Executive Summary

Q2 2025 delivered record revenue and improved profitability: revenue $186.687M (+26.1% YoY), gross margin 71.2%, adjusted EBITDA $15.696M with 8.4% margin .
Results exceeded Wall Street consensus: actual revenue $186.687M vs consensus $173.946M*, and adjusted EPS of $(0.32) vs consensus $(0.474)*; management raised FY25 revenue guidance to $720–$730M and adjusted EBITDA margin to 8.0–8.5% . Values retrieved from S&P Global.
Strategic drivers: accelerating core long-term monitoring, sustained Zio AT momentum, expanding innovative channels, and international growth; plus an AI-driven partnership with Lucem Health to identify at-risk patients earlier .
Key guidance signals for stock reaction: Q3 revenue expected down ~1% sequentially (seasonality), tariffs trimmed to a modest −20 to −40 bps margin impact for FY25, and CMS preliminary 2026 rates flat/slightly up for Zio Monitor and up ~2% for Zio AT .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue driven by core long-term monitoring, Zio AT strength, innovative value-based accounts, and international markets (“another record quarter”) .
Gross margin expanded to 71.2% (from 69.9% YoY) on volume leverage and operational efficiencies, despite a higher Zio AT mix .
Raised FY25 guidance (revenue to $720–$730M; adjusted EBITDA margin to 8.0–8.5%) citing strong momentum across core and innovative channels .
Management quote: “We’re uniquely positioned to revolutionize early cardiac detection and create substantial value… powered by AI, informed by data, and designed for scale” (CEO) .
Operational KPI strength: new-store accounts contributed ~68% of YoY volume growth; home enrollment ~23% of U.S. volume, supporting scalability .
Lucem Health AI partnership to accelerate early identification of undiagnosed arrhythmias (first-of-its-kind offering) .

What Went Wrong

GAAP net loss remained at $(14.218)M and GAAP diluted loss per share $(0.44), though improved YoY; adjusted net loss $(10.224)M and $(0.32) per share .
Operating expenses increased to $151.565M (adjusted $145.205M), reflecting remediation, growth investments, and global scale-up .
Q3 outlook implies slight sequential revenue decline (~1%) due to seasonality and ramp in clinical operations hiring, with gross margin to dip modestly from Q2 .
Free cash flow expected slightly negative in FY25 due to inventory build and infrastructure investments; FCF positivity targeted for FY26 .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$164.325	$158.677	$186.687
Gross Profit ($USD Millions)	$115.068	$109.216	$132.857
Gross Margin (%)	70.0%	68.8%	71.2%
Operating Expenses ($USD Millions)	$119.151	$141.772	$151.565
Adjusted Operating Expenses ($USD Millions)	$116.735	$140.437	$145.205
GAAP Net Loss ($USD Millions)	$(1.333)	$(30.700)	$(14.218)
GAAP Diluted EPS ($)	$(0.04)	$(0.97)	$(0.44)
Adjusted Net Income (Loss) ($USD Millions)	$0.240	$(30.299)	$(10.224)
Adjusted EPS ($)	$0.01	$(0.95)	$(0.32)
Adjusted EBITDA ($USD Millions)	$19.268	$(2.635)	$15.696
Adjusted EBITDA Margin (%)	N/A	−1.7%	8.4%

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Home Enrollment (% of U.S. volume)	N/A	23%	23%
New-Store Contribution to YoY Volume Growth (%)	N/A	~65%	~68%
Unrestricted Cash, Cash Equivalents & Marketable Securities ($USD Millions)	$535.6	$520.6	$545.5
Japan new commercial accounts (cumulative since launch)	N/A	N/A	8

Wall Street Consensus vs Actual (Quarterly)

Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025
Revenue Consensus Mean ($USD)	$153.387M*	$173.946M*	$184.742M*	$199.938M*
Revenue Actual ($USD)	$158.677M	$186.687M	$192.884M*	—
Primary EPS Consensus Mean ($)	$(0.936)*	$(0.474)*	$(0.282)*	$0.059*
Adjusted EPS Actual ($)	$(0.95)	$(0.32)	$(0.06)*	—
Revenue – # of Estimates	11*	12*	15*	14*
Primary EPS – # of Estimates	8*	9*	11*	10*

Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$690–$700M	$720–$730M	Raised
Adjusted EBITDA Margin	FY 2025	7.5%–8.5%	8.0%–8.5%	Raised midpoint
Gross Margin	FY 2025	Flat vs FY24	Slightly above FY24	Raised
Tariff Impact (Gross Margin)	FY 2025	−50 to −75 bps	−20 to −40 bps	Improved
Revenue Seq. Change	Q3 2025 vs Q2	—	~1% down (seasonality)	New disclosure
Adjusted EBITDA Margin	Q3 2025	—	9%–9.5%	New disclosure
CMS Rates (Prelim.)	CY 2026	—	Zio Monitor flat to slightly up; Zio AT ~+2%	New disclosure

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/technology initiatives	Building evidence and platform capabilities; multi-parameter vision	Lucem Health predictive-AI partnership to identify undiagnosed arrhythmias earlier	Accelerating
Supply chain/tariffs	FY25 tariff headwind −50–75 bps; inventory build to ensure supply	Tariff impact trimmed to −20–40 bps; slight gross margin dip in Q3 on hiring; continued inventory build	Improving
Product performance	Zio AT strong; long-term monitoring core growth	Zio AT record quarter; next-gen Zio MCT to file 510(k) “this quarter”; continued core growth	Strengthening
EHR/Epic Aura	Early rollout; >20–40% prescribing uplift in integrated accounts (early signs)	>40 health systems in pipeline; efficiency gains; expansion to departments/settings	Scaling
Innovative channels (value-based)	Low-single-digit volume; pipeline robust	12 partners under contract; ~2M potential patients; active pipeline of 40; Signify +1,000 prescribers; CenterWell launch	Expanding
International	Europe/UK strength; Japan launch and reimbursement groundwork	Japan 8 accounts launched; Europe steady uptake; UK private market strength	Broadening
Regulatory/legal	FDA warning letter/483 remediation on track; DOJ expenses; non-GAAP excluding Baxter litigation	Comprehensive responses submitted; planning third-party audit H2; collaborative FDA tone	Progressing
R&D execution	MCT filing expected Q3; platform enhancements	Next-gen Zio MCT filing this quarter; extended wear, improved form factor/software	Near-term catalyst

Management Commentary

CEO: “The second quarter of 2025 was another record quarter… accelerating growth in our core monitoring business, continued penetration of Zio AT… expansion with innovative value-based care partners” .
CFO: “We delivered strong profitable growth… $186.7M up 26.1% YoY combined with an adjusted EBITDA margin of 8.4%… third consecutive quarter of 20%+ YoY revenue growth while driving 500 bps of adjusted EBITDA margin improvement” .
CEO on guidance philosophy: “We continue to set expectations that we feel highly confident in… this latest revision reflects the same philosophy” .
CEO on Epic integration: “On average, we see north of 20% increase in prescribing patterns post integration, some accounts even as high as 40%” .
CEO on FDA: “We have submitted all of our responses… waiting for them to respond… planning a third-party audit… a new way of doing business for us” .

Q&A Highlights

Guidance drivers: Majority of FY25 raise from core business (~two-thirds), with the remainder split between Zio AT and innovative channels; maintains conservative stance .
Innovative channels: 12 partners (Signify, CenterWell, Oak Street), repeat monitoring expected; AI pilots showing 80–90% arrhythmia yields in asymptomatic patients .
Seasonality: Q3 revenue guided ~1% down sequentially; innovative channel patterns are new, prompting cautious planning .
MCT market and share: Zio AT wear-time advantage vs competitors (~14 days single patch vs ~12.8 days average two-patch competitors) and next-gen Zio MCT aims to close gaps; buy-and-bill segment (~20%) may require tailored approach .
CMS prelim. 2026: Zio Monitor flat/slightly up; Zio AT ~+2%; CMS ~24% of revenue .

Estimates Context

Q2 beat: Actual revenue $186.687M vs consensus $173.946M*; adjusted EPS $(0.32) vs consensus $(0.474)*. FY25 guidance raised, implying upward estimate revisions in revenue and margin trajectory . Values retrieved from S&P Global.
Q3 setup: Seasonality drives a modest sequential decline; gross margin expected slightly below Q2 on pre-hiring; despite this, full-year gross margin guided slightly above FY24 and adjusted EBITDA margin 9–9.5% in Q3 .
Estimate coverage: Q2 consensus based on 12 revenue and 9 EPS estimates; continued momentum in core and innovative channels may bias upward revisions near term*. Values retrieved from S&P Global.

Key Takeaways for Investors

Mix shift and scale: Sustained gross margin expansion to 71.2% despite higher Zio AT mix underscores operational leverage; watch for Q3 margin dip and recovery into Q4 .
Pipeline catalysts: Next-gen Zio MCT 510(k) filing “this quarter” and Epic Aura integrations (>40 systems) can drive share gains and prescribing uplift .
Innovative channels: Rapidly expanding partner base with repeat monitoring dynamics and AI-driven patient identification (Lucem) can unlock a large undiagnosed market over time .
Regulatory de-risking: Completed responses to FDA warning letter/483, third-party audit planned; continued collaboration supports product and platform cadence .
Tariff and CMS tailwinds: Tariff impact moderated (−20–40 bps) and preliminary CMS rates for 2026 appear stable to positive for Zio Monitor and Zio AT .
Liquidity and investment: $545.5M unrestricted cash supports inventory builds and infrastructure/AI investments; slight FY25 FCF headwind with FCF positive targeted for FY26 .
Trading implications: Near-term—expect consolidation on Q3 seasonal dip; medium-term—raised FY guidance, expanding margins, and product/EHR catalysts support upward estimate revisions and multiple resilience .

Additional Press Releases (Q3 timing but relevant evidence base)

AVALON real-world study (AJMC): Zio LTCM showed highest diagnostic yield, faster diagnosis, fewer CV events, lower costs vs other modalities in 428,707 commercially insured patients .
AMALFI RCT (JAMA): UK home-based screening with Zio LTCM increased AFib detection and shortened time to diagnosis vs usual care; feasible at scale via primary care EHRs .

Note: Non-GAAP presentation excludes certain patent litigation costs (Baxter-related) beginning Q1 2025; reconciliations provided in press releases .

iRhythm Technologies, Inc. (IRTC)·Q2 2025 Earnings Summary