iRhythm Holdings, Inc.

iRhythm is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. The company operates in the ambulatory cardiac monitoring market, which is well-established in the United States with an estimated 6.9 million diagnostic tests performed in 2025. Cardiac arrhythmias affect approximately 1.5% to 5% of the global population, with atrial fibrillation being the most common, affecting more than 50 million patients worldwide. The company estimates that in 2025 approximately 27 million individuals in the United States may be at elevated risk for undiagnosed arrhythmias. The market is characterized by rapid change resulting from technological advances, scientific discoveries, and other market activities of industry participants.

The market for remote cardiac monitoring is highly competitive. Primary competitors named in the filing include BioTelemetry, Inc. (acquired by Royal Philips), Preventice Solutions, Inc. (acquired by Boston Scientific, Inc.), and Bardy Diagnostics, Inc. (acquired by Hill-Rom Holdings, Inc. now part of Baxter International, Inc.). The company also competes with companies that sell traditional Holter monitors, including GE Healthcare, Philips Healthcare, Spacelabs Healthcare Inc., Welch Allyn Holdings, Inc., and Mortara Instrument, Inc. iRhythm is the market leader delivering more than 70% of LTCM services in the United States as of 2025. The company believes its Zio platform is uniquely positioned to deliver value as payers increasingly prioritize diagnostic accuracy and first-test resolution.

iRhythm generates revenue by providing ambulatory cardiac monitoring services from its Medicare-enrolled independent diagnostic testing facilities with qualified technicians. The company receives revenue primarily from third-party payors, which include commercial payors and government agencies such as the Centers for Medicare and Medicaid Services. For the year ended December 31, 2025, approximately 83% of revenue came through third-party payors, including approximately 24% of total revenue from the Medicare program. The company also receives revenue from healthcare institutions, which are typically hospitals or private physician practices. Revenue is recognized on an accrual basis based on estimates of the amount that will ultimately be realized.

The company currently offers three iRhythm ACM System options: the Zio monitor System, the Zio XT System, and the Zio AT System. The Zio monitor System is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software. The Zio XT System is the previous generation of the Zio monitor System. The Zio AT System incorporates a wireless gateway that provides connectivity between the patch and the software during the patient wear period. Zio monitor is 72% smaller, 62% lighter, and 23% thinner than Zio XT. The company also provides long-term continuous monitoring services and mobile cardiac telemetry monitoring services. For the year ended December 31, 2025, revenue from contracted third-party payors was $392.234 million ¹, representing 52% of total revenue; revenue from CMS was $179.350 million ², representing 24%; revenue from healthcare institutions was $125.613 million ³, representing 17%; and revenue from non-contracted third-party payors was $49.941 million ⁴, representing 7%.

The company's iRhythm Services are supported by a proprietary cloud-based data analytic software that is FDA-cleared, CE-marked, and Japan PMDA-approved. Since first receiving FDA clearance in 2009, the company has provided iRhythm Services via more than twelve million patient reports and has collected almost three billion hours of curated heartbeat data. The company's Zio patch monitors are not available for sale outside of use with the iRhythm Services. The company has developed proprietary photoplethysmography algorithms designed to be integrated into a wearable device and utilized with the ZEUS System. The company is evaluating potential opportunities to leverage these algorithms and intends to further pursue development opportunities on a wearable platform in the future.

On August 30, 2024, iRhythm Technologies entered into a Technology License Agreement with BioIntelliSense, Inc., receiving a perpetual fully paid up license to certain intellectual property, technology and products for research, development and commercialization of potential next generation products and services. iRhythm Technologies paid BioIS an upfront fee of $15.0 million ⁵ in cash consideration and purchased an aggregate of $40.0 million ⁶ of convertible promissory notes from BioIS, of which $20.0 million ⁷ were designated as Milestone Notes for satisfaction of regulatory milestone payment obligations. In June 2025, BioIS achieved the first of two regulatory milestones, and as of December 31, 2025, the company and BioIS are in the process of completing all required contractual conditions to cancel $10.0 million ⁸ in Milestone Notes plus accrued and unpaid interest. During the second quarter of 2025, the company recorded impairment charges of $2.5 million ⁹ associated with capitalized internal-use software in development relating to the Zio Watch. During the fourth quarter of 2025, the company recorded an additional $2.0 million ¹⁰ of impairment charges related to capitalized internal-use software projects in development not expected to be completed and placed in-service. In August 2025, the company formally terminated the Development Collaboration Agreement with Verily Life Sciences LLC.

For the year ended December 31, 2025, total revenue was $747.138 million ¹¹, compared to $591.839 million ¹² in 2024, representing an increase of 26%. Net loss was $44.551 million ¹³ for 2025, compared to a net loss of $113.289 million ¹⁴ in 2024. Gross profit was $527.250 million ¹⁵ in 2025, compared to $407.531 million ¹⁶ in 2024. Gross margin improved to 71% in 2025 from 69% in 2024. Adjusted EBITDA was $68.910 million ¹⁷ in 2025, compared to negative $7.748 million ¹⁸ in 2024. The company had cash and cash equivalents of $236.012 million ¹⁹ and marketable securities of $347.751 million ²⁰ as of December 31, 2025.

The company intends to further penetrate the core ambulatory cardiac monitoring market by expanding utilization within cardiology and electrophysiology practices while increasing adoption across additional clinical specialties and settings, including primary care. The company believes the ambulatory cardiac monitoring market extends well beyond traditionally symptomatic patients and that significant opportunity exists to expand access earlier in the care pathway. With an estimated 27 million individuals as of 2025 in the United States potentially at elevated risk for undiagnosed arrhythmias, the company believes it is uniquely positioned to support population health initiatives through scalable, evidence-based monitoring programs. The company is pursuing proactive monitoring strategies focused on patients at risk for undiagnosed arrhythmias.

The company is selectively expanding internationally in geographies with established regulatory pathways, reimbursement potential, and unmet clinical need. The company has established a commercial presence in the United Kingdom, selected European countries, and Japan, which collectively represent an estimated three million existing ambulatory cardiac monitoring services performed annually. The company intends to scale these markets deliberately over the medium to long term. The company is also selectively investing in opportunities to extend the core platform into adjacent clinical areas where arrhythmias intersect with other chronic conditions, including obstructive sleep apnea patients with an estimated prevalence of approximately 40 million in the United States, heart failure patients with an estimated prevalence of over 8.5 million in the United States by 2030, and patients with hypertension with an estimated prevalence of over 120 million in the United States in 2020.

The company experienced an improvement in gross margin from 2023 to 2025 and continues to focus on improving annual gross margins in the future. The company expects increases to cost of revenue due to increases in materials and electronics components pricing, labor rates, shipping rates, amortization of capitalized internal-use software, along with increases in the general level of inflation and tariffs on imports. The company expects to partially offset these increases by reduced costs from obtaining volume purchase discounts for material costs, implementing scan-time algorithms and process improvements, automating manufacturing assembly and packaging, and through software-driven and other workflow enhancements to reduce labor costs.

The company currently manufactures its iRhythm ACM Systems in its leased facility in Cypress, California, which is approximately 69,000 square feet (of which 34,000 square feet is used for manufacturing). The company believes this manufacturing facility has the capacity to meet its manufacturing needs for at least the next five years. Outside suppliers are the source for components and sub-assemblies in the production of the iRhythm ACM Systems. The company continues to invest in advancing its system portfolio and digital platform, including ongoing innovation in wearable biosensors, data analytics, and reporting capabilities, as well as the development of next-generation mobile cardiac telemetry solutions for which a 510(k) application was submitted to FDA in the third quarter of 2025.

Research and development expenses were $84.6 million ²¹ for the year ended December 31, 2025, compared to $71.5 million ²² in 2024. The company expects research and development costs to increase in absolute dollars as it hires additional personnel to develop new product and service offerings, product enhancements, and clinical evidence. Capital expenditures for property and equipment were $46.342 million ²³ in 2025. The company does not intend to pay dividends for the foreseeable future. The company used approximately $25.0 million ²⁴ of the net proceeds from the 2029 Notes offering to repurchase 229,252 ²⁵ shares of common stock at a purchase price of $109.05 ²⁶ per share in privately negotiated transactions.

The company faces headwinds from macroeconomic factors including inflation, interest rate volatility, and potential instability in the global banking system. Hospitals are experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care, and are facing significant financial pressure as supply chain constraints and inflation drive up operating costs. The company may experience inflationary pressure affecting freight costs, the cost of components for the iRhythm Services, overhead costs relating to maintenance of facilities, and wages paid to employees due to challenging labor market conditions. The company also faces risks from tariffs on imports, which may complicate and increase costs associated with the supply chain.

The company faces regulatory headwinds including the risk that CMS may reduce reimbursement rates for the CPT codes assigned to its services. In September 2025, Noridian Healthcare Solutions, LLC, Palmetto GBA, LLC, and CGS Administrators, LLC each published proposed Local Coverage Determinations regarding Temporary Nontherapeutic Ambulatory Cardiac Monitoring Devices. The adoption of these proposed LCDs could necessitate changes to the company's business model, methods of operation, billing processes, and related compliance controls. The company also faces ongoing enforcement risks from FDA, including the May 25, 2023 warning letter and July 2024 Form 483 observations, which have required significant time, attention, and resources.

Reimbursement by Medicare is highly regulated and subject to change, and during the year ended December 31, 2025, the company received approximately 24% ²⁷ of its total revenue from the Medicare program. If CMS or any key commercial payors reduce reimbursement rates for the iRhythm Services, the business could suffer. The company faces significant risk from audits or denials of claims by government agencies or payors, which could expose it to recoupment, regulatory scrutiny, and penalties. The company is subject to extensive FDA regulatory requirements, and noncompliance could result in enforcement actions including warning letters, recalls, or cessation of marketing. The company received a warning letter from FDA on May 25, 2023 alleging non-conformities to regulations for medical devices, and received Form 483 observations following July 2024 FDA inspections. The company is subject to legal proceedings including a putative securities class action lawsuit, patent litigation with Welch Allyn and BardyDx, and government investigations including a civil investigative demand received on December 12, 2025 from DOJ's Civil Division's Commercial Litigation Branch seeking information related to Zio AT and associated claims for reimbursement. The company's revenue relies on the iRhythm Services, which are currently its only offerings, and if these services fail to gain or lose market acceptance, the business will suffer.

Management's message emphasizes the company's mission to boldly innovate to create trusted solutions that detect, predict, and prevent disease. The strategic priorities emphasized for the period ahead include leading and expanding within the core ambulatory cardiac monitoring market, unlocking market expansion through access, evidence, and artificial intelligence, pursuing international expansion opportunities, extending the Zio platform into adjacent clinical opportunities, and advancing the product portfolio and technology platform. Management highlights that the company is a leading provider of ambulatory cardiac monitoring services in the United States with approximately 40% penetration of the core ambulatory cardiac monitoring market. The company intends to further penetrate the core market by expanding utilization within cardiology and electrophysiology practices while increasing adoption across additional clinical specialties and settings, including primary care. Management emphasizes the company's differentiated combination of patient-friendly, long-term wearable biosensors, proprietary FDA-cleared artificial intelligence algorithms, and integrated digital workflows. The company generated net losses of $44.6 million ²⁸ and $113.3 million ²⁹ during the years ended December 31, 2025 and 2024, respectively, and as of December 31, 2025 had an accumulated deficit of $803.4 million ³⁰.