iRhythm Raises Outlook as Profitability Accelerates
Second-quarter revenue reached $224.2 million as sustained demand lifted sales 20.1%.
iRhythm Holdings (IRTC), the digital cardiac-monitoring company, more than doubled adjusted EBITDA to $43.3 million from $15.7 million a year earlier as its margin expanded to 19.3%.
The profitability gain accompanied a new quarterly revenue high, although year-over-year growth slowed to 20.1% from 25.7% in the first quarter and more than 30% in the third quarter of 2024. Revenue increased 12.4% sequentially, topping the previous high set in the fourth quarter.
Second-quarter revenue rose from $186.7 million a year earlier, driven primarily by sustained volume demand, strength in the core business and newer growth channels. The GAAP net loss narrowed to $0.4 million, or $0.01 a share, from $14.2 million, or $0.44 a share. On an adjusted basis, iRhythm earned $19.3 million, or $0.58 a diluted share, compared with a loss of $10.2 million, or $0.32 a share.
Higher Zio-service volume and operating efficiencies helped gross profit rise 22.8% to $163.2 million, faster than revenue growth. Gross margin widened 160 basis points from a year earlier and 190 basis points sequentially to 72.8%, also exceeding levels in the previous two quarters.
Adjusted operating expenses declined slightly from a year earlier and fell $8.5 million sequentially to $145.0 million. GAAP expenses included $14.0 million in securities-class-action settlement charges and $0.7 million in cybersecurity-incident costs. Free cash flow more than doubled to $37.5 million, helping lift unrestricted cash, equivalents and marketable securities to $591.3 million.
iRhythm now expects full-year revenue of $880 million to $890 million, raising both ends of its previous range by $5 million. It also expects an adjusted EBITDA margin of 13% to 14%, up one percentage point from its prior outlook.
The company also agreed to acquire VitalConnect for about $287.5 million, adding mobile cardiac telemetry and hospital-to-home monitoring capabilities. The transaction is expected to close by year-end and contribute to revenue growth beginning in 2025, while iRhythm maintained its 15% adjusted EBITDA-margin target for that year. Separately, FDA clearance for its third-generation algorithm is expected to cut clinician review time by about half over time and produce roughly $100 million in cumulative savings over five years.