Back

iRhythm Technologies Announces Second Quarter 2019 Financial Results

PDF Version

SAN FRANCISCO, July 31, 2019-- iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care solutions company focused on the advancement of cardiac care, today reported financial results for the three months ending June 30, 2019.

Second Quarter 2019 and Recent Highlights

  • Revenue of $53.3 million for the three months ended June 30, 2019
    • 50% increase compared to second quarter revenue in 2018
    • 13% sequential growth versus first quarter 2019
  • Gross margin was 76%
    • 280 basis point year-over-year improvement
  • Achieved the majority of target sales force hiring in first half of 2019
  • Zio service CPT code change application accepted by the American Medical Association (AMA)

“Our second quarter results demonstrated continued strong company-wide execution and market penetration, with accelerating revenue growth in tandem with gross margin expansion,” said Kevin King, CEO. “The traction we have seen in both new and existing accounts continued into the quarter, and the exceptional progress we’ve made in salesforce hiring further strengthens our ability to expand the market opportunity we see for our Zio service. Importantly, we saw meaningful growth in Zio XT volumes in large accounts, as well as significant adoption of Zio AT at select customer sites, signaling our comprehensive commercial strategy and expanding service capabilities.

“As anticipated, our CPT code change application was accepted by the AMA for review for Category 1 status in September 2019. We look forward to the meeting as a next step and are excited to highlight the differentiated value of our Zio service as we go through the process,” concluded King. 

Second Quarter Financial Results

Revenue for the three months ended June 30, 2019 increased 50% to $53.3 million, from $35.5 million during the same period in 2018. The increase was primarily due to increased salesforce productivity, expansion into new accounts and improved penetration of existing accounts. Gross profit for the second quarter of 2019 was $40.5 million, or 76% gross margin, up from $26.0 million, or gross margin of 73.2%, during the same period in 2018. Margin expansion was primarily driven by productivity gains through our proprietary algorithms and workflow enhancements.

Operating expenses for the second quarter of 2019 were $51.8 million, compared to $37.7 million for the same period in 2018. The increase in operating expenses was driven by salesforce expansion, organizational support for our network sales strategy, expansion of R&D activities, and ongoing stock compensation expense.

Net loss for the second quarter of 2019 was $11.5 million, or a loss of $0.46 per share, compared with net loss of $12.2 million, or a loss of $0.51 per share, for the same period in 2018.

Updated Guidance for Full Year 2019

iRhythm projects revenue for the full year 2019 in the range of $212 million to $216 million, which represents 44% to 47% growth over the company’s prior year. Gross margins for the full year 2019 are expected to be between 75.5% to 76.5% and operating expenses for the full year 2019 to be between $198 million to $204 million including $29 million to $31 million for research and development and $169 million to $173 million for SG&A. This compares to previous revenue guidance of $206 to $211 million, gross margins of 75% to 76% and operating expenses of $193 to $199 million, which included $165 to $169 million for SG&A. The company expects sales headcount between 130 to 140 for the remainder of the year.

Webcast and Conference Call Information

iRhythm’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 dialing (844) 348-0016 for domestic callers or (213) 358-0876 for international callers, and referencing Conference ID: 7488066 or from the webcast on the “Investors” section of the company’s website at: www.irhythmtech.com.

About iRhythm Technologies, Inc. 
iRhythm is a leading digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distill data from millions of heartbeats into clinically actionable information. The company believes improvements in arrhythmia detection and characterization have the potential to change clinical management of patients.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements include statements regarding financial and salesforce guidance, CPT coding, market opportunity, ability to penetrate the market 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 filing made with the Securities and Exchange Commission on the Form 10-K on March 4, 2019. 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 Contact:                                                     Media Contact

Lynn Pieper Lewis or Leigh Salvo                                          Shannon Moore

(415) 937-5404                                                                          (415) 486-3272

investors@irhythmtech.com                                                   media@irhythmtech.com

 

 IRHYTHM TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

   

June 30,
 2019

 

December 31,
2018

Assets

       

Current assets:

       

Cash and cash equivalents

 

 $                   16,154

 

 $              20,023

Investments, short-term

 

 43,240

 

 58,320

Accounts receivable, net

 

 29,137

 

 21,977

Inventory

 

 2,774

 

 2,062

Prepaid expenses and other current assets

 

 3,669

 

 4,100

Total current assets

 

 94,974

 

 106,482

Property and equipment, net

 

 12,618

 

 9,158

Operating lease right-of-use asset

 

 94,326

 

 -  

Goodwill

 

 862

 

 862

Other assets

 

 4,515

 

 3,208

Total assets

 

 $                 207,295

 

 $            119,710

Liabilities and Stockholders’ Equity

       

Current liabilities:

       

Accounts payable

 

 $                     3,628

 

 $                2,284

Accrued liabilities

 

 23,304

 

 26,570

Deferred revenue

 

 1,199

 

 1,243

Accrued interest, current portion

 

 139

 

 139

Operating lease liabilities, current portion

 

 7,384

 

 -  

Total current liabilities

 

 35,654

 

 30,236

Debt

 

 34,927

 

 34,899

Deferred rent, noncurrent portion

 

 -  

 

 153

Operating lease liabilities, noncurrent portion

 

 88,106

 

 -  

Total liabilities

 

 158,687

 

 65,288

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

       

Common stock

 

 23

 

 23

Additional paid-in capital

 

 271,551

 

 257,955

Accumulated other comprehensive loss

 

 35

 

 (41)

Accumulated deficit

 

 (223,001)

 

 (203,515)

Total stockholders’ equity

 

 48,608

 

 54,422

Total liabilities and stockholders’ equity

 

 $              207,295

 

 $           119,710

 

IRHYTHM TECHNOLOGIES, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Revenue

 $53,331

 

 $35,469

 

 $100,545

 

 $66,034

Cost of revenue

 12,825

 

 9,490

 

 24,555

 

 18,101

Gross profit

 40,506

 

 25,979

 

 75,990

 

 47,933

Operating expenses:

             

Research and development

 8,639

 

 4,564

 

 15,395

 

 8,583

Selling, general and administrative

 43,189

 

 33,094

 

 79,894

 

 61,671

Total operating expenses

 51,828

 

 37,658

 

 95,289

 

 70,254

Loss from operations

 (11,322)

 

 (11,679)

 

 (19,299)

 

 (22,321)

Interest expense

 (440)

 

 (861)

 

 (849)

 

 (1,719)

Other income

 310

 

 334

 

 689

 

 717

Loss before income taxes

 (11,452)

 

 (12,206)

 

 (19,459)

 

 (23,323)

Income tax provision

 15

 

 -  

 

 27

 

 -  

Net loss

 $(11,467)

 

 $(12,206)

 

 $(19,486)

 

 $(23,323)

Net loss per common share, basic and diluted

 $(0.46)

 

 $(0.51)

 

 $(0.79)

 

 $(0.99)

Weighted-average shares used to compute net loss per common share,
     basic and diluted

 24,724,808

 

 23,747,131

 

 24,600,250

 

 23,614,281

 

CONTACT US FOR MORE INFORMATION