iRhythm Technologies Q1 Earnings Call Highlights

Key Points

• iRhythm reported Q1 revenue of $199.4 million (up 25.7% YoY), expanded gross margin to 70.9% (+210 bps) and delivered $14.1 million adjusted EBITDA, leading management to raise full‑year revenue guidance to $875–$885 million and adjusted EBITDA margin to 12–13%.
• Growth is volume‑driven—about 64% of YoY volume came from new accounts—with increasing penetration in primary care (roughly a third of volume) and EHR integration (about 53% of volume), plus strong U.K. results and early positive signs in Japan reimbursement.
• On product and regulatory fronts, a next‑generation AI algorithm 510(k) is under review and a next‑gen MCT launch is targeted for the first half of 2027, which management says could deliver “well north of $100 million” of cumulative value, even as the company remains subject to an FDA warning letter but reports no material findings from an independent review.

iRhythm Technologies NASDAQ: IRTC reported what management described as a strong start to fiscal 2026, posting first-quarter results that exceeded expectations and prompted the company to raise its full-year revenue and profitability outlook. Executives said performance was broad-based across the company’s Zio monitor and Zio AT offerings, with continued momentum in cardiology, primary care, innovative channels, and international markets.

First-quarter results: revenue up 26% and margin expansion

President and CEO Quentin Blackford said the company “delivered a strong first quarter, exceeding expectations on both the top and bottom line,” with revenue growth driven by volume and supported by continued margin expansion. CFO Daniel Wilson reported first-quarter revenue of $199.4 million, up 25.7% year over year.

Wilson said volume was the primary driver of growth, while iRhythm also benefited from “improvements with our estimated collections reserves related to our market access, contracting, and collection efforts.” He added that new accounts—defined as those open for less than 12 months—accounted for approximately 64% of year-over-year volume growth. Home enrollment for Zio services in the U.S. was about 23% of volume, consistent with prior quarters.

Gross margin was 70.9%, an increase of 210 basis points year over year, which Wilson attributed to operational efficiencies such as “manufacturing automation and workflow optimization,” as well as scale benefits. Adjusted operating expenses were $153.5 million, up 9.3% from the prior year period, driven by higher volume-related costs to serve, litigation-related expenses, and investments to support future growth.

On profitability, iRhythm reported a GAAP net loss of $13.9 million (a loss of $0.43 per diluted share), compared to a GAAP net loss of $30.7 million (a loss of $0.97 per diluted share) a year earlier. Adjusted net loss was $11.3 million (a loss of $0.35 per diluted share), compared with an adjusted net loss of $30.3 million (a loss of $0.95 per diluted share) in the first quarter of 2025.

Adjusted EBITDA was $14.1 million, or 7.1% of revenue, representing an 880 basis point year-over-year improvement. Free cash flow was negative $33 million, which Wilson said was consistent with normal seasonality related to annual compensation payments and working capital timing. The company ended the quarter with $549.6 million in cash, cash equivalents, and marketable securities.

Guidance raised, but management cites tougher comps later in 2026

iRhythm raised full-year 2026 revenue guidance to $875 million to $885 million, which Wilson said implies 17% to 18% year-over-year growth. The company also raised its full-year adjusted EBITDA margin guidance to 12% to 13%. For the second quarter, iRhythm expects revenue of $218 million to $220 million and adjusted EBITDA margin of 11.5% to 12.5%.

Responding to questions about why implied growth moderates later in the year, Wilson said the company was taking a measured approach given it is “early in the year,” and noted that the back half faces “pretty difficult comps, given the performance that we had in 2025.” Blackford said April trends were “encouraged by what we’re seeing,” and argued that when viewed on a stacked growth basis, “the momentum is very, very strong,” even with tougher year-over-year comparisons.

On margin outlook, Wilson said the company expects incremental gross margin improvement in 2026 from continued efficiencies in clinical operations and manufacturing. He also noted iRhythm has cost containment initiatives in place and does not expect the “current geopolitical situation” to materially impact gross margin.

Strategy: expand long-term monitoring adoption and move upstream into primary care

Blackford highlighted clinical evidence supporting longer-duration monitoring, citing a body of research spanning “more than 140 publications.” He said the company continues to see an opportunity to replace short-duration monitoring, noting that nearly two million short-duration Holter and event monitors are still prescribed annually in the U.S. and that “nearly 2/3 of arrhythmias are often detected only after 48 hours of monitoring.”

Executives also emphasized upstream expansion into primary care, which Blackford framed as a way to identify risk earlier and improve care coordination rather than displacing cardiology. He estimated more than 27 million people in the U.S. are at risk for arrhythmias, many of whom are first evaluated in primary care settings.

Workflow integration remains a key part of the approach. Blackford said approximately 53% of iRhythm’s volume now flows through EHR-integrated accounts, and more than three-quarters of the company’s top 100 customers are integrated. Wilson added that primary care continues to increase as a percentage of volume, and reiterated a prior metric of “roughly a third or a little bit over 30% of our volume coming from primary care,” alongside a prescriber base of more than 40,000 primary care prescribers cited in the prior quarter.

In innovative channels, Blackford said partners that began working with iRhythm in 2025 are “up and patching consistently in 2026,” though he acknowledged “lumpiness at that customer level.” He also said adoption is broadening from initially “asymptomatic” (or “undiagnosed, unaware”) populations into more symptomatic patients as partners see higher diagnostic yield with longer-duration monitoring.

AI, next-generation algorithm, and regulatory updates

Blackford said iRhythm’s platform includes more than 3 billion hours of curated ECG data, and the company is deploying predictive identification workflows integrated with iRhythm monitoring solutions. He said early pilots show “more than 85% accuracy in pre-identifying patients with clinically relevant arrhythmias,” with initial programs targeting high-risk populations including diabetes, CKD, CAD, COPD, sleep disorders, and heart failure. He said iRhythm expects real-world data from these efforts to be published later in 2026.

iRhythm also discussed a next-generation AI algorithm intended to reduce clinical technician review time “by as much as half over time.” Blackford said the company submitted a 510(k) for the next-generation algorithm last year, separate from its Zio MCT 510(k), and expects approval “later this year.” However, he said iRhythm plans to implement the algorithm alongside the next-generation MCT launch, which the company reaffirmed is targeted for the first half of 2027. Blackford described the potential financial impact as “well north of $100 million of value on a cumulative basis” over roughly five years.

On FDA matters, Blackford said iRhythm remains under an FDA warning letter, but the company has completed a comprehensive review of its quality management system and an independent third-party review that “did not identify any material observations.” He said the company believes the work completed “positions us well as the agency continues its review,” while noting timing remains with the FDA.

Regarding Zio MCT, Blackford said iRhythm and the FDA aligned on providing a “complete package once all elements are finalized later this year,” rather than submitting data on a rolling basis. He said this approach fits within iRhythm’s previously communicated clearance and launch timeframe.

International and adjacent markets: U.K. momentum, Japan reimbursement update, and sleep pilots

Internationally, Blackford said the company had its “best quarter in company history” in the U.K., which he characterized as validation in a cost-constrained health system. In Japan, he said iRhythm received an update to the reimbursement framework that adds a “modest supplemental payment for longer-duration monitoring.” While he said Japan economics are “early and are not a meaningful contributor today,” he called the change a positive signal and said the company is running a head-to-head study to pursue more favorable reimbursement, which he suggested is likely a “2027 event.”

In sleep, Blackford said pilots are producing “encouraging early feedback,” and described the market as nearly 40 million U.S. sleep apnea patients, with overlap with arrhythmia populations. He said iRhythm’s goal is to streamline fragmented sleep workflows into an end-to-end process through its ZioSuite digital tools, but added that meaningful contribution from sleep is more likely to be discussed as the company moves into 2027.

Blackford also addressed two external items in closing remarks before Q&A. He said the company has not received any additional requests for information from the DOJ since a civil investigative demand (CID) issued in December, and that iRhythm continues to cooperate. On a proposed local coverage determination (LCD), he said the company has not yet heard back from Medicare Administrative Contractors and that timing remains uncertain due to a “silent period.”

About iRhythm Technologies NASDAQ: IRTC

iRhythm Technologies, Inc is a medical technology company that develops and commercializes wearable cardiac monitoring devices and associated data analytics services. Founded in 2006 and headquartered in San Francisco, California, the company's flagship product is the Zio® patch, a discreet, single-use, continuous ECG recorder designed to monitor heart rhythms for up to 14 days. iRhythm's digital diagnostics platform combines biosensor technology with proprietary algorithms to detect arrhythmias and streamline data interpretation for physicians.

The Zio service is prescribed by cardiologists and other healthcare providers to aid in the diagnosis of atrial fibrillation, bradycardia, tachycardia and other rhythm disorders.

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