iRhythm Technologies, Inc. Q1 FY2026 earnings call

• Strong first quarter performance with revenue growth driven by volume and margin expansion. • Strategic focus on expanding the long-term continuous monitoring market by redefining arrhythmia diagnosis, with XeoMonitor as the foundation and XeoAT advancing. • Progress in moving upstream in the patient pathway, with primary care becoming an important entry point, and ~53% of volume flowing through EHR-integrated accounts. • Traction in innovative care channels and international markets, with best quarter in the UK and progress in Japan's reimbursement framework. • Clinical evidence supporting Xeo's benefits, launch of iRhythm Academy, and progress in adjacent markets like sleep. • Integrated, AI-enabled platform with over 3 billion hours of ECG data, and first health system deployment of predictive identification workflows. • Regulatory progress with completion of quality management system review and reaffirmation of Next Generation MCT 2027 release timeline.

Revenue was $199.4 million, up 25.7% year-over-year. Gross margin in Q1 was 70.9%, an increase of 210 basis points year-over-year. Adjusted EBITDA for Q1 was $14.1 million, or 7.1% of revenue, representing an 880 basis point improvement year-over-year. Volume was the primary driver of revenue growth, with new store growth accounting for ~64% of year-over-year volume growth. Home enrollment for ZO services in the U.S. was ~23% of volume in Q1.

• Raised full-year 2026 revenue guidance to $875 million to $885 million, 17%-18% year-over-year growth. • Anticipates Q2 2026 revenue in range of $218 million to $220 million. • Expects gross margin to incrementally improve for full-year 2026 due to clinical operations and manufacturing efficiencies. • Raised full-year 2026 adjusted EBITDA margin guidance to 12% to 13%. • Anticipates Q2 2026 adjusted EBITDA margin between 11.5% and 12.5%. • Full-year 2026 free cash flow expected to grow versus 2025, more weighted in second half due to operating seasonality.

• Subject to FDA warning letter, though remediation efforts completed and independent third party review found no material observations. • Geopolitical situation may impact cost containment, but no material impact expected on gross margin. • DOJ CID and local coverage determination timing uncertain. • Potential competition from outside the traditional medtech sphere, but iRhythm's end-to-end platform and moat are seen as defensible.

Q: Alan Gone with GP Morgan asked about guide raise, deceleration, and AI competition.

A: Quinton and Dan responded on guide being raised due to strong start, momentum in business, and iRhythm's defensibility with end-to-end platform.

Q: Stephanie Elgazy with B of A asked about EBITDA margin outperformance and NextGen algorithm.

A: Justin Fields and Quinton discussed EBITDA margin outperformance due to execution and efficiencies, and NextGen algorithm's benefits and approval timeline.

Q: Brandon Vasquez with William Blair asked about innovative channel partners.

A: Quinton talked about consistency in innovative channel partners and trends in their usage.

Q: Vijay Kumar with Evercore ISI asked about MCT market share ramp and NextGen algorithm.

A: Quinton discussed MCT as continuation of trend and NextGen algorithm's gross margin benefit.

Q: Nathan Trebek with Wells Fargo asked about reconfirmations for chart-derived diagnoses.

A: Quinton said no contemplated benefit in guidance yet.

Q: David Rescott with RW Baird asked about sleep market and iRhythm's value.

A: Quinton talked about sleep as strategic opportunity and iRhythm's ability to disrupt with end-to-end solution.

Q: Marie Thibault with BTIG asked about international reimbursement.

A: Quinton provided detail on Japan's reimbursement update and ongoing work for better reimbursement.

Q: Richard Newitter with Trust Securities asked about LCD and electrophysiology.

A: Quinton discussed LCD's potential impact and no indication of EP slowdown in data.

Q: Suraj Kalia with Oppenheimer asked about monitoring market and EP slowdown.

A: Quinton quantified monitoring market and no indication of EP slowdown.

Q: Gene Mannheimer with Freedom Capital Markets asked about long-term targets and primary care registrations.

A: Quinton said no update to long-term guidance and primary care volume increasing.

Q: Bill Plavanik with Canaccord Genuity asked about arrhythmia study and society interaction.

A: Quinton talked about generating data and interest in changing guidelines.

Q: David Roman with Goldman Sachs asked about profitability factors and investment opportunities.

A: Quinton discussed factors contributing to improved P&L and investment opportunities in various areas