Executive Summary / Key Takeaways

• Accelerating Growth and Profitability: iRhythm Technologies is demonstrating robust financial momentum, reporting 31% year-over-year revenue growth in Q3 2025 and projecting 24-25% growth for the full year, alongside a significant improvement in adjusted EBITDA margins and an anticipated shift to free cash flow positive in 2025 for the first time in its history.
• Technological Leadership and Innovation: The company's Zio System, combining a wire-free biosensor with AI-powered cloud analytics, offers superior diagnostic yield and patient experience. Future innovations, including the next-generation Zio MCT and multi-parameter sensing for sleep apnea, are poised to expand its technological moat.
• Market Expansion into Undiagnosed Populations: iRhythm is strategically tapping into a vast, undiagnosed arrhythmia market of approximately 27 million U.S. patients through primary care expansion, EHR integrations, and innovative value-based care partnerships, driving significant volume growth and healthcare cost avoidance.
• Strong Competitive Positioning: Despite a fragmented and competitive market, iRhythm's specialized focus, clinical evidence, and integrated digital workflow provide a distinct advantage over broader medical device players and traditional monitoring solutions.
• Disciplined Execution Amidst Challenges: The company continues to navigate regulatory scrutiny and macroeconomic headwinds with disciplined operational execution, including ongoing FDA remediation efforts and strategic supply chain management to mitigate tariff impacts.

The Pulse of Innovation: iRhythm's Vision for Cardiac Care

iRhythm Technologies, Inc. is at the forefront of digital healthcare, dedicated to creating solutions that detect, predict, and prevent cardiac disease. Since its inception in 2006 and initial FDA clearance in 2009, the company has pioneered ambulatory cardiac monitoring with its Zio System. This proprietary platform combines an FDA-cleared, CE-marked, wire-free, patch-based biosensor with advanced cloud-based data analytic software, empowering clinicians to diagnose arrhythmias more quickly and efficiently than traditional methods. The company's overarching strategy centers on expanding access to its services, enhancing its technological capabilities, and driving operational efficiencies to capitalize on a significant, largely untapped market opportunity.

The market for remote cardiac monitoring is highly competitive and rapidly evolving, characterized by technological advancements and a mix of large manufacturers and smaller, specialized service providers. Major players like Medtronic , Abbott Laboratories , Philips , and Boston Scientific offer broad portfolios that include cardiac rhythm management and patient monitoring systems. These diversified giants leverage extensive R&D, global distribution, and established regulatory expertise. However, iRhythm distinguishes itself with a specialized focus on patient-centric, non-invasive, long-term continuous monitoring. Its wire-free patch design prioritizes ease of use and patient compliance, which can lead to more effective data capture compared to bulkier, multi-lead systems. This targeted approach allows iRhythm to be more agile in product development and innovation within its niche.

Technological Edge and Expanding Horizons

iRhythm's core competitive advantage lies in its Zio System. The Zio patch, a 14-day wearable biosensor, continuously records ECG data, which is then analyzed by proprietary, FDA-cleared, cloud-based software. This integrated approach distills millions of heartbeats into clinically actionable information. The tangible benefits are significant: studies like AVALON and CAMELOT have consistently demonstrated Zio's clinical superiority, showing higher diagnostic yield, faster time to diagnosis, fewer cardiovascular events, and lower total healthcare costs compared to other monitoring approaches. For instance, the AVALON study, published in August 2025, reinforced these benefits in a commercially insured population with an average age of 46 years.

The company is not resting on its laurels, actively pursuing next-generation technologies. In September 2025, iRhythm submitted its 510(k) filing for the next-generation Zio MCT solution. This new device aims to significantly enhance its competitive position by offering a smaller form factor, extended 21-day wear, advanced detection algorithms, and an improved final wear report. Crucially, it will be on the same manufacturing platform as the Zio Monitor, promising future operational efficiencies. The "so what" for investors is clear: these innovations strengthen iRhythm's competitive moat by addressing market demands for longer wear times and enhanced diagnostics, potentially increasing market share and average selling prices.

Beyond cardiac monitoring, iRhythm is strategically expanding its technological capabilities into adjacent markets. Its August 2024 Technology License Agreement with BioIntelliSense (BioIS) grants iRhythm exclusive rights to develop multi-parameter sensing technologies, including pulse oximetry, accelerometry, and non-invasive blood pressure, for its ambulatory cardiac monitoring products. This partnership is foundational to iRhythm's long-term vision of developing AI prediagnostic and diagnostic pathways for sleep apnea. Management believes that identifying and diagnosing sleep disorders directly off the existing Zio patch platform offers substantial economic benefits and addresses a natural clinical overlap, as up to half of AFib patients also suffer from sleep apnea. While no revenue contribution from sleep apnea is factored into 2025 guidance, pilot programs are set to launch in late 2025, signaling a future growth vector.

Strategic Execution and Market Penetration

iRhythm's growth narrative is deeply intertwined with its strategic execution across multiple fronts. The company's focus on moving cardiac monitoring "upstream" into primary care physician (PCP) channels is yielding substantial results. Nearly one-third of its long-term continuous monitoring volumes now originate from PCPs. This strategy is critical for tapping into the estimated 27 million U.S. patients who are unaware of their arrhythmias, often confusing symptoms with comorbid conditions like type 2 diabetes, COPD, or chronic kidney disease. Early detection in these populations has demonstrated significant downstream cost avoidance, with potential savings of over $10 million for every 1,000 patients diagnosed earlier.

A key enabler of this upstream expansion is iRhythm's robust EHR integration strategy. As of Q3 2025, 76% of its top 100 customers are EHR integrated. The Epic Aura partnership, launched broadly in early 2025, is particularly impactful, with 30 systems live and another 65 in the pipeline. Epic Aura integrated customers typically experience an average increase of nearly 25% in monitoring volume within the first six months of going live, reflecting enhanced utilization and physician efficiency. This digital connectivity streamlines workflows, allowing PCPs to prescribe Zio devices and cardiologists to review reports without direct patient interaction, thereby alleviating specialist bottlenecks.

The company's innovative channel partnerships further underscore its market expansion efforts. iRhythm now has 18 active partner accounts, up from 12 in Q2 2025, with a robust pipeline of 40 active discussions and a long-term target of 100 potential partners in the U.S. market. These partnerships, often with value-based care organizations, target undiagnosed arrhythmia populations, demonstrating increased activity after pilot launches. The Lucem Health AI partnership, announced in Q2 2025, is advancing clinical AI capabilities to identify high-risk patients from large medical record datasets, with early pilot results showing an 80-90% yield in proactively identifying arrhythmias in unaware populations.

Internationally, iRhythm is steadily expanding its global footprint. The UK private market continues to show strong growth, and the company is seeing steady uptake in four additional European countries (Switzerland, Austria, Netherlands, Spain). In Japan, iRhythm achieved PMDA regulatory approval for Zio Monitor in September 2024, marking its entry into the second-largest ambulatory cardiac monitoring market globally with an AI-utilizing service. While initial reimbursement is at the established Holter monitoring rate, iRhythm is generating additional clinical evidence through real-world studies to support future differentiated reimbursement applications.

Financial Performance and Operational Discipline

iRhythm's financial performance in 2025 reflects its accelerating commercial momentum and disciplined operational execution. For the third quarter ended September 30, 2025, the company reported revenue of $192.9 million, a significant 31% increase year-over-year. Year-to-date, revenue for the nine months ended September 30, 2025, reached $538.2 million, up 26% from the prior year. This growth was primarily driven by increased volume across Zio Monitor and Zio AT, with Zio AT achieving record unit growth more than double the corporate average in Q3 2025.

Gross margin has shown consistent improvement, reaching 71.1% in Q3 2025, a 230-basis point increase over Q3 2024. This improvement is attributed to volume leverage and operational efficiencies, partially offset by higher blended cost per unit from an increased Zio AT product mix. Adjusted EBITDA for Q3 2025 was $21.6 million, representing an 11.2% margin, a substantial improvement from a negative 13.5% margin in Q3 2024. The company anticipates full-year 2025 gross margin to slightly exceed 2024 levels, despite an estimated 50 basis points negative impact from proposed tariffs on global imports.

A significant financial milestone is the expectation of becoming slightly free cash flow positive for the full year 2025, a year earlier than previously anticipated. This achievement is underpinned by robust cash provided by operating activities, which increased by $70.5 million during the nine months ended September 30, 2025, driven by revenue growth and efficient cash collections.

As of September 30, 2025, iRhythm held a strong liquidity position with $255.6 million in cash and cash equivalents and $309.6 million in marketable securities, totaling $565.2 million in unrestricted cash and short-term investments.

Operational discipline is a core tenet of iRhythm's strategy. The company has implemented manufacturing automation plans and reduced management layers, yielding over $25 million in savings in 2025. Its Global Business Services Center in the Philippines supports around-the-clock operations, enhancing efficiency and customer service. These efforts demonstrate iRhythm's ability to generate sustainable operating leverage while investing in growth initiatives and infrastructure for future scale.

Competitive Dynamics and Future Outlook

iRhythm operates in a competitive landscape where its specialized focus and technological advantages are key differentiators. While larger, diversified medical device companies like Medtronic (MDT), Abbott (ABT), Philips (PHG), and Boston Scientific (BSX) offer broad cardiac portfolios, iRhythm's emphasis on a user-friendly, wire-free patch and advanced AI-driven analytics provides a distinct edge in outpatient settings. The company's high market share in long-term continuous monitoring (over 70%) underscores its leadership, while its growing presence in mobile cardiac telemetry (currently around 13% market share, with a path to 25-35%) represents a significant growth opportunity. The Zio AT, with its 14 days of continuous wear, already offers a compelling alternative to competitors requiring multiple patches for similar durations.

The company's outlook for 2025 is robust, with full-year revenue guidance raised to $735 million to $740 million, representing 24% to 25% year-over-year growth. This includes continued strong volume growth and a low single-digit pricing tailwind. Adjusted EBITDA margin is projected to be between 8.25% and 8.75% of revenues, absorbing ongoing FDA remediation expenses and tariff impacts. For 2026, management anticipates a prudent guidance range of 16-18% revenue growth, intentionally excluding contributions from the next-generation Zio MCT until FDA approval timelines become clearer. Preliminary 2026 CMS rates are estimated to be flat to slightly up for Zio Monitor and up approximately 2% for Zio AT, which represents about 24% of total company revenues.

Despite the positive momentum, iRhythm faces several risks. Regulatory scrutiny from the FDA, including a warning letter and 483 observations related to quality systems and Zio AT, requires significant ongoing remediation efforts. The company is also involved in legal proceedings, including patent infringement lawsuits from Welch Allyn and Bardy Diagnostics, and a DOJ subpoena. Macroeconomic factors, such as inflation and supply chain disruptions, and the evolving regulatory landscape for AI technologies, could also impact operations. However, iRhythm's commitment to "best-in-class" quality standards and proactive engagement with regulators aims to mitigate these challenges.

Conclusion

iRhythm Technologies is poised for continued growth and profitability, driven by its innovative Zio platform, strategic market expansion, and disciplined operational execution. The company's ability to deliver superior diagnostic solutions through its wire-free biosensors and AI-powered analytics creates a compelling value proposition for patients, physicians, and the broader healthcare system. By effectively penetrating the vast undiagnosed arrhythmia market, leveraging EHR integrations, and expanding internationally, iRhythm is solidifying its leadership in ambulatory cardiac monitoring. The anticipated achievement of annual free cash flow positivity in 2025 underscores its financial maturity and capacity for sustained investment in future innovations, including next-generation MCT and multi-parameter sensing for sleep apnea. While regulatory and competitive challenges persist, iRhythm's strategic responses and technological differentiation position it favorably to transform cardiac care and generate long-term shareholder value.