iRhythm Technologies, Inc. Q4 FY2025 earnings call

• 2025 was a breakout year with strong volume-led revenue growth, expanded margins, and first positive free cash flow. - Focus on moving from episodic detection to proactive, integrated, and predictive care. - EHR integration strategy with over half of volume through EHR integrated accounts. - Significant advancement in predictive AI capabilities with early pilots showing over 85% accuracy in pre-identifying patients with clinically relevant arrhythmias. - Zio AT performing exceptionally well with unit growth more than twice the company average. - Next-gen MCT device with 21-day wear time, improved form factor, and enhanced algorithms under FDA review, expected in first half of 2027. - International markets as a growth opportunity with presence in U.K., select EU markets, and Japan. - Progress in sleep pilots with potential to extend workflow-driven model into sleep diagnostic market.

In Q4 2025, revenue was $208.9 million, up 27.1% y-o-y; full year 2025 revenue was $747.1 million, up 26.2% y-o-y. Gross margin in Q4 was 70.9%, up 90 basis points y-o-y; full year gross margin was 70.6%, up 170 basis points y-o-y. Adjusted EBITDA in Q4 was $34.3 million, 16.4% of revenue; full year adjusted EBITDA was $68.9 million, 9.2% of revenue. Zio AT had unit growth more than twice the company average. Long-term cardiac monitoring had nearly 72% share. Primary care accounted for over 1/3 of volume, with over 40,000 primary care physicians served. More than half of volume flowed through EHR integrated accounts, with 75 of top 100 customers fully integrated.

• Full year 2026 revenue expected to be in range of $870 million to $880 million, 16%-18% y-o-y growth. - Q1 2026 revenue expected to be in range of $193 million to $195 million. - Gross margin expected to incrementally improve in 2026. - Adjusted EBITDA margin expected to expand to 11.5%-12.5% of revenue in 2026, with Q1 2026 adjusted EBITDA margin between 3%-4%. - Free cash flow expected to grow vs 2025, more heavily weighted in second half of 2026.

• Heightened scrutiny around medical documentation practices, including chart scraping behaviors. - Uncertainties related to regulatory requirements and approvals for new products and AI capabilities. - Potential impact of changes in Medicare reimbursement and pricing on business performance. - Risks associated with international market expansion, including regulatory, competitive, and market adoption challenges.

Q: Part of what has been weighing on the stock is the language around the elimination of chart-derived diagnosis from CMS and what it might mean for Zio use?

A: Quentin Blackford addressed that Zio delivers confirmatory diagnosis, integrates into workflows, and helps reduce cost of care.

Q: Vijay Kumar asked about CMS proposal being a tailwind and international growth in fiscal '26?

A: Quentin Blackford was bullish on chart scraping being a tailwind, and Daniel Wilson said international contribution is growing slightly ahead of overall company growth.

Q: K. Gong asked about AI concerns?

A: Quentin Blackford said iRhythm's platform is unique with clean data, regulated algorithms, and deep EHR integrations.

Q: Brandon Vazquez asked about disciplined approach to forecasting in guidance?

A: Daniel Wilson said guidance is thoughtful, leaving upside opportunities out, with core U.S. monitor, Zio AT, and innovative channel as contributors.

Q: Marie Thibault asked about partnerships in guidance?

A: Daniel Wilson said innovative channel is emerging, with incremental partners added in Q4 and Q1.

Q: Nathan Treybeck asked about LRP targets and OpEx?

A: Quentin Blackford said will refresh LRP targets when close to $1 billion in 2027, and Daniel Wilson talked about driving efficiencies in gross margin and G&A.

Q: David Rescott asked about pricing in 2025 and 2026?

A: Daniel Wilson said 2025 price was favorable due to collections reserve true-up, and 2026 price is expected to be flat.

Q: Michael Polark asked about mobile gateway for next-gen MCT?

A: Quentin Blackford said initial mobile gateway is a locked smart device for Zio MCT product.

Q: David Saxon asked about innovative channel repeat monitoring?

A: Quentin Blackford said discussions with partners are unique, but repeat testing is likely.

Q: Suraj Kalia asked about Zio AT growth and bridge device challenge?

A: Quentin Blackford said Zio AT grew over 50% y-o-y, and challenge was cybersecurity concerns with old gateway.

Q: David Roman asked about referral channel and AI implications?

A: Quentin Blackford said wearables are lead generators but not driving innovative channel partners.

Q: Stephanie Piazzola asked about innovative channel partnerships in 2026 guide?

A: Daniel Wilson said innovative channel is low single digits of overall business, with new partners added.

Q: John Young asked about Epic Aura accounts?

A: Quentin Blackford said Epic is a strong partner with record integrations in Q4 and Q1, with potential upside not in guidance yet