iRhythm Technologies Announces First Quarter 2022 Financial Results

SAN FRANCISCO, May 05, 2022 (GLOBE NEWSWIRE) -- iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital healthcare solutions company focused on the advancement of cardiac care, today reported financial results for the three months ended March 31, 2022.

First Quarter 2022 Financial Highlights

• Revenue of $92.4 million, a 24.3% increase compared to first quarter 2021
• Gross margin of 66.9%, a 4.2 percentage point improvement compared to fourth quarter 2021
• Adjusted EBITDA* loss of $4.8 million, a $12.5 million improvement compared to fourth quarter 2021
• Cash and short-term investments of $208.8 million at March 31, 2022, a $30.3 million decline from December 31, 2021
• Amended debt facility with non-dilutive term loan of up to $75 million and a revolving credit facility of up to $25 million with a maturity date of March 1, 2027

*Refer to adjusted EBITDA reconciliation table below.

Recent Operational Highlights

• Updated reimbursement rates that impact Zio XT for CPT codes 93243 and 93247 to $329 and $342, respectively, published by National Government Services (NGS), a Medicare Administrative Contractor (MAC) that serves the Suburban Chicago area and where one of our independent diagnostic testing facilities, or IDTFs, is located
• Dr. Mintu Tarakhia appointed as Chief Medical Officer and Chief Scientific Officer to drive continued innovation, lead research and evidence generation and enhance the clinical product and service portfolio
• Important clinical data recently presented at The American College of Cardiology's 71st Annual Scientific Session and at the 2022 Heart Rhythm Society meeting highlighting Zio XT, Zio AT and Zio Watch

"Our strong first quarter results are indicative of the momentum we carried into 2022 with an acceleration in daily registrations leading to record quarterly volumes. New account openings were up 15% quarter-over-quarter, and we realized significant growth in our core U.S. market. Evidence supporting the clinical superiority of the Zio service continued to build at the annual ACC and HRS meetings through multiple presentations that demonstrated the effectiveness of long-term continuous ECG monitoring in a variety of use cases,' said iRhythm CEO and President, Quentin Blackford.

“We are energized by the tangible progress being made on the strategies we identified for achieving sustained growth in our core U.S. market and internationally, as well as leveraging our technology platform to expand into adjacent markets. With a strong pipeline of innovation and a renewed focus on operational discipline, I am excited about the opportunity ahead. iRhythm's potential is tremendous and backed by our commitment to deliver superior value to our patients, clinicians, payers and shareholders," concluded Mr. Blackford.

First Quarter Financial Results
Revenue for the three months ended March 31, 2022 increased 24.3% to $92.4 million, from $74.3 million during the same period in 2021. The increase was primarily driven by Zio XT and AT volume growth and increases in Medicare pricing.

Gross profit for the first quarter of 2022 was $61.8 million, up 21.4% from $50.9 million during the same period in 2021, while gross margins were 66.9%, down from 68.4% during the same period in 2021. The decrease in gross margin was primarily due to higher costs related to expanding capacity.

Operating expenses for the first quarter of 2022 were $110.3 million, compared to $78.3 million for the same period in 2021 and $83.5 million in Q4 2021. The sequential increase in operating expenses was due to one-time impairment and restructuring charges totaling $26.6 million associated primarily with a reduction in size of our San Francisco facility as well as severance and other employee exit related costs.

Net loss for the first quarter of 2022 was $50.6 million, or a loss of $1.71 per share, compared with net loss of $27.8 million, or a loss of $0.95 per share, for the same period in 2021.

Cash, cash equivalents, short-term investments and long-term investments were $208.8 million as of March 31, 2022.

Guidance
iRhythm projects revenue for the full year 2022 to range from $410 million to $420 million, which represents 27% to 30% growth over prior year results. Gross margin for the full year 2022 is expected to range from 68% to 69% and adjusted operating expenses are expected to range between $375 and $385 million. Adjusted EBITDA for the full year 2022 is expected to range from negative $15 million to negative $25 million.

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 accessing the live and archived webcast of the event, which will be available 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.

Use of Non-GAAP Financial Measures and Other Operating Metrics
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted operating expenses and adjusted net loss. See the schedules attached to this press release for additional information and reconciliations of such non-GAAP financial measures.

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, market opportunity, ability to penetrate the market, anticipated productivity improvements 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, including those on the Form 10-Q expected to be filed on or about May 6, 2022. 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:
Leigh Salvo		Morgan Mathis
(415) 937-5404		(310) 528-6306
investors@irhythmtech.com		irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

	March 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents	$	94,786			$	127,562
Short-term investments		113,998				111,569
Accounts receivable, net		55,286				46,430
Inventory		12,446				10,268
Prepaid expenses and other current assets		9,838				9,693
Total current assets		286,354				305,522
Property and equipment, net		57,135				55,944
Operating lease right-of-use assets		65,256				84,587
Goodwill		862				862
Other assets		19,110				16,052
Total assets	$	428,717			$	462,967
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,413			$	10,509
Accrued liabilities		41,935				51,486
Deferred revenue		2,933				3,049
Debt, current portion		—				11,667
Operating lease liabilities, current portion		11,501				11,142
Total current liabilities		61,782				87,853
Debt, noncurrent portion		34,917				9,690
Other noncurrent liabilities		832				697
Operating lease liabilities, noncurrent portion		86,344				85,212
Total liabilities		183,875				183,452
Stockholders’ equity:
Preferred Stock		—				—
Common stock		27				27
Additional paid-in capital		701,822				685,594
Accumulated other comprehensive loss		(353	)			(61	)
Accumulated deficit		(456,654	)			(406,045	)
Total stockholders’ equity		244,842				279,515
Total liabilities and stockholders’ equity	$	428,717			$	462,967

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)

	Three months ended March 31,
		2022				2021
Revenue, net	$	92,378			$	74,311
Cost of revenue		30,619				23,458
Gross profit		61,759				50,853
Operating expenses:
Research and development		10,542				8,510
Selling, general and administrative		73,158				69,813
Impairment and Restructuring		26,608				—
Total operating expenses		110,308				78,323
Loss from operations		(48,549	)			(27,470	)
Interest expense		(2,029	)			(335	)
Other income, net		16				124
Loss before income taxes		(50,562	)			(27,681	)
Income tax provision		47				98
Net loss	$	(50,609	)		$	(27,779	)
Net loss per common share, basic and diluted	$	(1.71	)		$	(0.95	)
Weighted-average shares, basic and diluted		29,596,325				29,164,430

IRHYTHM TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited)
(In thousands)

	Three months ended March 31,
Adjusted EBITDA reconciliation		2022				2021
Net loss	$	(50,609	)		$	(27,779	)
Income tax provision		47				98
Depreciation and Amortization		3,143				2,036
Interest expense		1,897				247
Stock-based compensation		13,903				20,230
Impairment and restructuring charges		26,866				—
Adjusted EBITDA	$	(4,753	)		$	(5,168	)

	Three months ended, March 31,
Non-GAAP restructuring and impairment reconciliation		2022
Impairment and restructuring charges, as reported	$	26,608
Restructuring related consulting fees		258
Non-GAAP restructuring and impairment	$	26,866
Adjusted net loss reconciliation
Net loss, as reported	$	(50,609	)
Impairment and restructuring charges, as reported		26,608
Restructuring related consulting fees		258
Adjusted net loss	$	(23,743	)
Adjusted net loss per share reconciliation
Net loss per share, as reported	$	(1.71	)
Impairment and restructuring charges, as reported		0.90
Restructuring related consulting fees		0.01
Adjusted net loss per share	$	(0.80	)
Adjusted operating expense reconciliation
Operating expense, as reported	$	110,308
Impairment and restructuring charges		26,608
Adjusted operating expense	$	83,700