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IT

iRhythm Technologies, Inc. (IRTC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $158.7M, up 20.3% YoY, with gross margin of 68.8% (+250 bps YoY). GAAP EPS was $(0.97) vs $(1.47) a year ago; adjusted EBITDA was $(2.6)M, an improvement from $(12.1)M in Q1 2024 .
  • Versus S&P Global consensus, revenue beat ($158.7M vs $153.4M*), while EPS was roughly in line/slightly below (($(0.95) vs $(0.94)* on an adjusted/consensus basis) .
  • FY25 guidance raised: revenue to $690–$700M (from $675–$685M) and adjusted EBITDA margin to 7.5%–8.5% (from 7.0%–8.0%). Q2 EBITDA margin guided to 6%–7%; full-year gross margin expected flat due to tariff headwinds of ~50–75 bps .
  • Key drivers: sustained Zio AT momentum (now ~14% of revenue) and upstream primary care adoption (>1/3 of LTCM volumes); catalysts include Zio MCT FDA submission targeted for Q3 2025 and Epic Aura rollouts showing early 20–40% prescribing uplift at integrated accounts .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line and margin expansion: Revenue +20.3% YoY to $158.7M; gross margin 68.8% (+250 bps YoY). CEO: “revenue growth exceeding 20% year-over-year” driven by demand for Zio monitor and Zio AT, with record demand in the UK .
  • Product/Channel momentum: Zio AT delivered the strongest quarter ever; management tied Q1 outperformance primarily to Zio AT growth. Primary care channels now account for over one-third of LTCM volumes, expanding the total addressable pool .
  • International and clinical evidence catalysts: Commercial launch in Japan (PMDA-cleared AI) and AVALON real-world evidence in >428k commercially insured patients reaffirming diagnostic yield and reduced retesting/CV events for Zio LTCM vs other modalities/providers .

What Went Wrong

  • Profitability still negative: GAAP net loss $(30.7)M and adjusted EBITDA $(2.6)M; incremental costs include FDA remediation/DOJ-related expenses (~$15M expected for FY25) and IP litigation costs (excluded from non-GAAP beginning Q1) .
  • Tariff headwinds and FCF: Tariffs expected to be a ~50–75 bps annual GM headwind; inventory builds to mitigate supply risk create slight FY25 FCF headwind; FCF positive targeted for FY26 .
  • Japan reimbursement: Initial rate aligned to Holter (not differentiated), reducing FY25 contribution below the prior ~$2M plan; company will generate local evidence to pursue improved reimbursement .

Financial Results

Quarterly trend (last three quarters)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$147.5 $164.3 $158.7
Gross Profit ($M)$101.5 $115.1 $109.2
Gross Margin (%)68.8% 70.0% 68.8%
Operating Expenses ($M)$151.8 $119.2 $141.8
Loss from Operations ($M)$(50.3) $(4.1) $(32.6)
Net Loss ($M)$(46.2) $(1.3) $(30.7)
Diluted EPS (GAAP)$(1.48) $(0.04) $(0.97)
Adjusted EBITDA ($M)$(19.9) $19.3 $(2.6)

Year-over-year comparison (Q1 2024 vs Q1 2025)

MetricQ1 2024Q1 2025
Revenue ($M)$131.9 $158.7
YoY Revenue Growth—20.3%
Gross Margin (%)66.3% 68.8%
Net Loss ($M)$(45.7) $(30.7)
Diluted EPS (GAAP)$(1.47) $(0.97)
Adjusted EBITDA ($M)$(12.1) $(2.6)
Adjusted Net Loss/Share$(1.23) $(0.95)

Estimates vs Actuals (Q1 2025)

MetricConsensus*ActualResult
Revenue ($M)$153.4*$158.7 Beat
Primary EPS (adjusted/consensus)$(0.94)*$(0.95) Slight miss/in line
EBITDA ($M)$(5.0)*$(2.6) Better than consensus loss

*Values retrieved from S&P Global.

KPIs and Mix (selected)

KPIQ1 2025
Zio AT share of revenue~14%
Primary care share of LTCM volumesNearly 1/3
Home enrollment (U.S. volume)~23%
New accounts (<12 months) as % of YoY volume growth~65%
Unrestricted cash & marketable securities$520.6M

Guidance Changes

MetricPeriodPrevious Guidance (Q4’24 call/8-K)Current Guidance (Q1’25)Change
RevenueFY 2025$675–$685M $690–$700M Raised
Adjusted EBITDA MarginFY 20257.0%–8.0% 7.5%–8.5% Raised
Gross MarginFY 2025n/aFlat YoY; tariffs (50–75 bps) headwind Maintained outlook detail
Q2 Revenue PhasingQ2 2025n/a~25% of FY revenue in Q2 New detail
Adjusted EBITDA MarginQ2 2025n/a6%–7% New detail
Free Cash FlowFY 2025/FY 2026n/aSlightly negative FY25; positive FY26 New detail

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
Zio AT momentumFDA 510(k) update for Zio AT; strong demand Sustained volume across channels; cash build Strongest MCT quarter; Q1 beat primarily AT; AT ~14% of revenue Accelerating
Primary care channelExpanding into primary care Value in risk-bearing primary care noted >1/3 of LTCM volumes from PCP; innovative channels low single-digit % but rising Expanding
Epic Aura integrationFirst commercial account live —Early integrated accounts show high 20% avg uplift, some near 40%; not in guide Positive early results
International expansionLaunches in AT/NL/CH/ES; JP PMDA approval —Japan commercial launch (14-day AI), initial reimbursement at Holter rate Launch with pricing work ahead
Regulatory/quality (FDA)Remediation progressing Quality systems enhancements On track to complete warning letter/483 remediation mid-2025; senior FDA contacts stable De-risking
Tariffs/supply chain——50–75 bps GM headwind; inventory builds to mitigate supply risk Managed headwind
Clinical/AI evidence—AHA/Eversana cost avoidance for early detection AVALON: higher yield, fewer retests/CV events vs others; ACC studies on Holter limitations Strengthening evidence base

Management Commentary

  • “The first quarter of 2025 demonstrated continued commercial momentum, with revenue growth exceeding 20% year-over-year, driven by… our Zio AT business” — Quentin Blackford, CEO .
  • “Adjusted EBITDA… negative 1.7% of revenue… 750 basis-point improvement… result of… sustainable efficiency at scale” — Dan Wilson, CFO .
  • “Our commercial launch in Japan… first ambulatory cardiac monitoring solution to utilize a 14-day PMDA-cleared artificial intelligence in arrhythmia detection… initial reimbursement… Holter monitoring rate… we intend to generate additional clinical evidence… to support future reimbursement applications” — CEO .
  • “In a handful of [Epic-integrated] accounts… high 20% increase… some… almost 40%… our guide does not anticipate any incremental benefit” — CEO .

Q&A Highlights

  • Guidance raise above the beat reflects durable Zio AT momentum; upside from innovative channels remains less predictable and mostly not embedded yet .
  • Japan FY25 contribution now below prior ~$2M expectation given Holter-level reimbursement; local head-to-head evidence planned to pursue higher rates .
  • Zio AT share gains appear driven by product advantages and ease of trial in existing monitor accounts, not only competitor disruptions; 14-day continuous wear differentiates vs competitors .
  • Epic Aura: Early evidence of prescribing uplift (high 20% avg, up to ~40%); not included in guidance until more data accumulated .
  • Regulatory: MCT submission still targeted for Q3; FDA leadership consistent at senior levels; remediation on track .
  • Tariffs: 50–75 bps GM headwind contemplated; supply-chain strategies prioritized over price increases; inventory build to ensure continuity .

Estimates Context

  • Q1 2025 revenue beat consensus ($158.7M vs $153.4M*) while EPS was in line/slightly below (($(0.95) vs $(0.94)*). Management raised FY25 revenue guidance to $690–$700M from $675–$685M and lifted EBITDA margin range to 7.5%–8.5% from 7.0%–8.0%, implying upward bias to revenue and margin models from here .
  • Q2 color: ~25% of full-year revenue expected in Q2 and adjusted EBITDA margin of 6%–7%; full-year GM flat due to tariffs suggests consensus gross margin should remain near current levels despite mix improvements .
  • FY25 FCF slightly negative (inventory builds and platform investments); FY26 FCF positive target noted for long-term models .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Zio AT is the incremental growth engine now; management attributes Q1 outperformance primarily to AT, with share gains likely continuing into 2H if momentum persists .
  • Upstream primary care penetration (>1/3 of LTCM volumes) and innovative risk-bearing channels (early stage) expand the TAM and support durable double-digit growth beyond cardiology/EP .
  • Epic Aura integration is a potential 2H tailwind; early 20–40% prescribing uplift in integrated accounts is not in guidance, setting up optionality for upside if rollout scales .
  • Guidance upgrade and Q2 phasing (25% of FY) improve near-term visibility; full-year GM flat outlook and tariffs (50–75 bps) temper margin expansion near term .
  • Japan launch is strategically important; near-term revenue tempered by Holter-rate reimbursement, but evidence-building plan targets future pricing improvement .
  • Regulatory de-risking continues: remediation on track; senior FDA continuity; MCT filing remains a 2H catalyst .
  • Liquidity remains strong ($520.6M cash/securities); FCF slightly negative in FY25 on inventory build and platform investments, turning positive in FY26, supporting continued execution .

Appendix: Additional Press Releases (Q1 2025 window)

  • Japan commercial launch of Zio LTCM (PMDA-cleared AI, 14-day monitoring); nationwide availability targeted by July 2025 via Senko .
  • AVALON real-world analysis (>428k patients) showed higher diagnostic yield, fewer retests, and fewer CV events for Zio LTCM vs other modalities/providers in a commercially insured population .