IRhythm Technologies Announces Third Quarter 2021 Financial Results
November 04, 2021 at 04:07 pm EDT
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SAN FRANCISCO, Nov. 04, 2021 (GLOBE NEWSWIRE) -- iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care solutions company focused on the advancement of cardiac care, today reported financial results for the three months ended September 30, 2021.
Third Quarter 2021 Financial Highlights
Revenue was $85.4 million, a 18.7% increase compared to third quarter 2020
Gross margin was 65.7%, a 8.9% decrease compared to third quarter 2020
Adjusted EBITDA (defined as EBITDA less stock compensation) was negative $8.7 million
Cash and Short-Term Investments were $256.8 million as of September 30, 2021, a $1.1 million increase from June 30, 2021
"Our third quarter results reflect the continued strength of our Zio platform with further market penetration of Zio XT in the U.S. complemented by strong growth from Zio AT and in the U.K.,” commented Quentin Blackford, iRhythm's President and CEO. “Once again, strong volume growth offset Medicare pricing headwinds. Further, despite the impact of staffing shortages which reduced volumes and impacted iRhythm’s ability to onboard new accounts, the company achieved 19% year-over-year growth and made tremendous progress working through clinical backlog to bring turnaround times back to normal levels. While staffing shortages remain a headwind, we have now resumed full sales activities and are encouraged by our registration trends as we have entered the fourth quarter."
Operational Highlights
Appointed Quentin Blackford President and CEO
Appointed Karen Ling to Board of Directors, replacing Raymond Scott, who retired
3-year results from the mHealth Screening to Prevent Strokes (mSToPS) clinical trial published in PLOS One
Surpassed two significant service delivery milestones that included serving four million patients in our history and amassing over one billion hours of curated ECG data
Received a UCSF Health Award in the Remote Diagnostic Tool category
“In just the few short weeks that I have been a part of the iRhythm team, I've gained an even deeper appreciation of the value that the Zio platform can bring to patients, physicians, and the healthcare system. It is clear to me that our clinical and competitive differentiation is widely recognized, and the Zio service is seen as best in class,” added Blackford. “Looking ahead, I see significant opportunity for continued growth in the U.S., expansion into the Silent AF market and international development. To capture our full potential, we must also transform the way that we operate so we can scale our business effectively and efficiently. I am very excited to be a part of this dedicated team of professionals as we further build on our world-class commercial and innovation capabilities while achieving new levels of operational excellence."
Medicare Reimbursement Update On November 2, 2021, the Centers for Medicare and Medicaid Services (CMS) released the Calendar Year 2022 Medicare Physician Fee Schedule (MPFS) Final Rule and accompanying Addenda, along with updated payment policies, payment rates, and other provisions for services furnished under MPFS on or after January 1, 2022. In the Final Rule, CMS did not issue national pricing and continued carrier pricing for calendar year 2022 on Category I CPT codes 93241, 93243, 93245 and 93247 for extended external ECG monitoring, the relevant codes for the Zio XT service.
iRhythm and other industry participants have been working with Medicare Administrative Contractors (MACs) to establish pricing for these codes. iRhythm remains engaged with all of the MACs and is working with other industry participants to submit additional cost data on long-term continuous ECG monitoring for consideration to establish fair and appropriate local rates. iRhythm is evaluating the new information included in the Final Rule and its potential implications on discussions with the MACs. iRhythm cannot provide certainty at this time on the potential outcome of the discussions with the MACs or on the timing of any action to be taken.
Third Quarter Financial Results Revenue for the three months ended September 30, 2021 increased 18.7% to $85.4 million, from $71.9 million during the same period in 2020. The increase was driven by an increase in volume partially offset by a decrease in Zio XT Medicare reimbursement rates.
Gross profit for the third quarter of 2021 was $56.1 million, up from $53.7 million during the same period in 2020, while gross margins were 65.7%, down from 74.7% during the same period in 2020. The decrease in gross margin was primarily due to a decrease in Zio XT Medicare reimbursement rates, and higher costs related to ensuring clinical capacity.
Operating expenses for the third quarter of 2021 were $79.4 million, compared to $58.5 million for the same period in 2020. The increase in operating expenses was primarily due to increases in compensation and legal spending.
Net loss for the third quarter of 2021 was $23.7 million, or a loss of $0.81 per share, compared with net loss of $4.7 million, or a loss of $0.17 per share, for the same period in 2020.
Financial Guidance Based on unforeseen ongoing impacts from the COVID-19 Delta variant, customer staffing challenges and delayed new account launches and expansion, iRhythm expects revenue to range from $317 million to $319 million for the full year 2021, representing year over year growth of approximately 20%. This compares to previous revenue guidance of $320 million to $325 million.
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. Investors interested in listening to the conference call may do so by accessing the live and archived webcast of the event available on the “Investors” section of the company’s website at: www.irhythmtech.com.
About iRhythm Technologies, Inc. iRhythm is a leading digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distill data from millions of heartbeats into clinically actionable information. The company believes improvements in arrhythmia detection and characterization have the potential to change clinical management of patients.
Use of Non-GAAP Financial Measures and Other Operating Metrics 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. See the schedules to this press release for additional information and reconciliations of such non-GAAP financial measures.
Forward-Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements include statements relating to reimbursement rates and coverage, market expansion, plans to reduce costs and improve efficiency, expectations for future performance and financial guidance. 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 on Forms 10-K and 10-Q. 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 Relations Contact:
Leigh Salvo
(415) 937-5404
investors@irhythmtech.com
Media Contact:
Morgan Mathis
310-528-6306
irhythm@highwirepr.com
IRHYTHM TECHNOLOGIES, INC. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share data)
September 30, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
167,371
$
88,628
Short-term investments
89,396
246,589
Accounts receivable, net
52,820
29,932
Inventory
9,960
5,313
Prepaid expenses and other current assets
5,641
7,363
Total current assets
325,188
377,825
Property and equipment, net
53,429
34,247
Operating lease right-of-use assets
86,116
84,714
Goodwill
862
862
Other assets
14,655
14,091
Total assets
$
480,250
$
511,739
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
4,893
$
4,365
Accrued liabilities
53,141
40,532
Deferred revenue
2,374
930
Debt, current portion
11,667
11,667
Operating lease liabilities, current portion
10,707
8,171
Total current liabilities
82,782
65,665
Debt, noncurrent portion
12,603
21,339
Other noncurrent liabilities
2,432
1,830
Operating lease liabilities, noncurrent portion
86,593
81,293
Total liabilities
184,410
170,127
Stockholders’ equity:
Preferred stock
—
—
Common stock
27
27
Additional paid-in capital
669,373
646,258
Accumulated other comprehensive income
(6
)
11
Accumulated deficit
(373,554
)
(304,684
)
Total stockholders’ equity
295,840
341,612
Total liabilities and stockholders’ equity
$
480,250
$
511,739
IRHYTHM TECHNOLOGIES, INC. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data)
Three Months Ended September 30,
Nine Months Ended September 30, 2021
2021
2020
2021
2020
Revenue, net
$
85,432
$
71,944
$
241,021
$
186,357
Cost of revenue
29,284
18,232
78,737
49,779
Gross profit
56,148
53,712
162,284
136,578
Operating expenses:
Research and development
8,685
8,768
26,801
29,725
Selling, general and administrative
70,745
49,701
203,227
140,945
Total operating expenses
79,430
58,469
230,028
170,670
Loss from operations
(23,282
)
(4,757
)
(67,744
)
(34,092
)
Interest expense
(279
)
(384
)
(921
)
(1,145
)
Other income, net
(76
)
569
103
1,311
Loss before income taxes
(23,637
)
(4,572
)
(68,562
)
(33,926
)
Income tax provision
94
105
308
253
Net loss
$
(23,731
)
$
(4,677
)
$
(68,870
)
$
(34,179
)
Net loss per common share, basic and diluted
$
(0.81
)
$
(0.17
)
$
(2.35
)
$
(1.25
)
Weighted-average shares, basic and diluted
29,433,003
28,050,210
29,294,559
27,358,096
IRHYTHM TECHNOLOGIES, INC. Reconciliation of Net Loss to Adjusted EBITDA (Unaudited) (In thousands)
iRhythm Technologies, Inc. is a digital health care company, which creates solutions that detect, predict, and prevent disease. The Company designs, develops, and commercializes device-based technology to provide ambulatory cardiac monitoring services. It offers three Zio System options: the Zio Monitor System, the Zio XT System, and the Zio AT System. It offers its Zio ambulatory cardiac monitoring services, including long-term continuous monitoring, short-term continuous monitoring, and mobile cardiac telemetry monitoring services (Zio Services), using its Zio Systems. The Zio Monitor System is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (the Zio Monitor patch) that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software (ZEUS) System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period.