iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health
care company focused on creating trusted solutions that detect,
predict, and prevent disease, today reported financial results for
the three and six months ended June 30, 2023.
Second Quarter 2023 Financial
Results
- Revenue of $124.1 million, a 21.6%
increase compared to second quarter 2022
- Gross margin of 69.5%, a 70-basis
point improvement compared to second quarter 2022
- Cash, cash equivalents and
marketable securities of $164.7 million as of June 30,
2023
- Updated fiscal year 2023 revenue
guidance in a range of approximately $485 million to $490
million
Recent Operational
Highlights
- Second-highest quarter ever of Zio XT new account openings and
continued volume growth across both Zio XT and Zio AT with balanced
growth across multiple channels
- Zio granted high medical needs designation by Japanese Ministry
of Health, Labour, and Welfare ("MHLW") and the Company submitted a
Shonin pre-market application to the Pharmaceuticals and Medical
Devices Agency ("PMDA") for regulatory review
- Upcoming data presentations at the European Society of
Cardiology ("ESC") Congress in Amsterdam, the Netherlands, from
August 25-28, 2023
"We delivered another strong performance during
the second quarter as we realized continued balanced growth across
both Zio XT and Zio AT and across multiple channels, building on
the solid momentum we achieved earlier this year," said Quentin
Blackford, iRhythm’s President and CEO. "Revenue growth of 21.6%
year-over-year was driven by increasing demand for Zio services as
we continue to redefine the standard of cardiac care and
demonstrate our unique value proposition to customers, patients,
and payers. This past quarter was the first in which our commercial
teams were able to speak to the CAMELOT study of real-world
evidence for Zio XT as we continued to increase penetration within
our existing accounts and gained traction within the primary care
space."
"As we've moved into the third quarter, we have
also hit several milestones that we believe are important to
building our international presence. In Japan, we are thrilled that
the Zio Monitor System has been granted high medical needs
designation by the MHLW at the recommendation of the Japanese Heart
Rhythm Society (JHRS), and we look forward to continuing our
collaboration with the JHRS and the PMDA during their review of our
regulatory dossier. In Switzerland, we have initiated our first
engagement with one of the country's five university hospitals.
With continued momentum in our core U.S. business, progress with
market access exploration and operational efforts in certain
international markets, an improving financial profile, and the
broader Zio Monitor commercial launch in the United States later
this year, we are encouraged by the significant opportunities ahead
of us that we believe will allow us to capture growth for years to
come," concluded Mr. Blackford.
Second Quarter Financial
ResultsRevenue for the second quarter of 2023 was $124.1
million, up 21.6% from $102.1 million during the same period in
2022. The increase was driven by growth in volume of Zio services,
partially offset by a decline in net average selling price.
Gross profit for the second quarter of 2023 was
$86.2 million, up 22.7% from $70.2 million during the same period
in 2022, while gross margin was 69.5%, up from 68.8% during the
same period in 2022. The increase in gross profit was primarily due
to increased volume and a reduction in cost per unit.
Operating expenses for the second quarter of
2023 were $105.1 million, compared to $93.7 million for the same
period in 2022. Adjusted operating expenses for the second quarter
of 2023 were $99.7 million, compared to $93.5 million during the
same period in 2022. This increase in adjusted operating expenses
resulted primarily from increased payroll-related costs to support
growth in operations.
Net loss for the second quarter of 2023 was
$18.5 million, or a diluted loss of $0.61 per share, compared with
net loss of $23.9 million, or a diluted loss of $0.80 per share,
for the same period in 2022. Adjusted net loss for the second
quarter of 2023 was $13.1 million, or a diluted loss of $0.43 per
share, compared with an adjusted net loss of $23.7 million, or a
diluted loss of $0.79 per share, for the same period in 2022.
Cash, cash equivalents, and marketable
securities were $164.7 million as of June 30, 2023.
2023 Annual Guidance iRhythm
projects revenue for the full year 2023 to grow approximately 18%
to 19% compared to prior year results, ranging from approximately
$485 million to $490 million. Gross margin for the full year 2023
is expected to range from 69% to 70% and adjusted operating
expenses are expected to range between $417 million and $427
million. Adjusted EBITDA margin for the full year 2023 is expected
to range from approximately 0% to 0.5% of revenues.
Webcast and Conference Call
InformationiRhythm’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, which will
be available on the investors section of the Company’s website at
investors.irhythmtech.com.
About iRhythm Technologies,
Inc.iRhythm is a leading digital health care company that
creates trusted solutions that detect, predict, and prevent
disease. Combining wearable biosensors and cloud-based data
analytics with powerful proprietary algorithms, iRhythm distills
data from millions of heartbeats into clinically actionable
information. Through a relentless focus on patient care, iRhythm’s
vision is to deliver better data, better insights, and better
health for all.
Use of Non-GAAP Financial
Measures 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, adjusted
net loss, adjusted net loss per share, and adjusted operating
expenses. We use these non-GAAP financial measures for financial
and operational decision-making and as a means to evaluate
period-to-period comparisons. See the schedules attached to this
press release for additional information and reconciliations of
such non-GAAP financial measures to their most directly comparable
GAAP measures. We have not reconciled our adjusted operating
expenses and adjusted EBITDA estimates for full year 2023 because
certain items that impact these figures are uncertain or out of our
control and cannot be reasonably predicted. Accordingly, a
reconciliation of adjusted operating expenses and adjusted EBITDA
estimates is not available without unreasonable effort.
Adjusted EBITDA excludes non-cash operating charges for
stock-based compensation, depreciation and amortization as well as
non-operating items such as interest income, interest expense,
income tax provision, impairment and restructuring charges, and
business transformation costs.
We exclude the following items from non-GAAP
financial measures for adjusted net loss, adjusted net loss per
share and adjusted operating expenses:
- impairment and restructuring charges, and
- business transformation costs, which include one-time
professional services and severance costs to augment and
restructure the organization to use both outsourced and offshore
resources.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and the Private Securities Litigation Reform
Act of 1995. These statements include statements regarding
financial guidance, market opportunity, ability to penetrate the
market, anticipated productivity improvements and expectations for
growth. 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, including those
on the Form 10-Q expected to be filed on or about August 3, 2023.
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 ContactStephanie
Zhadkevich(919) 452-5430investors@irhythmtech.com
iRhythm Media ContactSaige Smith(262)
289-7065irhythm@highwirepr.com
IRHYTHM TECHNOLOGIES,
INC.Condensed Consolidated Balance
Sheets(unaudited)(in
thousands)
|
June 30, 2023 |
|
December 31, 2022 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
61,578 |
|
|
$ |
78,832 |
|
Marketable securities |
|
103,161 |
|
|
|
134,312 |
|
Accounts receivable, net |
|
51,108 |
|
|
|
49,918 |
|
Inventory |
|
14,478 |
|
|
|
15,155 |
|
Prepaid expenses and other current assets |
|
11,816 |
|
|
|
10,555 |
|
Total current assets |
|
242,141 |
|
|
|
288,772 |
|
Property and equipment, net |
|
89,845 |
|
|
|
75,670 |
|
Operating lease right-of-use
assets |
|
57,917 |
|
|
|
60,666 |
|
Goodwill |
|
862 |
|
|
|
862 |
|
Other assets |
|
38,723 |
|
|
|
22,252 |
|
Total assets |
$ |
429,488 |
|
|
$ |
448,222 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
7,150 |
|
|
$ |
7,517 |
|
Accrued liabilities |
|
64,469 |
|
|
|
65,497 |
|
Deferred revenue |
|
3,695 |
|
|
|
3,051 |
|
Operating lease liabilities, current portion |
|
14,099 |
|
|
|
13,031 |
|
Total current liabilities |
|
89,413 |
|
|
|
89,096 |
|
Debt, noncurrent portion |
|
34,942 |
|
|
|
34,935 |
|
Other noncurrent
liabilities |
|
1,012 |
|
|
|
1,307 |
|
Operating lease liabilities,
noncurrent portion |
|
80,242 |
|
|
|
83,072 |
|
Total liabilities |
|
205,609 |
|
|
|
208,410 |
|
Stockholders’ equity: |
|
|
|
Preferred stock |
|
— |
|
|
|
— |
|
Common stock |
|
30 |
|
|
|
28 |
|
Additional paid-in capital |
|
803,792 |
|
|
|
762,380 |
|
Accumulated other comprehensive loss |
|
(152 |
) |
|
|
(396 |
) |
Accumulated deficit |
|
(579,791 |
) |
|
|
(522,200 |
) |
Total stockholders’ equity |
|
223,879 |
|
|
|
239,812 |
|
Total liabilities and
stockholders’ equity |
$ |
429,488 |
|
|
$ |
448,222 |
|
|
|
|
|
IRHYTHM TECHNOLOGIES,
INC.Condensed Consolidated Statements of
Operations(unaudited)(in
thousands, except per share data)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue, net |
|
$ |
124,130 |
|
|
$ |
102,051 |
|
|
$ |
235,566 |
|
|
$ |
194,429 |
|
Cost of revenue |
|
|
37,905 |
|
|
|
31,806 |
|
|
|
73,660 |
|
|
|
62,425 |
|
Gross profit |
|
|
86,225 |
|
|
|
70,245 |
|
|
|
161,906 |
|
|
|
132,004 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
13,677 |
|
|
|
11,945 |
|
|
|
28,519 |
|
|
|
22,487 |
|
Selling, general and administrative |
|
|
91,420 |
|
|
|
81,751 |
|
|
|
191,763 |
|
|
|
154,909 |
|
Impairment and restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,608 |
|
Total operating expenses |
|
|
105,097 |
|
|
|
93,696 |
|
|
|
220,282 |
|
|
|
204,004 |
|
Loss from operations |
|
|
(18,872 |
) |
|
|
(23,451 |
) |
|
|
(58,376 |
) |
|
|
(72,000 |
) |
Interest expense |
|
|
(832 |
) |
|
|
(482 |
) |
|
|
(1,782 |
) |
|
|
(2,511 |
) |
Interest and other income,
net |
|
|
1,435 |
|
|
|
69 |
|
|
|
2,867 |
|
|
|
85 |
|
Loss before income taxes |
|
|
(18,269 |
) |
|
|
(23,864 |
) |
|
|
(57,291 |
) |
|
|
(74,426 |
) |
Income tax provision |
|
|
213 |
|
|
|
33 |
|
|
|
300 |
|
|
|
80 |
|
Net loss |
|
$ |
(18,482 |
) |
|
$ |
(23,897 |
) |
|
$ |
(57,591 |
) |
|
$ |
(74,506 |
) |
Net loss per common share,
basic and diluted |
|
$ |
(0.61 |
) |
|
$ |
(0.80 |
) |
|
$ |
(1.89 |
) |
|
$ |
(2.51 |
) |
Weighted-average shares, basic
and diluted |
|
|
30,502 |
|
|
|
29,843 |
|
|
|
30,400 |
|
|
|
29,720 |
|
|
|
|
|
|
|
|
|
|
IRHYTHM TECHNOLOGIES,
INC.Reconciliation of GAAP to Non-GAAP Financial
Information(unaudited)(in
thousands, except per share data)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted EBITDA
reconciliation |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(18,482 |
) |
|
$ |
(23,897 |
) |
|
$ |
(57,591 |
) |
|
$ |
(74,506 |
) |
Interest expense |
|
|
832 |
|
|
|
482 |
|
|
|
1,782 |
|
|
|
2,511 |
|
Interest income |
|
|
(1,468 |
) |
|
|
(196 |
) |
|
|
(2,902 |
) |
|
|
(328 |
) |
Income tax provision |
|
|
213 |
|
|
|
33 |
|
|
|
300 |
|
|
|
80 |
|
Depreciation and
amortization |
|
|
3,791 |
|
|
|
3,351 |
|
|
|
7,367 |
|
|
|
6,494 |
|
Stock-based compensation |
|
|
14,099 |
|
|
|
15,098 |
|
|
|
32,350 |
|
|
|
29,001 |
|
Impairment and restructuring
charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,608 |
|
Business transformation
costs |
|
|
5,409 |
|
|
|
175 |
|
|
|
11,095 |
|
|
|
433 |
|
Adjusted EBITDA |
|
$ |
4,394 |
|
|
$ |
(4,954 |
) |
|
$ |
(7,599 |
) |
|
$ |
(9,707 |
) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted net loss
reconciliation |
|
|
|
|
|
|
|
|
Net loss, as reported |
|
$ |
(18,482 |
) |
|
$ |
(23,897 |
) |
|
$ |
(57,591 |
) |
|
$ |
(74,506 |
) |
Impairment and restructuring
charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,608 |
|
Business transformation
costs |
|
|
5,409 |
|
|
|
175 |
|
|
|
11,095 |
|
|
|
433 |
|
Adjusted net loss |
|
$ |
(13,073 |
) |
|
$ |
(23,722 |
) |
|
$ |
(46,496 |
) |
|
$ |
(47,465 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net loss per
share reconciliation |
|
|
|
|
|
|
|
|
Net loss per share, as
reported |
|
$ |
(0.61 |
) |
|
$ |
(0.80 |
) |
|
$ |
(1.89 |
) |
|
$ |
(2.51 |
) |
Impairment and restructuring
charges per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.90 |
|
Business transformation costs
per share |
|
|
0.18 |
|
|
|
0.01 |
|
|
|
0.36 |
|
|
|
0.01 |
|
Adjusted net loss per
share |
|
$ |
(0.43 |
) |
|
$ |
(0.79 |
) |
|
$ |
(1.53 |
) |
|
$ |
(1.60 |
) |
Weighted-average shares, basic
and diluted |
|
|
30,502 |
|
|
|
29,843 |
|
|
|
30,400 |
|
|
|
29,720 |
|
|
|
|
|
|
|
|
|
|
Adjusted operating
expense reconciliation |
|
|
|
|
|
|
|
|
Operating expense, as
reported |
|
$ |
105,097 |
|
|
$ |
93,696 |
|
|
$ |
220,282 |
|
|
$ |
204,004 |
|
Impairment and restructuring
charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26,608 |
) |
Business transformation
costs |
|
|
(5,409 |
) |
|
|
(175 |
) |
|
|
(11,095 |
) |
|
|
(433 |
) |
Adjusted operating
expense |
|
$ |
99,688 |
|
|
$ |
93,521 |
|
|
$ |
209,187 |
|
|
$ |
176,963 |
|
|
|
|
|
|
|
|
|
|
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