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iRhythm Technologies Announces Second Quarter 2017 Financial Results

SAN FRANCISCO, Aug. 02, 2017 (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 and six months ended June 30, 2017.

Second Quarter 2017 Financial Results

  • Revenue for the quarter ended June 30, 2017 increased 52% year-over-year to $23.9 million
  • Gross margin for the second quarter 2017 was 72% versus 67% in the second quarter of 2016
  • Achieved first-ever cash flow break-even quarter


Second Quarter 2017 Business Highlights

  • Received FDA clearance for a next-generation product with timely data transmission capabilities.
  • Data presented at the 3rd European Stroke Organisation Conference in Prague demonstrated that Zio Service is more efficient for the detection of arrhythmias than Holter monitors in patients who have recently experienced cryptogenic strokes or transient ischemic attacks.
  • An expert statement jointly developed by ten professional organizations was released during the Heart Rhythm Society’s 38th Annual Scientific Sessions. The Expert Consensus Statement on Catheter and Surgical Ablation for Atrial Fibrillation acknowledged that extended continuous patch monitors, such as Zio, are an effective tool for aFib monitoring following a cardiac ablation procedure.
  • A research collaboration with Stanford University’s artificial intelligence lab utilizing iRhythm's ECG database recorded from its Zio monitoring system yielded an algorithm that performed better than trained individual cardiologists in detecting 13 types of heart rhythms as well as noise from artifact.


"Second quarter results demonstrated the traction we continue to achieve with our Zio Service for ambulatory cardiac monitoring. Growth in both existing and new accounts, as well as momentum in our in-network health plan contracting resulted in strong revenue growth and improved gross margins. In addition, we saw growing clinical awareness, inclusion in key guidelines, and support from the international professional community acknowledging the benefits of our Zio Service,” said Kevin King, CEO. "Looking ahead, I am confident in our ability to continue to execute on two key components of our growth strategy: expanding our sales channel and increasing our in-network health plan contracting.”

Second Quarter Financial Results
Revenue for the three months ended June 30, 2017 increased 52% to $23.9 million, from $15.7 million during the same period of the prior year. The increase in revenue was due primarily to increased volume of the Zio Service in new and existing accounts, as well as continued success with in-network contracting efforts.

Gross profit for the second quarter of 2017 was $17.1 million, or 72% gross margin, up from $10.6 million, or 67% gross margin, in the same period of the prior year. Margin expansion is primarily attributable to productivity gains through the company’s machine-learned algorithms associated with report generation, the impact from the mix shift to contracted claims, and continued reduction of device-related manufacturing costs.

Operating expenses for the second quarter of 2017 were $23.0 million, an increase of 61% compared to $14.3 million for the same period of the prior year. The increase in operating expenses was primarily driven by accelerated salesforce expansion investments and a material increase in stock-based compensation.

Loss from operations for the second quarter of 2017 was $6.4 million, compared to $4.4 million for the same period of the prior year.

Cash, cash equivalents, and investments totaled $109.8 million as of June 30, 2017.

Guidance for Full Year 2017
iRhythm projects revenue for the full year 2017 to range from $94 to $96 million, gross margins for the full year 2017 to range from 71.5% to 72.5% and operating expenses for the full year 2017 to be between $89 and $92 million. This compares to previous guidance of $88 to $92 million in revenue, 70% to 72% in gross margins, and $85 to $88 million in operating expenses for the full year 2017 provided on May 3, 2017.

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: 48344560 or from the webcast on the “Investor Relations” 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 guidance. 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 Form 10-K filing made with the Securities and Exchange Commission on March 31, 2017, and the Form 10-Q on May 12, 2017. 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.

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
June 30, 2017 December 31, 2016
Assets
Current assets:
Cash and cash equivalents $16,249 $ 51,643
Short-term investments 93,578 54,407
Accounts receivable, net 10,851 9,406
Inventory 1,231 1,390
Prepaid expenses and other current assets 1,817 1,671
Restricted cash 91 91
Total current assets 123,817 118,608
Investments, long-term 10,981
Property and equipment, net 6,166 4,653
Goodwill 862 862
Other assets 3,531 3,052
Total assets $134,376 $ 138,156
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable $ 2,658 $ 2,103
Accrued liabilities 9,985 10,165
Deferred revenue 557 947
Accrued interest, current portion 525
Debt, current portion 1,471
Total current liabilities 15,196 13,215
Debt 31,614 32,227
Deferred rent, noncurrent portion 140 26
Accrued interest, net of current portion 126
Total liabilities 46,950 45,594
Stockholders’ equity:
Common stock 27 22
Additional paid-in capital 226,365 219,718
Accumulated other comprehensive loss (50) (9)
Accumulated deficit (138,916) (127,169)
Total stockholders’ equity 87,426 92,562
Total liabilities and stockholders’ equity $ 134,376 $ 138,156


IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Revenue $ 23,854 $ 15,734 $ 45,291 $ 28,588
Cost of revenue 6,744 5,156 13,081 9,815
Gross profit 17,110 10,578 32,210 18,773
Operating expenses:
Research and development 2,776 1,667 5,397 3,212
Selling, general and administrative 20,255 12,608 37,479 24,129
Total operating expenses 23,031 14,275 42,876 27,341
Loss from operations (5,921) (3,697) (10,666) (8,568)
Interest expense (839) (803) (1,661) (1,581)
Other expense, net 316 64 580 (413)
Net loss $ (6,444) $ (4,436) $ (11,747) $ (10,562)
Net loss per common share, basic and diluted $ (0.29) $ (3.09) $ (0.53) $ (7.42)
Weighted-average shares used to compute net loss per common share,
basic and diluted
22,362,608 1,435,483 22,257,849 1,424,278


Investor Relations Contact: Lynn Pieper Lewis or Leigh Salvo (415) 937-5404 investors@irhythmtech.com Media Contact Aaron Murphy (415) 229-3331 media@irhythmtech.com

Source: iRhythm