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iRhythm Technologies Announces Second Quarter 2019 Financial Results

854 Days ago

Raises Guidance for Full Year 2019

SAN FRANCISCO, July 31, 2019 (GLOBE NEWSWIRE) -- 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

Condensed Consolidated Balance Sheets
(In thousands)

    June 30,
  December 31,
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

Condensed Consolidated Statements of Operations and Comprehensive Loss
(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  

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