cloud, right? It’s the battery there that limits the power, or the power consumption is what limits the duration of life. I actually think there’s a model out there where the patients are okay recharging that gateway. They’re recharging smartphones all the time. If we can get this thing to communicate with a smart device and then push up through that connection, that’s one way to get around it. It’s really about, you know, can we keep it to a single patch on the patient? I do think, and we’re doing more studies as we speak that even go beyond 21 days that could get us a longer duration of monitoring.

If that’s what the customer really, really wants, we want to find a way to meet them there. If that’s what they want out of the gate today, we’ll send a second patch. Our competitors today are sending four patches. Usually, they send two, and if the folks want to monitor for a longer duration and get into week three and week four, they’ll send another patch behind it, right? Even two patches, I guess, if you want 21 and another nine days or so, you’re probably a better experience than what our competitors are offering.

Patrick, Runs the US MedTech team, Morgan Stanley: I’m enjoying that my Apple Watch is telling me it’s time to stand. I’m going to ignore it. If we could talk a little bit about asymptomatic, it’s a topic that comes up a fair bit. I used this argument when we were doing the Heartflow IPO, but we screen for colonoscopies structurally with patients, but heart attacks, coronary artery disease, all that side of things, rhythm disorders, it’s kind of the number one killer in the U.S. It’s cardiology, really. Big picture, how do you think about asymptomatic and your role within that?

Quentin, CEO, iRhythm: I think asymptomatic is going to be a big driver of growth for this company in the future. I think we’re struggling a little bit sort of trying to understand how do we predict exactly when it’s going to come online and to what degree and how fast. We’re seeing some traction there already. About 3% of our prescribing volume in Q1 came from the innovative channel partners, which is predominantly asymptomatic monitoring, right? We saw that step up again in Q2 and expect it will continue to grow. How fast that adoption goes is a little bit hard for us to identify. We talk often about Signify, was one of our early customers there. It took them 18 months to get to a nationwide, you know, program. We talk about the likes of CenterWell, and it took them 90 days to get to a nationwide program.

The pace of ramp, just how quickly they go is something we’re still trying to learn. We believe there’s probably 27 million folks in the U.S. alone who have undiagnosed or are completely unaware that they have arrhythmias. I think what’s fascinating is when you start to dig into that, you find out that a vast majority of those 27 million folks exist in roughly four disease states. They’re type 2 diabetics. They have COPD, or they have CKD, or they have OSA. We’re working aggressively to target those comorbid disease states and proactively monitor those populations. This goes down the path a little bit of what we talked about back on Q2. We made a small investment in a firm by the name of Lusome where we’re developing AI.

It’s proprietary AI to ourselves, exclusive to ourselves in cardiac that we can proactively go to these at-risk entities, leverage the power of the algorithms across their EMRs, and look for markers in their patient history that would tell us that that patient is likely to have an arrhythmia. We put a patch on, monitor them, diagnose them, and then we provide care or help ensure that care is provided to reduce the downstream cost of caring for that patient. What’s encouraging is in some of these early trials, the first 1,000 patients that we ran through sort of this algorithm criteria found that about 920 patients actually had an arrhythmia. North of 90% hit rate. The second one that we went after, we opened the aperture just a little bit. We’re still north of 80% hit rate.

More than 800 out of the 1,000 patients that we put a patch on did in fact have an arrhythmia. We’re in the middle of a third trial as we speak, and it’s early, but I can tell you, we’re 100% out of the first handful of folks that have come back in terms of hit rate of who actually had an arrhythmia versus who we thought. I think that’s going to become very important to how we think about opening up this 27 million patient population. If we can go into these payers with a high degree of accuracy, identify which of their patients likely have arrhythmias, get a patch on them, diagnose it, now they can treat them very differently.

It’s interesting when we’re looking at the type 2 diabetic population, outside of a physician’s office, the most common place that a type 2 diabetic will get diagnosed with an arrhythmia is the emergency room. The majority of the time it’s tied into a circulatory related event, right? We can bend that curve. If we can just impact one patient for a provider or a payer, that’s about $17,000 per patient that we’re saving that system, right? We believe we have a real ability to sort of bend that cost curve. We’re excited about getting after it. I think that’s how you’re going to open up the asymptomatic market.

Patrick, Runs the US MedTech team, Morgan Stanley: A dialysis patient has cost $100,000 a year. Now they can just keep going. Most clinics have a team, a cardiology team, because so many of the patients just code out in the chair.

Quentin, CEO, iRhythm: Yep.

Patrick, Runs the US MedTech team, Morgan Stanley: If you have that sense ahead of time, then I avoid a lot of that, right? Get ahead of it. Yeah, that makes a lot of sense. That’s really interesting. I mean, when you’re having those discussions with the payers, I mean, there’s from the best possible way, your product is not particularly expensive in terms of an absolute dollar pricing pack. What is preventing them from that engagement? Is it just that there’s a million things to do and they just haven’t thought about that population management side to date? Like, what’s the...

Quentin, CEO, iRhythm: Yeah, no, there’s a couple of things that come up. Yes, they’ve got a lot of different priorities. There have been situations where we pitch our program, they’re very interested in it, but it comes back to, oh, look, it’s just not the top priority, right? Let’s talk about it in six months or 12 months. That has occurred. One of the big challenges we run into is we don’t have the physician capacity to prescribe and then follow up with these patients. Even if we diagnosed and learned that they had it, we can’t provide the care to ensure we reduce the cost of caring for that patient downstream. We’ve come up with some creative ways to address that.

We bring alongside ourselves a third-party virtual cardiology capability that, one, can prescribe the Zio if you’d like them to, or any patch for that matter if you’d like them to. Two, once diagnosed, we can hand them over to this virtual cardiology capability and ensure that we’re managing that patient to reduce the cost of caring for them over the next 12 months or so, right? Or as long as you want to go, but we’re really intent on trying to get costs down within 12 months. That has opened the door tremendously. Of all the 12 innovative channel partners that we’ve signed, every one of them has required this wraparound service capability. In the 40 accounts that we’re in active discussions with right now, the majority of those are wanting to have that discussion around that holistic program.

To me, this is more than just offering a device to identify diagnosed disease. It’s sort of an entire program that we’re bringing to the table that I think is highly unique, differentiated, that is very compelling to them and can help address their constraints, particularly around capacity or wraparound care afterwards that allows them to step into it much earlier, much quicker.

Patrick, Runs the US MedTech team, Morgan Stanley: That’s so interesting. I mean, when you’re thinking about that wraparound virtual cardiology services care on that side of it, isn’t there an element of just communicating to the patient, even just the knowledge they have, you know, paroxysmal AFib or whatever, isn’t that highly material from that? You can just be like, drink a bit less.

Quentin, CEO, iRhythm: They’ll change, you know, diet habits, health habits, right? Just the awareness and knowing, I think, is something every patient probably wants to know. The payer system wants to know that there’s a change in that behavior, right? What are we able to do to help ensure that we do change that behavior and that system can in fact realize a reduction in the cost of caring for the patient? I think that’s so critical for us. We spend a lot of time trying to measure, monitor, identify, communicate the ability to reduce the downstream cost. What I don’t want to do is open this channel up, end up diagnosing a whole lot more arrhythmia, but then the cost of care is not changing one bit. It’s going to be viewed as we’re just adding incremental cost.

We got to be careful not to let that be the argument that ever wins the day. We’re pretty deliberate about following cost of care, identifying where the cost savings are coming from, and helping our partners understand that.

Patrick, Runs the US MedTech team, Morgan Stanley: I’m going to ask you about a leading question, which is basically, you know, we started by saying Avalon and Camelot opened up for you guys a lot of doors that didn’t exist before. When you think about the asymptomatic side of things, sometimes we get the question around wearables and, well, you’re a wearable too, but cheap wearables and how that competes. Is the existence of the data side just, and the fact that that opened the doors, evidence that in order to have a meaningful position in the asymptomatic, you need a data set, a history? You know, you can’t be a consumer-facing product.

Quentin, CEO, iRhythm: Yeah, I think the data is incredibly important. I think you have to be more than just a wellness sort of device. I think most physicians, for them to change their course of therapy, are going to want to get to a diagnosis of something, right? Not being able to get to a formal diagnosis off of a traditional wearable like you’re discussing here, I think, is something that holds that back. What we find is, with the Apple Watch as a great example, it’s probably one of the best lead generators that we found in our Zio business over the last several years. Folks show up, I got my Apple Watch telling me that I’ve got an arrhythmia or a dangerous arrhythmia that you need to take a look at, put a Zio on, right? That works very well for us. We’re fine with that scenario.

I think it’s actually helped open up the market.

Patrick, Runs the US MedTech team, Morgan Stanley: We were talking before about the primary care physicians and getting them involved in that side. How does, for you and your guys’ perspective, how does servicing that group, how do you approach it differently when you think about the core cardiologists?

Quentin, CEO, iRhythm: Yeah, for us, there’s two ways that we go after primary care. The first is in the large integrated health networks that we’re already in. Here, we’re leveraging the relationship that our Territory Manager, our Key Account Manager, customer service folks, that they already have with the cardiologist and the EP within the network. We’re leveraging that relationship to have the cards and the EPs actually begin to bring the primary care physician into the discussion. A lot of times, we don’t even have to approach the card and the EP to have them already reaching out to primary care to say, we want the prescribing to happen a lot sooner. We’re in a backlog. We’re not seeing patients for three or four months. We don’t want patients to leave our network and go somewhere else. How do we make sure we’re seeing the right folks?

Let’s get a patch on them earlier, and then we’ll identify who we need to see sooner versus later. That’s one approach in the large systems we’re already in, just leveraging the existing relationships, our existing TMs, the power of the cardiologist, the EP within the network, and have them move us further up the care pathway. That’s one way. The other way is through the innovative channel partners. That’s very much more of a high-level strategic, account-level sale, right? Here, we’re talking with whether it’s the CFO, whether it’s the CEO, whether it’s the Head of Strategy or large corporate projects. We’re having those discussions at the executive level, and then they’re pushing it down through their channels. In that scenario, literally, you’ve got a group of, call it maybe up to 10 folks. We aren’t quite at 10 folks in the company now.

We’ll probably get somewhere close to it. It’s roughly 10 folks who are out there really selling at a high enterprise-wide level versus sort of on the ground trying to convince one physician versus the next versus the next. I think this approach of innovative channels and then within health networks we’re in probably get us to 60, 65% coverage of primary care in the States. While we’re doing that, I think word of mouth is going to continue to grow in the primary care space around the ease of use of using patch-based technologies that I think inbound interest will continue to grow. I think we’ll serve the majority of the market. We’ll see where it goes. It definitely is going to be enough to keep us busy for the next several years.

If we’ve got to think differently at that point in time to get after the remaining 30% to 40%, we’ll look at it. I think there’s a lot of different ways we could do that. There are partnering opportunities with folks who have large primary care network or sales channels. If we drop our product in the bag in a number two position, I think there are ways to get after it, right? We don’t have to go build a large commercial force.

Patrick, Runs the US MedTech team, Morgan Stanley: Obviously, U.S. conference, U.S. place, but just to pivot a little bit outside the U.S., Japan, obviously a huge market, huge opportunity. I know you’re a parody on pricing, but how do you think about, or the investment, I should say, how do you think about the opportunity set in Japan?

Quentin, CEO, iRhythm: It’s an exciting market. It’s the second largest market in terms of the volume of ambulatory cardiac monitoring that’s taking place. A little over $1.5 million tests being prescribed every single year. We want to be there. We’re excited to be there. We did a lot of work on the clinical and the medical side, getting up to the point of launching into the market where we had tremendous support from the Japanese Heart Rhythm Society. We had a high medical needs designation bestowed upon the Zio product in particular, not even long-term monitoring, but Zio in particular, which I thought was a big differentiator. Unfortunately, the clinical medical side is very disconnected from the reimbursement authorities, right?

I don’t think we got a lot of credit for a lot of the data that we were able to demonstrate that showed superior outcomes, and therefore we didn’t get a reimbursement level we had hoped for. We decided to go ahead and go into that market at the Holter rate code. We could have decided not to. Ultimately, I thought it was the best thing to go ahead and get into that market, start to seed it. A lot of what the reimbursement authorities were asking for was head-to-head data of our product versus a local Japanese manufactured Holter device on the Japanese population. The best way to get at that in my mind was to get right in the market and let’s just start going head-to-head, and we’ll start tracking and monitoring those outcomes. We’ll present that back to them in the first half of next year.

My hope is, you know, we see a reimbursement rate more reflective of the value that we’re bringing. I think at the current rate today, it’s probably just around a $200 million market. If we can get the rate that we believe, you know, we probably ought to, it’s probably a $500+ million market, right? We’re certainly excited by it. The one thing that I think ends up being a little bit of an advantage in going in at the Holter rate is you don’t have this argument of, well, it’s more expensive, so I’m going to continue to use the old technology. I mean, we’re at parity now. There’s a real opportunity to come in very quickly, build a base, build head-to-head, demonstrate superior outcomes, and then argue for a higher rate. We’ll give it a shot.

Patrick, Runs the US MedTech team, Morgan Stanley: Maybe to push on that a little bit, even at parity in that way, I still don’t really get, being comparatively newer to this, I called it Philips for like 15 years, but like, why are so many people still using Holter monitors? It’s a bit of a weird conundrum. Is it just like the inertia in the system? It just takes time.

Quentin, CEO, iRhythm: I think that’s a little bit, that’s a part of the Japanese culture, right? It’s a very loyal culture. They’re loyal to their own relationships, vendor relationships. They’ve been doing business with these folks for a long period of time. They’ve been trained up in this way. It’s what they know. I think there’s a lot to overcome on that. When you sit down, the last time I was over there just before launch, it was impressive to look across the room and see all the folks from the Japanese Heart Rhythm Society, from the very senior leaders, the President of the society, all the way down through their fellows, in the room supporting our efforts to get into the market. It’s not going to be for lack of that high-level support that we need. It’s going to be changing behaviors. It’s going to be education.

It’s going to be those sort of things. It’s no different than the early times in the U.S. market.

Patrick, Runs the US MedTech team, Morgan Stanley: Even in the U.S., there’s still this like weird sleeve that refuses this.

Quentin, CEO, iRhythm: There’s still 1.5 million, right? You know, short-term Holters being prescribed. Right. It’s kind of silly. I mean, you got data now that would tell you 65%, nearly 65% of all arrhythmias, even in a symptomatic population that get diagnosed, happen after 48 hours. Why are we still prescribing short duration, 48 hours or less Holter monitors? It’s just silly. Yet there’s 1.5 million of them out there, right? And another 0.5 million of events. I mean, there’s close to a $500 million market still serving those older technologies. I think that will shift. I don’t know that you’re never going to get them completely out of the market, but there’s no reason for them to continue to be north of a million, 1.5 million prescriptions every single year. It’s just there’s such a better way to get at this. It comes back to it’s what they’re used to.

We got to educate them. A lot of this happens out in rural settings, right? How do you get out to find these folks? There’s a path there. We’ll get there. It is surprising to see how much still happens through that.

Patrick, Runs the US MedTech team, Morgan Stanley: You do a lot of these meetings. You do a lot of catch-ups and things like that. You get a lot of questions. Are there any things that you are surprised you don’t get asked or that the market’s so fixated on that compared to what you’re focused on internally, you know what I mean? That it just doesn’t fit.

Quentin, CEO, iRhythm: Yeah. No, I think for the most part, our folks understand the story pretty well. The thing that we don’t get asked a lot that I suspect we’ll start to get asked more, but we’re certainly spending a lot of time internally on this, is just building out the platform. I think we have a real right to win in sleep. I think we will absolutely get to the point where we can diagnose sleep disease off of the chest. As we push hard into primary care, one of the big ideas that I have around that is that if we can get to primary care and if we can make it as easy to find arrhythmias as we have, but transfer that over into other disease states like sleep disease, I think we have a right to win there. I think that we will win there.

We’re pushing full steam ahead internally on developing that capability, ultimately submitting something to the FDA here in the future that will give us the ability to diagnose sleep off of the same patch. Potentially, you end up looking at a scenario where all of a sudden your average revenue per patch goes from $300 today to $500 in the future. I love what that does in the margin profile of the business. I wish we talked more about that probably. I understand why we don’t. There’s a lot in the core business that we had to solve over the last 18 to 24 months. I feel great about where we’re at with the FDA at this point. I feel great that they know where we’re taking the product profile and into the future. I suspect we’ll probably start talking more about that into the future.

I think it’s just a tremendous opportunity for us.

Patrick, Runs the US MedTech team, Morgan Stanley: Is there a partnership doable with one of the U.S. players?

Quentin, CEO, iRhythm: Yeah, I think, look, I don’t have any interest in offering up a therapeutic in this space. I have all the interest in the world of sort of leveraging the relationships they might have to help us diagnose earlier and then hand them over to those folks, right? I think there’s great opportunity there. I think those are discussions, you know, they’re active, right? We have them. I think we’re not quite ready yet. We don’t have a diagnostic tool just yet. When we do, I think some of those things can move at a faster pace. I think it makes all the sense in the world that if we’re going to go find this disease, we need to make sure the patients and these systems that we’re finding it with, again, a system that’s not super interested in just diagnosing more and not knowing what to do with it.

If we can couple that with a therapeutic offering or a journey for that patient to get the care they need, I think now you’re starting to offer something really valuable to these folks. I think there’s a pathway there at some point.

Patrick, Runs the US MedTech team, Morgan Stanley: Love it. Quentin, thank you so much.

Quentin, CEO, iRhythm: Yeah, thanks for having us.

Patrick, Runs the US MedTech team, Morgan Stanley: Thanks, guys.

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