iRhythm Technologies Announces Third Quarter 2024 Financial Results

GlobeNewswire Inc.

October 30, 2024 8:08PM GMT

SAN FRANCISCO, Oct. 30, 2024 (GLOBE NEWSWIRE) --  iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care company focused on creating trusted solutions that detect, predict, and prevent disease, today reported financial results for the three months ended September 30, 2024.

Third Quarter 2024 Financial Highlights

  • Revenue of $147.5 million, an 18% increase compared to third quarter 2023
  • Gross margin of 68.8%, a 260-basis point increase compared to third quarter 2023
  • Unrestricted cash, cash equivalents and marketable securities of $522.0 million as of September 30, 2024

Recent Operational Highlights

  • Strong quarterly registration volume driven by record demand from existing accounts combined with another record quarter of new account openings in the United States and record registrations in the United Kingdom
  • Received FDA 510(k) clearance for updates previously made to the Zio AT device as letter to file
  • Expanded global reach with commercial launch of Zio monitor in Austria, the Netherlands, Switzerland, and Spain, and received Japanese PMDA regulatory approval for Zio monitor, highlighting our continued commitment to bringing our innovative digital healthcare solutions to millions of people worldwide
  • Entered into technology license agreement with BioIntelliSense to incorporate medical grade, connected, multi-sensor capabilities into our future ambulatory cardiac monitoring products, positioning us to expand the capabilities of our product platform
  • Upcoming data at American Heart Association's Scientific Sessions 2024 in Chicago from November 16–18

"The third quarter of 2024 was an exceptional quarter of execution as our teams drove significant demand in our core business, made substantial progress in expanding our Zio services into global markets, and established an important licensing agreement with an external partner to drive future platform capabilities for long term growth," said Quentin Blackford, president and chief executive officer of iRhythm. "Third quarter revenue growth of over 18% year-over-year was driven by record volume demand from existing accounts, and our field teams were also able to open a record number of new accounts during the quarter while continuing our expansion into primary care channels. We were also very pleased to be able to celebrate one million patients having been registered for Zio monitor - our newest generation, long-term continuous monitoring system - in October and have officially launched our first commercial account using Aura - Epic’s specialty diagnostics and devices suite."

"We also made tangible progress towards long-term initiatives to drive future growth. For the first time ever, we have achieved more than 10,000 billable registrations in a single quarter in the UK, and we are excited that we have begun receiving physician orders following commercial launch in four additional European countries. Furthermore, we have recently received a FDA 510(k) clearance for updates to our Zio AT device associated with our FDA remediation efforts, an ongoing and critical priority for our teams to demonstrate our commitment to quality, compliance and performance. With strong execution across multiple growth levers and with additional catalysts on the horizon, we could not be more excited about the future of iRhythm."

Third Quarter Financial Results
Revenue for the third quarter of 2024 was $147.5 million, up 18% from $124.6 million during the same period in 2023. The increase was driven by growth in demand for Zio services.

Gross profit for the third quarter of 2024 was $101.5 million, up 23% from $82.5 million during the same period in 2023, while gross margin was 68.8%, up from 66.2% during the same period in 2023. The increase in gross profit was primarily due to increased volume of Zio services provided due to higher demand. The increase in gross margin was primarily due to operational efficiencies as well as the absence of increased reserves for excess Zio XT printed circuit board assembly (PCBA) components that were incurred during the prior year.

Operating expenses for the third quarter of 2024 were $151.8 million, compared to $110.1 million for the same period in 2023. Adjusted operating expenses for the third quarter of 2024 were $143.8 million, compared to $107.1 million during the same period in 2023. The increase in adjusted operating expenses was primarily driven by a $32.1 million charge for license consideration payable to BioIntelliSense that was recognized on iRhythm’s unaudited condensed consolidated statements of operations as acquired in-process research and development (“IPR&D”) expense during the third quarter of 2024. In alignment with SEC guidance around non-GAAP financial measures relating to acquired IPR&D expense, iRhythm does not exclude expenses related to acquired IPR&D from its non-GAAP results.

Net loss for the third quarter of 2024 was $46.2 million, or a diluted loss of $1.48 per share, compared with net loss of $27.1 million, or a diluted loss of $0.89 per share, for the same period in 2023. Adjusted net loss for the third quarter of 2024 was $39.2 million, or a diluted loss of $1.26 per share, compared with an adjusted net loss of $24.1 million, or a diluted loss of $0.79 per share, for the same period in 2023. The increase in net loss was primarily driven by a $32.1 million charge for license consideration payable to BioIntelliSense that was recognized on iRhythm’s unaudited condensed consolidated statements of operations as acquired IPR&D expense during the third quarter of 2024.

Unrestricted cash, cash equivalents, and marketable securities were $522.0 million as of September 30, 2024.

2024 Annual Guidance
iRhythm projects revenue for the full year 2024 to grow approximately 18% to 19% compared to prior year results, ranging from approximately $582.5 million to $587.5 million. Gross margin for the full year 2024 is expected to range from 68.5% to 69.0%. iRhythm now expects adjusted EBITDA margin for the full year 2024 to range from approximately negative 2% to negative 1.5% of full year revenues. Adjusted EBITDA guidance includes license consideration payable to BioIntelliSense that is recognized on iRhythm’s consolidated statements of operations as acquired IPR&D expenses, including a charge of approximately $32 million of expense incurred during the third quarter of 2024. In alignment with SEC guidance around non-GAAP financial measures relating to acquired IPR&D expense, iRhythm will not exclude expenses related to acquired IPR&D from its non-GAAP results, which include adjusted EBITDA.

Webcast and Conference Call Information
iRhythm’s management team will host a conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET. Interested parties may access a live and archived webcast of the presentation on the “Events & Presentations” section of the company’s investor website at investors.irhythmtech.com.

About iRhythm Technologies, Inc.
iRhythm is a leading digital health care company that creates trusted solutions that detect, predict, and prevent disease. Combining wearable biosensors and cloud-based data analytics with powerful proprietary algorithms, iRhythm distills data from millions of heartbeats into clinically actionable information. Through a relentless focus on patient care, iRhythm’s vision is to deliver better data, better insights, and better health for all.

Reclassifications
Certain prior period amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact on previously reported results of operations or financial position.

Use of Non-GAAP Financial Measures
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted net loss, adjusted net loss per share and adjusted operating expenses. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. See the schedules attached to this press release for additional information and reconciliations of such non-GAAP financial measures. We have not reconciled our adjusted operating expenses and adjusted EBITDA estimates for full year 2024 because certain items that impact these figures are uncertain or out of our control and cannot be reasonably predicted. Accordingly, a reconciliation of adjusted operating expenses and adjusted EBITDA estimates is not available without unreasonable effort.

Adjusted EBITDA excludes non-cash operating charges for stock-based compensation expense, changes in fair value of strategic investments, impairment and restructuring charges, business transformation costs, and loss on extinguishment of debt. Business transformation costs include costs associated with professional services, employee termination and relocation, third-party merger and acquisition, integration, and other costs to augment and restructure the organization, inclusive of both outsourced and offshore resources.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements include statements regarding financial guidance, market opportunity, ability to penetrate the market, anticipated productivity improvements and expectations for growth. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled “Risk Factors” and elsewhere in our filings made with the Securities and Exchange Commission, including those on the Form 10-Q expected to be filed on or about October 30, 2024. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.

Investor Contact
Stephanie Zhadkevich
investors@irhythmtech.com

Media Contact
Kassandra Perry
irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except par value)
(unaudited)

 

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

519,535

 

 

$

36,173

 

Marketable securities

 

2,496

 

 

 

97,591

 

Accounts receivable, net

 

77,427

 

 

 

61,484

 

Inventory

 

15,032

 

 

 

13,973

 

Prepaid expenses and other current assets

 

13,419

 

 

 

21,591

 

Total current assets

 

627,909

 

 

 

230,812

 

Property and equipment, net

 

122,390

 

 

 

104,114

 

Operating lease right-of-use assets

 

45,570

 

 

 

49,317

 

Restricted cash, long-term

 

8,358

 

 

 

 

Goodwill

 

862

 

 

 

862

 

Long-term strategic investments

 

59,059

 

 

 

3,000

 

Other assets

 

45,540

 

 

 

45,039

 

Total assets

$

909,688

 

 

$

433,144

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

7,593

 

 

$

5,543

 

Accrued liabilities

 

73,958

 

 

 

83,362

 

Deferred revenue

 

3,031

 

 

 

3,306

 

Operating lease liabilities, current portion

 

15,522

 

 

 

15,159

 

Total current liabilities

 

100,104

 

 

 

107,370

 

Long-term senior convertible notes

 

645,821

 

 

 

 

Debt, noncurrent portion

 

 

 

 

34,950

 

Other noncurrent liabilities

 

17,978

 

 

 

1,012

 

Operating lease liabilities, noncurrent portion

 

74,019

 

 

 

79,715

 

Total liabilities

 

837,922

 

 

 

223,047

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.001 par value – 5,000 shares authorized; none issued and outstanding at September 30, 2024 and December 31, 2023

 

 

 

 

 

Common stock, $0.001 par value – 100,000 shares authorized; 31,516 shares issued and 31,287 shares outstanding at September 30, 2024, respectively; and 30,954 shares issued and outstanding at December 31, 2023

 

31

 

 

 

31

 

Additional paid-in capital

 

854,363

 

 

 

855,784

 

Accumulated other comprehensive loss

 

(66

)

 

 

(112

)

Accumulated deficit

 

(757,562

)

 

 

(645,606

)

Treasury stock, at cost; 229 and 0 shares at September 30, 2024 and December 31, 2023, respectively

 

(25,000

)

 

 

 

Total stockholders’ equity

 

71,766

 

 

 

210,097

 

Total liabilities and stockholders’ equity

$

909,688

 

 

$

433,144

 

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue, net

 

$

147,538

 

 

$

124,604

 

 

$

427,514

 

 

$

360,170

 

Cost of revenue

 

 

46,062

 

 

 

42,130

 

 

 

135,051

 

 

 

115,790

 

Gross profit

 

 

101,476

 

 

 

82,474

 

 

 

292,463

 

 

 

244,380

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

15,694

 

 

 

16,309

 

 

 

52,378

 

 

 

44,828

 

Acquired in-process research and development

 

 

32,069

 

 

 

 

 

 

32,069

 

 

 

 

Selling, general and administrative

 

 

103,375

 

 

 

93,768

 

 

 

318,797

 

 

 

285,531

 

Impairment charges

 

 

641

 

 

 

 

 

 

641

 

 

 

 

Total operating expenses

 

 

151,779

 

 

 

110,077

 

 

 

403,885

 

 

 

330,359

 

Loss from operations

 

 

(50,303

)

 

 

(27,603

)

 

 

(111,422

)

 

 

(85,979

)

Interest and other income (expense), net:

 

 

 

 

 

 

 

 

Interest income

 

 

6,456

 

 

 

1,717

 

 

 

16,198

 

 

 

4,619

 

Interest expense

 

 

(3,329

)

 

 

(927

)

 

 

(9,501

)

 

 

(2,709

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

(7,589

)

 

 

 

Other income (expense), net

 

 

1,182

 

 

 

(108

)

 

 

772

 

 

 

(143

)

Total interest and other income (expense), net

 

 

4,309

 

 

 

682

 

 

 

(120

)

 

 

1,767

 

Loss before income taxes

 

 

(45,994

)

 

 

(26,921

)

 

 

(111,542

)

 

 

(84,212

)

Income tax provision

 

 

188

 

 

 

195

 

 

 

414

 

 

 

495

 

Net loss

 

$

(46,182

)

 

$

(27,116

)

 

$

(111,956

)

 

$

(84,707

)

Net loss per common share, basic and diluted

 

$

(1.48

)

 

$

(0.89

)

 

$

(3.59

)

 

$

(2.78

)

Weighted-average shares, basic and diluted

 

 

31,262

 

 

 

30,607

 

 

 

31,147

 

 

 

30,470

 

IRHYTHM TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Adjusted EBITDA reconciliation*

 

 

 

 

 

 

 

 

Net loss

1

 

$

(46,182

)

 

$

(27,116

)

 

$

(111,956

)

 

$

(84,707

)

Interest expense

 

 

3,329

 

 

 

927

 

 

 

9,501

 

 

 

2,709

 

Interest income

 

 

(6,456

)

 

 

(1,717

)

 

 

(16,198

)

 

 

(4,619

)

Changes in fair value of strategic investments

 

 

(1,059

)

 

 

 

 

 

(1,059

)

 

 

 

Income tax provision

 

 

188

 

 

 

195

 

 

 

414

 

 

 

495

 

Depreciation and amortization

 

 

5,135

 

 

 

4,067

 

 

 

15,426

 

 

 

11,434

 

Stock-based compensation

 

 

17,158

 

 

 

21,008

 

 

 

59,970

 

 

 

53,358

 

Impairment charges

 

 

641

 

 

 

 

 

 

641

 

 

 

 

Business transformation costs

 

 

7,360

 

 

 

2,999

 

 

 

8,656

 

 

 

14,094

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

7,589

 

 

 

 

Adjusted EBITDA

 

$

(19,886

)

 

$

363

 

 

$

(27,016

)

 

$

(7,236

)

 

 

 

 

 

 

 

 

 

Adjusted net loss reconciliation*

 

 

 

 

 

 

 

 

Net loss, as reported

1

 

$

(46,182

)

 

$

(27,116

)

 

$

(111,956

)

 

$

(84,707

)

Impairment charges

 

 

641

 

 

 

 

 

 

641

 

 

 

 

Business transformation costs

 

 

7,360

 

 

 

2,999

 

 

 

8,656

 

 

 

14,094

 

Changes in fair value of strategic investments

 

 

(1,059

)

 

 

 

 

 

(1,059

)

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

7,589

 

 

 

 

Adjusted net loss

 

$

(39,240

)

 

$

(24,117

)

 

$

(96,129

)

 

$

(70,613

)

 

 

 

 

 

 

 

 

 

Adjusted net loss per share reconciliation*

 

 

 

 

 

 

 

 

Net loss per share, as reported

1

 

$

(1.48

)

 

$

(0.89

)

 

$

(3.59

)

 

$

(2.78

)

Impairment charges per share

 

 

0.02

 

 

 

 

 

 

0.02

 

 

 

 

Business transformation costs per share

 

 

0.24

 

 

 

0.10

 

 

 

0.28

 

 

 

0.46

 

Changes in fair value of strategic investments per share

 

 

(0.03

)

 

 

 

 

 

(0.03

)

 

 

 

Loss on extinguishment of debt per share

 

 

 

 

 

 

 

 

0.24

 

 

 

 

Adjusted net loss per share

 

$

(1.26

)

 

$

(0.79

)

 

$

(3.09

)

 

$

(2.32

)

Weighted-average shares, basic and diluted

 

 

31,262

 

 

 

30,607

 

 

 

31,147

 

 

 

30,470

 

 

 

 

 

 

 

 

 

 

Adjusted operating expense reconciliation*

 

 

 

 

 

 

 

 

Operating expense, as reported

 

$

151,779

 

 

$

110,077

 

 

$

403,885

 

 

$

330,359

 

Impairment charges

 

 

(641

)

 

 

 

 

 

(641

)

 

 

 

Business transformation costs

 

 

(7,360

)

 

 

(2,999

)

 

 

(8,656

)

 

 

(14,094

)

Adjusted operating expense

 

$

143,778

 

 

$

107,078

 

 

$

394,588

 

 

$

316,265

 

*Certain numbers expressed may not sum due to rounding.
1 Net loss for the three and nine months ended September 30, 2024 includes $32.1 million of acquired in-process research and development expense.