iRhythm Technologies, Inc. Stock

Hello, everyone. Thank you for joining us, and welcome to the iRhythm Holdings, Inc. Q2 2026 Earnings Conference Call.

[Operator Instructions]

I will now hand the conference over to Lisa Pecora, Senior Vice President, Finance and Investor Relations. Lisa, please go ahead.

Thank you, operator, and thank you all for joining iRhythm's Second Quarter 2026 Earnings Call.

With me today are Quentin Blackford, iRhythm's President and Chief Executive Officer; and Dan Wilson, our Chief Financial Officer.

Before we begin, please note that management will make forward-looking statements within the meaning of federal securities laws under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include, but are not limited to, statements regarding our intentions, beliefs and expectations about future events, strategy, competition, products, operating plans and performance.

Forward-looking statements on this call are based on current estimates and assumptions and involve risks and uncertainties, and actual results may differ materially.

These statements are made as of today, August 6, 2026, and are time sensitive. We undertake no obligation to update or revise them, except as required by law.

Accordingly, you should not place undue reliance on these statements. For a discussion of risks and uncertainties, please refer to our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the SEC.

Additionally, during the call, we will discuss certain financial measures that have not been prepared in accordance with GAAP. Unless otherwise noted, all references to financial measures on this call are presented on a non-GAAP basis.

These non-GAAP measures should not be considered in isolation or as a substitute for or superior to GAAP results. Reconciliations to the most directly comparable GAAP measures can be found in our earnings release and the slides accompanying today's call.

And with that, I'll turn the call over to Quentin.

Good afternoon, everyone, and thank you for joining us. We had another very strong quarter, and I'm pleased to be here to discuss both our second quarter 2026 performance and the progress we are making against our long-term strategy.

I will begin with a brief overview of the quarter, then discuss today's announced agreement to acquire Vital Connect and finish with several key business updates. Dan will then talk about our financial performance and guidance in more detail.

Second quarter revenue was $224.2 million, up 20.1% year-over-year. This marks our seventh consecutive quarter of growth above 20%, a meaningful accomplishment and a reflection of the durability of demand for Zio, the strength of our commercial execution, and breadth of our growth drivers.

Momentum remains strong across cardiology, primary care, innovative channels and international markets. We are particularly pleased to see that growth translate into exceptional margin expansion, demonstrating both the strength of our platform and the operating leverage inherent in our model.

The combination of sustained top-line performance and increasing operating leverage gives us continued confidence in our strategy and the substantial opportunity ahead.

Let me turn to our agreement to acquire Vital Connect, which we announced today. We have followed Vital Connect for some time and developed a great deal of respect for its technology, its people, and the platform the team has built.

We are enthusiastic about bringing our organizations together because the combination meaningfully expands the ways we serve physicians, health systems and patients while remaining closely aligned with our mission to improve diagnosis, prevent disease and ultimately enhance patient care.

Vital Connect brings a complementary and comprehensive platform that supports 4 cardiac monitoring modalities: mobile cardiac telemetry or MCT, event monitoring, long-term continuous monitoring, and short-term Holter.

This technology is also FDA-cleared for continuous patient monitoring in the hospital, further expanding our capabilities beyond ambulatory cardiac monitoring and across the continuum of care.

The strategic fit is compelling. Vital Connect reinforces our commitment to innovation in ambulatory cardiac monitoring and adds an FDA-cleared platform with a patient monitoring service up to 30 days, 4-in-1 device functionality, flexible service models, live-looking capabilities, and multivital monitoring.

These features complement our existing portfolio and give us additional tools to meet different clinical, operational and economic needs of customers and patients. This acquisition also expands our ability to participate in the NCT segment.

This is a large market segment and customer needs vary considerably by workflow, site of care, and patient population. Adding Vital Connect's proven platform to our national sales force will give physicians and health systems on a nationwide basis greater choice and flexibility.

Together with Zio AT and Zio MCT, the acquisition of Vital Connect creates a complementary set of solutions to serve different MCT customers and patients.

Vital Connect is also important to the broader evolution of our platform. Its biosensor can monitor up to 11 physiological parameters, including ECG, heart rate, respiratory rate and body temperature, providing a robust foundation for our multivital strategy.

Over time, these capabilities allow us to address a wider range of clinical needs and care settings, including inpatient monitoring and hospital-to-home programs, creating additional avenues for sustainable long-term growth.

Financially, we expect the transaction to strengthen our long-term growth profile. We anticipate a positive contribution to revenue growth beginning in 2027 and thereafter.

Combining Vital Connect's business with the meaningful progress we continue to make in our base business, we remain confident in the combined company achieving our previously communicated adjusted EBITDA margin target of 15% next year.

I also want to be clear about what this means to our current NCT strategy. We remain committed to both Zio AT and Zio MCT. Because the NCT market serves diverse physician workflows, sites of care, and patient preferences, we do not believe a single solution will address every need.

Therefore, our objective is to provide a portfolio of complementary options. To that end, we continue to work towards a clearance for Zio MCT in the first half of 2027.

In parallel, we will allocate resources towards understanding and accelerating performance with Vital Connect to ensure a rapid and successful integration of Vital Connect's products into our commercial force, as well as evaluate and define a product roadmap that combines the best of both product platforms and brings continued innovation to the market that serves the needs of our customers and patients.

Turning to another central element of our strategy, reaching patients earlier in their care journey.

We believe that at least 27 million people in the U.S. are at risk for arrhythmias, and many of these individuals first engage with the health care system through primary care, value-based care and population health settings.

This creates a significant opportunity to expand access to Zio by embedding long-duration cardiac monitoring more directly into the clinical workflows where patients are first identified, evaluated, and referred.

During the quarter, we advanced our predictive arrhythmia solution strategy with the signing of 2 commercial agreements through our partnership with Luum that combine predictive identification workflows with iRhythm monitoring solutions.

These partnerships are intended to support earlier diagnosis and intervention, and our pipeline of additional opportunities continues to develop.

We are also expanding our predictive arrhythmia solutions work with Desert Oasis Healthcare using AI-driven analytics to identify patients who may benefit from cardiac evaluation and monitoring.

We continue to see strong momentum in the innovative channels, which was our fastest-growing channel in the quarter. Demand remains robust across a growing network of value-based care, primary care, and population health partners.

As these programs scale, utilization is expanding in both symptomatic and asymptomatic patient populations. Early pilot programs have demonstrated more than 85% accuracy in identifying patients with clinically relevant arrhythmias before they enter the diagnostic process.

The early results of these programs are encouraging and support our conviction that earlier identification can improve outcomes and reduce total health care costs.

Primary care is an important part of our upstream strategy, with the majority of the 27 million people in the U.S. at risk for arrhythmias entering the health care system through this pathway.

To support that care journey, we recently launched our first-ever targeted direct-to-patient initiatives through the patient point network, providing coordinated arrhythmia education for patients, physicians, and office staff.

The goal is straightforward: increase awareness of symptoms and risk factors, help patients seek evaluation sooner, and make the connection between primary care and cardiology more efficient.

A key enabler of our growth strategy in verticals such as primary care is our strong commitment to technology integration. Approximately 60% of our volume now comes from EHR-integrated accounts and nearly 80 of our top 100 customers are integrated today.

By embedding cardiac monitoring more directly within provider workflows, these integrations reduce friction, improve efficiency, and help support earlier identification of patients who may benefit from monitoring.

We believe this positions us well as cardiac care increasingly shifts upstream and towards earlier detection. International remains another emerging growth opportunity, supported by continued commercialization progress and clinical evidence generation during the quarter.

For example, in the U.K., we are building momentum with the NHS, supported by award-winning Zio integration and expanding interest in primary care cardiac monitoring.

In the Netherlands, we are deepening relationships with key opinion leaders as we position the business for future market expansion. And in Japan, the higher reimbursement rate we discussed last quarter became effective on June 1.

In each of these markets, we are staying disciplined in how we execute, investing to generate clinical evidence, advance reimbursement and build scalable commercial capabilities.

Globally, we also continue to expand the body of evidence supporting the clinical and economic value of our platform. Data presented at the European Heart Rhythm Association, the American Diabetes Association and the International Society for Pharmacoeconomics and Outcomes Research add to our body of clinical evidence on outcomes and economic benefits of early detection and disease management with long-term continuous monitoring.

Turning to adjacent markets. Sleep remains a large and underpenetrated opportunity with approximately 40 million sleep apnea patients in the U.S., many of whom overlap with arrhythmia populations.

We continue to execute pilot programs and refine our strategy with a focus on simplifying fragmented workflows across the sleep ecosystem through a more integrated approach.

Similar to cardiac monitoring, we believe streamlining these workflows can create meaningful value for patients, providers, and the broader health care system. We are encouraged by the potential while remaining measured in how we invest in scale.

Before turning it over to Dan, I'd like to address several business and regulatory updates.

First, a positive development during the period on reimbursement was the final LCDs issued by Noridian, CGS, and Palmetto, which address key areas of ambiguity in the initial drafts and delivered a constructive outcome.

Importantly, these LCDs clarify appropriate modality-specific coverage without introducing additional access restrictions.

Overall, the final policy removes a source of uncertainty for the market.

Second, we achieved an important milestone this quarter with FDA clearance of our third-generation algorithm, which will be used across our entire platform.

Once launched in the first half of 2027, we expect it to reduce clinical technician review time by as much as 50%, driving meaningful productivity gains and approximately $100 million of cumulative cost savings over 5 years while supporting continued margin expansion.

We're also excited by the incremental opportunity to leverage this capability on the Vital Connect platform over time. This is a strong example of how our investments in data and AI can improve both the customer experience and the efficiency of our operating model.

Third, as you know, we remain subject to an FDA warning letter and continue to work through the agency's review process.

We have updated the agency on the completion of our remediation activities and our self-initiated third-party audit and look forward to their return in anticipation of closing out the warning letter.

While the timing of any action remains with the agency, we remain focused on supporting the process and responding to any request from the FDA.

Fourth, I'd like to acknowledge that on July 31, we agreed to settle our outstanding litigation with Baxter and its subsidiaries, Welch Allyn and Bardy Diagnostics, for a settlement payment of $50 million.

With this matter now resolved, we can move forward with greater clarity and focus, directing our attention and resources towards the strategic initiatives, innovation, and execution that drive long-term value creation.

Finally, I'd like to provide a brief update on the recent cybersecurity incident we announced in June.

On June 8, we identified unauthorized activity in certain third-party hosted business applications. We promptly activated our response plan, engaging external experts and notifying law enforcement.

The incident has been contained and the root cause identified. While certain data was exfiltrated, our investigation and remediation actions resulted in no material impacts to our products, patient care, business operations or financial results.

Looking forward, our priorities are clear: sustained volume-led growth across cardiology, primary care and innovative channels, continuing to improve profitability through scale, productivity and disciplined execution, advancing key innovation initiatives, including next-generation MCT and predictive AI, thoughtfully expanding into international and adjacent market opportunities and maintaining the strong operational and compliance foundation that supports long-term success in a rapidly evolving landscape.

With that, I'll turn the call over to Dan.

Thank you, Quentin. We delivered another quarter of strong financial performance, supported by sustained demand for our ambulatory cardiac monitoring services and continued operational discipline across the business.

We generated robust year-over-year revenue growth while delivering record profitability, demonstrating our ability to scale efficiently and translate growth into significant operating leverage.

We remain encouraged by the momentum across the business and the consistency of our execution. Revenue for the second quarter was $224.2 million, up 20.1% year-over-year, reflecting healthy demand across our customer base and continued momentum in newer growth channels.

Volume remained the primary driver of growth, complemented by modest pricing gains and continued strong execution in collections.

Our broad and expanding prescriber base continues to underscore the strength and durability of demand, while new stores contributed approximately 45% of year-over-year volume growth.

Moving down the P&L, gross margin in the second quarter was 72.8%, an increase of 160 basis points year-over-year. This sustainable improvement was driven by targeted operational efficiencies, including manufacturing automation and workflow optimization, as well as product mix and scale benefits from higher volumes.

Second quarter 2026 adjusted operating expenses were $145 million compared to $145.2 million in the prior year period, a decrease of 0.1%.

Our expense performance also reflects a focused approach to investment as we funded key growth initiatives while thoughtfully managing costs across the broader organization.

As a result, we kept operating expenses essentially flat while delivering strong revenue growth and operating leverage.

On the bottom line, GAAP net loss for the second quarter was $0.4 million or net loss per diluted share of $0.01 compared to a GAAP net loss of $14.2 million or net loss per diluted share of $0.44 in the second quarter of 2025.

Adjusted net income for the second quarter was $19.3 million or net income per diluted share of $0.58 compared to an adjusted net loss of $10.2 million or net loss per diluted share of $0.32 in the second quarter of 2025.

These results highlight the progress we've made in building a more profitable business as operating leverage across the organization contributed to significant year-over-year improvement in earnings.

Adjusted EBITDA for the second quarter was $43.3 million or 19.3% of revenue, representing an improvement of more than 1,000 basis points compared to the prior year.

The year-over-year improvement reflects our disciplined spend management, moderating FDA remediation expenses, and timing of innovation and growth-related investments.

This performance underscores the operating leverage we are building in our business model and our confidence in delivering against our longer-term target of 15% adjusted EBITDA margin in 2027.

Free cash flow during the second quarter was positive $37.5 million, a record for the company and reflective of the inherent operating leverage in the business and disciplined working capital management.

We ended the quarter with $591.3 million in cash, cash equivalents, and marketable securities, a strong cash position that provides us with substantial flexibility to fund future growth initiatives.

Before turning to our guidance for the remainder of this year, I wanted to give a few comments on the financial aspects of the Vital Connect transaction.

We expect the acquisition to positively contribute to revenue growth beginning in 2027 and thereafter, with Vital Connect currently at an approximately $65 million annual revenue run rate.

For gross margin, we expect that the combined company will remain above 70% gross margin by leveraging the scale, operational infrastructure and AI capabilities we have built.

And finally, as previously noted, we remain confident in the combined company achieving our previously communicated adjusted EBITDA margin of 15% in 2027.

We look forward to providing more detailed guidance following the closing of the transaction.

Now turning to our updated financial outlook for Q3 and full year 2026, which does not include any contribution related to our pending acquisition of Vital Connect.

We are raising full year 2026 revenue guidance to $880 million to $890 million, representing 18% to 19% year-over-year growth. This outlook reflects sustained demand across our core business while maintaining the same disciplined approach to forecasting newer and emerging channels.

On a full-year basis, we now expect a modest positive contribution from pricing relative to 2025, attributable to the price benefit we realized in the first half, with revenue growth continuing to be driven primarily by volume growth across Zio Monitor, the innovative channel, Zio AT, and international.

In the third quarter of 2026, we anticipate revenue to be in the range of $221 million to $223 million, consistent with typical revenue seasonality.

For gross margin, we remain confident in our ability to sustain the strong margin performance we've delivered year-to-date while continuing to drive meaningful improvement relative to 2025.

The efficiencies we've created across clinical operations and manufacturing, combined with increasing scale and the adoption of AI-driven workflow tools, support further reductions in our cost to serve over time.

With respect to the broader macro and geopolitical environment, we've taken proactive steps to manage potential cost pressures and do not currently expect a material impact on our gross margin outlook.

Based on our performance year-to-date and outlook for the remainder of 2026, we are raising our full-year adjusted EBITDA margin guidance to 13% to 14%.

This reflects the benefits of continued scale, disciplined expense management, and a balanced investment approach across our key growth initiatives.

We anticipate certain investments in growth initiatives, including targeted investments in primary care expansion to ramp in the second half of the year.

For the third quarter, we expect an adjusted EBITDA margin of 12% to 13%. Excluding certain unique items such as litigation settlement payments and transaction costs, we continue to expect free cash flow to increase year-over-year in 2026 with stronger cash generation in the back half of the year, driven by the normal operating cadence of the business.

Before closing, I'd like to briefly address the preliminary physician fee schedule proposed by the Centers for Medicare and Medicaid Services, or CMS.

We view the proposed reimbursement rates up low single digits across both long-term continuous monitoring and mobile cardiac telemetry as further validation of the health care industry's continued focus on earlier disease detection, preventative care and evidence-based clinical decision-making.

These trends align closely with Zio's strength in delivering objective diagnostic insights through extended uninterrupted cardiac monitoring.

We look forward to reviewing the final rule, which is expected later this year, and we'll provide additional commentary at that time.

In closing, our second quarter results reflect the strength of our execution and the increasing profitability of our business model. Moving forward, we remain focused on expanding patient access, operating efficiently, and investing thoughtfully in the opportunities that position us for long-term success.

With the addition of Vital Connect, we look forward to delivering profitable growth where we will continue to balance profitability expansion with disciplined investments towards growth.

I will now turn the call back to Quentin for closing remarks.

Thank you, Dan. This was an excellent quarter for iRhythm. We are encouraged by the momentum in our business and the opportunities we see to further expand our impact.

We delivered our seventh consecutive quarter of revenue growth above 20%, expanded margins significantly, generated strong free cash flow, and raised our full-year outlook.

Our results reflect the strength of the Zio platform, the consistency of our execution and, most importantly, the work of our people. At the same time, today's agreement to acquire Vital Connect represents an important next step in the evolution of iRhythm.

It adds complementary monitoring capabilities, expands our presence in MCT, and provides a foundation for multivital monitoring and additional care settings that will meaningfully benefit patients and customers over time.

We're enthusiastic about the strategic potential of the combination, but we will remain disciplined in how we integrate the business, prioritize investments and pursue the opportunities ahead.

Our strategy is clear: expand access, advance innovation and execute with discipline. Before we move to Q&A, I want to thank the entire iRhythm team.

Over the past month, Newsweek recognized iRhythm as both one of America's greatest workplaces and one of the world's greenest companies.

Those recognitions belong to our employees. Their talent, dedication, and commitment to our mission are what make our performance possible, and our culture remains one of the most important competitive advantages we have.

With that, we're now happy to take your questions.

[Operator Instructions]

Your first question comes from the line of John Young with Canaccord.

Congratulations on the strong quarter and congratulations on the Vital Connect acquisition. I know it's a high-quality company that we've known for several years.

Could you walk through the synergies you expect with the MCT business specifically? How will you position their existing MCT offering versus upcoming Neo MCT?

How do you expect this will accelerate the MCT category overall for iRhythm?

Yes. Thanks, John. I appreciate that question. Look, we've followed Vital Connect for quite some time at this point and understand their technology really well. And I think we understand the MCT category really well as well.

I think what we've come to realize is that there's going to have to be multiple product offerings in that category to ultimately succeed. And so we remain committed to AT, to MCT, and now the Vital patch.

If you look at it, Zio AT for us was a product that could really serve about 50% of that MCT market, just given the short duration, 14 days, not being able to get out to 30 days, not having the live-looking capability, the downgradable 4-in-1 capability.

Those were all things that were shortcomings with AT, yet it still served a good part of the market. Vital Patch opens up the remaining 50% of that market. Even our own Zio MCT product would only open up probably another 20% to 30%.

So having Vital Patch in there gives us access to the entire market, which is probably a $1 billion market, growing in the high single digits. It's probably an incremental $500 million market opportunity for us.

So we're excited about it. We're excited to get this through HSR review. We expect that to close by the end of the year, and our focus is going to be integrating this into the commercial team in the very first part of next year.

Your next question comes from the line of Joanne Wuensch with Citi.

This is Anthony on for Joanne. This was a pretty impressive quarter on EBITDA margins, keeping OpEx essentially flat. Any reason not to maybe raise EBITDA a bit more? And then also just a quick follow-up.

Was there any tariff refund benefit this quarter?

Yes. Thanks, Anthony. I appreciate the question. Maybe hitting the second part of your question there first.

No, there was not a tariff benefit realized in the quarter. So that was not part of the 19% adjusted EBITDA margin that we delivered in the quarter.

You heard in my prepared remarks that there are some investments that we intend to make in the back part of the year. We are raising full-year adjusted EBITDA guidance and are ready to deliver, call it, over 400 basis points of improvement versus 2025.

So we're really excited about that leverage that's coming through in the business. At the same time, we see a lot of opportunities ahead of us to continue to grow the business and talked about primary care, continuing to open that up, innovative channel, sleep, other initiatives like that.

So we always want to be thoughtful and drive towards profitable growth and really balance those investments in the business to drive growth, but also deliver profitability expansion.

So excited about what is showing through in the business, excited about the setup for the rest of the year and really excited about what the investments can mean for future growth of the business.

Your next question comes from the line of Allen Gong with JPMorgan.

Congrats on the good quarter and deal. I guess I want to dive a little bit deeper into a question that was just asked.

So I understand that Vital Connect helps expand the remaining 50% of the market, but arguably, it could also handle the 50% of the market that is currently addressed with AT.

And with Vital Connect, a big value to the technology is the additional markets that it seems to open. I think we've talked to them; they've valued the transition care, inpatient monitoring, and hospital at home as markets in the billions of dollars as well.

So I guess just again on the positioning, should we think of this as more of a new product to target those opportunities and unlock the remaining 20% to 30%?

And then when we think about technologies that you've talked about maybe being a stepping stone into other modalities like sleep apnea, is this the deal that we should have been looking for?

Allen, thanks for the question. And I think you go back to my prepared remarks; we certainly hit on those exciting new opportunities that come via the Vital Connect transaction.

They are exciting to us. And honestly, they're part of sort of the road map that we've been focused on for some time now. And hospital monitoring is certainly interesting to us.

They've done a nice job of entering into that space already and beginning to make inroads there. The hospital-to-home segment is something that we've talked about in the past, particularly as we build out our own multivital product capability.

Now Vital Connect accelerates that capability, having multivital capabilities already on their platform. So those are nice synergies in the transaction and very synergistic relative to the overall strategy of our company.

I wouldn't leave out RPM as well. Remote patient monitoring is another area of focus that they built out a capability very nicely around. That's something that we've also had on our road map as well.

So this certainly goes well beyond just the MCT market. It absolutely opens up incremental opportunity within MCT. And I think we're going to be able to benefit patients and customers meaningfully more as a result of it.

But MCT alone is not the only reason that we're interested and excited about Vital Connect. So you hit the nail on the head with respect to those incremental ancillary market opportunities that I do think can be valued in the billions of dollars in terms of market potential.

We're in the early stages. We're going to be thoughtful and measured in how we continue to lean into those, but we certainly want to lean into the experience of Vital Connect and what they've learned there and capitalize on the inroads that they've already made.

Your next question comes from the line of Marie Thibault of U.S. Bancorp BTIG.

I just wanted to quick check in on the direct-to-patient marketing that you've started, I think, in some select ZIP codes.

Can you give us an early read on what you're learning from those efforts? And should we expect that you'll plan to expand that program here in the quarters to come?

You certainly, Marie, should expect that we're going to continue to lean into and expand it. And that's part of the incremental spend in the back part of the year that Dan was alluding to.

We know that direct-to-patient, direct-to-consumer, primary care, these are all areas that have real potential behind them and early indicators are that they are real opportunities.

So we will continue to invest in those. They'll be measured as we go to make sure that we're seeing the sort of returns that we expect to around them before we just lean into them even harder.

But we're excited by those. We are in the very early stages of the initial DTP efforts and the in-clinic and physician office marketing that we're doing with patients.

So it's a little bit early to measure those results, but I will tell you that the confidence is high enough right now that we're going to continue to lean into it and excited about what we're going to see out of it.

So we're a little early, but we're excited by it.

Your next question comes from the line of Stephanie Elghazi with BofA.

Congrats on a good quarter and the deal. I just wanted to check on Zio MCT and how that's tracking relative to previous expectations for the launch in the first half of next year?

And any progress you would share on the mobile gateway data submission to the FDA?

Yes. Thanks, Stephanie. So we continue to make progress on Zio MCT. It continues to be a priority for us and an area that our teams are focused on.

As you'll note in my prepared remarks, I commented on the fact that we remain focused on getting clearance on that product in the first half of next year.

I think it's important for you to realize, though, that we expect Vital Connect will close before the end of the year, which means we are going to be focused on integrating that Vital patch into our commercial team's hands right around the turn of the year, the very early part of next year, which requires training and launching across a nationwide platform.

So that will be our #1 focus as we enter into this deal and transaction and look to close it here in the near term.

At the same time, we're going to continue to focus on the submission of MCT and getting that clearance so that we do have optionality as we go into the future.

But I think it's important for folks to realize Vital Connect is the primary focus here in the near term as we look to launch a new product into the MCT space, which will be that Vital patch.

Your next question comes from the line of David Saxon with Needham.

I'll echo the congrats on the quarter and the deal. So yes, I just have a multi-parter on the Vital Connect deal. So you talked in the script $65 million run rate.

I think that reflects a slowdown they saw in the first quarter due to a transition. And my understanding is they recovered from that and are ramping and targeting about $100 million next year.

So is that a fair way to think about what they could do from a revenue contribution perspective in '27?

And then the second part of the question is just, I mean, my math, you're the leader in the extended Holter category, obviously, you'll probably get a couple of points there from their platform.

And I mean, I would guess your MCT share is going to have a 2 handle in front of it. So just talk about your confidence in getting it through the regulators and whatnot.

Yes, there's a lot in there, and I'll ask Dan to jump in and help if I miss anything or just remind me of what we've missed because I want to try to hit all of it for you.

I'll come back to -- this is a company that we've spent a lot of time getting to know over the years and certainly have really come to appreciate their technology and frankly, the teams behind the company that have been building it.

But there have been some structural considerations over the years that made it very difficult to step in and acquire the company.

We've had those conversations with the teams over the years, and Peter and that team did a nice job of addressing those right towards the end of last year and into the beginning of this year, which did create a little bit of a hiccup in that business.

They've come out of it really nicely. They're growing quite nicely now, and we're excited by what we're seeing in that business. So they have addressed that, and I see that as temporal and the recent business trends would certainly indicate that was the case as well.

But having addressed that particular issue now opened up the opportunity together with nice gross margin improvements that we were seeing in that business to step in and acquire the company.

And so we're excited to be at the point now to be able to do that. In terms of run rate revenue, what that looks like for next year, we're not going to get out and guide to 2027 at this point in time.

Some of that's going to be contingent upon exactly when the deal does close, and we're going to wait until that happens to give you sort of a forward look and a guidance of the combined companies.

Again, our idea is that this thing will close by the end of the year. But until it does close, we're going to hold back on providing combined company guidance.

The last point on HSR review or getting through the FTC: this is very much about the FTC or MCT product category. It's a very competitive transaction.

I mean, there's a tremendous amount of competition that remains in the MCT category. The largest players in this space really focus on MCT between Biotel and Preventice and others.

And I think that the combination of our company and Vital Connect doesn't change that competitive dynamic within the MCT category. So we're excited by the opportunity.

We feel very good about the ability to get through the FTC and the HSR review, and we'll keep you updated on how we progress through that.

David, I'll just add on the revenue. I can't necessarily speak to what they've quoted historically.

The $65 million run rate that I had in my prepared remarks, that does contemplate our revenue accounting, which, as you know, we essentially report a net revenue that follows a contractual allowance.

And so that is our revenue recognition. That's how we derived that $65 million. Hopefully, that's helpful.

Your next question comes from the line of Nathan Treybeck with Wells Fargo.

Congrats on a strong quarter and on the deal. Quentin, are you seeing any sign that the very strong growth you've seen in innovative channels is beginning to normalize?

Or do you still believe those channels are still in early innings? And then maybe just talk about the cadence of new partner adds in the quarter? And I guess, what's implied in the second half relative to the first half?

Yes. We continue to be excited with the innovative channel opportunity. And I just think whether it's primary care, whether it's value-based care, population health, there are so many different angles in that innovative channel business that have us excited, and the teams continue to add new partners as we go.

We saw another healthy quarter of new partners coming on board. I think that the reality is they all come on board at different paces and in different ways, and that gets a little bit hard to forecast and predict.

And so we've not changed our way of thinking about how we look at innovative channels into the back half of the year and in our guidance. It's more of a wait-and-see approach with that business.

But it has been encouraging. It continued to grow incredibly well in the second quarter.

It was exciting to see our first employer-sponsored plans sign up within the innovative channel business. I continue to think that employer-sponsored plans remain a meaningful opportunity in the self-insured populations. So I'm excited to see that door begin to open.

I think we're still in the very early innings here, and we'll continue to lean into it and focus on it, but we're also going to be measured in how we think about it in our guidance, and we'll let those results play through before we get ahead of ourselves.

Your next question comes from the line of Vijay Kumar of Evercore ISI.

Quentin, I want to go back on the deal. I just want to make sure we understand the deal rationale.

This feels like a dual product strategy, right, within MCT. And I know you have a 2.0 product that's going to address the other part of the market. Is this going to be cannibalistic? Like how is Vital Connect going to fit in?

Does this reduce your enthusiasm for 2.0? I know there have been some questions about delays on 2.0 submission to the FDA. Has it been submitted to the FDA? And I think on the stock issuance, do we know the number of shares that are expected to be issued to fund the deal?

Yes. I'll let Dan hit on the stock issuance piece. It very much is a dual product strategy within the MCT category.

Back to my prior comments, I think it's going to take multiple products to really serve that MCT category as effectively as possible. There are just so many different preferences when it comes to physician needs and expectations in that category, and patient needs and expectations.

There are some that like the longer wear duration that can get out to what will be 21 days in our MCT product as a single wearable patch. There are others that don't mind replacing a patch every 7 days or so, and getting out to 30 days of monitoring is more important to them.

Sometimes the downgradable aspect is more important to physicians or to patients, or having the live look as they're wearing the device, being able to peek in and see what's going on.

Those are all different requirements that our customers, physicians and patients ultimately have in this category. So I do think a dual product strategy is the right one.

You mentioned Zio MCT 2.0. I think maybe you're referring to MCT 1.0, which is what we're working to get clearance with the FDA. That continues to progress, and we continue to seek that.

But there ultimately would have been a pathway in our own product roadmap that would have taken MCT 1.0 onto MCT 2.0 that would have introduced many of the features that you're seeing in the Vital patch as well.

So now we've accelerated that into our product portfolio. And frankly, we'll have multiple product offerings to serve this segment sooner than what we had ever anticipated in the organic roadmap pathway that we had.

And Vijay, on your question on the number of shares issued, just as a reminder, $50 million in equity, calculated with a 30-day volume-weighted average price.

That equates to just a little more than 420,000 shares, which is less than 1.5% dilution.

Your next question comes from the line of David Rescott with Baird.

Congrats on the quarter and the deal. I wanted to ask maybe a 2-parter on the deal itself.

I totally appreciate the MCT angle, but you called out some of these multiparameter sensing capabilities that can open the door to some additional markets longer term.

I recall 2 years ago or so, you did this licensing agreement with BioIntelliSense for some other sensor capabilities.

So curious if you could paint us maybe a picture around what these additional parameters get you beyond what you've been working on so far today and maybe not necessarily the time lines, but how we should think about some of these additional opportunities to break into multiparameter monitoring could come about?

And then when you think about the either cost synergies or investments that you've made that Vital Connect has made, is there anything in particular that you could call out there when you think about more of the cost synergy side of it?

Sure. So let me hit on the first one and then Dan can take the second part of that.

When you think about the multivital opportunity or the incremental sensing parameters that are out there, there is some overlap in what Vital Connect has already been able to achieve on their Vital patch, along with what we were looking to do in our own efforts internally.

So it does speed us up in terms of bringing some of those incremental sensing capabilities onto an iRhythm platform or a combination of iRhythm and Vital Connect's platform now.

But there are also some incremental capabilities that we were focused on and that we acquired through that IP license with BioIntelliSense, and those are important.

As an example, we really like the TPG capability that BioIntelliSense has. We find it to be very differentiated, unique, like our freedom to operate in and around that. You would ultimately see that come together in our platform, including the vital patch.

And so those are important and complementary to each other as we think about the future. They don't obsolete each other. They just help build an even stronger product into the future that we think can serve many more patients, obviously open up new markets.

I think multivital monitoring is going to be very important in the whole hospital into the home segment. It's going to be important with RPM capabilities.

These are all new markets that aren't contributing to our revenue or growth profile today, but in the future, I believe, have the potential to do that.

So we're excited by it. there's still work to be done, to be honest with you, on the whole product road map. And so you'll hear more from that from us into the future, but early thoughts around it are exciting.

And David, on the second part of your question there, I will say growth really is the primary focus of the acquisition.

We see a real opportunity there to leverage the commercial engine that we've built and the reach that we have there, the clinical service capabilities we've built, and I'm excited about seeing that come to life as we bring Vital Connect into the combined company.

On the cost side, I would say we've built operational capabilities and scale that we really believe will allow the 2 companies to operate more efficiently than they would kind of independently. Much like our core business, our focus is on profitable growth as we think about this deal.

So a lot to leverage there in terms of the capabilities that we've built. And if you think about it, they're really, call it, 10 years behind us in terms of the build-out of capabilities and operational infrastructure, and that's exactly what we're going to bring to bear as we welcome them to iRhythm.

Your next question comes from the line of Mike Polark with Wolfe Research.

This is Drew on for Mike. I think if I heard correctly, you mentioned that new stores contributed 45% to volume growth, which is down from previous quarters.

So maybe what's driving that decel? And how should we think about that and the cadence in the coming quarters?

Yes. I appreciate the question there. We have commented previously that that number can fluctuate and vary quarter-to-quarter.

You have heard us speak to a number of the large accounts that we opened up in 2025. And if you recall, that was in the early part of 2025. So those accounts, and in addition to those, a few innovative channel partners rotated out of new stores into same stores as we define it there.

And so we saw that flip a little bit to the same-store side. I would say, importantly, still seeing solid growth from both sides of the business and would likely expect that to stay a little more weighted towards same-store given the dynamics that I just mentioned.

Your next question comes from the line of Richard Newitter of Truist Securities.

Great quarter. Congrats on the deal. I actually have 2 questions on the deal. I'll ask them both upfront. First one, Quintin, what exactly is the top priority or the biggest thing you need to do or entail in integrating Vital into your infrastructure?

And is there anything that you've got to get this right, or is this the heaviest lift? So if you could just answer that and where the biggest kind of focus is there?

And then the second question is, you mentioned earlier, you said heading into '27, Vital is your key priority. And it sounds like you were talking about that relative to I just want to clarify if that's the case, because in any way, is this a signal that you're deprioritizing Zio MCT in favor of Vital?

Thanks, Rich. So let me hit the first one. In terms of what needs to happen to make sure this is successful right out of the gate, I think there are really 2 things that I'm most focused on and will be driving as an organization and the team.

One is introducing the Vital Patch across a nationwide commercial team, increasing access to this product for patients and physicians alike across the entire country.

This is a company that began, grew, and scaled in the Northeast, North Central, and the Southeast, taking it from, call it, 30 reps under their control to a commercial force of 200-plus on our side.

We're going to make sure that that goes off well, that we're trained up well, and that our customers have a great experience with this as it makes its way into the market.

Along with that, from an operational perspective, that means we need to be able to scale the volumes quite quickly to support what we think will come with a nationwide launch.

And so think about that from an inventory, supply chain, distribution, logistics, intake capability; those are all things that we're very much focused on, and we'll be spending time really ensuring that we're able to meet that demand as the 2 companies come together.

With respect to prioritization in MCT, it's important to realize we are continuing our efforts on MCT. We're not backing away from MCT. I do believe that you need a multiproduct strategy in this MCT category to ultimately be able to go after the entire marketplace.

Zio MCT will be a superior product to Zio AT. And over time, we need to move away from Zio AT and onto a Zio MCT platform. We know it has a better cost profile. There's more automation that we can put to it in our manufacturing centers, has a longer wear profile.

These are all very important things to us. And so I think if you go back to my prepared remarks, you see our focus is on continuing to be on getting that product cleared with the FDA and ensuring we have optionality in that MCT product space or market space.

However, just given where we think that we're going to close with Vital Connect, we're going to be in a situation where that product is going to be available to our commercial team ahead of clearance with MCT, or at least that's our belief, because we think that we'll get through the FTC by the end of the year.

That means we need to be prepared for an integration of Vital Patch onto our commercial force as quickly as possible. So I'm just trying to lay out for you how we think about things coming together.

I think Vital Patch and Vital Connect get closed earlier, and we're not going to wait around for an MCT clearance to then figure out whether to introduce one product versus the other. We're going to lean right into Vital Patch, get that out there and get going with it.

Your next question comes from the line of Suraj Kalia with Oppenheimer.

_:p id="641283052" name="Suraj Kalia" type="A" /> Congrats on the quarter. Quentin, forgive me; many calls are going on at the same time, so I must have probably missed this. Is the value proposition for Vital Connect really about your Vital Connect NCT product?

And partly the question within the question is: is the algorithm going to be different for Vital Connect versus the Zio MCT, even if we keep the bridge devices and everything aside for now? I'm just talking about the software component.

So maybe if you can help us understand, is the logic here to push Vital Connect initially until Zio MCT comes online? I'm just trying to understand the need for Vital Connect at this time, especially on the NCT side. And apologies again if you've already talked about this.

Yes. Well, I think Vital Connect, and the Vital Patch in particular, brings incremental features beyond Zio MCT that are very interesting to us and are important to be able to compete in the entire MCT category.

Again, the 4-in-1 capability, the live-looking capability, getting out to 30 days, as an example, opens up a remaining part of the market that Zio MCT can't get to.

That's a meaningful market opportunity. That's another $200 million to $300 million market opportunity that, frankly, Zio MCT just could never have gotten to.

So back to my point of needing to have various products and feature sets, I think that's very important to be able to compete in the entire MCT category.

So yes, we do like what Vital Patch brings to us within MCT. The MCT market, I do think it opens up incremental opportunity on our own Zio MCT product.

But beyond that, it also opens up things like inpatient monitoring, in-hospital monitoring that they have clearance for. It opens up opportunities like hospital into the home, RPM capabilities.

Those are all unique capabilities of their product and their platform that we're excited about and believe open up new revenue opportunities into the future.

One last point on the software algorithms. Look, we're going to be able to bring the best of both companies together in this respect. We've done a good amount of work around the clinical side of it.

We feel good about their product. Obviously, we, as iRhythm have invested tremendously over the years in clinical data. We'll continue to do that in the future on the combined platform and I think leverage our learnings and put the best product into the market.

Your final question comes from the line of Mason Carrico with Stephens Inc.

A lot has been asked, but I guess I think you guys have mentioned the potential for a publication or some data later this year, showcasing real-world economics within the innovative channel partner or innovative partner channel.

Is that still on track? What other initiatives are you deploying to help potentially accelerate these partners moving from pilot to more enterprise-wide deployment?

That's a great question. And you're exactly right. We commented on that in the past. We do continue to expect to see some of that real-world data make its way into the marketplace in the back half of this year.

We expect one of our innovative channel partners to continue to work to publish information. We've had one that has begun to speak about it from the podium.

We expect more to come, but we also have some work that we're doing with one of these innovative channel partners, too, that we'll likely publish.

So I do expect you're going to see some real-world data, cost-benefit data, cost savings data make its way into the market.

Your next question comes from the line of Brandon Vazquez with William Blair.

On the quarter and on the deal. I'll just leave it to one question, maybe a big picture question.

As you bring in this complementary technology from Vital Connect, do you think as you look down in the future, sleep or maybe even we've had discussions in the past about diagnosing valve disease, et cetera.

Does this expedite or make a clear line of pathway to some of the future TAM expansion opportunities? And if so, does that look like a co-mingling of the 2 products, maybe on the back end at least?

Or does the hardware eventually merge? Do you always keep 2 pathways? Just talk a little bit about that, what this deal might look like in 3 to 5 years instead of just in the next couple of years.

Yes, it's a great question. And that's part of what really excites us about the opportunity.

When you start to look out 3, 4, 5 years, you think about the new markets that are starting to come into reality at that point in time, whether it is your in-hospital monitoring in the Med-Surg ward within the hospitals as an example, you can start to see the whole hospital into the home monitoring, really trying to bend the cost curve of readmission back into the hospital.

I think we're going to be able to monitor all of the appropriate modalities off of the sensor that are important. And importantly, we have an IDTF capability in the background that is providing monitoring for a lot of these health systems that just don't have the capacity to do it.

And so I love the way we're positioned to be able to get after some of those new market opportunities out into the future. I do think other disease states are going to continue to grow and become more prevalent.

You've heard us talk about sleep. Sleep continues to be important to us. We'll continue to lean into it. I like what we're learning there. It's going to be a real opportunity for us.

Heart failure is another one that I think has a real opportunity to be impacted. And I think the combination of our 2 companies gives us a platform with a lot of flexibility on it where we can take the best from both sides over time and really improve what is available to patients and physicians in the marketplace.

So a lot yet to come, but there's a lot of capabilities on our own platform that I think would be terrific on their platform. And I think there's a lot of things in their platform that could be terrific on ours, and that's what we'll be focused on bringing together over time.

So we're excited by the combination, and we think it opens up a lot of incremental market opportunities and a lot of incremental product features that ultimately millions and millions of patients are going to get the benefit of.

There are no further questions at this time. I will now turn the call back to Quentin for closing remarks.

Well, in closing, I'd like to take an opportunity to recognize our employees on a terrific quarter, in many respects, a record quarter across so many measures for us.

And it's really their commitment and execution that has made this possible for the company. We continue to deliver strong results while continuing to invest in the opportunities that are going to drive the growth of the company into the future.

And with a differentiated market position, expanding capabilities, the strategic addition of Vital Connect, we believe we're well positioned to extend our leadership and create long-term value.

So as we celebrate our 20th anniversary, I couldn't be more proud of the team, more optimistic of the future. And I thank all of you guys for joining us today. See you soon.

This concludes today's call. Thank you for attending. You may now disconnect.

[Audio Gap] and Senior Vice President of Finance and IR, Lisa Pecora. So thank you both for being here today.

Thanks for having us.

Maybe we can start with the positive update last week on the LCD. Some of the issues with the proposal were addressed as hoped, and there were some incremental positive updates as well. So it would be good to hear your thoughts on the update and those additional patient population opportunities mentioned.

Yes, yes, so thanks again for having us. It's good to be here and good to see you all. So really pleased with where that landed. As you know, kind of the initial language that was drafted had some kind of nuances and some complexities and contradictions that needed to be worked through. And, yes, that's ultimately the reason for the process that CMS runs and the MACs to solicit comments from industry, iRhythm as well as other industry participants all commented through that period, and that feedback was received and the final draft landed in a really favorable spot.

You mentioned additional patient indications, and it was really encouraging to see that systemic emboli as well as pre- and post-TAVR. So really pleased with where the final LCD landed. Ultimately, we believe that increases access, not limits access. And that's on the back of kind of clinical and economic evidence that we presented, obviously, advocacy through the process as well. So really pleased with where that landed.

Great. And then maybe we can turn to your Q1 earnings, which saw a good 3% beat on revenues. Maybe you can just start high level with the drivers of strength between Zio monitor, Zio AT and the innovative channel part of...

Yes, really pleased with the start of the year. Q1 was another strong quarter for the company, both on the top and bottom line, sixth consecutive quarter of over 20% growth. So really encouraged to see the continued momentum in the business and contribution really from a number of different parts of the business, which is also encouraging. Zio monitor, our core Zio monitor in the U.S. continues to be the primary contributor to growth.

That's obviously the biggest part of our business, saw good results there, volume-led growth in the quarter. Zio AT, we set up the year guiding that AT would grow slightly above company average. We saw that in the first quarter. So good momentum there. And then innovative channel, we talked about that being the fastest-growing channel in our business, and that remains our fastest-growing channel in the business. And that would be our expectation for the remainder of the year as well. Encouraging what we saw there out of innovative channel and also see a really healthy pipeline for that momentum to continue.

And then on the revenue guidance, just how you're thinking about the guide raised by the beat in Q1 and then the growth rate for the year steps down from Q1. So maybe you can talk about the tough comp dynamic and again, just how you're feeling about the momentum in the business.

Yes. Yes. So our guidance philosophy is always to make sure we're not getting ahead of ourselves and no change in terms of how we're setting up the remainder of the year. A lot of good contribution from the different areas of the business, as I was mentioning, and innovative channel, that is one that we like to leave primarily as upside given that's a newer part of our business, a little less predictable than our core business, and that's how we continue to approach guidance.

As you were pointing to the tough comps, we knew that was coming with all of the success we had in 2025 and the growth that we saw really accelerating through the year in 2025. So the back part of this year, in particular, has difficult comps for us. If you look at a 2- or 3-year stacked growth chart, you will not see that deceleration. So from our perspective, it really is just a comp issue. And again, we're really encouraged about the momentum in the business.

And then the margin outperformance in Q1 was also pretty strong. EBITDA beat by $7 million, and you raised the guide by the beat there. So maybe you can also just touch on the margin strength in the quarter.

Yes, sure. Maybe I'll let Lisa.

Stephanie, I'd love to talk about margin. I'll take that one. So we really are proud of the progress, both on gross margin as well as the bottom line. So as you look at the gross margin, it really starts there. We've made great progress with our manufacturing efficiencies driven by past investments in automation. So that's a big component. But we've also driven good leverage with our clinical technicians and workflow efficiencies that, that enable that gross margin progress.

So starting with gross margin and then moving down, Q1 actually demonstrated about 750 bps of year-over-year improvement with SG&A. And that's where we're targeted and focused with margin leverage. It's all about driving that scale, prioritized investments, making sure we're being really thoughtful to put the dollars in the best possible spot. So overall, that drove over 7% adjusted EBITDA margin in Q1 compared to a negative adjusted EBITDA Q1 last year. So great progress. We're excited to continue that through the year.

Maybe I'll just add. I think there's some inherent leverage in the business that maybe isn't fully appreciated. I made reference to this on our Q1 call. The innovative channel as that continues to grow, we've talked about that being a one-to-many selling model. That is a highly-efficient model for us, that's driving good leverage for us.

EHR integration, that has been a great way to grow the business efficiently and that leads to leverage in the business. And then the other thing I would say is AT is calling -- we're calling on the same physicians and same accounts that are prescribing Zio monitor. So as we're successful there, that's naturally leading to leverage in the business as well. So we're encouraged by it.

Great. And then on the Q1 call, it sounded like you received some additional clarity from the FDA on the regulatory path for Zio MCT and reiterated the first half of 2027 timing. So can you just talk about what's needed for the package you're going to submit to the FDA later this year and why you're able to maintain that timing?

Yes. So as folks know, we made a decision to move to a mobile phone gateway in the beginning part of this year. With that, the design work is essentially done, but there's additional testing that we have to do, and this is software verification testing, electronics testing, just more kind of routine in nature. It takes time to run that testing and collect the data and ultimately get that back to the FDA.

In conversation with the FDA, it was our view, it was the better approach to hold that data until it's all completed and then resubmit back to the FDA later this year rather than doing it on a rolling basis. So we're going to take that approach. That was one path considered when we guided to first half '27 launch for Zio MCT, which was why we're able to reiterate that guidance.

Got it. And then post approval, maybe just remind us how you're thinking about potential adoption ramp. At the beginning of this year, you shared you're at 15% market share in MCT, which I think was about a 5-point increase year-over-year. So maybe just how you're thinking about MCT and ramp of additional share capture?

Yes. So we've been successfully increasing our market share in that segment. It's a segment that we are very excited about. If you think about the overall market, long-term continuous monitoring, which is our bread and butter with Zio monitor, that's the fastest-growing segment in the market, high teens growth. MCT segment is kind of the next segment that's growing in the overall market and call that high single digits.

And we have a big opportunity ahead of us where we're only 15% share in that market versus 72% share in long-term continuous monitoring. So it's a market segment we're excited about. We have been pretty open that Zio AT has competitive gaps and Zio MCT will start to close those gaps. And we believe it's the product that can really start to accelerate our share gains in that market.

It is a segment that is pretty fragmented, and there's different features and business models within that segment, and we'll be evaluating that and continuing to innovate and make sure we're putting ourselves in the best position to gain our share of that market. It is our goal ultimately to be the market leader in that segment. And it's, again, a segment we're excited about and committed to.

And then you also, on the earnings call, talked about the next-gen algorithm that you expect FDA approval for later this year that will be launched with MCT. And you noted how this could be a really big financial lever for the business. So could you maybe talk about the enhancements and the benefits to COGS that you expect?

Yes. So AI has been core to our business from the very beginning. When you are collecting 14 days of data, continuous data that's 1.5 million heartbeats on average, you need very, very sophisticated AI tools to curate that data and kind of pull out the relevant insights. And we're on our second-generation deep learned algorithm today. We have developed our third-generation. It's with the FDA. That's the one that we mentioned on the Q1 call. The testing that we've done on that algorithm shows really meaningful savings in terms of time needed to ultimately finalize the report and deliver it to the physician.

So it's going to put us in a really favorable position to scale efficiently. And we called out 50% scan-time savings, over $100 million in cost savings over a 5-year period. So it's something we're excited about. We did mention we'll launch that with Zio MCT in that first half '27 window and excited about what that impact is going to be to margins and our ability to scale.

On the $100 million in value over a few years that you noted, could you maybe explain how you get there?

Yes. I think you -- I mentioned the 50% scan-time savings. If you use that metric, apply it to the service cost within our COGS line, you can get there. Think about it more as an enabler of scale. So we'll -- with those scan-time savings, we'll work into those types of savings over time. There is some amortization that will offset the benefits that we'll see, but that's pretty small in nature. And given the impact, we'll work through those offsets pretty quickly.

And then just wanted to, I guess, wrap up Zio MCT and the impact on the model there, just thinking about the 21-day wear time versus 14-day, you have more days of monitoring revenue and costs, and it will be on the Zio monitor form factor. So just how we should think about that on the model?

Yes, we do think Zio MCT can be accretive to the gross margins relative to Zio AT. You mentioned on the same platform. Lisa mentioned manufacturing, automation. And so we're able to leverage those benefits across the full platform once MCT moves to the common platform. It will have 21 days versus 14 days today. There's enhanced detection algorithms, more sophisticated detection algorithms on the device.

So that likely offsets the increased wear time. Importantly, there's no revenue gain by going from 14 days to 21 days. We're still delivering the MCT service billing for the same CPT code. But again, believe that Zio MCT is a product that's going to move us more meaningfully into that segment and excited about the financial impact.

Got it. And then touched on AI before, but maybe just a follow-up there. It's obviously been topical given your capabilities and concern out there of potential commoditization of AI and in-sourcing by customers. So maybe you can just walk through what the barriers are there. And clearly, you're continuing to advance your capabilities. So can you talk about your moat there as well?

Yes, exactly. And you hit the punchline there. We believe AI is an enabler for us, not a disruptor. And we tried to hit that head on, on the Q1 call and articulate the moat that we've built around our platform. There's a lot that goes into delivering the service, the clinical service. We've been at it for 20 years. I mentioned EHR integration earlier that's critically important to the customers and making sure you are kind of easy to operate.

There's a lot of aspects of just device management, making sure the device is there and ready, high patient compliance, and we've invested on the device side of our business, obviously, with the new platform and then all the AI capabilities that we've been building. Importantly, AI is only as good as the data that you are training it on. We have over 3 billion hours of curated ECG data that has been training that we've been utilizing to train our AI tools. And that is for sure, differentiated relative to other competitors and data sets out there. So we're -- again, we're going to continue to invest in AI. It's been an enabler of our business, and we expect that to continue.

And you mentioned on the last call that you're now in your first health system with predictive AI. So could you talk about the strategy for rolling this out more broadly with both traditional health systems and innovative channel partners and any economics to consider?

Yes, yes, it's clear to us that there's patients that are undiagnosed, remain undiagnosed, and they are either not aware of symptoms or they're having symptoms, but they're being confused with other disease states. And there's a lot of clear data that shows if you monitor these patients, you're going to find undiagnosed arrhythmias, the predictive algorithm that we're launching with the first health system, that really makes it easy for these accounts to identify the patients that are most at risk of having an undiagnosed arrhythmia, either based on risk factors or symptoms that are in their medical record but have been forgotten.

So we're excited about what that can mean. We believe there's a 27 million-plus patient opportunity for undiagnosed arrhythmias. This algorithm is kind of one tool to open up that market for us. And obviously, we're early, and we're going to learn a lot in some of these initial deployments, but we're excited about what that can mean.

And then the innovative channel partners revenue today represents a low single-digit percent of your revenue. But as you mentioned earlier, it's very fast growing. So any way to think about what portion of your revenue this could become over time? Is it mid-single digits, high single digits?

I would say both of those are possible. And as I mentioned earlier, it's the fastest-growing segment of the business. So naturally, it will continue to grow as a percent of revenue. But more importantly, we believe we're still in the early innings of the opportunity. I mentioned 27 million patients. We're doing a lot of research around that now to identify where those patients are being managed and how to get to those patients.

And we've been successful at this point in really working with kind of the early adopters. We call it innovative channel for a reason. These are innovative partners that are forward-thinking, and we will continue to work with partners of that type, but eventually want to start working our way into kind of the majority of the population. And this market research will certainly inform that, and there's other things that we need to be doing to open up that opportunity. Certainly, clinical and economic evidence -- continued clinical and economic evidence is going to be critical to opening up that market. We're working on those data sets now. And that real-world evidence is pretty powerful when it comes to selling these types of programs into partners. So we're excited about it.

And then on the economic data that you were talking about, I think you expect some of that later this year, and you're kind of just touching on this, but I would think that, that data can be helpful to get other potential partners interested. So maybe just interested to hear like how big of a catalyst do you think that economic data could be?

I think it can be pretty meaningful. A lot of times, we're engaging with partners. The first question will be, well, who else are you doing this with? We've been able to answer that question now. And then the second question is, well, what does the data look like? We do -- we are able to piece data together to tell an economic story, but there's nothing that is as powerful as real-world evidence to show this partner in this program for 12, 24 months, these are the outcomes they saw both from a clinical standpoint and an economic standpoint. So we know it's important to continue to open up this market. That data is important for us, and we're working with partners today, and we'll look to have that evidence published at some point later this year.

And then this innovative channel partner and focusing on asymptomatic patients, this strategy is differentiated versus what peers are doing. So maybe you can just remind us of how you're uniquely positioned to go after this opportunity versus peers?

I don't want to give too much there given our competitive advantages there. But clearly, I mentioned 72% share in the long-term continuous monitoring segment. These partners are using long-term continuous monitoring. I would point to all of the clinical and economic evidence that we have today, over 140 peer-reviewed publications. That's a great starting point, even if it's not economic evidence from these programs.

And think about the CAMELOT data, the AVALON data that we've produced over the last couple of years, that shows Zio is very clearly the best long-term continuous monitor in the market, highest diagnostic yield, lowest retest rate, lowest healthcare resource utilization. Those are all matters or factors that matter to these innovative channel partners. And then I would say our scale and our ability to integrate efficiently with these partners that's differentiating as well. The one-to-many selling model that I mentioned, some of these partners want to monitor a big number of patients in a short amount of time. Our scale allows us to serve those partners uniquely relative to our competitors.

Got it. And then on the -- you've mentioned that the increased focus from CMS on chart scraping behaviors could be a tailwind and maybe it's still early, but are you seeing any impact? Or how do you expect this to be a tailwind?

Yes, yes, I'd say probably too early to see an impact there. We do feel very strongly that our program is -- has a really good kind of product market fit for what Medicare Advantage is meant to be and highly compliant in line with kind of the guidelines around these types of programs. It has a patient encounter. It is a definitive diagnostic where a patient is wearing the device.

It's being reviewed by cardiologists and ultimately leading to a definitive diagnostic. And we're also going to market with strategies to ensure that there is a care pathway that follows a diagnosis. And that's important in these plans as well to show that there's follow-through, once you identify the patient, you are then continuing on the caring and managing for that patient, and that's part of our go-to-market strategy.

And then I wanted to ask about the data at HRS, which showed that short-term Holter misses a large proportion of AF recurrence post ablation. So just curious if you expect this data to impact practices in these patients and help conversion opportunity from...

Yes, it certainly should. And if you combine that with other clinical data recently where physicians are making a determination to stop anticoagulation therapy, you want to be certain that there is not recurrence of AF. If you do short-term monitoring, you're going to miss a good number of patients that have recurring AF. So we believe it's one more data set of very clear clinical evidence that supports long-term continuous monitoring with Zio over short-term Holters. That segment of the market has been declining for several years now. There's still, call it, 1.5 million short-term Holters being done in the U.S. each year, but declining and evidence like this will ensure that it continues to decline and convert to long-term continuous monitoring.

Yes. And I just wanted to touch on just sort of how you view the AFib ablation market and sort of the growth you see from there and just as a driver of the business...

Yes, I would say -- and investors have heard us say this, I believe it is a tailwind in the business. We would not say it's the #1 kind of tailwind or driver of our business, just given absolute numbers of ablations in the U.S. Our move into primary care certainly is a bigger driver of our business. But it has been helpful to the market, and that market will continue to grow as -- and so we believe it will continue to be a tailwind for our business as well.

And then just also wanted to touch on the sleep pilots and how those are going and sort of the opportunity you see from home sleep tests and the willingness of patients to do that.

Yes. Yes. We're encouraged by the early signs of what we're seeing with our pilots, have had a number of accounts signed up. We -- our research suggests that 20% of our prescribers today already prescribe the home sleep test. As we make it easier for those physicians and other physicians to prescribe a home sleep test, we believe that can be an even more meaningful number.

Our pilots are confirming that. We're excited about what we're learning. The long-term vision is ultimately to do what we've done in cardiac monitoring in the home sleep test market. A lot of the same kind of operational aspects in delivering cardiac monitoring are there in sleep testing, and we believe we've built those capabilities over 20 years that can put us in a really favorable position to make a positive impact in that market.

Also on international, that's been low single-digit percent of your overall revenue, but Q1, I think you mentioned was the best quarter in company history there. So what's driving the momentum internationally?

Yes. Yes. We're still pretty early in the 4 Western European countries. U.K., we've been in that market for a few years now. That was the primary driver of the Q1 results, really encouraged by the momentum we're seeing there. Primarily in the private market as we're continuing to look to open up the public market there and have various pathways we're pursuing there. Japan is another market we're really excited about.

We do need to secure higher reimbursement there, and we're working on the head-to-head clinical evidence that will be needed to ultimately get to that premium reimbursement that we believe Zio deserves. But very encouragingly, good adoption of Zio in Japan, really strong pipeline there. We're seeing accounts convert and bringing Zio in. So we're excited about the early momentum in Japan. Certainly, once we get to premium reimbursement, that could be more of a needle mover for the company.

And then on the CID, it sounds like no update since December, but anything you would say on how you're thinking about the potential outcomes there?

Yes, yes, no updates to share there. We continue to be responsive and work with the DOJ to provide context to the information that we're providing. I can't speculate on what that outcome may be and when and what that may look like. Certainly, we're motivated to get it behind us and remove a bit of an overhang. And we don't fully control that, but we'll certainly look for opportunities to try to get that behind us.

And then maybe just wanted to come back to margins and longer-term profitability. You talked about some good drivers of gross margin expansion and SG&A leverage. But yes, maybe you can just touch on longer-term drivers and opportunity within SG&A still.

Back in 2022, we actually, at Investor Day, had put out 15% adjusted EBITDA for 2027, and we feel really good that the traction that we're gaining supports that. We had also talked about 73% on the gross margin line. And given all the pillars of leverage that we've spoken about with automation and manufacturing scale, we also feel good on gross margin. And with our new and incremental next-gen AI algorithm, we feel that, that will continue as well. So sky is the limit. We're not done with 2027. We continue to feel that there's really good progress to gain on margins from there.

And then also just wanted to touch on free cash flow in the last minute here. You achieved your positive free cash flow goal last year, continuing to grow it this year. So maybe just how you're thinking about free cash flow growth as a priority.

Yes. Yes, I'd say very consistent with the comments Lisa made on profitability. We did reach an important target last year as a company, first year of positive free cash flow. A lot of focus on it internally. Our expectation is that, that will grow relative -- meaningfully grow relative to last year. I would also mention that is while reinvesting back into the business. And we talked about the different points of leverage in the business that we're seeing, and we're balancing that by reinvesting back into the business, back into the opportunities that we see that drive kind of near-, medium- and long-term growth. I believe that's the kind of the right balanced plan.

Okay. Great. Well, I think we're just about out of time. So thank you both for being here today.

Thank you so much. Appreciate it.

Thank you.

Hello, everyone. Thank you for joining us, and welcome to iRhythm Holdings Q1 2026 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Lisa Pecora, Senior Vice President of Finance and Investor Relations, for opening remarks.

Thank you, operator, and thank you all for joining iRhythm's First Quarter 2026 Earnings Call. With me today are Quentin Blackford, iRhythm's President and Chief Executive Officer; and Dan Wilson, our Chief Financial Officer. Before we begin, please note that management will make forward-looking statements within the meaning of federal securities laws under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our intentions, beliefs and expectations about future events, strategy, competition, products, operating plans and performance.

Forward-looking statements on this call are based on current estimates and assumptions involve risks and uncertainties, and actual results may differ materially. These statements are made as of today, April 30, 2026, and are time sensitive. We undertake no obligation to update or revise them, except as required by law. Accordingly, you should not place undue reliance on these statements. For a discussion of risks and uncertainties, please refer to our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the SEC.

Additionally, during the call, we will discuss certain financial measures that have not been prepared in accordance with GAAP. Unless otherwise noted, all references to financial measures on this call are presented on a non-GAAP basis. These non-GAAP measures should not be considered in isolation or as a substitute for or superior to GAAP results. Reconciliations to the most directly comparable GAAP measures can be found in our earnings release and the slides accompanying today's call.

With that, I'll turn the call over to Quentin.

Good afternoon, everyone, and thank you for joining us. I'm pleased to be here to discuss our first quarter 2026 performance and outlook for the balance of the year. I will begin with an overview of the quarter, our strategic progress and our outlook for 2026 and beyond. Dan will then talk about our financial performance and guidance in more detail.

We delivered a strong first quarter, exceeding expectations on both the top and bottom line. Revenue grew 26% year-over-year, driven by volume, and we continue to execute on our profitability improvement commitments as we expanded margins. Importantly, our performance was broad-based across Zio Monitor and Zio AT and across each of our key growth pillars, including cardiology, primary care, innovative channels and international. Our results reflect both strong execution in the core business and continued progress against the strategic priorities we believe will support durable growth over time.

At the center of that strategy is our effort to expand the long-term continuous monitoring market by redefining arrhythmias are diagnosed once patients enter the diagnostic pathway. A growing body of clinical evidence now spanning more than 140 publications consistently shows that nearly 2/3 of arrhythmias are often detected only after 48 hours of monitoring, reinforcing the limitations of short duration monitoring. Yet nearly 2 million short-duration Holter and event monitors are still prescribed annually in the U.S., representing a significant opportunity to upgrade care.

By continuing to shift clinical practice towards longer duration monitoring, we believe iRhythm is not only gaining share, but actively growing the market by increasing diagnostic yield and improving patient outcomes. Zio Monitor remains the foundation of our platform, supported by consistent prescribing trends, broad clinical adoption and continued growth across new channels and international markets.

Zio AT also continued to advance this quarter, taking share with new account wins and expanding utilization within existing accounts. That progress came despite a challenging prior year comparison and reinforces our view of the MCT category as a durable and increasingly important contributor to the platform.

One of the most important drivers of our long-term opportunity is our continued move upstream in the patient pathway. We estimate that more than 27 million people in the U.S. are at risk for arrhythmias, many of whom are first evaluated in primary care settings. As a result, primary care is becoming an increasingly important entry point for earlier detection and more proactive management. We continue to expand our reach and engagement within primary care, helping clinicians rule arrhythmias in or out while enabling cardiology to focus more efficiently on the highest acuity patients. This is not a shift away from cardiology. Rather, it expands the overall market and improves patient flow, diagnostic efficiency and care coordination across settings.

A key enabler of this strategy is workflow integration. Approximately 53% of our volume now flows through EHR integrated accounts and more than 3/4 of our top 100 customers are now integrated. This level of integration is particularly valuable in primary care, where once embedded, we partner closely with our customers to help them develop best-in-class clinical pathways rather than just a transactional tool.

We continue to see traction across innovative care channels with growth supported by a broad and expanding set of value-based primary care and population health partners. Activity remains consistent and repeatable, driven by both new account wins and expanding utilization within existing relationships. Importantly, as certain programs mature, we're seeing adoption broaden across both symptomatic and asymptomatic populations, reinforcing the relevance and durability of the Zio platform as care delivery continues to shift upstream and toward value-based models.

International remains another emerging source of opportunity. In the U.K., we had our best quarter in company history, reflecting growing traction and validation of our model in a cost-constrained health system. In Japan, we recently received an update to the reimbursement framework that introduces a modest supplemental payment for longer duration monitoring. While the economics remain early and are not a meaningful contributor today, we view this as a positive signal that reflects growing recognition of the long-term continuous monitoring and reinforces the pathway to more favorable reimbursement as we generate local head-to-head clinical evidence. We are also making progress in adjacent markets.

In sleep, our pilots continue to produce encouraging early feedback and reinforce the meaningful opportunity ahead in a U.S. market of nearly 40 million sleep apnea patients, of which there is significant overlap with arrhythmia populations. Sleep is another good example of why workflow integration matters. Sleep diagnostics today remain highly fragmented across primary care, cardiology, sleep specialists, sleep labs, home testing, interpretation and follow-up and often across disconnected systems. Our focus is not simply on introducing a new device or algorithm, but on building a streamlined end-to-end clinical workflow that simplifies how sleep diagnostics are ordered, interpreted and acted upon.

As we have done in cardiac monitoring, we believe workflow simplification can create meaningful value for both providers and the healthcare system, particularly as care continues to shift upstream. From a clinical perspective, recent evidence continues to support our position and reinforces the significant opportunity ahead of us. At ACC, we shared new real-world evidence showing Zio's high diagnostic yield for clinically actionable arrhythmias across cardiometabolic risk populations, including increased risk in chronic kidney disease and rising atrial fibrillation detection with obesity.

We also launched iRhythm Academy, which scales high-quality on-demand education to help clinicians adopt best practices and new advances more efficiently. At HRS, we presented new data reinforcing the superiority of Zio after AF ablation and in pregnancy. In addition, we published 2 peer-reviewed studies highlighting the clinical and utilization advantages of long-term continuous monitoring using Zio. The data show that traditional short-term monitoring often misses actionable arrhythmias and that Zio enables earlier diagnosis with fewer repeat tests across both Medicare and commercially insured patients.

Taken together, these efforts reinforce 3 points. Zio long-term monitoring improves diagnostic yield. It expands relevance across broader patient populations, and it can reduce inefficiency and downstream cost, all of which are critical as we continue to expand beyond traditional symptomatic populations and move further upstream into earlier detection with the potential to lower downstream costs for the healthcare system.

Consistent with that clinical expansion, recent CMS policy developments continue to emphasize objective diagnosis, quality and measurable outcomes over documentation-driven strategies. The final 2027 Medicare Advantage rate announcement reflects funding stability alongside continued tightening around risk adjustment and coding practices. This policy trajectory reinforces the importance of confirmatory diagnostics that drive accurate diagnosis and appropriate care and positions Zio well as healthcare continues to shift towards value-based models.

With our vision to scale beyond traditional arhythmia monitoring, our ability to execute is supported by an integrated AI-enabled platform. We now have more than 3 billion hours of curated ECG data, and we continue to build on that foundation by combining internal and external data sets, including claims and EHR data to improve detection, identify at-risk patients earlier and enhance clinical workflows.

As we continue to advance our AI predictive capabilities, we are now in our first health system deployment of predictive identification workflows integrated with iRhythm monitoring solutions, and we have an active pipeline for additional health systems to follow. Early pilots show more than 85% accuracy in pre-identifying patients with clinically relevant arrhythmias, reinforcing our conviction that iRhythm is positioned not just to detect disease, but also help predict risk earlier and ultimately prevent it.

Our initial programs focus on high-risk populations, including patients with diabetes, CKD, CAD, COPD, sleep disorders and heart failure, where arrhythmias are both common and costly. These initiatives are designed to improve efficiency, quality and reduce cost of care delivery, and we look forward to real-world data being published later this year. More broadly, iRhythm's durability in an AI-driven environment is grounded in the fact that healthcare value is not created by algorithms alone. It is created by operating an end-to-end AI-embedded FDA-regulated, clinically integrated and reimbursed service at scale.

Our platform is deeply embedded across leading health systems and supported by deep workflow integration, broad reimbursement, extensive clinical evidence and a proprietary ECG data set that continues to grow significantly. Coupled with the operational complexity of device programs, specialized clinical support and high regulatory scrutiny, our platform will continue to compound in value over time, particularly as we expand beyond cardiovascular into a multi-specialty intelligence platform.

I'm pleased to share that same foundation is helping drive progress as we expand our AI capabilities with our new next-generation AI algorithm. Leveraging our large proprietary multibillion-hour data set, we believe this next-generation algorithm, which will be used across our entire platform of Zio Monitor, Zio AT and our future Zio MCT can reduce clinical technician review time by as much as half over time, which would improve efficiency, support future margin expansion and further strengthen our competitive position as we increase the clinical value to our patients and physicians. We submitted the 510(k) for this next-generation AI algorithm to the FDA last year alongside, albeit separate from our Zio MCT 510(k) submission.

Next, I'd like to provide an update on our regulatory progress. As you know, we remain subject to an FDA warning letter. As part of our remediation efforts, we committed to address all of the agency's concerns. We also elected to go beyond the specific actions requested by the FDA, which included conducting a comprehensive review of our entire quality management system to identify and implement further improvements, which we have now completed.

Consistent with our commitments to the agency, we also engaged an independent third-party to conduct a comprehensive review of our quality management system. That review was completed in the first quarter and did not identify any material observations. We believe this outcome reflects both the seriousness with which we have approached this work and the substantial progress we have made. While the timing of any action by the FDA remains with the agency, we believe the work completed to-date positions us well as the agency continues its review.

With respect to our next-generation MCT program, we've made a lot of progress over the past few months and are happy to reaffirm our first half 2027 release time line. As we noted on our last earnings call, we identified a clear path to our next-generation MCT clearance, including the determination that it was in our best long-term interest to move to a new mobile gateway sooner, which would require some additional work and data to be submitted to the FDA.

As we continue to work collaboratively with the FDA, they have clarified that rather than submit additional data on a rolling basis, the preferred path is to provide a complete package once all elements are finalized later this year. We had anticipated this might be one outcome for how we might update our submission, so it falls within our previously communicated clearance and launch time frame. We believe this collaborative approach, enabling us to stay on track with our approval and launch time lines while also advancing an enhanced next-generation AI algorithm for clearance at a potentially earlier time point is a clear sign that all of our hard work over the past few years to improve our relationship with the FDA has been paying off.

Looking ahead, our priorities remain clear: to drive durable volume-led growth across cardiology, primary care and innovative channels, continue expanding margins through operating discipline, efficiency and scale, advance our innovation road map, including next-generation MCT and predictive AI build international and adjacent markets with discipline and maintain high standards of operational excellence and compliance in a rapidly evolving healthcare environment.

With that, I'll turn the call over to Dan.

Thank you, Quentin. iRhythm delivered continued strong financial performance in the first quarter of 2026, reflecting durable demand for iRhythm's ambulatory cardiac monitoring services and disciplined execution across the organization. Our results demonstrate once again our focus on profitable growth as we recorded another quarter of strong year-over-year revenue growth, while driving 880 basis points of improvement to adjusted EBITDA margin. We are encouraged to see the continued growth in the business while driving strong operating leverage.

We delivered revenue of $199.4 million, representing 25.7% year-over-year growth. Performance was driven primarily by sustained volume demand across our customer base, reflecting continued strength in our core business and contributions from newer growth channels. Volume remained the primary driver of year-over-year revenue growth, while we also benefited from improvements with our estimated collections reserves related to our market access, contracting and collection efforts. These results were supported by continued engagement across a broad and expanding prescriber base, reinforcing the durability of volume demand.

New store growth, with new store defined as accounts that have been opened for less than 12 months, accounted for approximately 64% of our year-over-year volume growth. Home enrollment for Zio Services in the U.S. remained consistent from prior quarters at approximately 23% of volume in the first quarter.

Moving down the P&L. Gross margin in the first quarter was 70.9%, an increase of 210 basis points year-over-year. This sustainable improvement was driven by continued operational efficiencies, including manufacturing automation and workflow optimization as well as scale benefits from higher volumes. First quarter 2026 adjusted operating expenses were $153.5 million compared to $140.4 million in the prior year period, an increase of 9.3% year-over-year, primarily driven by an increase in volume-related costs to serve, litigation-related expenses and investments to drive future revenue growth. We invested purposefully in the business to fuel near, mid- and long-term growth while delivering strong operating leverage with revenue growing meaningfully faster than operating expenses.

On the bottom line, GAAP net loss for the first quarter was $13.9 million or a net loss of $0.43 per diluted share compared to a GAAP net loss of $30.7 million or a net loss of $0.97 per diluted share in the first quarter of 2025. Adjusted net loss for the first quarter was $11.3 million or a net loss of $0.35 per diluted share compared to an adjusted net loss of $30.3 million or a net loss of $0.95 per diluted share in the first quarter of 2025. Adjusted EBITDA for the first quarter was $14.1 million or 7.1% of revenue, representing an 880 basis point improvement year-over-year and a significant improvement in profitability, demonstrative of the operating leverage inherent in our business.

Free cash flow during the first quarter was negative $33 million, in line with normal seasonality attributable to annual compensation payments and working capital seasonality. We ended the quarter with $549.6 million in cash, cash equivalents and marketable securities, a strong cash position that provides us with substantial flexibility to support future growth initiatives.

Looking ahead, we are raising full-year 2026 revenue guidance to $875 million to $885 million, representing 17% to 18% year-over-year growth. This outlook reflects sustained demand across our core business, while maintaining a disciplined approach to forecasting newer and emerging channels. On a full-year basis, we continue to expect pricing to be approximately flat overall to 2025, with revenue growth driven by continued volume growth across core Zio Monitor, Zio AT, innovative channels and international. In the second quarter of 2026, we anticipate revenue to be in the range of $218 million to $220 million, consistent with typical revenue seasonality.

For gross margin, we expect the clinical operations and manufacturing efficiencies we've driven will continue to incrementally improve our gross margin profile for the full-year 2026. We believe that these sustainable improvements will continue to lower our cost to serve as we leverage our fixed cost infrastructure over a higher volume of patients over time and introduce new artificial intelligence and workflow tools. Regarding the current geopolitical situation, we have cost containment initiatives in place and do not expect a material impact to gross margin.

From a profitability standpoint, we are raising our full-year 2026 adjusted EBITDA margin guidance to 12% to 13%, reflecting increased operating leverage and a balanced approach to investing in our key priorities, including product innovation, commercial initiatives, international expansion and platform capabilities. For the second quarter 2026, we anticipate adjusted EBITDA margin to be between 11.5% and 12.5%. We continue to expect full-year free cash flow in 2026 to grow versus 2025 with free cash flow more heavily weighted in the second half of the year due to normal operating seasonality.

In summary, our first quarter results demonstrate the resilience of our business model and the progress we are making in scaling our platform with disciplined investment. We are seeing increasing validation of the value our services deliver, particularly in their ability to help lower downstream healthcare utilization. This dynamic reinforces demand for our solutions, especially as healthcare systems remain focused on efficiency and cost-effective care delivery. We similarly remain focused on growing the number of patients we serve while operating efficiently and investing in the opportunities we believe will drive sustainable growth in our business.

I will now turn the call back to Quentin for closing remarks.

In the first quarter, we were pleased with our start to the year with strong top line growth, continued margin expansion and ongoing investments in the capabilities that support durable long-term value creation. As we enter iRhythm's 20th year, our performance reflects the strength of our platform, the discipline of our execution and the relevance of the problem we are solving.

Arrhythmias remain a significant clinical and economic challenge. They are often episodic, asymptomatic or misattributed to other conditions and are often missed by short-duration diagnostics. Delayed or misdiagnosis can lead to worse patient outcomes and avoidable costs across the healthcare system. iRhythm sits at the intersection of several powerful trends, an aging population, increasing prevalence of arrhythmias, growing cost pressure, cardiology capacity constraints and the shift towards value-based proactive care.

We believe the market opportunity ahead is significantly larger than it has historically been recognized and that our platform positions us well to lead that expansion to create long-term value for patients, physicians, providers, payers and shareholders. Our focus remains on disciplined execution. We are driving volume-led growth by expanding access through primary care and integrated networks, advancing our platform through AI and workflow innovation and investing selectively where we see clear clinical and economic return.

Looking ahead, the opportunity is not only about expanding the market, it's about strengthening our platform advantage. Our growing clinical data set, AI capabilities and deep body of clinical validation increasingly differentiate iRhythm. As healthcare increasingly prioritizes accuracy, evidence and efficiency, we believe validated data-driven diagnostics will be increasingly important in improving outcomes and lowering system cost, attractively positioning iRhythm to create long-term value for all stakeholders.

Before we move to Q&A, I want to briefly touch on a couple of items that are often top of mind. With respect to the DOJ, we have not received any request for additional information since the CID issued in December and continue to cooperate fully. Separately, regarding finalization of the local coverage determination, we have not yet heard back from the MACs. As expected, timing remains uncertain given the current official silent period.

With that, we're now happy to take your questions.

[Operator Instructions]. Your first question is from Allen Gong with JPMorgan.

Just the first one is going to be on the guide. You're coming off of a quarter where I think you came in $5 million or so above consensus. You raised the full-year by that amount, but then the rest of the year implies a bit of a deceleration from there. Help me understand how much of that is conservatism? How much of that is informed by what you're seeing so far in April?

Yes. Thanks, Allen, for the question. I guess maybe to start, as always, we don't like to get ahead of ourselves. It is early in the year, and we want to be thoughtful around how we set up the year. Certainly, a great start to the year in the quarter. We talked about momentum kind of across the different business. Really encouraged about what we're seeing and the trends that we expect to see for the remainder of the year.

I would point the back part of the year, in particular, starts to have some pretty difficult comps given the performance that we had in 2025. Again, feel really good about what we're seeing in the business. There's certainly potential upside that we're not going to bake into the guide given the early part of the year, and that's a similar approach that we've taken previously. If those play through, that's great, but there's a reason we leave them outside the guide to start. Like what we're seeing in the business, a lot of good contribution across the different growth drivers in the business.

Allen, I'll just jump in. This is Quentin. In terms of what we're seeing in April, we're encouraged by what we're seeing there, good results. We feel good about that. Obviously, we can contemplate that in the reiteration of the guide and the increase in the guide as well.

One last point I'd just make with respect to what Dan had commented on and your point on the slower growth rates in Q2, Q3 and Q4. When you look at things on a stacked growth comp basis, the momentum is very, very strong, and so despite the tougher comps we're running into year-over-year in the next few quarters here, which we contemplate, the overall momentum in the business continues to be really strong.

Then just as a follow-up, I think one of the pressures on the broader medtech space recently has been a fear around AI. Looking at your business, it does seem as though you might be a little bit more exposed to that even more so than other medtech companies. You're talking about this new algorithm that you're planning to launch. But when we think about potential competition from outside of the traditional medtech sphere, how concerned are you about that? How do you position yourself to better compete against those kinds of entrants?

Yes, it's a fair question. It's one that we get a lot. It's one that I feel very good about in terms of our defensibility and the moat that we've built in the business. I think you have to keep in mind, we're not simply just offering a software capability or an algorithm. It's much more than that. It's running an end-to-end program for these customers of ours around cardiac monitoring and ultimately arrhythmia diagnosis, which includes, for sure, AI capabilities that we've now got 20 years of experience behind us, a 3 billion hour data set that's curated ECG data that we can build off of.

Frankly, that's been part of what's enabled us to move into spaces like predictive capabilities, and we're excited to be launching our first commercial predictive AI collaboration that I mentioned in prepared remarks. It's also what's enabled us to advance our next-gen algorithm that will reduce our technician review time by nearly half over the next several years, which is going to be a meaningful financial contributor.

It's the power of that data that allows us to move quickly in those spaces but also the broader end-to-end program that we enable these customers to be able to run without worry, whether that's a hardware device on the front end, like our patch that has incredible patient compliance. 98% of our folks will wear the patch up to 14 days. We know duration of monitoring is important. Getting a longer duration wear period is important, which is more than just an algorithm. That's a form factor in a hardware component.

There's the intake process of receiving these things, downgrading the data or -- downloading the data, sorry, coupling it with the patient context that's provided with it. There's many times that you look at feedback and there might not be any arrhythmia in the ECG data, but the patient feedback in the diary or the electronic digital-facing app is meaningful. The physician wants to know that. You're not going to capture all that in just an algorithm alone.

Then on top of that, it's got to be clinically validated and upheld to the FDA scrutiny from a quality perspective or you could go on to reimbursement. There's a massive market access component to ensuring that your solution is reimbursed, and that takes tremendous effort. I think we're up to 93% of all lives in the U.S. are now covered with respect to access to Zio. That takes time and effort with other solutions. There's a lot that goes into it. It's not just simply an AI capability. It's an end-to-end program that's being run that we have mastered over the years, and we have a market-leading position for a reason, and we will continue to defend that well.

I think the platform we've built ultimately gives us the ability to drop incremental AI capabilities on and through the large integration platform that we have with the vast majority of our customers enable them to have access to some of these capabilities seamlessly on their side. They're not having to integrate multiple times over. They have a single point of integration with iRhythm. We can bring to them several of these solutions and give them very quick, easy access. I'm excited by the position we have. We'll continue to move quickly, and we're bullish on the position we have here.

Your next question is from Stephanie Elghazi with BofA.

I wanted to ask on the EBITDA margin in the quarter was pretty strong at 7% and better than your guide of 3% to 4%. Just curious what drove that outperformance? Then you raised the guide slightly to 12% to 13%. Just curious why not raise more. Maybe it's just early in the year, but yes, curious your thinking on that.

Yes. Thanks, Stephanie, for the question. Maybe the second part of your question first there. Yes, we are raising the guide essentially by the magnitude of the beat in the quarter. Again, early in the year, I don't want to get ahead of ourselves, but certainly seeing the profitability flow through nicely in the business and saw a nice result there in the quarter. I would just comment really continued strong execution across our teams. We've seen gross margin continue to step up nicely.

A lot of efficiencies being driven within our clinical operations team, our manufacturing teams and the automation that we've implemented. Certainly, continued opportunity there as we leverage our scale, leverage technology, our next-generation algorithm, as we mentioned, and have a nice road map there to continue to drive efficiencies and operating leverage.

Below gross margin, I'd say similar efficiencies and automation. Then maybe we'll just call out some of the maybe more underappreciated aspects of our business that can drive nice operating leverage. That we've talked about innovative channel, the one-to-many selling model that is present in that channel, and that has real operating leverage that's playing through.

You think about our land and expand model as we open an account and then expand in the primary care and other prescriber bases, and we can do that really, really efficiently. Related to that, EHR integration, integration drives operating leverage on an account level basis and really allows us to expand prescribers in a really efficient way. Then certainly, within G&A, we've been hard at work there, very disciplined and a lot of opportunities to continue to drive leverage there. Really excited about what we've driven to over the last couple of years, but see a lot of opportunity in front of us to continue to drive profitability expansion.

Then just wanted to follow-up on the next-gen algorithm. I think that was a new positive update, and you mentioned some of the efficiency benefits it can bring. I was wondering if anything else you can share on the features of this next-gen algo?

Then just to confirm, you said it's a separate filing from MCT, but submitted at a similar time. Could we be expecting FDA approval in the coming months? Then what's the plan for rolling that out once you get approval?

Yes, Stephanie, this is Quentin. In terms of the financial lever, there's probably not a larger financial lever that we have in the business, quite honestly, than this next-generation algorithm when it gets implemented. We're excited by what that will bring. Our view is it has the opportunity to cut review time by nearly half, if not more, over time, which is going to allow us to scale very, very efficiently into the future, and so as we do some of the math around it over the next 5 years or so, it's well north of $100 million of value on a cumulative basis that we expect to be delivered from this. This is a meaningful lever for us that we're excited to get into the company and start to realize the benefit from it.

To your point, we did submit it last year alongside MCT. It continues to run independent and on its own time line. We would expect approval later this year. We'll be sure to keep you updated when that approval comes. In terms of implementing it, we will implement it alongside MCT, when MCT is approved and implemented in the first half of '27. There's some work from the development teams to integrate that algorithm onto the production side. We will team that up with the MCT launch as well and keep those coupled. That's how we're thinking about it.

Your next question is from Vijay Kumar with Evercore ISI. Your next question will be from Brandon Vazquez with William Blair.

It's Max on for Brandon. You guys have a handful of innovative channel partners that have been with you for a few quarters now. Can you guys just touch on what you've learned from the more tenured relationships and how that's helping you guys as you approach some of the newer accounts?

Yes. One of the things that's most encouraging with our innovative channel partners is that every single one of these partners who patched with us in 2025 is up and patching consistently in 2026. We're starting to see more consistency in that channel. Quite honestly, there will continue to be lumpiness at that customer level, but overall, we're seeing more consistency in it. We're encouraged by that.

We continue to sign up some new partners over the course of Q1. The pipeline is incredibly healthy as we head into Q2, same with Q3. We're excited by what innovative channel partners will bring to us. We're starting to see a bit more consistency around it. We want to see that continue to play out into the future before we start to get ahead of ourselves, but we're starting to see what we anticipated we might in those areas.

The other thing that's really encouraging is what we're seeing in that channel partner business is most of these customers start with us on the asymptomatic side or maybe better described as undiagnosed, unaware arrhythmia patients. These are folks who generally have symptoms in their medical records. They're just not aware of them or they're being confused with other disease states like type 2 diabetes or COPD, CKD, sleep, you go down the list. What's encouraging in what we're seeing with our innovative channel partners is that folks who started on the asymptomatic side are actually starting to use the device much more on the symptomatic side of their business as well.

I think part of that comes back to the attributes of the Zio product itself. These folks are learning through their own real-world data that longer duration monitoring produces a higher diagnostic yield. It doesn't miss the arrhythmias. Where in the past, maybe their symptomatic patients were using a traditional Holter short duration sort of monitor, they're missing them, and they're realizing that and they're starting to patch with longer duration. A lot of really interesting, encouraging trends coming out of that part of the business. We're very bullish on what that means for the future and opening up the 27 million patient TAM that we think is out there. It's still early, but we've been encouraged by what we're seeing.

Then, Quentin, you previously talked about how MCT can eventually drive share closer towards that 40% to 50% range over time. How should we think about that market share ramp once MCT launches in first half of '27? I understand AT continues to take share. Should we see that MCT launch as a continuation of that trend? Then how does the next-gen algorithm with MCT play into that?

Yes. Look, I think the right way to think about it is a continuation of the trend. We know that the new MCT product closes a lot of the competitive gaps that our current ZAT product has, but I think we're going to want to see that product play in the market before we're going to guide to something different. I think the right way to think about it right now is a continuation of the trend that we see with Zio AT with a lot of excitement that it has the potential to do even better than that. That's probably not how we're going to set expectations out of the gate.

I would say with Zio AT's performance, we continue to demonstrate the ability to take share with an inferior product. We're just all the more excited by the ability to get MCT into the product -- or sorry, into the market. With respect to getting the algorithm into the product, it's going to drive meaningful gross margin benefit. One of the nice things about Zio MCT is it's coming on the same form factor that our Zio Monitor is already on, which is going to enable us to leverage a lot of the automation from a manufacturing perspective that we already have. We were already going to see a nice benefit from AT into MCT.

Now that we are able to drop the next-gen algorithm onto that platform as well, it's going to really enhance the gross margin profile. We're excited by that. I would note, though, that next-gen algorithm, while we'll bring it to market alongside Zio MCT, it will apply across our entire platform. It's going to be immediately applied against Zio Monitor and the large presence that we have there. We'll continue to run on the Zio AT product as we work through those inventory levels and migrate towards Zio MCT and we'll also be on the MCT product. It's a complete platform application of that new algorithm that we're excited by.

Your next question is from Vijay Kumar with Evercore ISI.

This is Kevin on for Vijay. Just the one on the DOJ CID request. I know you mentioned there has not been any request for additional information. Can you just update us on what exactly asked for so far? Looking forward, do you have maybe a preliminary view on what the range of outcomes might be here from this request?

Yes. No, the request for information in that CID was very consistent with the original subpoena that dates back to 2023. It seems very clear that they're focused in and around the AT product line and really specific to dates back in the '17 to '21, '22 time frame. That's what we can infer from the line of questions and the information request.

To go beyond that, it would be hard for us to do. There's not much more clarity we can give. It just seems like for the breadth of their review and investigation has been focused in that area and tied into those time frames. As we have more clarity, we'd be happy to share it with you. Obviously, Zio AT was not a big part of our portfolio back in those early days. It was newly launched and was growing over time. It's hard to size up anything along those lines though, and that's not something we would speculate on.

Our next question will be from Nathan Treybeck with Wells Fargo.

Are you beginning to see any benefits flow through from reconfirmations for chart-derived diagnoses? Are you anticipating any benefit in your guidance?

We haven't contemplated anything in the guide, Nathan, in particular. We continue to believe that we're in a very good position relative to the focus around the chart-derived mention that has been made out there and the increased scrutiny around it.

From our perspective, our partners consistently use Zio to get to a confirmed diagnosis, which is exactly what CMS is trying to get to is ensure that there's a real confirmed diagnosis versus just speculation of the chart-derive nodes, and so we like the position. We haven't seen a change in behavior necessarily. To be honest with you, most all of our channel partners are using the product to get to that confirmatory diagnosis, and that's what they've been using from the beginning of the relationship. We'll continue to monitor it and watch it. We think this is a nice tailwind in the business and I expect that's how it will play out, but we haven't adjusted anything in guidance at this point for.

Your next question is from David Rescott with R.W. Baird.

Congrats on a good start to the year here. I wanted to ask about the sleep market. It sounds like there's some pilots that are ongoing, but would be curious to hear maybe from our perspective, when we should expect to maybe hear something more on sleep, when we should be thinking about this potentially becoming some type of opportunity that you're more meaningfully moving into.

Then when you think about the competitive offerings that are out there, what value do you think iRhythm can bring to that market with not only a hardware component, but also just the broader service offering longer term?

Yes. Look, I think you're going to hear us continue to talk about sleep over the course of the year, David. It's an important strategic opportunity for us and one that our pilots are validating to us is real. In terms of meaningful contribution, we'll talk about that as we get out into '27. I don't see it as being something that's going to move the needle in a significant way just yet, but as we get more confidence in it and lean into it, we'll keep you apprised of that, and we'll speak to it when that time comes.

I do think that we have a real opportunity to disrupt this space. It's more than about simply a home sleep device, and it's more about an algorithm that can identify and detect sleep disease. This is very similar to what we did with cardiac arrhythmias. We disrupted an entire marketplace by providing an easier end-to-end solution to identify, monitor and diagnose these patients. Right now, sleep patients are being lost in their journey, whether it's getting referred from primary care on to cardiology, on to a sleep practice to a sleep lab to a home sleep test that they never receive or don't send back, like the entire system is just very fractured and one that we believe we can bring a lot of organization to and make it as simple as when that physician wants to order a sleep test.

It's as easy as hitting a button in our digital tools, Zio Suite, we get a device to that patient, could either be in the clinician's office. It could be through home enrollment just like we do today with cardiac arrhythmias. The they wear the device. We get the information back. We can provide a report right through an IDTF capability and provide that report right back through the digital tool to that physician where it ends up being incredibly seamless and all that back-end effort is invisible to the physician.

We think that is a real opportunity to disrupt in this space. We know from our market channel checks that our customers are prescribing home sleep tests already or would be more than willing to prescribe home sleep test. I think that as we continue to move further up the care pathway, as you see the proliferation of even GLP-1s into the marketplace to treat sleep disease, you're going to see more prescribing in primary care. We can make this very seamless and very easy for the physician. We're excited by that.

I think it's much more than just a home sleep test itself. It's about the workflow efficiencies that we can create and I don't think there is a single competitor out there who's able to disrupt and provide an offering in the market like we can. There's nobody else who brings that end-to-end solution like we do today. There's a lot of mom-and-pop one-off sleep practices or sleep IDTFs, but nobody is integrated seamlessly in a workflow like we can be, particularly through the large presence of system integrations that we already have, I think there's a real opportunity to disrupt this.

Your next question is from Marie Thibault with BTIG.

This is Alex on for Marie. Congrats on a nice quarter. I just wanted to ask some questions on the international business. You guys mentioned in the prepared remarks that you recently got an update to the reimbursement framework with a supplemental payment. I was just curious on if you could provide any more detail on that? Is there any more ongoing work to try to continue getting the reimbursement rate further up there?

Yes. Thanks, Alex, for the question. We did see -- and that's specifically in Japan, we did see a small increase in the reimbursement rate there. It is still below what we think is ultimately the value that we are bringing to the market, and we are still running the head-to-head study and collecting that data to ultimately secure more favorable reimbursement in that market. We will continue to work towards that -- that's likely a 2027 event, but we're looking to collect that data and ultimately get to more favorable reimbursement.

Encouraging that we saw a bit of a step-up here recently, but again, I don't believe that reflects the value that we're bringing into that market, and we're going to continue to pursue that premium reimbursement.

Your next question is from Richard Newitter with Truist Securities.

This is Filipe on for Rich. Just on the proposed LCD for ACM, if you could just help us understand if that was finalized today in its current state, what are your expectations for just potential impact or implications?

Just second question upfront. Just on the electrophysiology opportunity, I guess, can you help us understand like what inning of penetration you are in there? Maybe how does the MCT approval unlock patients you're maybe not getting to?

I'll address the first one on the LCD. I'm not sure I exactly follow the second question there, but I'll give it a shot. With respect to the LCD, to your, I guess, specific question of it's implemented as written today, what would that impact be or what we would see. The reality is, as it's written today, it would move just about everything into an MCT category because it's requiring continuous monitoring with 24-hour monitoring, I think, is exactly what the language is in the LCD has currently awarded.

If that were the case, you're going to be moving a significant amount of LTCM monitoring business into the MCT category, which would have a significant uplift from a revenue perspective on the company, which I don't believe is probably the intention of what the 3 MACs who are putting that proposed language forward.

Now we have engaged directly with the MACs. Nearly all of industry has engaged with the MAC. I think we're all pretty consistent in our recommendation with respect on how to clarify that language, and we expect that we'll see that get revised in some sort in the final language that they put into that LCD. I think if you look at the LCD as it's currently written, it would start to really confuse or even contradict some of what's in the national coverage decision that is out there, which that is not the intent of the LCDs. I think they're trying to provide more clarity around what they want to see within the MCT category, but as currently written, it starts to restrict the ability to provide the other modalities of monitoring, and I just don't believe that that's what they're after. We'll continue to engage with them on the opportunities where they present themselves. They're in a quiet period as we speak, and so we're waiting to see what comes out of that.

I think there are other LCDs that are out there who have -- that have been written to sort of clarify around ambulatory cardiac monitoring. Novitas is one of those. I think they did a pretty nice job of providing that clarity. You might end up seeing the 3 MAC here end up with something closer to that. That's speculation. I don't know exactly. As currently written, it would move the majority of the market into an MCT style monitor, and that cannot be what the intent is of the cost of monitoring for the overall healthcare system would be increased dramatically.

Your next question is from Suraj Kalia with Oppenheimer.

Quentin and Dan, congrats on a nice start to the year. Quentin, a number of calls going on. Forgive me if you've already talked about this. 2-part question. I'll pose it right upfront, Quentin. Where do you think the current monitoring market stands? I know there are numbers of 5 million, 6 million that historically we have used, but you guys continue on this solid growth trajectory, which means the overall pie is shifting. Can you quantify just in terms of where currently the long-term monitoring is versus the MCT, at least in terms of the U.S. patient, that would be great.

Quentin, the second part of my question, if I could pose, there has been a lot of chatter about EP slowdown. I know this is derivative, but are you also picking it up in Zio scripts in post-ablation hospital monitoring?

Yes. Good question. With respect to the monitoring market, our view is that monitoring market is somewhere around 6.5 million to 7 million tests today in the U.S., of which probably 3.5 million of those tests are long-term cardiac monitoring or patch-based longer duration monitors, of which we have probably 72% of that market is sort of what our market share estimate is based upon the last data points that we had.

There's also about 1 million MCT tests that are being performed in the U.S. market. That's a rough estimate, but that's what our data is telling us. Just in terms of framing up the market, that's how we think about those 2 modalities. I do think that we are expanding the market, though. We're very excited by the fact that we think the market is much larger than anywhere close to the 6.5 million tests being performed today. There's 27 million folks at least in the U.S., who most likely have arrhythmias just have been undiagnosed and unfortunately, are confusing the symptoms of those arrhythmias with other comorbid disease states.

It's our intent to go open the market and find those folks, and that's a big part of why the predictive algorithm capabilities that we've built and are now implementing in our first commercial relationship are so important to us. We know we can find these patients. Importantly, we find them and get them monitored because when you diagnose early, the downstream reduction in cost is proving to be very clear and very significant, and we know we can bend that cost curve.

In terms of your point on the EP slowdown, I would say there's nothing in our data that would give us that indication at this point. We'll pay close attention to it. It's a little bit of an interesting dynamic. The data continues to sort of coalesce around the fact that longer duration monitoring even post-ablation is quite important. The current guidelines today, I believe, for post-monitoring of a PFA procedure is somewhere around 2 to 3 months out, you're generally monitoring with a short duration monitor and then you're monitoring on an annual basis as well with a short duration monitor.

The data would tell us that I think we're missing 25% to 30% of arrhythmias that are present as a result of not using longer duration monitoring in those particular procedures. That becomes quite important, even dangerous because if you're starting to change anticoagulation prescribing off of a short-duration monitoring and you're missing the arrhythmias, you may be stopping too soon on this, which puts the patient at risk, and so that data continues to build. We had some interesting data that was put out at HRS.

What I suspect you could see and we might be seeing, I don't know, Suraj, is if there is a slowdown, we might -- maybe we end up seeing an offsetting mix switch towards longer duration monitoring at mask that. I don't have anything to indicate a slowdown at this point in time. Our data wouldn't tell us that either, but I do think we're in a nice position here to increase the amount of monitoring post PFA procedures.

Your next question is from Gene Mannheimer With Freedom Capital Markets.

Congrats on a good quarter and outlook. Along some of the lines that were discussed, kind of running ahead of guidance and raising it, have you contemplated any change to your long-term financial targets? Follow-up would be, could you just remind us the percent of registrations coming from primary care lately?

Yes. Gene, thanks for the questions. We have not updated the -- our long-term guidance that's out there for 2027 revenue, gross margin and adjusted EBITDA margin. Certainly, the guidance that we have for 2026 puts us on pace to deliver those targets as we get a bit closer we'll think about potentially updating those, but continue to feel really good about ultimately delivering on that long-range guidance that we set back in 2022.

On the second part of your question, we continue to see primary care increase as a percent of volume. That is a big part of the growth that we're driving and moving upstream into primary care. Last quarter, we mentioned over 40,000 primary care prescribers. We see that number continue to increase. We gave a metric at one point, call it, roughly 1/3 or a little bit over 30% of our volume coming from primary care, and that has been steadily upticking as well. That will remain a growth driver for the business, and we're excited about what that means.

Your next question is from Bill Plovanic with Canaccord Genuity.

It's Zachary on for Bill. What you were just speaking about with longer-term monitoring showing that arrhythmias can be missed even after ablation because of shorter-term monitoring. I understand that you're generating data around it, but is there any interaction with societies about switching the protocols for these studies? Or I think someone asked before about interaction with EPs, but in those post-ablation patients, is there any penetration you guys can pick up from there?

I think it's certainly an approach and one that we would be very interested in pursuing and certainly be moving down that pathway. Clearly, you need data and you need real data. I think that data is just coming together. This was the first study that was published here recently, and we'll continue to add to that and accrue the data behind it to make it even more powerful. Ultimately, you would love to see those guidelines change.

I mean the guidelines today just frankly, leads to a situation where you may be putting patients at greater risk than what you could be if you were using a better modality of monitoring. We know that, that monitoring is there. We know that Zio is it. If we can change guidelines, we will certainly lean in to try to do that.

Your next question is from David Roman with Goldman Sachs.

This is David on for David, all by myself this afternoon. I wanted just to ask about the profitability here, maybe as I look at the $5 million raise in revenue for the year, you're also putting through roughly a $5 million raise on EBITDA. The incremental gross margin continues to go up, I think, now approaching something like 80% if you look at Q1. Maybe you could help us just think through some of the factors contributing to the improved P&L here, the drop-through rate you're seeing? Then as you reflect on the margin upside, where are some of the biggest opportunities for incremental investment here?

Yes. Thanks, David. I appreciate the question, and we are really excited about what we're seeing in the business in terms of profitability. It does start with gross margin, and we've seen nice leverage there and continued gross margin expansion and see a good kind of road map to continue to drive that. We've talked about manufacturing automation and subsequent phases there continuing to drive efficiencies on, call it, the device side of our cost of service.

Within the clinical operations, opportunities there to continue to drive efficiencies with our next-generation algorithm and clinical kind of workflow tools, and we're making those investments now, have been making those investments, and we'll look to implement those to continue to drive gross margin leverage.

Then on the rest of the P&L from an OpEx standpoint, we do feel really good that we have a balanced approach here, where as we drive upside in revenue and grow revenue year-over-year, we are letting some of that play through and land at the bottom line while reinvesting back into the business. There isn't a shortage of things that get us excited about in terms of investing into the business. Zio MCT, certainly, the next-generation algorithm, as I mentioned. Clinical evidence has always been something we want to invest in. We'll continue to invest in. We have a nice road map there as we look at the back part of this year. There's a lot we can do from a marketing standpoint. Opportunities there to invest into programs there.

International is an opportunity we're investing in to open up as is innovative channel, as is sleep. A lot of opportunities for -- and I don't think I named them all. A lot of opportunities to make investments in the business, and that's what gets us excited and drives us to be as disciplined and as efficient as we can in the spend that we control. We afford ourselves the opportunity to invest in those items that I mentioned.

There are no further questions at this time. I will now turn the call back over to Quentin Blackford, President and CEO, for closing remarks.

Well, thank you. As we close another strong quarter, I want to once again thank our iRhythm employees around the world. Their execution has been very good, and our results are a direct reflection of their hard work. Our future has never been brighter, and our market continues to expand around us with many meaningful drivers. As we enter our 20th year, I couldn't be more proud of the team, and I couldn't be more confident in the future that we will achieve together. Thanks for your time. I'll see you guys all soon. Take care.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for attending today's iRhythm Holdings, Inc. Q4 2025 Earnings Conference Call. My name is William, and I will be your moderator today. [Operator Instructions]. At this time, I would now like to pass the conference over to our host, Stephanie Zhadkevich, Senior Director of Investor Relations with iRhythm. Stephanie?

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the fourth quarter and full year ended December 31, 2025.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. These are based upon our current estimates and various assumptions and reflect management's intentions, beliefs and expectations about future events, strategies, competition, products, operating plans and performance. These statements involve risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures and should be read together with the most directly comparable GAAP financial measures. Please refer to the tables in our earnings release and 10-K for a reconciliation of these measures to their most directly comparable GAAP financial measures. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 19, 2026. iRhythm disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I'll turn the call over to Quentin Blackford, iRhythm's President and CEO.

Thank you, Stephanie. Good afternoon, everyone, and thank you for joining us. I'm pleased to be here with Dan Wilson, our Chief Financial Officer, to discuss our fourth quarter and full year 2025 performance and how we're positioning the company for 2026 and beyond. Dan will walk through our financials shortly, but I want to begin by framing where we stand today and where we're headed. 2025 was a breakout year for iRhythm.

We delivered strong volume-led revenue growth and meaningfully expanded margins as we exited the year with momentum across cardiology, primary care, innovative channels and international markets. At the same time, we strengthened the underlying platform that will fuel the next several years of value creation. Growth in the quarter and for the full year continued to be driven by volume across all channels. With growth in the fourth quarter of 27%, this marked our fifth consecutive quarter of revenue growth above 20%, reinforcing the durability of our platform and breadth of our growth drivers.

Our leadership in long-term continuous monitoring remains strong with nearly 72% share in a segment growing in the high teens, supported by more than 135 scientific publications to date. On profitability, we also made great progress as we reached a key inflection point, finishing the year with positive free cash flow results for the first time in our company's history and exceeding expectations with respect to adjusted EBITDA margins. In the fourth quarter, adjusted EBITDA margins meaningfully exceeded the 15% goal that we have identified as we approach $1 billion in revenue, demonstrating the profitable scalability of our business, but this year was about more than financial milestones. -- is about validating the strategic direction we've set, moving from episodic detection to proactive, integrated and increasingly predictive care. The need for long-term continuous monitoring continues to grow. Arrhythmias remain episodic, often invisible until they cause downstream complications, and they are consistently missed by short duration or symptom-driven diagnostics.

Data demonstrates that nearly 65% of all arrhythmias, whether symptomatic or asymptomatic are found after 48 hours of monitoring, reinforcing the need for longer duration, yet nearly 2 million short duration Holter and event monitors continue to be prescribed in the U.S. market on an annual basis. We estimate that at least 27 million people in the U.S. are living with significant risk of undiagnosed arrhythmias, a staggering and costly gap in care.

At the same time, the health care system is constrained. Nearly half of U.S. counties and close to 90% of rural counties have no cardiologists. Access is not improving, which means the point of arrhythmia detection must shift. In 2025, we demonstrated the power of enabling that shift. More than 1/3 of our volume originated in primary care settings, supported by our expanding footprint in integrated delivery networks, HR integrated workflows and innovative channel partnerships. We now serve approximately 40,000 primary care physicians, creating a scalable proactive care model that aligns with the growing focus on value-based care and population health. This is not a shift away from cardiology. Rather, it expands the market for these important customers as our ability to help Rule-in/Rule-out patients can enable cardiology to focus on the highest acuity patients, while primary care becomes an effective front door for earlier detection meeting the majority of our patients where they are most often being seen.

Helping to fuel this move upstream is the power of our EHR integration strategy. More than half of our volume now flows through EHR integrated accounts, and 75 of our top 100 customers are fully integrated. These integrations are not simply workflow enhancements, they create meaningful stickiness, increased prescribing consistency and drive long-term account durability. We also advanced our predictive AI capabilities significantly in 2025. With nearly 3 billion hours of curated ECG data, we're now combining internal and external data sets such as claims and EHR information to identify patients at risk of arrhythmias before diagnosis. Early pilots through our partnership with Lucem Health show more than 85% accuracy in pre-identifying patients with clinically relevant arrhythmias.

While early, these programs reaffirm our conviction that iRhythm is positioned not just to detect disease but to help predict risk earlier and ultimately to help prevent it. Our initial programs focus on high-risk populations such as patients with diabetes, CKD, CAD, COPD, sleep and heart failure, where arrhythmias are common and costly. These programs are not just about diagnosing more patients, they are focused on doing so in a way that improves the efficiency, quality and cost of care delivery.

Zio provides a definitive diagnosis, enabling providers to stratify risk, route patients appropriately and reduce unnecessary downstream health care utilization, resulting in early indications of better patient outcomes and reduce cost of care. As an independent diagnostic provider, iRhythm delivers objective, clinically validated results that integrate directly into existing workflows and care pathways, which helps protect providers and systems and increasingly audit sensitive risk-bearing environments.

Within our MCT business, our current Zio AT offering continues to perform exceptionally well, with unit growth running more than twice the company average for the year. The strength continues to be supported by new account wins, expanding utilization within existing accounts and increased prescribing alongside Zio Monitor. This notable and sustained performance even before bringing an exciting new product to market, reinforces our view that Zio AT is a durable growth driver resonating with physicians today and that we will continue to gain market share in the near term.

Consistent with our prior comments, we are incredibly excited about our next-gen MCT device, featuring a 21-day wear time, an improved form factor aligned with our Zio Monitor and enhanced algorithms which is currently under FDA review. We remain in active dialogue with the agency as we work through their questions and continue to expect to release the product in the first half of 2027. We believe the combination of a strong Zio AT offering today and a thoughtfully architected next-generation device sets us up to meaningfully expand our presence in the MCT market, where we hold roughly 15% market share compared to our 72% market share in long-term cardiac monitoring. Every 10 points of market share gains represents roughly $80 million to $100 million of incremental annual revenue.

International markets continue to represent a compelling long-term growth opportunity. We are now commercial in the U.K., select EU markets and Japan, markets that collectively conduct over 3 million ambulatory cardiac monitoring test annually and where iRhythm holds less than 1% share. In the U.K., we delivered our largest quarter of volume ever and we'll be participating in pilots under the NHS Supply Chain's Value-based Procurement Program. In Japan, we are now generating in-country evidence to support future applications to the MHLW for reimbursement reconsideration. Across all regions, our focus remains on disciplined execution, evidence generation and Reimbursement progression as we scale these markets thoughtfully.

We've also made encouraging progress with our Sleep Pilots. Early feedback continues to reaffirm the meaningful opportunity ahead as we address long-standing challenges in the sleep diagnostic market. With nearly 40 million sleep apnea patients in the U.S. and significant overlap with arrhythmia populations, we believe we are well positioned to extend our workflow-driven model into this adjacent space as care continues to shift upstream.

iRhythm today sits at the intersection of several powerful trends: an aging population, increasing prevalence of arrhythmias, movement toward value-based care and growing demand for proactive health management. We believe the market opportunity ahead is significantly larger than it has historically been viewed and that our platform spanning biosensors, AI and workflow, positions us well to lead that expansion.

As we enter 2026, our focus is clear and consistent: one, delivered durable volume-led growth across cardiology, primary care and innovative channels. Two, expand margins through sustained operational efficiencies and scale benefits. Three, advanced platform innovation, including our next-generation MCT and predictive AI. Four, scale international and adjacent markets with discipline and rigor and, five, maintain operational excellence and compliance in a rapidly evolving health care environment. With this focus, we are confident in our ability to execute this expansion in a way that creates long-term value for patients, physicians, providers, payers and shareholders.

Finally, as the industry grapples with heightened scrutiny around medical documentation practices, including recent attention on chart scraping behaviors, we want to be explicit about our position. iRhythm operates as an independent diagnostic provider with objective clinically validated reports that integrate directly into provider workflows. Our product is prescribed directly by a physician and enables a confirmatory diagnosis. Our processes are designed to support accurate diagnosis while reducing administrative burden and audit exposure for providers and payers. We are an effective tool providing exactly what oversight bodies are asking for in terms of confirmed diagnosis and are excited about the potential tailwinds from the emerging expectations of a more accountable, audit-sensitive environment.

Thank you again for joining us today. 2026 marks iRhythm's 20th anniversary and represents a very important year as we aim to become a $1 billion company in 2027, whose truest measures are lives touched, innovations delivered and transformational leadership serving the patients who are counting on us.

With that, I'll now turn the call over to Dan to walk through our financial results and outlook.

Thank you, Quentin. iRhythm delivered continued strong financial performance in the fourth quarter and full year 2025, reflecting durable demand for iRhythm's Ambulatory Cardiac Monitoring Services and disciplined execution across the organization.

We delivered fourth quarter 2025 revenue of $208.9 million representing 27.1% year-over-year growth and full year 2025 revenue of $747.1 million, representing 26.2% growth compared to 2024. Performance was driven primarily by sustained volume demand across our customer base, reflecting continued strength in our core business and contributions from newer growth channels. While volume remains the primary driver of growth, pricing was also favorable for full year 2025 and in the fourth quarter, including improvements with our estimated collections reserves related to our market access, contracting and collection efforts executed throughout 2025. New store growth with new store defined as accounts that have been opened for less than 12 months accounted for approximately 68% of our year-over-year volume growth.

Home enrollment for Zio Services in the U.S. remained consistent from prior quarters, with approximately 23% of volume in the fourth quarter.

Moving down the P&L. Gross margin in the fourth quarter was 70.9%, an increase of 90 basis points year-over-year and full year gross margin was 70.6%, an improvement of 170 basis points year-over-year. This sustainable improvement was driven by continued operational efficiencies, including manufacturing automation and workflow optimization as well as scale benefits from higher volumes, partially offset by product mix.

Fourth quarter operating expenses were $145.8 million compared to $119.2 million in the prior year period, and operating expenses for the full year 2025 were $584.7 million, an increase of 11.8%. We invested purposefully in the business to fuel near, mid- and long-term growth while delivering strong operating leverage with revenue growing meaningfully faster than operating expenses.

On the bottom line, net income for the fourth quarter was $5.6 million or $0.17 per diluted share and was the first positive quarterly net income in iRhythm's history. Net loss for the full year 2025 was $44.6 million or a loss of $1.39 per diluted share. Adjusted EBITDA for the fourth quarter was $34.3 million or 16.4% of revenue, representing a 470 basis point improvement year-over-year and a significant improvement in profitability.

Full year adjusted EBITDA was $68.9 million or 9.2% of revenue, representing an improvement of more than 1,000 basis points compared to 2024 and over 500 basis points if normalizing for IP R&D expenses. We generated $14.5 million of free cash flow in the fourth quarter and $34.5 million for the full year, ending 2025 with $583.8 million in cash, cash equivalents and marketable securities and providing us with substantial flexibility to support future growth initiatives.

And another milestone for iRhythm, 2025 was the first year of positive adjusted EBITDA and free cash flow in the company's history. A significant result for the company and demonstrative of the profitable growth we are focused on delivering. Looking ahead, we entered 2026 with strong momentum and a solid foundation. For the full year 2026, we expect revenue to be in the range of $870 million to $880 million, representing 16% to 18% year-over-year growth. This outlook reflects sustained demand across our core business while maintaining a disciplined approach to forecasting newer and emerging channels. On a full year basis, we expect pricing to be approximately flat overall to 2025, with revenue growth driven by continued volume growth across core Zio Monitor, Zio AT, innovative channel and international.

In the first quarter of 2026, we anticipate revenue to be in the range of $193 million to $195 million, consistent with typical revenue seasonality. For gross margin, we expect the clinical operations and manufacturing efficiencies we've driven will continue to incrementally improve our gross margin profile for the full year 2026. We believe that these sustainable improvements will continue to lower our cost to serve as we leverage our fixed cost infrastructure over a higher volume of patients overtime and introduce new artificial intelligence and workflow tools.

From a profitability standpoint, we expect adjusted EBITDA margin to expand meaningfully to 11.5% to 12.5% of revenue in 2026, reflecting continued gross margin improvement and operating leverage while still investing appropriately in product innovation, commercial initiatives, international expansion and platform capabilities. We continue to anticipate normal seasonality in our adjusted operating expense profile with higher expenses coming through in the earlier half of the year due to spend associated with corporate activities and payroll expenses. For the first quarter of 2026, we anticipate adjusted EBITDA margin to be between 3% and 4% of revenue. And lastly, we expect free cash flow to grow versus 2025 with free cash flow more heavily weighted in the second half of the year due to normal operating seasonality.

In closing, we delivered a strong fourth quarter and a transformational year in 2025. We exited the year profitably, free cash flow positive and well positioned to continue scaling the business. Our financial performance reflects the durability of our growth model, the leverage in our operating structure and the discipline in which we are investing for the future. We believe our improving financial profile is supported not only by operating leverage, but also by the growing recognition that our services can reduce downstream health care utilization, which supports durable demand and efficiency-focused care environments. I will now turn the call back to Quentin for closing remarks.

The fourth quarter capped an exceptional year for iRhythm. In 2025, we delivered strong top line growth, expanded margins and achieve profitability and free cash flow positivity for the first time in our company's history, all while continuing to invest in innovation and long-term growth. At its core, the challenge in arrhythmia detection remains clear, a reactive symptom-driven approach continues to miss patients. Arrhythmias are episodic, often asymptomatic and frequently undetected by short duration diagnostics, leaving millions undiagnosed and contributing to avoidable downstream events. At the same time, access constraints across the health care system are intensifying, with nearly half of U.S. counties lacking a cardiologist, the point of detection must move upstream.

We believe these forces, rising clinical need and constrained access are fundamentally reshaping our market and play directly into iRhythms' strengths. As we enter 2026, our 20th year as a company, we do so with more momentum, scale and strategic clarity than at any point in our history. Looking ahead to 2026, we are confident in our ability to deliver another year of durable volume-led growth while continuing to expand profitability. Our focus remains on disciplined execution, expanding access through primary care and integrated networks, advancing our platform through AI and workflow innovation and investing selectively in product and international growth, all while maintaining financial discipline. We believe iRhythm is still in the early innings of unlocking a market that is far larger than historically recognized, and we are well positioned to lead that expansion in a way that creates long-term value for patients, providers, payers and shareholders.

With that, we're now happy to take your questions.

[Operator Instructions] Our first question comes from the line of Joanne Wuensch with Citi Group.

I think part of what has been weighing on the stock is the language around the elimination of chart-derived diagnosis from CMS and what it might mean for Zio use? Could you please address that? And I do have a follow-up.

Joanne, thanks for being here. Thanks for the question. Yes, I'd be happy to address that. I think that -- actually, I think there's two issues in and around Medicare to address. One is around the pricing and one is around the chart-derived diagnosis. And I think that Zio frankly fits both of those issues really well in terms of addressing the underlying concerns that might be out there around it. When you think about chart-drive diagnosis, Zio delivers the opportunity to get to a confirmatory diagnosis, which I think is very important. Physicians are prescribing the product. Patients are wearing that product. We're getting a very clear signal from that patient of which we're then able to provide a report that can provide an opportunity for that physician to confirm a diagnosis. And I think that's very important that it ends up integrating into the workflow and the patient records, that are then ultimately reviewed down the line from an audit perspective or any other perspective to confirm, in fact, that there was a diagnosis made.

So I think we play very well there. I'm actually very excited by some of the conversations we've had with partners out there who are using the device in that way, and I believe it's going up being a nice tailwind for us. At the same time, I think there's some concerns around just the overall pricing direction, maybe pricing not intended to be as much of an increase in the future years is what folks had anticipated.

But I think, again, what we're finding in these programs that Zio is being utilized and is that we are, in fact, reducing the cost of care for these patients and that's starting to become very clear to us. I actually think you're going to see some data that's going to get published later this year from some of these innovative channel partners who are able to demonstrate pretty clearly now that they've got a period of time under their belt of using Zio in a proactive way that is going to demonstrate the cost of caring for these populations is in fact being reduced and coming down. And that's exciting to see. I can't wait to have that data get published and get out there, but I think it addresses the very focus of where health care is going, which is we've got to get the cost of care down and Zio is demonstrating the real ability to do that. So I think both of those have been a bit of an area of concern, and I think Zio and iRhythm itself are positioned incredibly well to address those.

Just as a quick follow-up and a different topic. Could you give guidance for what you think gross and operating margins may look like for 2026?

Yes. Joanne, we did give formal guidance for adjusted EBITDA. That was adjusted EBITDA margin of 11.5% to 12.5% for the full year. We also gave guidance there for Q1 of 3% to 4% for Q1 '26. On gross margin, I did comment, we expect incremental improvement relative to 2025, I can tell you we're thinking that in the range of 80 to 100 basis points of improvement relative to 2025. So hopefully, that gets you there for the '26 number.

[Operator Instructions] Our next question comes from the line of Vijay Kumar with Evercore ISI.

One on the guidance kind of questions, right. Look, I know this focus on CMS reimbursement. But I'm wondering, is the CMS proposal perhaps a tailwind if hospitals are doing chart-scrapping are they now being forced to use or should be using Zio Monitor in LTCM patches, right, to avoid chart-scrapping. So I'm wondering, could this be a tailwind and along those lines, what are you assuming for international growth in fiscal '26?

Thank. Maybe I'll let Dan hit on the international assumption in the guidance. With respect to your first question, and the chart-scraping comments and again, having a confirmatory diagnosis that is in the medical records. I think that is something that our partners are very focused on, again, in the discussions with them, I think that's exactly the path that they're heading down. I'm bullish on what that has the potential to mean for iRhythm in our company. I do think that while they're going to look for ways to continue to button up and bolster sort of their evidence and documentation around anything with particular Medicare focus on it. And so I do think this ends up being a tailwind.

At the same time, we did not factor anything into our forward-looking expectations around this at this point in time. I think this is one where we'll let that play out. We'll let that show up in results. And if so, we'll talk about that in a very favorable way. But early indications, early conversations, I feel -- feel very bullish around sort of how folks are talking about the way that iRhythm and Zio can be used to address some of these concerns. We'll see how that plays but I'm excited about it. Dan, maybe you want to hit on the international.

Yes. Vijay, so a question on international contribution within the 2026 guide. We'll tell you that we have that growing slightly ahead of overall company growth. I would say some upside there potentially, but really just getting started in a number of those markets, 5 of the 6 that we are in, were opened, call it, in the last 18 months or so. So would expect the progress we're making in '26 to really show up more meaningfully in terms of contribution as we look to '27 and beyond.

Our next question comes from the line of Allen Gong with JPMorgan.

Thanks for the question. So let me get one, and I kind of want to touch on some of the AI concerns that we've seen weighing on some stocks in med tech recently. I think in the past, you've talked about maybe like 20% of the customer base will want to -- want to be some of the analysis on their own. And in that case, you're not really able to build CMS for that analysis portion of the code. But if your providers are more willing to use AI and potentially do some of that analysis on their own with the help of third-party providers. Is that something that you're concerned about? And how do you address that concern?

Thanks, Allen. Look, I think we're all incredibly excited about the prospects of AI and where that can go over the future years. I think at the same time, we've been doing this for 20 years. And frankly, our platform is pretty much a closed platform. But I think what sets us apart and continues to give me confidence that we're going to have success in this area is that it's more than just a software capability. It's more than just an AI capability. It starts with the data. The AI is only as good as the data coming into it. And we have very specific purpose-built hardware that allows us to capture very clean ECG data, having a clean signal is very important.

If you're starting to bring together disparate data sets, ECG data that are very unique and different and marked in different ways. I think it's hard for that AI to truly be specific and as good as what iRhythm is able to generate and provide. You also have to keep in mind, we operate in a very highly regulated space where each of these algorithms require FDA clearance. And that clearance takes years and years of clinical validation. It takes real-world evidence, things that are measured in time frames of years, not months or quarters. There's work to be done in and around reimbursement and workflow as well that become major barriers. You look at our past. We've done the work to establish the CPT codes. We've got CMS coverage in place, national coverage decisions. We've got commercial payer contracts that are in place and importantly, I think, deep EHR integrations.

Physicians don't just simply adopt algorithms and they're not going to just simply bolt-on a bunch of AI algorithmic capabilities onto their existing platforms. It has to fit within their workflow. And I think that's something that we continue to build out and have a tremendous focus on. We've commented on this in the past, over half of our volumes flow through integrated systems with our customers. And I think that ends up being a very important aspect of how AI will continue to get introduced into the future. And then just given the size, and we've got 13 million patients, we got 3 billion hours. That data set is growing incredibly fast, which is going to give us the ability to stay ahead from an AI perspective.

So I feel really good about our opportunity to continue to have success here and protect the business but also grow it really, really well and frankly, even take advantage of the platform that we have, where we can drop in other AI capabilities as we go into the future that I think allows us to be unique and differentiated. So I like our position here, and I feel good about it, and I think we're in a unique spot here.

Our next question comes from the line of Richard Newitter with Truist.

I wanted to just ask on MCT. I know it sounds like that's going to -- you guys are committing -- or recommitting to that coming commercial in the first half '27, to hear that. I guess can you just run through what exactly you need to do to get that over the finish line? At the [indiscernible] comments, you talked through some enhancements and feature sets that you're going to integrate into it. Can you just remind us what those are, what's involved there and the confidence in the timeline?

Yes. Look, nobody is more excited about MCT than we are. I can tell you that as well as our commercial team and even our customers. I think we're in a great spot right now. Clearly, Zio AT is performing incredibly well. I think it's demonstrating the ability to be very sustainable and durable in terms of its growth profile. We're now over a year of growth with that product line that is more than twice the rate of our total company. And in Q4, it was up sequentially another 10%. So the momentum in AT affords us to make some decisions in and around MCT that are in the right path for the long-term outcomes of the company versus the short-term speed, but there are some things we could do to bring it to market faster. But frankly, it's not the right thing to do.

And this is a category that's evolved quite a bit over the last 2 years with the FDA in terms of their expectations as well as future expectations, including even a new category code that was created within the last couple of years as well. And so I think we understand with the FDA, with future expectations are going. And one of the most notable improvements that we need to make or changes that we need to make to to our MCT submission, frankly, is getting to a mobile gateway, moving away from our old gateway that's been out there for well over a decade and going ahead and making that move to a mobile gateway today, is important. That's something that we're in discussions with the FDA on right now in terms of how to update the submission. And so we're moving down that pathway and MCT will come to market with a new gateway.

We continue to feel confident in that first half of '27 time frame, and that's the right way to think about it, excitingly, it's going to get our duration out beyond 14 days, get us to 21 days. It's going to have an enhanced algorithmic capability with it as well. With the mobile gateway, it's actually going to improve the patient's interaction and experience quite a bit, which is exciting to see as well. So better cost economics, better cost profile, better impact on gross margin over time. These are all things that are in the right long-term health of our business, and we're pursuing to be in a position where we can make those decisions versus speed to market. So feel good about it. We're excited to get MCT to market, and we're just working with the FDA now on the best way to get that done.

Our next question comes from the line of Brandon Vazquez with William Blair.

Maybe, Dan, for you, I wanted to go back to guidance real quick. I think you used the phrase disciplined approach to forecasting when you gave the guidance. Maybe sub talk to us a little bit about what that means, what it is, what is embedded, what are the risks and opportunities as you think about the 2026 guidance frame that you gave us?

Thanks, Brandon, for the question. So maybe we'll just start. No change to kind of our philosophy on guidance. We want to be thoughtful. We want to put something out there that we're confident that we can deliver. And as you've heard us talk about a few times now, leave some of the upside opportunities out of the guide that ultimately, if they do play through, we'll be happy and can over-deliver on that initial guidance.

In terms of kind of the different areas of contribution within that guidance, maybe starting with core U.S. monitor continue to -- that continues to fuel the majority of our growth from an absolute dollar standpoint. We're growing in line with the market, if not a bit faster than the market. We're seeing primary care continue to expand the opportunity and then certainly our remaining opportunity to continue to shift share away from legacy technology. So feel really good about kind of the durable growth there. That was a source of upside in '25, the core U.S. monitor that there's an opportunity for that in '26 as well.

With Zio AT, you heard Quentin talk about momentum and the strength that we're seeing there. Certainly an opportunity to continue to grow our share of that segment, right, from the 15% we are today, and we're really winning kind of alongside to Zio Monitor and winning kind of as a full platform. So really encouraged what we're seeing with AT.

In '25, you did hear Quentin comment, AT was growing essentially double the company average. That isn't -- what was contemplated in the '26 guidance, really think about AT growing a bit ahead of overall company growth, but below that double company average that we saw in 2025. And then the last component I mentioned -- I talked about international earlier. The last component being innovation -- innovative channel. So continue to expect that to remain the fastest-growing channel.

What's baked into guidance is really just an incremental step-up from the run rate that we saw exiting 2025. So the run rate in Q4. If you were to annualize that, that gets you to the majority of what we've contemplated in guidance and continue to feel good about delivering that. Certainly, some upside in that channel. It's a newer part of our business, a little bit less visibility than the core business. We want to be really thoughtful around what we baked in the guidance there. We did have some incremental partners come in, in Q4 and Q1, which puts us in a really good position to continue to grow that part of the business. So hopefully, that helps then kind of deconstruct the '26 guidance.

Our next question comes from the line of Marie Thibault with BTIG.

Just wanted to follow up on that question about guidance and try to see if we could learn a little bit more about what's being included in that outlook for the partnership. I wonder if you could just tell us a little bit more about the number of partners you now have that you're working with? How many might be scaling up this year after pilots last year. Any more detail in all of the focus of interest for us.

Yes. Thank you, Marie. So I would say we -- as I just mentioned, we continue to add partners to that part of the business, the Innovative Channel business. I will tell you it will start to -- has started to blur with the core part of our business as these partners are monitoring both symptomatic and asymptomatic patients. So in terms of the number of absolute partners, we're likely not to give that kind of quarter-to-quarter, but I did mention, we've added incremental partners both in Q4 and the early part of Q1. So I feel good about where that business is headed. It's early. It's an emerging part of our business. So as we think about setting up [indiscernible] really want to make sure we're not getting ahead of ourselves there.

Our next question comes from the line of Nathan Treybeck with Wells Fargo.

So Quentin, just kind of as you mentioned in this quarter, you were operating a compositive. You hit 16% EBITDA margin at an annualized revenue that's below $1 billion. I guess, when can we expect you to refresh your LRP targets? And it seems like there could be pretty significant upside to those LRP targets considering that you still have remediation costs, your cost base.

And Dan, just on the OpEx, it came in considerably below my forecast, I just want to understand what's going on there? And how should we think about OpEx in '26?

Yes. Maybe I'll hit on the $1 billion and the long-range plan. I think as we get close to that in '27, certainly, Nathan, we'll take a look at refreshing what that looks like further out in the future. But look, we're going to deliver on what we said we were going to do. And as we get close to doing that, then that's going to make the right sort of sense in terms of time to reset some expectations. I do feel very good about it. You think back 4 years ago, almost when we set that expectation. Certainly, a lot of things played out very differently than what we anticipated. We thought we would have had the MCT product here, frankly, a couple of years ago. But to see the way the team has been able to really drive the core business and what we've seen in our core Monitor business, what we've opened up in the innovative channel partners, what we are seeing in that MCT category, even without -- what we think is a much better product in the new MCT offering. We know that, that market share opportunity is real.

What we're validating in our Sleep pilots gives us confidence that sleep is going to be a nice contributor to us well out into the future. And so I am very excited by where the company can go and the position that we're in. But I think for the time being, let's get to the $1 billion in '27 and then we'll start to think about how we reset those expectations further out.

On the profitability side, I'll let Dan speak to it, but he's done a terrific job driving the team and just identifying where those levers are at in our company. I think we've got great confidence on how we drive into the 15%, and then we know we can go beyond that, but I'll let him speak a little bit more to that.

Yes. Thanks for the question, Nathan. So I'd say the formula for Q4 and 2026 are kind of consistent. Driving efficiencies within gross margin and G&A while reinvesting back in the business, both for commercial initiatives and as well as a number of the innovation efforts that we're focused on. So we always try to set up a balanced plan where we're driving efficiencies, really looking at gross margin. You heard my comments about gross margin stepping up incrementally in 2026.

And then within OpEx, certainly, continuing to drive leverage within that G&A line. And that's leveraging our global footprint, leveraging the global business service center that we have stood up now for the last few years. There's a number of G&A functions that are fixed and won't need to scale with volume. And then certainly, FDA remediation, as you noted, as that moderates overtime, that would be a nice source of leverage for us as well. And then we look at that and then decide what should be reinvested back into the business, both from a sales and marketing standpoint and an R&D standpoint. And look to have a balanced plan that is ultimately driving to deliver long-term value for shareholders.

If I can just follow up with one more. Just on chart-scrapping, I guess how do you expect a potential tailwind could unfold? Would it be a directive from regulators to do confirmatory diagnoses or would it be more self-driven by the providers?

And then just beyond the potential near-term tailwind, are you hearing any concerns from your customers that have high Medicare Advantage population that continuing asymptomatic screening to be risky for them?

No. I would say, certainly not on the latter part of that question. As a matter of fact, in the discussions we're having with customers, and I sat with one just about 2 weeks ago, who's been a terrific partner of ours, they're expanding their program even further. Just they're starting to see real cost data accumulate now that their program has been in place for over a year that is demonstrating very clearly that they are able to reduce the cost of caring for these populations. So they'll end up, I believe, expanding that population, and that's going to be a nice opportunity for us, but I think it's indicative of even where the future of more of these partners end up heading. So I'm excited by where that goes.

I think your specific question on chart-scraping, I expect this is going to be much more of a self-driven behavior and change and maybe approach of some of these folks from the past. I think that they want to have the confirmatory records in the patient records, having a zero report there that demonstrates very clearly where an arrhythmia is present or not is something that bolsters their own documentation and from the discussions we've had, I I expect this will be a tailwind for us. But again, our approach has always been around these sort of things, let them play out. As they do play out as we learn more, then we can speak more about them and even roll them into forward-looking expectations when the time is right. But I think the majority of this from what I can tell and what I expect is probably more of a self-driven change in behavior as well as anticipated.

Our next question comes from the line of David Rescott with Baird.

Great. Congrats on all the progress in '25. Dan, you mentioned that pricing was favorable in 2025. I think you pointed to improvements in the estimated collections of reserves were a factor there. So wondering if you could maybe just unpack exactly what's going on in that front? And when you think about 2026, I think you called out pricing as being relatively flat this year. I believe there is an uplift broadly in the reimburse rate from Medicare this year in '26. So can you help us understand maybe why pricing should be flat this year relative to the Medicare uplift and then relative to some of the pricing comments you made for 2025?

Yes. Thanks, Dave. Happy to take those questions, and maybe start -- we did start out 2025 with guidance, expecting price to be down low single digits for the year. Ultimately, the year did come in call it, up low single digits. So we weren't able to over-deliver on the price expectations and guidance that we gave for 2025. A few things behind that, certainly, product mix was a portion of that. But as noted in that Q4 price benefit, we book a net revenue amount that is an estimate of what we expect to ultimately collect and that's gross revenue less contractual allowance. As we go through the collection cycle, we're comparing actual collections versus what was estimated and we true up our estimate kind of as appropriate. And -- that's what we saw in the fourth quarter. Our collections were running ahead of our estimates. And so we had a true-up of, call it, low single-digit millions in the quarter. It is onetime in the quarter, but I would say the performance of our market access teams, our payer contracting, our revenue cycle operations, that performance certainly should sustain and give us a really solid foundation as we think about price in '26 and beyond.

We're not going to factor that into guidance just yet, but certainly a good tailwind for us. You did comment on the Medicare rates being up in 2026. That is specific to Zio Monitor to long-term continuous monitoring. Medicare overall is 25% of our business, as you know. In the MCT category or AT Medicare rates are slightly down year-over-year in 2026. But as you put it all together, mix, channel mix, product mix, the right way to set up the year for 2026 is ultimately price being flat relative to 2025. If we can over-deliver on that, great, like we did in 2025, but we want to set up the year kind of in an appropriate way.

Our next question comes from the line of Michael Polark with Wolfe Research.

I want to better understand the mobile gateway comment for next gen MCT. How is this different than the existing gateway? Is this -- is this an app on a patient's own smartphone? Is that the illusion or does mobile gateway mean something different? Any color would be welcome.

Yes. Mike, thanks for that question. I'm glad you asked it so that we can clarify. The initial version of the mobile gateway will essentially be a smart device, but able to be locked in to where it only communicates directly with our Zio AT product. So we will provide that each and every time that the Zio new Zio MCT product is shifted and delivered to a patient, and they'll use that as a way for the Zio MCT product to communicate through that gateway. But it will be locked with the potential to have a Zio App included on it. But it will not be on their own smart device.

I think that a future iteration of the product, you certainly can see us moving to a patient's own smartphone that has some other complications with it that need to be worked through. But certainly, you see that in other marketplaces, I think back to the days of CGM and DexCom certainly, we ended up going down that pathway. But that will not be the first that we had down here with Zio MCT. It will be a locked smartphone capability only to be utilized with the Zio MCT product.

Our next question comes from the line of David Saxon with Needham.

I had a follow-up on the innovative channel just around when the right time is to start engaging those partners around repeat monitoring. Is that something you can standardize either across the channel or partner by partner? And I mean you guys are good at generating data. So like is there any data you have internally that shows there is some value to monitoring after a certain period of time?

Yes, I think it's a great question. And to be honest with you, I think with every one of these channel partners, the discussion is a little bit unique and different to their own practices. Some will talk about repeat testing every every 12 months, others will talk about it every 3 years. I do think, for the most part, everybody is talking about some sort of repeat testing, but what the frequency looks like is just too early to identify just yet. I think that importantly, once you get to a confirmatory diagnosis and you start to treat that patient, you're going to want to make sure that, that arrhythmia is either being addressed or if it's reappeared, you're going to want to know that, which naturally leads into why there would be repeat testing here.

At the same time, I think that the further we go into this, payers are understanding sort of the cost benefit associated with these monitoring programs. And I think that annual monitoring, annual patching is something that you could see start to be used from a risk perspective to identify how they even think about pricing their programs with their patient population. So there's a lot of reasons to see this move towards more of an annual sort of monitoring program, but it's still too early to speak to exactly how that's going to play out. But those are discussions that are being had, and I think there will be some aspect to annual monitoring in these partner programs.

Our next question comes from the line of Suraj Kalia with Oppenheimer.

Congrats on a great quarter. Can you hear me all right?

Yes, we got you.

Perfect. So Quentin, many calls going on. Forgive me if you've already talked about this. Our math suggests you guys grew Zio AT, roughly around 30% or higher click. When you look at the bridge device, so the gateway device for Zio AT, I understand in past conversations there have been comments about like there were some concerns about -- patient concerns about the bridge device, hence this shift to cellular for the Zio MCT product, hence this delay, right? More specifically, Quentin, can you tell us what was the challenge with the bridge device because so far, unless my math is wrong, you guys have still navigated very effectively growing at 30% clip 15% or close thereof MCT shared. Hopefully, you got my question, Quentin.

Yes. I got it, Suraj. And thank you for the question. Just to clarify on AT and just to speak to the strength of that product, and I put this in our prepared remarks as well. It's growing at more than twice the rate of the overall company average. So for the year, our Zio AT product actually grew north of 50%. I think that's important to note just considering the success in that MCT category that we're having with a product that we know will be enhanced with the new Zio MCT offering. So our momentum there is incredibly strong.

To Dan's point earlier, we did not set up our guidance that way for 2026. But if you look at the last 5 quarters, we've demonstrated the ability to grow that at nearly twice the overall rate of our company. So we're bullish on the category for sure, and we're excited by it.

When you think about the mobile gateway, as we were working through this with the FDA, there were some questions around cybersecurity that -- we're certainly going to require us to design some incremental capabilities into our old gateway if we were going to address those questions. And the challenge of that was that, we knew we were going to have to move to a new gateway at some point in the future. And rather than take the time today to design those incremental cybersecurity features and capability into the old gateway only to obsolete it in the next round of future innovation that we would introduce after this MCT product, we made the decision to go ahead and just bring it right into a new mobile gateway that addresses the cybersecurity concerns.

So this is all around making the right decisions for the long-term health of the business. We know that we can address these. We see a clear path to getting a product approval, but it does take us to a mobile gateway sooner than what we had expected, and that requires a bit of time there. So that's contemplated in all of the the timelines that we've put out there, but getting to the new mobile gateway is going to address those concerns around the cybersecurity aspect that we would have had to have done in the old gateway just doesn't make sense to really spend the time, effort, resources, putting it into something that we knew was going to be obsoleted.

Our next question comes from the line of David Roman with Goldman Sachs.

Maybe you could talk a little bit more about the referral channel within the innovative partners and the extent to which you're seeing consumer-based devices drive patients into that channel, maybe the degree to which some of the false positives that come off of those devices are actually increasing testing volume? And then maybe if you can tie that back to some of the AI questions you got earlier, maybe would help just complete the picture a little bit of how to think about the implications.

Yes. Look, it's an interesting question because I think if you look across our business, there's no question that wearable devices -- forget just the innovative channel partners. Just in general, wearable devices have tended to be a pretty good regenerator for our company, meaning that folks or patients show up in their clinicians' office with a wearable device indicating maybe there's an arrhythmia or something there that needs to be monitored. And ultimately, a Zio gets prescribed for that patient and they get to the fact that they can get a real confirmed diagnosis. And so wearables have been a terrific lead generator for us.

But you look at these innovative channel partners, whether it's a wearable or not. And quite honestly, I don't see the wearables sort of leading patients into these programs. These are programs with our innovative channel partners that they're very particular around who they're going to monitor. You think about our Lucem AI capabilities where we're identifying patient populations proactively by looking through medical records where we can say, look, we have a pretty good idea and belief that, that patient likely has an arrhythmia and then you get a patch on that patient. And those accuracy rates have been as high as 90% in these early trials. But every one of these partners are typically profiling a population within their coverage universe, whether it's a comorbid disease, state of diabetes, COPD, CKD, sleep, you can go down the list, they're putting a patch on those patients to get to a confirmed diagnosis. That is what they're looking for.

And in the case, if [indiscernible] is something that is part of their model, they want that confirmed diagnosis, documented diagnosis in their records as further support. And so I don't see the wearables as being something that's really driving the innovative channel partners at this point in time. I do think it's been a nice lead generator for us in the past, but these innovative channel partners are pretty particular around the populations that they're targeting and going after. And then what I'm encouraged by, and I think you'll see this data later this year, you're going to see some really compelling cost reduction capabilities coming out of these programs that, frankly, is allowing us to expand the programs within these channel partners. So excited about what we're seeing. But I don't think wearables are necessarily driving innovative channel partners. I don't think wearables address what the channel partners are after. Frankly, they want an accurate confirmed diagnosis, and that's something that Zio provides, and they're leaning-in to us for that.

Our next question comes from the line of Stephanie Piazzola with Bank of America.

I wanted to follow up on the innovative channel partnerships and how the 2026 guide includes a step-up in the '25 exit rate and just any help on how to think about what that exit rate was I think, volume from innovative partners have been low single digits, but stepping up each quarter. So did that trend continue in Q4? And is it still around low single digits or more mid-single-digit range? And any other help on how to think about the step-up factored into 2026.

Yes, Stephanie. Good question there. So innovative channel partner, I would continue to point to low single digits as a percentage of overall business. We did see that trend positively upward as we were going through 2025. My comments on exit rate, if you took revenue from innovative channel in Q4 and annualize that, that's essentially or gets you a good amount of what we have contemplated in guidance.

And then also mentioned, we have had new partners come on board in both Q4 and Q1. So feel good about that base of business continuing to grow. I'll reiterate though, that is an emerging part of our business. The visibility there isn't as great as it is in our core business. Each of our partners are unique in terms of how quickly they ramp their business, the patients that they're proactively monitoring. And so for all those reasons, we're going to be thoughtful. We want to make sure we don't get ahead of ourselves. But really excited about what that business can contribute in 2026, both from a guidance standpoint as well as potentially upside.

Our last question comes from the line of John Young with Canaccord Genuity.

I wanted to ask on Epic Aura accounts. I don't think it was discussed. Was that the 75 number that you provided in the prepared remarks. And any commentary on volume improvements that you're seeing from Aura. And is that embedded in the core company guidance expectations for 2026? Or is that another source of potential upside?

Yes. Good question. Epic continues to be a terrific partner for us and one that we continue to be excited about. Just to be clear, I mentioned top 75 of 100, that's all integrated systems, not just Epic system. So just to be clear, it's across all EHR platforms, but Epic is a big part of that. Epic itself continues to perform incredibly well. I would tell you, we had a record number of Epic integrations performed in the fourth quarter. We're on pace to set another record in the first quarter of this year. So it's growing quite nicely, and the pipeline is incredibly strong, and that's going to continue to play out over the course of the year.

We know that when we get integrated with these folks, our data would tell us 6 months post integration, we see roughly a 25% increase in overall prescribing volume. We're not setting up our guidance that way. Again, I think we'd like to be thoughtful on those things and let some of those play through before we would factor all that into guidance. But the Epic partnership and the integrations associated with it have been going very, very well and I would say, ahead of plan. And we're bullish on what Q1 and the rest of this year is going to look like.

Thank you. At this time, I would now like to pass the call back over to the management team for any closing remarks.

Well, thank you. As we close, I just want to take a moment to thank the iRhythm employees around the globe. The progress that we shared today, the strong growth, expanding profitability, the increasing impact that we're making on patients, it's only made possible by their dedication, the expertise and the relentless focus that they demonstrate each and every day on doing the right thing for our patients and our customers. It's their work ethic, it's their commitment that continues to set us apart, especially as we operate in an increasingly complex environment. And as I think ahead of entering into our 20th year, I couldn't be more proud of the team and more confident in what we're going to accomplish together. And I just want to put a big shout out to the team. Congratulations on all you've done and look forward to the future.

Thank you to the folks that are on the call today. I look forward to seeing all of you guys in the near future and look forward to a great 2026. Thank you.

Thank you. That will conclude today's call. Thank you for your participation. You may now disconnect your lines.

Okay. Thanks, everyone, for coming today. My name is Allen Gong, here on the JPMorgan Medtech team. I'm really excited to have the management team of iRhythm here today this morning. We're going to start off with some prepared remarks from CEO, Quentin Blackford, and then we're going to tag in Dan Wilson, CFO, for some Q&A after that. So Quentin, if you could start us off.

Terrific. Can you guys hear me okay? Thanks for having us, Allen. We appreciate the opportunity to be here. We're excited to be here, coming off of an incredible 2025 for iRhythm, and we're looking forward to an even more exciting 2026. As we look ahead, just a quick reminder, I will be using forward-looking statements during the course of this morning's presentation. I'd refer you to our company website, company filings for any further information that you might be looking for there.

When a signal changes everything, when we talk about signals in arrhythmias, we're not talking about just any one particular thing, signal show up in a variety of different ways. And it's the complexity of that, that creates the challenge for players in this space, for us, it also becomes the opportunity. We think about how these signals show up in practice on a daily basis, sometimes it's a story like Carissa, who finds herself in the ER, dealing with severe health issues, only to have an EKG performed and told her that everything is perfectly fine. She is sent home, no issues. She finds herself back there less than a week later. Again, another EKG performed, told that everything is fine. But this time, she's sent home with a Zio. And we find over the duration of monitoring during those 14 days that she does, in fact, have a very dangerous arrhythmia that needs to be dealt with and treated.

Where we find a story like Julie, who has all the symptoms in the world that would indicate an arrhythmia is present only to find out after monitoring for 14 days with Zio that there are, in fact, no arrhythmias present. We can rule out that we need to put it down that pathway. Or somebody like Woody in the upper right-hand corner here, from all means a very healthy individual, very active individual. He's in his 60s, outgoing, loves the golf, would never have suspected that there was an arrhythmia present, but his physician in his annual physical decided that he should wear a Zio, and we find out that he does, in fact, have arrhythmias underneath the surface that are lurking that need to be treated.

Or more recently, in our efforts to move towards predictive capabilities, we're starting to take our 3 billion hours of heartbeat data, couple it with external medical records and data sets and find in those medical records where patients likely have arrhythmias but have never been diagnosed before. And in this case, Louise, we find out that she does, in fact, have arrhythmias, somebody who would never have been monitored had we not identified through the proactive approach of looking through medical history files and finding those folks.

The reality is, a symptomatic reactive approach to monitoring for cardiac arrhythmias is not sufficient. It's why we have 27 million folks in the U.S. alone today who are undiagnosed with cardiac arrhythmias, we have to change that, and we are changing that. That's how iRhythm is changing the game.

This is our 20th year as a company, our 20-year anniversary. We've had an incredible impact. We've been a terrific company in terms of addressing an unmet need in the marketplace, but the reality is the market is coming together with 2 forces converging at the same time. On the one hand, we've got demand that is growing tremendously. You've got an aging population. You've got a silver tsunami of folks moving into the Medicare age population. We've got data that's telling us more and more every day that these arrhythmias are showing up in younger populations. You've got technology that's advancing with tremendous success like PFA that needs to be monitored both pre and post. You've got to move towards value-based care, population health, all of these things are lining up very well for the iRhythm story, and we meet the need in this very significant way, but at the same time, we have an access issue in this marketplace.

There's not enough cardiologists and EPs to see the patients that need to be monitored. Nearly 50% of all counties in the U.S. alone have no cardiologist. That climbs to nearly 90% if you go into rural communities. We have to change the way we think about monitoring. This is why moving to primary care is so important. It's a big effort on our part, and we're having tremendous success as we open up that channel.

When you think about who iRhythm is today, we've got really 3 pillars that we focus on as we build out the platform of our capabilities. We've got a biosensor aspect to it, where we've got a wearable device. Patients today will wear that device for 14 days at a time. We'll record every single heartbeat. Most of our patients will wear the duration of 14 days. On average, we get 13.8 days out of wear out of each patients experience with us. We'll capture nearly 1.5 million heartbeats from that patient, and then we'll leverage the power of our AI. We're on our second generation of an FDA-approved algorithm to comb through all of those heartbeats that we capture and identify with precision exactly what's going on.

99% of all of our physicians will agree with the findings that we put into the reports that we provide back to them. We've now got our third-generation algorithm in the hands of the FDA. We're excited by what that brings for us into the future and looking to get that into the market. And then we bring that all together in a digital capability, a digital workflow, a digital ecosystem, Zio suite, which makes it very easy to prescribe for physicians, but also monitor the patients throughout. And then in the final report prescribe, diagnose off of it and store that in EMR. It's a highly unique differentiated capability. More than 50% of all of our volume in the company today now flows through integrated accounts and nearly 80 of our top 100 accounts are now fully integrated.

A snapshot of who we are from a financial perspective and the market opportunity ahead. We'll deliver more than $740 million above the high end of our guidance for 2025 revenue. Notably, we'll also be profitable for the first time in the company's history, and importantly, free cash flow positive for the first time in our company's history in 2025, both meaningful milestones for us.

Yet at the same time, we only have about 40% of the overall ACM market as we define it today, which in the U.S. is about 7 million tests being performed. In the international spaces that we're now in, just the countries we serve, there's about 3.2 million tests being performed. We have less than 1% of that market opportunity, but we believe the market is very different than how we think about it today, particularly as you open up the ability to monitor for undiagnosed unaware the asymptomatic population.

In the U.S. alone, we believe there's 27 million folks, the majority of which overlap with comorbid disease states, and I'll talk about this in a bit, that we need to go find that we need to identify proactively, diagnose, and then get the proper treatment to avoid the downstream cost that these patients bring into the health care system.

And then finally, we have a tremendous amount of research that stands behind our product. We've got more than 135 research manuscripts that have been published, nearly 40 of them independently peer reviewed. We have no issue letting the data sort of stand behind our product. We publish more data than any other player in this space. It's a competitive advantage for us. Here recently, the CAMELOT, the Avalon studies, the two of those have been meaningful as we sit down with payers, and we can show through head-to-head analysis that Zio is, in fact, better than the competitive players in this marketplace, faster time to diagnosis, higher diagnostic yield, lower health care resource utilization.

We think about the market. Today, we serve a market of roughly 10 million tests being performed each and every year. That consists of 7 million tests in the U.S. and 3 million tests outside the states, just in the markets that we're serving. So there's 6 countries that make that up. However, we believe the future looks very different. So back to the market expansion, we think there's a near-term opportunity of roughly 30 million tests. That's represented by $27 million undiagnosed folks that we believe exist in the U.S. alone and the 3 million tests in the international space in the markets that we serve.

We think about the drivers of how we will continue to grow our business and where that growth comes from within the core market. Today, we've got about 72% market share in the long-term cardiac monitoring space. Think about that as patch-based monitoring beyond sort of 3 days. We target 14 days in everything that we do, that's the majority of our business. But we have 72% market share in that segment that's growing high teens.

With that, we believe the majority of the undiagnosed population, the 27 million folks that are out there ultimately will be monitored with a long-term patch. That is the ideal way to find these folks. We know that 65% of all arrhythmias are found after 48 hours of monitoring. Short-duration monitoring simply just does not work. It does not meet the need. And you think about it, though, there's still nearly 2 million short duration tests that are being performed in the U.S. marketplace every single year. That's a $500 million market opportunity for us to continue to go after. We will continue to take share in that space, and we're having great success with it today.

Another really exciting opportunity for us is in the MCT space. So within this category, there's about 1 million MCT procedures being performed. Today, we've got about 15% market share within that category compared to the 72% market share in the long-term cardiac monitoring space. The reason for that more than anything else is, first, we came into it as a follower. We led with LTCM, and then we brought a product into the MCT space. That's what we call our Zio AT product. Frankly, that product is not as competitive as it needs to be. We know there are some gaps relative to the competitive offerings. We only monitor out to 14 days. Physicians are looking for a longer duration of monitoring, wanting to get out to north of 20 days. We're addressing those with the product that we have on file with the FDA as we speak, which I expect will be making its way into the market in 2027.

We'll talk more about that in a slide or two. But for every 10 points of share that we can capture in the MCT category, it's roughly $80 million to $100 million of incremental opportunity to us on an annual basis. Again, I don't think we get to 70% market share in MCT. The majority of our competitors, this is where they play most significantly, but I do think we can move that to 20%, 30%, 40% market share, which represents a significant growth opportunity for us.

And then finally, on the international side, just again to reiterate, we're in 6 countries. We have less than 1% market share in the countries that we now have entered into in a market that's serving up 3 million tests each and every year. So a tremendous opportunity to grow in that particular area. I talk about moving into the undiagnosed asymptomatic space. I talked about the capacity constraints of the existing systems, some of those structural challenges. The only way to address that is to continue to move up the care pathway into primary care. And we're having an incredible amount of success in doing that. We began this effort several years ago to open up the primary care segment. If you look at it, total claims across the entire marketplace, more than 20% of prescribing is now coming through primary care. The vast majority of that is being led by iRhythm. So for us, well over 1/3 of our business comes through the primary care channel. It is, in fact, opening up. This is a great leading indicator of where things are going.

Primary care is comfortable prescribing, they're comfortable diagnosing. If they aren't comfortable diagnosing through the Zio suite tool, we can bring virtual capabilities to the forefront that can help them get to a diagnosis, and it helps them understand where they're going to route their patient through their health networks in terms of where that care journey goes. We're approaching primary care in 2 different ways. Sometimes we get asked, are you looking to build out a significant primary care commercial force, we are not. That is not how we're approaching this space. We've come out it in 2 ways. One is we leverage the relationship we have with our cardiologists and our EPs and the large independent health networks that we're already in. We're in the vast majority of these across the nation. These cards, these EPs will bring primary care to the table to educate them, to inform them of how easy it is to prescribe.

In some cases, in these large networks, primary care will prescribe, the report will get published and produced into Zio suite the cardiologist, the EP will come into the digital tool. They'll read that report, they can diagnose electronically, and then determine where that patient is going to move throughout their network.

It's becoming what we like to call a rule in and rule out tool within these large networks. The other approach that we're taking is through large national accounts. We call them innovative channel partners. The majority of these are large national primary care partners that ultimately we contract with at the very top level sort of a central point, and they push us down through their national networks. So from a sales rep perspective, we're able to cover the entire country quite well. This approach for us, as we've done the math, we think we can approach roughly 65% of all primary care physicians with this approach. As I think the momentum grows and the awareness around prescribing and primary care grows, I think word of mouth is going to continue to pull more and more folks into here.

We think about how we're approaching these innovative channel partners. The majority of these programs that we're launching, and this has been a significant growth driver for us over the course of '25. Most of these folks will target these comorbid disease states. So the overlap of arrhythmias within type 2 diabetes within CKD, CAD, COPD, sleep, heart failure is enormous. And so when these innovative channel partners start with us and really target an unaware undiagnosed population, usually it's in one of these disease states. And they'll start in 1 of these, and then they'll start to branch out into other particular areas.

We know that arrhythmia folks within these disease states, when there's overlap, are incredibly more costly for the payers to manage. Hospitalization rates are incredibly higher, length of stay in the hospital is incredibly higher, visits to the ER are incredibly higher. We know we can bend the curve from a cost perspective if we can find these arrhythmias before they result in a patient showing up in the emergency room.

What's really fascinating with this approach is the accuracy, at which we've been able to identify these patients in these large channel partner programs that likely have arrhythmias, and then get a patch on to them and find out that they do, in fact, have an arrhythmia that the clinician would find relevant that they would make some sort of decision from.

We started to partner with a company, we made an investment in a firm -- AI firm by the name of Lucem this last year, combining our 3 billion hours of heartbeat data together with external medical records, history files, other indicators, and what we've been able to do is produce algorithms that can very proactively go into a patient population with these partners, look across it from a digital perspective, using the power of AI and identify who we think, which patients we think in their population likely have arrhythmias, and then we get a patch on proactively monitor and what we're finding is more than 85% of the time were accurate. That, in fact, where we think arrhythmia is present, there is an arrhythmia present, and again, these are folks who have never been diagnosed historically. It's a game-changer.

It's getting a lot of traction. We're actually starting to see this move beyond just the innovative channel partners into some of these health networks that we're partnering with, where they're wanting to launch the same sort of approach within their comorbid disease states in the populations that they're managing.

MCT, I talked about this. This is an incredibly exciting opportunity for us. Again, we've had great success here, probably 15% market share in this category today compared to 72% market share in LTCM, but the reality is our current product is not as competitive as we need it to be. The new product that we have on file with the FDA as we speak, we'll move to a consistent common form factor as our long-term cardiac monitor. So it's going to bring with it a much better patient experience. It will go out to 21 days versus the 14 days that we have today.

What's interesting today is most MCT, competitive MCT products. When you look at the duration of monitoring they're getting, they're only getting around 14 days themselves, and that's because you're changing patches or the physician will find what they were looking for earlier and won't patch third or fourth. With our product, you're going to get a full duration of 21 days. You're going to get a lot of data to analyze through that the AI work, and we believe produce superior outcomes. Excited to get that through. Again, with the FDA as we speak. I expect that this will be a product that you'll see us bring to the market in the 2027 time frame.

International, another big opportunity. We talked about being into the U.K. We've been there for a few years now. It's growing incredibly well. Japan, we just entered into that market, second-largest market in the entire world, 1.6 million ACM test being performed each and every year. We're about 7 months into that effort, tremendous progress so far. In those -- in both of those countries, we're working through reimbursement as we speak. So we decided to go into those markets underneath the Holter rate code while we work directly with the government agencies there to get a more favorable rate established that we can work with into the future.

In the EU countries here in the center, these 4 countries have very favorable reimbursement, and that's why we chose them out of the gate, good progress in the early stages of launching into those markets as well. I talk about AI. I mean, at the end of the day, AI is what sets iRhythm apart. And what I find really fascinating and exciting about the future of our company is historically, AI was really embedded in the product itself.

It's how we really look through the heartbeat data that came off of the patch, but we're starting to leverage the 3 billion hours of heartbeat data that we have connected with external data sets that can get us to the point where we're starting to become much more predictive in identifying where these arrhythmias exist, particularly in comorbid disease states, but also finding other health factors that are very interesting to our payers and our partners, getting the place where we can predict the onset of AFib.

If we don't see it in the patch that you're wearing today, we can see through the markers you're likely to have it in the next 6 months, 12 months, 18 months. If you've never been diagnosed before, where we can predict that you likely do have it need to be monitored, opening up opportunities in sleep, hypertension, other adjacent markets. These are all things that AI is opening the door for us, and we're excited about into the future, which brings me back to the platform.

We're really investing in every one of the pillars of this platform. So when you think about it from a hardware perspective, excited by what we're moving forward with MCT, a long term -- or alongside our long-term cardiac monitor. We're adding other sensing capabilities onto it as we speak. So we're bringing PPG onto the sensor. We'll shortly have SPO2 capabilities, hypertensive capabilities, heart rate variability, respiratory rate. All of these things open up new opportunities to diagnose other disease states as we move into the future.

And then on the AI side, I've talked about it a few times, just connecting our data sets with external data sets, leveraging the power of AI and the massive information that we do have, I think, puts us in a really unique position to continue to advance there, and then continue to drive integrations and workflow efficiency. It's so critical if you're going to move into primary care, the workflow burden has to be incredibly light, and we're focused on how we can make that as little as light as possible. We talk about EHR. We announced a collaboration with Epic a little over 1.5 years ago. We know the power of integration. So when we get fully integrated with an account, we usually see volumes increase roughly 20% to 25% post integration.

Epic is not the only system that we're working with. We've worked across all EHR systems, but our goal is to be integrated with every one of our major customers. And again, I said it earlier, 80 of our top 100 accounts were now integrated with nearly 52% of all of our volume is flowing through these integrated systems.

Comprehensive evidence generation is another thing that sets us apart. Last year was probably -- well, it was a record year for us in terms of evidence generation. We had nearly 28 publications that came out, continuing to articulate the difference between Zio and any of our competitors. We're publishing head-to-head data. We're showing through a review of medical history files, whether that's with CMS, that's with claims, commercial claims that we're far and away, superior from a head-to-head perspective, diagnostic yield, time to diagnosis, health care resource utilization.

We're also showing in these comorbid disease states that if we can identify an arrhythmia earlier and prevent one of these patients who might have type 2 diabetes as an example, from ever making their way to the ER, we're going to save that payer roughly $17,000 per patient, or for every 1,000 patients, we can find, it's roughly $15 million to $17 million of savings that's getting a lot of attention from these payer partners.

And then sleep, we've talked about sleep for a little over probably 2 years now. We're now launching into sleep with dedicated pilots. We've got over 40 pilots that are now launched with accounts early, early in the effort here, but very pleased with the early indicators of the success that we believe we can have here. We know that over 20% of our current prescribing physicians of Zio are prescribing home sleep test -- we believe right through the integrations that we've built a seamless workflow that we can make it very easy for these folks to ultimately look for sleep disease at the same time that they're looking for cardiac disease.

Nearly 80% of all folks who have AFib have obstructive sleep apnea or sleep apnea. There's a tremendous amount of overlap. There's a real opportunity to win here. We're excited by what we're finding in the early stages here, and this will continue to grow over the course of the year.

Just looking back on '25, as I wrap up, obviously, just a tremendous year for the company. We saw growth accelerate across every aspect of our business, the core business, innovative channel partners, MCT, international, every one of those segments of the business grew quite nicely and accelerated from where they've been in the past.

Again, more than 50% of all volume now moving through integrated accounts that's incredibly important to us. We think about FDA remediation, we don't talk a lot about it now because it's behind us. We spent a tremendous amount of time over the last 18 months really focused on addressing the questions of the FDA, making sure that we've got a quality management system that is sufficient, if not above and beyond the expectations that they have with us. We've completed all remediation activities. We're now in the process of having a third party come in and audit ourselves, which we're more than happy to share with the FDA findings that come out of that, just demonstrating that we are holding ourselves to a different standard. And for the most part, those things are in our past. And then I would just say from a financial perspective, a tremendous year from a profitability perspective, again, first time in the company's history that will be profitable from an adjusted EBITDA perspective, first time that we will be free cash flow positive as well. Excited to see that and see that continue to grow into the future.

So think about '26. We put out expectations this morning, which more or less reinforced where we were at a little over a quarter ago. Again, we'll deliver in 2025, north of $740 million in revenue. We expect $870 million to $880 million in revenue in 2026. That's about 17% to 18% growth off of where we expect to finish this year. And from a profitability perspective, we expect to be around 11.5% adjusted EBITDA to 12.5%, which continues to be roughly 300 to 400 basis points of improvement, demonstrating the significant leverage opportunity that we have in the P&L as we continue to grow, but importantly, still make the investments that will open up the new market opportunities for us into the future.

So I'll wrap with this. I think, iRhythm has been in a terrific position. We're in a wonderful spot when you think about where the future of health care is going, aging population, value-based care, population health, younger generation want to more proactively manage their health. These are all things that accrue very well to where iRhythm is positioned. We've got several core markets that are expanding as we speak, 27 million folks undiagnosed. We've got several new adjacent markets like sleep, hypertension that really excite us. And then, we've got international opportunities as well, where we're very early, less than 1% market share, and of course, doing all of this while focused on the bottom line, making sure that we do it in a profitable way with a clear path to 15% adjusted EBITDA margins that we put out as we approach $1 billion in revenue, I think there's a potential for the company to get into the mid-20s. And you'll see us talk about that once we get the historic goal of 15% achieved and set our sights on something new in the future.

So thanks for your time. Allen, I'll turn it over to you to jump into Q&A.

Thanks, Quentin. So I guess just to start off, you preannounced the results today, also provided initial 2026 guidance. So just looking at the $740 million plus, there's obviously a lot of room up there, and we'll find out more about that in February, March, I imagine. But just for that record volume comment, can you help us break that down between Zio monitor, between Zio AT, between innovative partnerships and other drivers? Like what drove that record volume quarter?

Yes, that volume continues to be strong, Allen, across really every aspect of the business. The core business is growing incredibly well. We had several large competitive conversions early in the year that continue to contribute very, very well and grow nicely. We continue to sign up more innovative channel partners in the fourth quarter, which, quite honestly, I suspected -- and it did slow a little bit from what we had seen in our prior couple of quarters, but as you came into the holiday period from the last time we spoke with you guys, we shared that we were at 18 innovative channel partners that continued to grow, but that grew through the holiday period. Most folks aren't going to turn on those programs in the middle of holidays to wait to the new year. So -- but we did see continued progression within the channel partners, which was very nice to see. .

And I think AT, it continues to demonstrate there's a real opportunity in that market to capture share. Whether that's new accounts that are coming on prescribing both long-term cardiac monitoring, so Zio monitor and Zio AT, at the same time, or even legacy monitor accounts that are beginning to prescribe AT as well. There's a lot of great data out there that would articulate our AT product is as good as anything else out there, but we understand some of the customer feedback in terms of what they want to see enhancing the product, and we're committed to getting that to them with the new product that's with the FDA now. But I don't know if there's anything else Dan you'd add. It was across the board, Allen, it was a strong quarter.

And then, I guess, looking at the guide that you provided today, I believe, $870 million to $880 million, around 17% to 18% growth, but we'll have to see where that falls once you get the final numbers. You had previously talked to around 16% to 18% growth. So this comes in a little bit better than that, and I think one of the drivers that I definitely want to touch on a bit more is on the pricing side, especially with physician fee schedule updates, but just what gets you a little bit more bullish on what's keeping you conservative into the new year?

Do you want to take it?

Yes, sure. You did note price there. So when we originally kind of provided that preliminary 16% to 18%, there was some CMS pricing benefit factored in what ultimately landed was a bit better than that. That is contemplated in the 17% to 18% that we gave today. And then from an absolute dollar standpoint, with '25 preliminary results we provided this morning, obviously, that absolute number going up as well. Similar to Q4, really good momentum across all of those different vectors. You've heard us talk about this many times as we set guidance, we want to put in what we're -- what we have high confidence in, certainly, our core business and the momentum maintaining there.

AT continues to grow really, really nicely for us, an innovative channel continues to open up in a meaningful way. There is some lumpiness to that part of the business. So we'll be thoughtful in terms of what we bake into guidance there, but all of that is factored into the numbers we gave this morning.

Got it. And then when we think about the innovative channel, right, you had mentioned that you had reached 18 heading into the holiday period. I think you had added around 6 in the third quarter. It sounds like with the holiday period being a little bit more challenging to really start up these programs, how much of -- again, like how much contribution are you expecting in 2026 from, let's say, the programs that have been ramping up, the newer programs that you added this year? And what are your assumptions around continuing to add programs in 2026 like new partnerships?

Yes, we'll definitely add more partners in 2026. That pipeline is incredibly strong. We feel very good about it. I think we've got good line of sight to what we expect to start in the first part of this year. The reality is through the holiday period, folks just aren't going to start up these programs, and they're going to wait until the beginning of the new year. So we like what we see there. I think part of the challenge with each one of these innovative channel partners is everyone is a little bit different in terms of how they come out of the gate, how they start up. And with that approach, or sort of that being the fact that how they start up, our approach to it has been a little bit conservative to say let's see how they come out of the gate, let's see how they contribute, and then we can start to roll those into our forward-looking guidance.

So I think with the channel partners that we've got a good deal of history with, we feel very good about how to forecast those. We can forecast those nicely. They're going to continue to grow very nicely. In 2026, we've rolled those expectations into our guidance, but it's the new folks coming on or folks that we have less duration of experience with, that we're a bit more hesitant to bake into the formal guidance, and we'll let that play out, and we'll update expectations along the way.

As Dan said, we're not going to get ahead of ourselves. I think we want to make sure we put a number out there. We felt very good that we can deliver. I feel good about that in terms of what we put out there at this point in time. AT continues to perform quite well, but quite honestly, it's another year of competing in that market that we don't necessarily have the best product there. So we've ratcheted down some of the expectations around that. If we can continue to grow that as we have, great. There's going to be a terrific opportunity with it. But we're just trying to be thoughtful in terms of how we set these expectations. We're not going to get ahead of ourselves.

So you mentioned AT. And I guess like with MCT submitted in the third quarter of last year, I think that 2027 is on like the later end of when we would have hoped for a launch. So is that just -- we've seen a bit of -- the approval and submission of MCT has gone through some challenges. So should we just think of that as conservatism around the time line for the FDA getting back to you? Is there any reason why you expect that it might take a little bit longer to get that approval through? Or is it the launch process is going to be a little bit more strenuous for you?

Yes. I think, look, we're in active dialogue with the FDA on MCT, encouraged by what we're seeing in the back and forth. There's clearly a lot of questions from the FDA around cybersecurity, no question at all. I think as we think about the long-term scalability of how to meet some of their questions and their expectations, we wrestle with, do we design or do we develop anything incrementally in the existing form factor? Should we look at something different?

A good example of that is take the gateway, and I don't have it here, but we've got a gateway that's been with us for over a decade as we move to a mobile gateway, would that give us more scalability? If we did that from a development perspective, are we talking about adding another month or two to the approval time line, those are the things we're considering as we go through it. We really want to make sure that we set this up for long-term scalability in the best way possible. And clearly, with the success of AT that we're having, I don't feel a rush to have to sort of make a poor decision long term for the betterment of the near term, quite honestly.

So looking through some of that, but the other challenge that we're running into, to be honest with you, is the success of AT has been beyond what we anticipated. We're having to make inventory purchases to keep up with that demand, which now means you got to work through that before you can convert over to MCT. And so a -- from my perspective the best way to think about MCT is early part of 2027, and that's the way to set expectations at this point. Well, I hear a lot of folks talk about 2026. I don't expect it to contribute in '26. It's not in our numbers. I think '27 is the right way to be thinking about that.

And I guess just talking about the MCT market more broadly, I think for the Zio monitor, it's very well understood where the growth opportunities are at between symptomatic and now asymptomatic AF. MCT, there's a lot more potential conditions that you've been -- you could be treating. You mentioned pre and post AF ablation, especially with PFA helping to accelerate that market, but where else should we think be looking for growth opportunities for Zio AT and eventually Zio MCT above and beyond just taking share in the market?

Well, I think one of the greatest opportunities is in the core legacy long-term cardiac monitor market, the Zio monitor space, where our customers have just shared with us, look, 14 days is not going to be sufficient for what we're looking for. We want to get beyond, at least 20 days as a minimum. And this new product will do that. It will get to 21 days, but those folks are -- they're not going to prescribe Zio AT. They've been clear. They want something with a longer duration. And so I think we'll meet that expectation with the new MCT product, and so the ability to convert the opportunity with our Zio monitor customers into them not prescribing our product for their MCT needs, I think, is a real opportunity. We're having great success on the competitive aspect, the new accounts coming in and converting from competitive MCT products into our Zio AT product.

I think that we've done a great job. The teams have done a great job being able to articulate the value of Zio AT sort of compared to other competitive offerings and demonstrate that it's as good, if not better, and these new accounts are seeing that data. They're leaning into that data, they're experiencing it themselves. They're prescribing. It's the legacy accounts that we've had a harder time sort of flipping over, they're sort of stuck in that longer duration of monitoring. So I think that's where the majority of the opportunity is going to come from.

I think you get out beyond 21 days, I think even from a competitive perspective, it's going to be able to open up more doors than what we have today. There are some competitors or customers who are using competitive products who you knock on the door, and it's just not long enough in terms of duration, they don't want to take that call, right? So I do think it will open up some additional opportunity for that competitive conversion, but 15% market share in that overall market compared to 70% in LTCM, I think there's an incredible opportunity there.

I don't expect that we're going to deliver 70% market share in that MCT space. But again, if we can capture 10 points, it's $80 million to $100 million of revenue. So if that 25% can get -- or sorry, 15% can get to 25% to 35%, 45%, is going to be a significant driver for us.

You touched on the competitive landscape there, and I think this is kind of a two-part question, one for Zio monitor, one for Zio AT. But when we first quite a while ago now, when Zio XT was really starting to do quite well. We saw a flurry of patch competitors entering the market. A lot of them were then acquired by much larger competitors in the MedTech space, and it's quite difficult to track how the strategy there has evolved. So just from a competitive landscape, your competitors are seeing you having great success with your innovative partnerships is -- has there been a competitive response? Is there a reason why your competitors couldn't go try to undercut you or get ahead of you and try to make the same kind of deals with these partners just and with the benefit of scale and maybe some bundling or what have you and really compete on that front?

Yes. We hear some noise. I mean, we hear some noise at times of competitors talking about launching programs into innovative channel partners, comorbid disease states, the overlap. The challenge, and this is why I love the position that we have is we led out of the gate as a company with a product that targeted sort of that 14-day monitoring, not the continuous feedback loop. It wasn't an MCT product, right? So it led with a lower cost, lower price profile that could be applied as easily in primary care as it could in cardiology and EP, whereas our competitors, they lead with MCT -- and for them to step from MCT down into long-term cardiac monitoring, their cost profile of their product is incredibly prohibitive to do that, right? So you don't see a lot of folks do it. As a matter of fact, when we started to push primary care 2 years ago, I was met time after time after time by folks who said that will never work.

You can't -- it will never get prescribed in primary care. Your cost profile is never going to work. You can never make money down in that segment of the market. Look, we're prescribing more in primary care than we ever have before. We're more profitable than we ever have before. And I'll take that financial profile all day long. We will drive hard into primary care because we have the right product feature, cost profile to go there where our competitors do not. I think for so long, the reimbursement, quite honestly, was so much higher in MCT that everybody focused on MCT and that's where they wanted to go. We took a very different approach. We went after long-term cardiac monitoring. We feel like that's better for the patient, and patient gets better answers, faster answers, and it's better for the health care system from a cost perspective for sure.

So we don't see a lot of folks coming down here. We're trying to go as fast as we can, lock it up. It's why the integration aspect of what we do is so important. When we get integrated in and locked into an integrated system, the stickiness there is incredibly high. I couldn't give you the name of a single account where we've got an EHR integration that's been completed that has walked away from doing business with iRhythm. Integrations are powerful. We've got to get them completed. I'd love to see 100% of the business. The reality is we will never get to 100%, but we made good progress there and excited about what we see.

With the time we have left, I do want to touch on the P&L, the profitability side of things. It feels like a lifetime ago, but you laid out long-term targets for 2027, getting to 15% EBITDA. I think we've definitely seen more focus and more improvement there over the last year or two. That's definitely been appreciated. And now you're set up to get to 11.5% to 12.5% next year, I believe, or this year. So that seems like a pretty good bridge to get to 15%, but what is getting you to that 11.5% to 12.5% between gross margin, we saw that get to 70% plus, hopefully, it stayed there in the fourth quarter. You've always talked about having room in G&A. So what is driving the expansion this year? And then what gets you that final 250, 300 basis points next year before we start looking longer term?

Yes. Sure. So really pleased with the progress we're making. You noted it 2025 was tremendous first year of profitability in the company's history as well as free cash flow positive. So really pleased with that. 2026 will be a continuation of that. Certainly, opportunity within gross margin. You've heard us talk about investments into manufacturing automation, our clinical operations team being really efficient and executing really, really well there. It starts with gross margin. We'll continue to see expansion there. And then down the P&L, you noted G&A, that is our preferred kind of focus in terms of driving leverage.

And importantly, I would say guidance that we've put out as well as results historically is a balanced plan where we are continuing to drive profitability, but importantly, continuing to invest in the opportunities we see in front of us. And you heard Quentin's remarks on all the different growth opportunities and growth levers that we see, and we want to make sure that we're investing into those opportunities, while continuing to drive profitable expansion, and we like that setup.

Yes, you kind of like touched on the next question I had, which was you do have a lot of future growth opportunities. Sleep apnea being one of the biggest ones. You've talked about 20% of those patients are already kind of customers of yours, but then there's obviously the 80% that you aren't targeting yet. So when we talk about 15%, and I think you mentioned getting to 20% beyond that, that contemplates continuing to invest in those opportunities. Revenue is upside, but the costs are kind of baked in there?

That's right. I mean, -- it's how we run the business, quite honestly. We factor in the ability to invest in these opportunities without factoring in the revenue contribution to the degree the full degree of it, that we've got the bandwidth to be able to invest. And as the revenue comes, it should be upside, which they can fuel further investments out in the future. So costs are considered in that without the full revenue contribution coming through.

Okay. I think we have about a minute left. So Quentin, Dan, I'm going to turn it over to you for any closing remarks, any last thoughts you want investors to leave with today on the iRhythm story.

Look, we couldn't be more excited about where the company is at. Obviously, '25 was a terrific year. We saw momentum pick up across all aspects of the business, and the momentum on the profitability side was terrific as well. I think getting to free cash flow positivity was a big milestone for us and hats off to the team for getting there, but I couldn't be more bullish on where the future is going. I think the market is so much bigger than what we've looked at historically. I think we're just in the front end of opening that up, and then we'll have an opportunity to enjoy it. '25 was a great year. I think '26 is going to be another wonderful year for the company. We appreciate the support and look forward to catching up with each of you guys over the course of the day, if not over the course of the year. So, thank you.

Thank you.

Good afternoon, everybody, and thank you for joining us for the post-lunch first meeting. I'm still Joanne Wuensch, the medical technology analyst here at Citibank and thrilled to have the management of iRhythm with us, including Dan Wilson. And we -- I was just trying to figure out when you became the CFO?

About 14 months ago. September 24. Yes.

It is so fresh. Am I allowed to ask you about that? Or that's a...

Yes. Absolutely.

What are you finding now that you've moved from IR to the CFO role?

Yes, it's been a fantastic transition. Obviously, been with iRhythm for 6 years now, have always been incredibly bullish on the company and the opportunities we have in front of us. It's been really a lot of fun to be in the CFO role and kind of drive where we're allocating our capital and the initiatives that we're going after and really driving profitable growth, which iRhythm has been a growth company since its beginning. We're now, I like to say, a profitable growth company, which I think is important place to be and have a great team supporting me and the rest of the company, including Lisa here. It's been great.

Wonderful. Well, I'm going to get to the real questions now. And what I really would like to do is sort of get a state of the union on the ambulatory cardiac monitoring market. I've thought about it as growing maybe mid-teens possibly 20% on a good day, but iRhythm is putting a much faster growth. And so I'd love to get your opinion on what is driving the market and what is driving your accelerated growth?

Yes. So the overall market, ambulatory cardiac monitoring, call it, 6.7 million tests in the U.S. that as a whole market growing, call it, healthy mid-single digits. The 2 segments of the market that we operate in, long-term continuous monitoring, which we pioneered. That is by far the fastest-growing segment of the market. As you noted, growing, call it, high teens percent year-over-year. That's consistent with kind of where we're growing. We have been taking share a point or 2 over the last couple of years, so outpacing that overall market growth slightly. I think there's a lot of tailwinds in our market that we're excited about and remain excited about.

If you think about pulsed field ablation that has been certainly a tailwind to our market. As therapies improve, it is right to assume that upstream diagnostics will benefit from that as well. So that's been great to see that's a tailwind. Certainly, just general consumer awareness around cardiac arrhythmias, certainly benefiting the market. As you know, we've been pushing aggressively up into primary care and shifting the market in that direction. Combined with that improving consumer individual awareness. We're able to capture patients earlier in the care pathway where they should be -- should be being monitored, that's been a nice tailwind for the market.

And when you think about risk factors for arrhythmias. Certainly, there's comorbidities that influence arrhythmia risk, but age is one of the biggest risk factors. Obviously, you have an aging population. The Silver Tsunami, if you've heard that term before, is upon us, we're seeing more and more individuals aging into Medicare and increasing risk of cardiac arrhythmias warranting monitoring. So a lot of tailwinds in the market. We believe we're well positioned to capitalize on those opportunities and continue to drive the market forward.

So let's take each one a little bit. I want to talk about the upstream going into the primary care market. I think it was January of 2023 or 2024, you would talk about 20% of the XT patches were being used by PCPs. And I think an updated number from our CEO call was closer to 30%. How do I think about how much of the accelerated growth is coming from that shift? And how much it may be from something else?

Yes. I think primary care has definitely been a big part of it. I wouldn't say cardiologist is not growing, right? I've talked about pulsed field ablation and that's generally within electrophysiology. So there's post-ablation monitoring, taking place there. There's a desire to find those patients that are candidates for PFA procedures and other ablation procedures. But we're seeing a lot of healthy partnership between cardiologists, electrophysiologists and primary care working together.

And we're supporting that through designing workflows where primary care prescribe Zio. But if they're uncomfortable or prefer to have a cardiologist read the report, we can route the report to a cardiologist in their network or a virtual cardiologist through a partnership and have the report read that way. So there's a lot of workflow optimization that we support that allows kind of this upstream move to primary care and don't believe it's slowing down. You mentioned 20% now 30%, that's the right way to think about it, and we believe that will continue to expand.

So you think it goes 30, 40-plus or over time?

I think so. You think about -- I think there's 300,000 primary care physicians out there between cardiologists and EP is probably closer to 50,000. So multiple times higher, and it's just -- it's better for the system, better for patients, better for payers, controlling more care within primary care, making sure it's truly qualified patients that ultimately make their way to the specialists. It's better for all parties.

So let's talk a little bit about the PFA wave because when we talk to doctors, they sort of say exactly what you're saying, which is we want to diagnose the patients so we can do the PFA procedure, and then we want to monitor the patient to make sure it worked. So are you capturing both sides of that coin?

Absolutely. So yes, to your point, they want to fuel the funnel or find patients to bring into the funnel for these procedures. So they're partnering with primary care oftentimes to find candidates. And then there is post-ablation monitoring, and that was true for more traditional ablation procedures as well. There's always been post-ablation monitoring, but as PFA becomes a safer and more efficient procedure that's increasing volumes and therefore, the greater number of post-ablation monitoring being done as well.

You did have this kind of dynamic with the TAVR evolution?

To a degree, but much smaller numbers. So I don't have the specific market sizes with me, but ablation PFA, I think, is a greater number of procedures versus TAVR and certainly higher growth currently.

And when you talk about taking market share, I think you said 1 to 2 points of market share, where is that coming from? And is that across XT and AT or is that just -- and I still think of XT and AT not monitor MCT?

Yes. Yes. So the 1 to 2 points of share was specifically for Zio monitor, which is what replaced our legacy product, Zio XT, that's in long-term continuous monitoring. Again, that's the segment we pioneered call it, 70% -- low 70% share of that market. I'd say it's the shift in the primary care certainly. I think we have a unique advantage there. I think the brand recognition that we've built since we pioneered this segment over the last 15 years or so. All of the clinical and economic evidence that we continue to generate that has been critically important to distinguish Zio relative to other long-term continuous monitoring technologies on the market.

Historically, a lot of the evidence that we were generating was long-term continuous monitoring with Zio over short-term Holters showing the benefits there, where we've really started to show with clinical evidence like CAMELOT and AVALON is differentiating Zio relative to other long-term continuous monitoring brand. So that's certainly been a driver. The XT, the monitor transition from a form factor standpoint, that's been a great driver. It's a beautiful product. 55% smaller, 72% lighter, truly miniaturizing that form factor for a better patient experience. And then I would argue all of the kind of support around the service as well.

From an operational standpoint, I mentioned some of the workflows that we can design. EHR integration has been a big investment for us and driver for us. We're now over 50% of volume through EHR integration, that makes it that much simpler for a prescriber to prescribe Zio. It opens up all prescribers within a network. They don't have to kind of come out of their clinical workflows to prescribe Zio, they can stay right there in the EHR. So there's a lot of kind of reasons why we continue to be well positioned competitively, and we're going to continue to invest in those.

So when you use the phrase innovative channel partners, what does that mean?

Yes. The right way to think about that is essentially proactive monitoring. So these patients are...

Hold on. Proactive monitoring meaning I walk in and they go, "Hey, you are sort of BMI, family history of heart disease, let's put a Zio on you."

Exactly right. And these -- and the innovative channel partners they own the risk for the patient in some way, whether they have their own Medicare Advantage plan, they're capitated in some way, some type of risk-based arrangement where they can make the determination, they can proactively say, "I want to monitor this patient. " They have risk factors, maybe they're not presenting with symptoms. And what we're seeing is, oftentimes, these patients are having symptoms. They're just -- they're believed to be part of a different condition.

And more and more evidence as we're getting into this is showing you monitor these patients, you're going to find a high number of undiagnosed arrhythmia. So innovative channel the way we think about it is proactive monitoring, different from our core business, which is generally symptomatic patients coming in with symptoms, getting prescribed Zio. Innovative channel is groups that own the risk for a patient population and can make the decision to proactively monitor.

And how does that change? I mean I think there's one that you talked about a partnership with Lucem?

Lucem.

Lucem. Okay. Help me understand how that partnership or another partnership comes about and how you monetize it?

Yes. Yes. So we're -- I'd like to tell investors, this has been a 10-year strategy in the works. We have been working on opening up this market for quite some time. There was a number of clinical trials that you probably remember, [ mSToPS ] [indiscernible] a number of others kind of generating the evidence. Where we have found a good product market fit in the last 12, 18 months is in this innovative channel group. And the benefit there is they own the risk of the patient so they can make the decision to proactively monitor, but they also have the touch point with the patient, right? So oftentimes, they're patients -- they're either going into the patient's home or patients are coming into their office. They can explain the program to them. They can show them the device. They can explain the benefits of it.

Initially, we were thinking we can sell these programs into payers. That was a little more challenging. And again, where we've seen the nice product market fit is this innovative channel partnership. You mentioned the partnership with Lucem Health, there we're developing AI that will essentially target -- look at a patient population for an innovative channel partner and identify which patients within that population are at risk for undiagnosed monitoring and then make the decision to proactively monitor that.

What's great about this AI tool is you can tune it to where if you want to say, I want to monitor patients and get a 50% diagnostic yield, you can tune the algorithm that way and identify patients and expect to get a 50% diagnostic yield. If you want to dial it back and say, actually, I want to be more selective and see an 80% yield, you can dial it that way and vice versa. The other benefit is this algorithm is kind of constantly updating. It's regularly reviewing health records and as risk factors change within your population that's going to be dynamic and identify the patients that are most at risk of undiagnosed arrhythmias.

As we've gone into market in innovative channel, this isn't a tool we have yet -- had to utilize, but as we get deeper into it, we think this can be a real benefit and a meaningful enabler to open up the market opportunity.

So on the third quarter call, you also talked about 18 active channel partners with a healthy pipeline. How do you leverage the 18 active channel partners? And how do you build the pipeline?

Yes. So the 12 -- it was 12 going into Q3, and we updated that to 18. So we're seeing nice progress there. One thing that's most encouraging about this segment of our business. And it's early, and it's emerging. But one of the most encouraging things is that for every time we've got a partner to a pilot program, they've continued on to a full commercial program, which tells me that the value proposition is playing through. We lead with data. So we present evidence as to why they should consider a pilot and then we run the pilot and bring data back to them to show, okay, you monitor 1,000 patients. Here's all the different arrhythmia types that you found in your population, the diagnostic yield et cetera. So that's been a really powerful tool. By the way, we use that in our core business as well, our Zio Service report. We always like to lead with data, and that's a meaningful part of our business.

So leading with that evidence, we have a nice healthy pipeline, call it, 40 partners that we're in discussions with and selling into a bigger list that's been identified call it, 100 partners or so. I think where we -- where our work is, we know top down, there's, call it, 27 million patients that are at risk of undiagnosed arrhythmias but not being monitored today. So we believe in that opportunity as we've started running these programs with partners, we've gotten even more confident that, that's a real number and a real opportunity.

Ultimately finding where -- who owns the risk for those patients and who can make those decisions to proactively monitor those patients. That's the work that we're actively doing to be a little more sophisticated in terms of how we target and go to market and find those 27 million patients. We're confident it's in that pipeline of 40 partners were having active discussions with and then the bigger pipeline of 100. But in terms of how we position, how we go to market, how we target those partners, that's some research that we're doing now.

One of the things sometimes investors ask me is how penetrated as a company? And asymptomatic AF, and I find it an interesting question because I don't know who's asymptomatic, because if you don't have asymptomatic, which 1 of the 3 of us would be it. But I'm going to ask you the same question because your opinion matters far more than mine on this topic.

Fair. We actually just presented some data at AHA to show symptom rhythm correlation is not what I think has historically been believed. So a patient feels like they're having a symptom, but how that correlates to an underlying event is actually very, very low, which tells you that there's patients out there that may or may not be having symptoms but are at risk of having underlying arrhythmia.

So again, I think as we're getting into these programs, we're running pilots, running full programs, coming back and showing the data that you have a significant number of patients with undiagnosed arrhythmias. They may or may not have been having symptoms, again, oftentimes confusing it with something else that they're dealing with, but it's very clear. You proactively monitor these patients that meet certain risk factors and you are going to be surprised with how many come back with diagnose arrhythmias.

In September, you submitted Zio MCT to the FDA. And I think it was on the third quarter call, you talked about it being held up. Those aren't your words. So is your mind, given at that time, the government was on a shutdown. That's been relieved. Is there any way to give us an update or comment on where that process is?

Yes. Yes. So we did submit early September. Generally, 510(k)s, you expect to receive comments back from the FDA within 60 days. We did receive comments back from the FDA recently. So encouraging that those timelines are still maintaining despite the government shutdown, whether or not that ultimately impacts timelines from here forward remains to be seen, but encouraging that, that process is moving forward. Comments were kind of consistent with what our expectations were there. Certainly, the FDA has a lot of focus on cybersecurity right now, industry-wide, those are comments we receive that we'll work through.

Still too early to put timelines around potential clearance. What we have guided investors to is don't expect Zio MCT that contribute to '26 revenue. That's a good way to set up the year as we get through -- get deeper into the review process, our timelines get a little more clear, we'll update folks there if there is any change to that, but that's the right way to think about it.

Okay. Were there any surprises in the questions or anything that you're like on?

No, I don't think so, consistent with kind of expectations and being early in the review process, certainly, comments to work through. But yes, no real surprises.

Excellent. In your SEC filing for the third quarter, you noticed or noted that 3 of the MACs had proposed an LCD covering ambulatory cardiac monitoring. Can you level set us on what this is? We read a note on it and it created a bit of commentary. Words I might use too, but we're going to call it commentary.

Yes, that's fair. That's fair. Yes, in this -- so we do have a national coverage decision for the category, and that's I think, 20 years old or so. You do see LCDs come in to supplement in NCDs, particularly when there's been changes within the industry in terms of the technologies and how the service is delivered. We saw this with 2 other MACs a couple of years ago, and that was a process we had to work through as well, where there's proposed language that needs kind of refining and through comment periods, industry participation, physician society support, ultimately landing final coverage decisions in the right spot.

So we're working through that process. We did participate in the comment period with all 3 of the MACs. We believe our competitors did as well as well as other industry participants, advocacy groups and physician societies as well. So we got to work through it. We do believe there was some kind of inadvertent language in there in terms of MCT level requirements for all modalities, and we commented around that, and we got to work through the process. Unfortunately, there's no timeline around this. There isn't a set schedule. But working through the process, that's the reason there's open forum for industry comment and believe that lands in the right way.

What happened with the 2 LCDs that or the 2 MACs that presented this a few years ago?

Yes, it was a favorable outcome.

Okay. So a similar process. You went to bat the HRS and everybody went at it and it was favorable? And how you define favorable that they rewarded it?

Correct. Yes. I think aligning with FDA guidelines around what is expected by modality, who the appropriate patients are for each modality. And this is where we lean on our clinical and economic evidence. We think it's very clear, long-term continuous monitoring with Zio is the most appropriate modality for the vast majority of patients out there. It has the highest diagnostic yield, lowest retest rate, best health care resource utilization, and that's all proven through the CAMELOT data, in particular, which, by the way, was 300,000 Medicare lives. So that's important data. Obviously, we presented that and again, believe work through the process and it will land in the right way.

I want to talk a little bit about the international business, which is pretty young in its development. Can you give us an update on where you are with that and what the next steps are to grow it?

Yes. So we've been making some good progress there. Historically, the U.K. was really our only international market over the last, call it, 12, 14 months, we have launched into 5 new markets, 4 Western European countries and then Japan more recently in the last few months.

So maybe starting with Japan. Japan is second-largest ACM market out there, 1.6 million tests prescribed annually. Generally traditional short-term Holter monitoring in that 1.6 million. So a real opportunity to shift that market to long-term continuous monitoring. I believe we're well positioned to grow our position in that market. We had a high medical needs designation and good physician society support their. Ultimately, the reimbursement rate that was initially assigned as the Holter rate and market Holter rate, which we don't believe recognizes the full value that we're delivering.

So we are -- but the feedback was clear. They want to see head-to-head evidence, Zio versus in-market Japanese Holter Technologies. We're running that study now. We'll get that data collected and back in front of MHLW, which is an annual cycle. Think of that probably as a '27 event, not a '26 event by the time we run the study, get the data collected and back in front of MHLW and optimistic that lands in a good spot as well. Similar story in other countries, it's generally a market access and reimbursement effort. We are a new category as we were in the U.S. several years ago.

So it's generally showing the evidence giving physician society support there within country and working the reimbursement channels. We're in Switzerland, Netherlands, Austria and Spain and showing good progress there. International has not really been a contributor to our business. Historically, it's starting to contribute. We're seeing good, healthy volume this year. I would expect that to continue in '26. But importantly, kind of seeding these markets for more meaningful contribution, think about it in '27 and beyond.

The Analyst Day that presented the LRP was 3 years ago, if my memory is correct?

Right in 2022.

It was a 5-year LRP or a 3-year LRP?

Five years. So '27 targets.

It's '27 targets. At what stage do you refreshed us? Because it feels to me like the business is very different than it was 3 years ago?

Yes. I would say it is. Some good, some bad, some headwinds, some tailwinds. Certainly, '25 has been a phenomenal year and seeing tremendous amount of growth in the business. No, we're not in a rush to update those targets. We'll get through next year, certainly or into next year. If there is a point in time where we need to update those targets, we'll take that opportunity, but continue to feel good about those.

I think you're a little bit ahead on profitability?

I think the pace that we've been driving from a profitability standpoint would put us slightly ahead of that. It's always a balance, though. We have a lot of innovation that we want to invest in. We do want to drive more and more profitability expansion and just trying to balance those 2 year-to-year. We are -- as I mentioned before, profitable growth is the driving kind of force. We want to continue to expand profitability that 400 basis points of adjusted EBITDA expansion year-to-year is how we think about it. That allows us to reinvest back into the business and continue to invest in innovation that will grow the business over the long term.

You gave preliminary 2026 revenue guidance on your third quarter, if I remember correctly, it was high teens. And we talked afterwards, and I said, why is high teens the right number? And so I'm going to ask you that same question?

Yes. Yes. We didn't give guidance, but coming off a quarter where we reported over 30% growth, we thought it was important to give a little bit of color around 2026. We pointed to kind of where Street numbers were at the time, which was in that 16% to 18% range and essentially said, we felt comfortable there. It's a good way to set up the year. We'll give formal guidance as we get into 2026, but didn't want any kind of surprises there.

Obviously, a lot of momentum in the business and believe it's sustainable and durable. There's a lot to be excited about. Certainly, with the performance of 2025, we're going to have difficult comps all of next year, but certainly feel good about what's in front of us and the business continuing to grow. And we want -- I'd say, no different than this year. We want to be thoughtful in terms of how we set guidance. We want to put something out there. We have high confidence in. We're going to bake things in that we have good visibility to and then leave things out of guidance that maybe are a little less predictable or there are some factors that need to play through that before those ultimately contribute to the business.

Innovative channel is a good example. That's an early -- an emerging part of our business, right? We don't have a lot of history there. It's kind of concentrated with across 18 partners today, and there can be some lumpiness in that business. So we want to be thoughtful there, not get ahead of ourselves, bake in what we have high confidence in and then leave the rest to play through as upside.

So can we use the word conservative?

We like -- we prefer the words.

This is like no, no, don't use that word.

We prefer the word thoughtful -- thoughtful and balanced approach. And I mean, I will say there's a reason we're leaving things out of guidance, and that's because they don't -- we don't have as high confidence in them as we do what we're putting in guidance. So I definitely want to remind folks of that, and we do try to be thoughtful. Some of these things may not play through and may not come in as upside, but we want to put guidance out there that we have high confidence in.

Is there an update or anything you can share on the FDA warning letter and the review process?

Yes. We made really good progress this year. If you remember, we put in a 12-month remediation plan with the FDA, I want to say, August, September last year. We had every timeline, every commitment in that 12-month plan. So we're through that. We've communicated that back to the FDA. That is an area where during the shutdown, they kind of put it to the side and said they would pick that back up when they came back. We're not stopping there.

As we've talked about, we've engaged a third-party firm to come in and essentially do a full audit of our entire quality management system. We communicated that to the FDA. We committed to the FDA, we would share those findings. That will run through, call it, the early, early part of next year, and we'll communicate that back to the FDA. But have made great progress, proud of the progress we've made, certainly not done yet, but like where it's headed.

I believe there were some changes to reimbursement of the patch of the -- we're calling it monitor. Can you comment on that, please?

Yes. So every year, CMS updates the physician fee schedule. There's a proposed rule and a final rule. The final rule published, I want to say, early November. It comes out in pieces. So there's an initial final rule that comes out as a PDF and then data tables, essentially Excel tables that have the different values within that.

What ultimately landed is long-term continuous monitoring, which is the primary reimbursement codes for Zio monitor, Medicare rates going up, call it, 8% next year and then for MCT slightly down for next year for Medicare. Medicare is 25% of our revenue, about 25% of our revenue. Commercial, call it, 50% of our revenue.

Commercial is not -- generally not indexed directly to Medicare. We've worked hard to kind of divorce those 2 and set commercial rates independent of Medicare rates. And we'll give more guidance on this when we give formal 2026 guidance in terms of price versus volume for next year, but certainly a positive outcome.

Over time, you -- not you, but the company has spoken about other programs, sleep apnea, for example, I believe there are others too, there's a laundry list of them. Is one program further along than another? And what is the timeline for hearing an update on that?

Yes, great question. So that is absolutely -- when I talk about reinvesting back into the business, that is an area that we are really excited about. I would put sleep probably ahead of the others. If you think about from a product standpoint, we have Zio MCT that's with the FDA now. That's kind of the next product platform. And then beyond that, we've been working on a multivitals platform. We licensed some technology last year to start to bring in more sensing capabilities onto the device.

So think about SpO2, respiratory rate, heart rate variability, other vitals. And as we're sensing more from the patient, it's right to assume we can deliver more insights for that patient and particularly around sleep. That's one that we think we can do something very similar to what we've done in cardiac monitoring. There's a significant overlap between cardiac arrhythmia and sleep patients. We've built the channel. If you think about our move into primary care as well as cardiologists and electrophysiologists, there's a desire to manage sleep for their patients as well. So we believe we're really well positioned there. We're actively making those investments into that opportunity to open it up. That's a mid- to longer-term opportunity for us, certainly not a 2026 driver. But again, I believe that could be a meaningful opportunity for the company.

You're busy.

We are, and we're having fun.

Good to hear. So when we're all here together at this time next year, what are we going to be talking about?

I think I'd probably stick on the innovation theme. So obviously, we have Zio MCT actively with the FDA now. Certainly, we'll have updates kind of where we're at with MCT this time next year. And I think some of these other opportunities kind of deeper in the pipeline, we'll start to really get some visibility. And we're excited about prioritizing those kind of innovation efforts as we go into 2026 and start making some meaningful progress there. So I'd point to that.

Excellent. Thank you so much, both of you for joining us here today.

Appreciate it. It's great to be here.

Good afternoon. Thank you for attending today's iRhythm Technologies, Inc. Q3 2025 Earnings Conference Call. My name is Jemma, and I'll be your moderator for today. [Operator Instructions]

At this time, I'd like to turn the conference over to our host, Stephanie Zhadkevich, the Senior Director of Investor Relations. Please proceed.

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the third quarter ended September 30, 2025.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. These are based upon our current estimates and various assumptions and reflect management's intentions, beliefs and expectations about future events, strategies, competition, products, operating plans and performance. These statements involve risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent annual and quarterly reports on Form 10-K and Form 10-Q, respectively, filed with the Securities and Exchange Commission.

Also during the call, we will discuss certain financial measures that have not been prepared in accordance with U.S. GAAP with respect to our non-GAAP and cash-based results, including adjusted EBITDA, adjusted operating expenses and adjusted net loss. Unless otherwise noted, all references to financial metrics are presented on a non-GAAP basis. The presentation of this additional information should not be considered in isolation of, as a substitute for or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and 10-Q for a reconciliation of these measures to their most directly comparable GAAP financial measures. Unless otherwise noted, all references to financial measures in this call other than revenue refer to non-GAAP results.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, October 30, 2025. iRhythm disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

And with that, I'll turn the call over to Quentin Blackford, iRhythm's President and CEO.

Thank you, Stephanie, and good afternoon, everyone. We appreciate you joining us today. Dan Wilson, our Chief Financial Officer, is with me on today's call. My remarks will focus on our business performance during the third quarter of 2025 and our outlook for the remainder of the year. I will then turn the call over to Dan to provide a detailed review of our financial results and updated guidance for the year.

We're pleased to report another quarter of strong commercial momentum, reflecting our disciplined execution and differentiated platform technology. For the third quarter, revenue was $192.9 million, representing year-over-year growth of 31%. This result was driven by record performance in both Zio Monitor and Zio AT, continued success moving monitoring upstream through primary care expansion, penetrating further into innovative health channels and a record number of new EHR integrations that continue to deliver measurable impact.

Our competitive differentiators, operational scalability, market access advancements, market expanding innovation, EHR investments and clinical evidence are resonating across the health care ecosystem. Together, these capabilities have enabled us to deliver meaningful impact for patients with iRhythm Services having generated nearly 12 million reports worldwide.

Within our core U.S. business, account expansion and system-wide conversions remain robust. We continue to see strong adoption in both hospital and ambulatory settings, supported by our EHR integration strategy and a streamlined digital workflow that improves clinician efficiency. Larger integrated delivery networks are increasingly choosing iRhythm for enterprise-wide solutions, recognizing the clinical and operational value of our scalable platform, enabling full network conversions in a way not previously seen in our company history.

Our EHR integration strategy continues to deliver meaningful value as 76 of our top 100 customers are now EHR integrated. We now have 30 systems live with Epic Aura with an additional 65 systems in active implementation or advanced discussions. Epic Aura integrated customers typically see an average increase of nearly 25% in monitoring volume within the first 6 months of going live, reflecting how digital connectivity directly enhances utilization and physician efficiency.

We continue to make strong progress expanding into primary care, where upstream use of Zio as a rule-in or rule-out tool supports earlier intervention for improved patient outcomes. This approach helps alleviate specialist bottlenecks, improves physician network efficiency and can allow for more proactive and timely care for the benefit of patients.

Clinical evidence remains at the core of our differentiation. At major conferences this year, including ADA, ACC and HRS, new real-world analysis underscores the importance of early detection and monitoring. We consistently see that arrhythmias often precede major cardiovascular events and that proactive monitoring strategies to identify patients earlier in their care pathway have demonstrated significant reductions in emergency visits, shorter hospital stays and lower overall cost of care for patients managed with proactive monitoring.

Recent published data further validates our approach. For every 1,000 patients with certain comorbid conditions that are diagnosed with arrhythmias earlier in the care pathway, there is potential for over $10 million in downstream cost avoidance by preventing events that increase health care resource utilization, such as ER visits and hospitalizations. Real-world claims analysis indicates that arrhythmia patients are hospitalized more than twice as often as non-arrhythmia patients. With 2 to 5 extra days of length of stay and ER visit rates more than double compared to non-arrhythmia cohorts. These findings reinforce the strategic importance of proactive monitoring and AI-driven risk stratification, not only to reduce catastrophic events, but to lower the total cost of care.

Additionally, the AVALON study published in the American Journal of Managed Care in August, once again confirmed the clinical superiority of Zio's long-term continuous monitoring service, this time in a significantly younger population. In a real-world analysis of more than 400,000 commercially insured patients with an average age of 46 years, Zio demonstrated higher diagnostic yield, faster time to diagnosis, fewer cardiovascular events and lower total health care costs compared to other monitoring approaches. These findings were consistent with the results from the earlier CAMELOT study, which analyzed over 300,000 Medicare patients, reinforcing the strength and reproducibility of our clinical evidence across large diverse populations. Despite this evidence, the fact remains that nearly 2 million short duration Holter and event monitors continue to be prescribed in the U.S. each year, representing a market opportunity of nearly $500 million.

Our risk-bearing and innovative channel partnerships have continued to expand, reflecting the growing recognition of the value of proactive monitoring. We now have 18 active partner accounts with a healthy pipeline of additional partnerships currently under discussion. These partnerships enable population health programs generally targeting large undiagnosed arrhythmia populations, particularly individuals living with type 2 diabetes, COPD, chronic kidney disease, sleep disorders and heart failure. Through these programs, we have the potential to prove the value of proactive detection and demonstrating meaningful reductions in hospitalization rates and health care costs.

As announced this past July, our partnership with Lucem Health continues to advance clinical AI capabilities by enabling the ability to look across the medical records of large patient data sets and identifying undiagnosed patients at highest risk of cardiac arrhythmias. Early results in pilot settings have been encouraging in terms of the ability to proactively identify with high degrees of accuracy where cardiac arrhythmias exist in these unaware populations, reinforcing the strength of our data-driven approach and our ability to deliver population health insights that improve outcomes for the more than 27 million patients in the U.S. that we believe are living with undiagnosed arrhythmias.

As we further validate the accuracy of the predictive arrhythmia solution, we are gathering valuable insight into how to best engage and scale across health systems. We have a number of Tier 1 health systems in active discussions and believe this partnership represents an important step in our strategic evolution from a device-enabled service into a comprehensive digital health platform powered by data and artificial intelligence.

The third quarter also set another record for Zio AT with year-over-year unit growth more than double our corporate average. We continue to expand within existing accounts but notably are launching more new accounts with both Zio Monitor and Zio AT from the outset with workflow integration through EHR systems acting as a key enabler to accelerate utilization and improve system-wide physician adoption.

In September, we submitted our 510(k) filing for Zio MCT, our next-generation mobile cardiac telemetry solution featuring a smaller form factor, extended 21-day wear, advanced detection algorithms and an improved final wear report. We look forward to continuing to partner with the FDA throughout the review process. Also on the innovation front, we're advancing development of AI prediagnostic and diagnostic pathways for sleep apnea, a chronic condition associated with an increased risk of arrhythmia and cardiovascular disease, particularly amongst undiagnosed individuals.

Our internal data suggests that many of existing iRhythm customers are already prescribing home sleep testing and their patients being diagnosed with sleep apnea. Clinical literature has suggested that up to half of patients with AFib have sleep apnea and that the prevalence of AFib increases fourfold in patients with severe sleep apnea. Further, the literature shows that sleep apnea adversely affects AFib treatment outcomes and that outcomes can be improved with treatment of both conditions as well as cardiovascular risk factor modification. Given the meaningful clinical overlap, sleep apnea represents a natural and highly complementary adjacency for our cardiac monitoring platform, reinforcing our ability to expand into adjacent markets that share meaningful clinical overlap. Importantly, by providing broader clinical insights, we can provide the tools to clinicians that have the potential to allow for a more efficient workflow, better patient experience and holistic approach to patient care.

Outside of the United States, we continue to advance commercially to drive adoption of long-term continuous monitoring. In Japan, we now have 13 systems live, supported by positive physician feedback highlighting Zio's clear and comprehensive reports, rapid turnaround time and Zio's ability to find arrhythmias that might be missed with other solutions. We are also advancing evidence generation to support potentially differentiated reimbursement with retrospective and prospective studies underway that include head-to-head comparison of Zio versus local Japanese cardiac monitoring devices in local patient populations. With the Japanese Heart Rhythm Society recommendation and high medical needs designation, we are hopeful that this additional real-world evidence will strengthen our reimbursement positioning over time.

In Europe, growth in the U.K. private market remains strong, and we continue to grow our presence in the 4 EU countries. Our focus on clinical evidence and key opinion leader engagement is building awareness and credibility across these new markets. The Oxford University led a multi-randomized trial of over 5,000 patients presented at this year's ESC Congress and published simultaneously in JAMA, demonstrated that a remote screening strategy with the Zio long-term cardiac monitoring service led to higher AFib detection rates and faster diagnosis versus usual care and in an older population with more comorbidities compared to prior screening trials, including mSToPS. The data show that just as we have proven in the U.S., primary care initiated home-based monitoring with Zio at scale is feasible and effective, reinforcing the potential for growth in primary care channels in the U.K. and beyond.

Overall, our third quarter results demonstrate the operational and financial momentum across iRhythm. We are executing well on our strategic priorities with disciplined execution. While our commercial momentum continues to build, our focus on driving productivity gains and improving efficiencies are allowing us to meaningfully advance our profitability profile at the same time. Importantly, we are now generating positive free cash flow earlier than anticipated and expect this year to be free cash flow positive on an annual basis for the first time in our company's history, reflecting both the strength of our commercial model and the progress we've been making in building a scalable, sustainable and profitable business.

With that, I'll turn it over to Dan to review our financial performance in more detail.

Thank you, Quentin. As a reminder, unless otherwise noted, the financial metrics that I discuss today will be presented on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release and on our IR website.

We delivered another quarter of strong profitable growth in the third quarter with revenue of $192.9 million, up 30.7% year-over-year, combined with an adjusted EBITDA margin of 11.2%. Volume growth was strong across both product lines, driven by continued execution in our core business, sustained Zio AT volume growth and contributions from innovative channel accounts. Pricing also came in slightly favorable due primarily to higher Zio AT product mix.

New store growth with new stores defined as accounts that have been open for less than 12 months accounted for approximately 60% of our year-over-year volume growth. Home enrollment for Zio Services in the U.S. remained steady at approximately 23% of volume in the third quarter.

Moving down the P&L. Gross margin for the third quarter was 71.1%, an improvement of 230 basis points compared to the third quarter of 2024. This improvement to gross margin was driven by volume leverage and continued benefit from operational efficiencies, offsetting the higher blended cost per unit from increased Zio AT product mix.

Third quarter adjusted operating expenses were $141.4 million compared to $143.8 million in the third quarter of 2024. Recall that third quarter 2024 adjusted operating expenses included a $32.1 million charge associated with licensed technology that was recognized as acquired in-process research and development, or IPR&D expense. Excluding that charge, the increase in adjusted operating expenses in third quarter 2025 was primarily driven by volume-related costs to serve and investments to drive future growth.

On a normalized basis, adjusted operating expenses as a percentage of revenue improved as a result of thoughtful and intentional initiatives that our teams have implemented to drive sustainable efficiencies while simultaneously investing in growth initiatives and infrastructure investments for future scale.

Adjusted net loss in the third quarter of 2025 was $2 million, or an adjusted net loss of $0.06 per share compared to an adjusted net loss of $39.2 million, or an adjusted net loss of $1.26 per share in the third quarter of 2024.

Adjusted EBITDA in the third quarter of 2025 was $21.6 million, or an adjusted EBITDA margin of 11.2% of revenue compared to an adjusted EBITDA margin of negative 13.5% in the third quarter of 2024. Excluding IPR&D expenses, adjusted EBITDA margin during the third quarter of 2024 would have been 8.3% versus 11.3% for the third quarter of 2025, an improvement of approximately 300 basis points.

Given our strong performance year-to-date and our outlook for sustained growth, we are raising our revenue guidance for full year 2025 to $735 million to $740 million or 24% to 25% year-over-year growth. This outlook contemplates continued strong volume growth as well as a low single-digit pricing tailwind. We continue to anticipate a strong fourth quarter aligned with normal seasonality, but note that our year-over-year growth rate outlook includes a slight deceleration due to the unique strength of our business in the fourth quarter of 2024 as discussed previously.

For gross margin, we continue to anticipate full year 2025 gross margin to slightly exceed full year 2024 gross margin as clinical operations and manufacturing efficiencies largely offset impacts from tariffs on global imports. We continue to anticipate approximately 50 basis points of negative impact to gross margin from tariffs for the full year.

We are also raising our full year adjusted EBITDA margin guidance to 8.25% to 8.75% of revenues. As discussed in prior quarters, adjusted EBITDA continues to absorb acquired IPR&D expenses, tariff impacts and FDA remediation expense.

Finally, we ended the third quarter in a strong financial position with $565.2 million in unrestricted cash and short-term investments. Free cash flow generation during the quarter was $20.0 million, which marks our third consecutive quarter of trailing 12-month positive free cash flow generation. We now expect to be slightly free cash flow positive for full year 2025. This significant company milestone represents our ability to drive sustainable efficiencies while also investing in infrastructure, growth initiatives for future success and next-generation technology platforms.

In closing, we were very pleased with our financial results from the third quarter of 2025 and the sustained growth of our business. Our teams are executing at a high level, and we remain focused on delivering durable profitable growth. We see momentum across multiple growth vectors, and we are making appropriate investments in growth initiatives and infrastructure scalability while continuing to improve our profitability profile. We believe this sets us up well for continued profitable growth as we close out 2025 and look towards 2026 and beyond.

With that, I will now turn the call back to Quentin for closing remarks.

Thanks, Dan, and thank you all for your continued support of iRhythm today. In closing, the continued progress we've made this quarter is a testament to our accelerating momentum. We're expanding adoption, forging new partnerships and delivering innovative solutions that are transforming cardiac care. Our clinically proven platform, advanced AI analytics and seamless digital integration are driving real impact for patients, providers and shareholders. With each milestone, we're building toward a future where early actionable cardiac insights are the standard, and iRhythm is leading the way.

Operator, we're now ready for questions.

[Operator Instructions] Our first question comes from Nathan Treybeck with the company, Wells Fargo.

Congrats on a very strong quarter. Just to kick it off, Q3 growth accelerated versus the first half and guidance implies over 20% in Q4. You didn't see the expected seasonal step down. So your core Zio Monitor business has been accelerating for the past couple of quarters on record new account openings. I was hoping you could go into more detail on what specifically has been driving the new account openings and the volume growth? How much of it is share shift versus overall market growth?

Yes. I think -- Nathan, thanks for the question. It's good to be talking with you. I think there's a few things that are driving the growth in that core business. And I would point out, it was a record quarter for us in the monitor business, just like it was in the AT business, to be quite honest with you. And a lot of that is driven by new accounts onboarding. But one of the things that's unique about iRhythm in the last 12 months is we've developed the ability to scale and really absorb the entire network of these customers who are coming on board on day 1. And that's very appealing to these customers where historically, we might have to go in and convert an account at a time and work to ultimately convert the entire system over a period of time. Now we're able to do that out of the gate.

The other thing that I would note in those new accounts is that we're seeing more than ever new accounts come into working with iRhythm, where they're bringing their entire long-term cardiac monitor business, so monitor, but also bringing their MCT business with AT as well, and that's fueling a lot of strength in the AT portfolio for us, which I think is just reflective of the value of that product line and these customers seeing that.

So the quality of the new accounts has gotten stronger and stronger over the course of the year. The size of them has gotten stronger, and we're more bullish than ever on our ability to continue to take share, but also grow the overall market. There's no doubt that the move to primary care continues to expand. We're seeing it within the networks that we're already in. And of course, innovative channel partners continues to grow as well as it did from Q2 to Q3 and stepping up there. So quite a few drivers across the business, but I think it's a combination of market share shift as well as the overall market probably picking up a bit.

Our next question comes from Joanne Wuensch with the company, Citigroup.

This is actually [ Anthony ] on for Joanne. Sort of just piggybacking off of Nathan's question. You raised the full year by more than a beat. I think it implies like a $4 million and change over consensus for the fourth quarter. Could you maybe just pick apart what is driving that outperformance you're expecting this quarter?

Yes. Thanks for the question, Anthony. This is Dan. I can start and Quentin can fill in with anything. So as Quentin just spoke to, really the beat in Q3 was primarily attributable to monitor in the core business, but also saw a really healthy contribution from AT, record growth for both AT and Monitor and then growing contribution continued from innovative channel. And as we think about the fourth quarter, it's a very similar setup. I would point out the raise for the guidance for Q4 really primarily tied to Zio Monitor, still expect nice healthy growth from both AT and innovative channel. Those are 2 that we've -- particularly with innovative channel have taken the approach to really leave outside of guidance for everything that we don't have really strong visibility to and high confidence. So very similar approach to Q4. Most of that raise is attributable to Monitor. But encouragingly, seeing really good contribution across the different businesses.

Our next question comes from Richard Newitter with the company, Truist.

Just wondering on AT, momentum seems to be holding strong. As we think about the launch of MCT next year or at least potential approval, I mean, how should we be thinking about growth cadence for MCT?

Yes. Thanks for the question. Look, we continue to be very encouraged by the performance in that AT business line. I think when you start to dissect it, what's really encouraging is that we're seeing it grow very well in our existing core monitor accounts that are now beginning to adopt AT, but also more than ever, the new accounts that are coming on board with us are coming on board using both Monitor and AT out of the gate. And I think that bodes well for our expectations into the future when we're seeing that these new accounts are willing to come on board with us using both product lines.

In terms of MCT itself, I think that's a hard one for us to forecast exactly when it's going to ultimately make its way to the market. We're planning for that to be in the back half of next year. However, I think without clear visibility from an FDA perspective on what the timeline is from an approval perspective, you're probably going to see us set up expectations for 2026 that don't include MCT contribution until we have real clear line of sight into when that timeline is going to firm up for us.

So I continue to be big believers in the AT business, super bullish on the opportunity to convert market share within that MCT category. I think we're probably around a 13% market share player today. I think there's a real path into 25%, 35%. But in terms of MCT itself, I think we want to see some clear line of sight to exactly when that approval might come before we start to really bake in expectations, at least for '26.

Our next question comes from David Saxon with the company, Needham & Company.

Congrats on the quarter. So I wanted to ask on the innovative partner channel. So I think it was last quarter, you talked about 100 potential partners in the U.S. I think in the script, you said you had 18 today. That's up 6 from last quarter, I believe. So can you just talk about the sales cycle there? Like how long does it typically take to onboard? And then what's a realistic penetration level for that channel over the next, call it, 1 to 2 years? And then can you also size that customer group at this point in terms of percentage of sales?

Yes. Maybe I'll hit that last point first. We continue to see that step up from where it was in Q2. We're not going to disclose it each and every quarter, but you can assume that it did continue to step up. And the overall dollar contribution from innovative channel partners was absolutely higher in Q3 than it was in Q2 as well. So we're seeing good progress there.

To your point, we had 12 customers in Q2. We communicated in the prepared remarks, we're up to 18. I would say the size of those customers on average are about similar to what we saw in the initial 12, and we're excited about where that has the potential to go.

In terms of the sales cycle, it's so different by customer right now. And I think that's a little bit of the hesitation that we have in putting forward specific expectations in our guidance. I could give you the example of Signify that took well over a year to sort of get to scale. Then I could give you an example of CenterWell that took about 90 days to get to scale. So it's just -- it's a different sales process. It's a different scaling process with each one of them.

Some of these move very quickly when you can show the data that is coming together articulating the value of finding these arrhythmias, particularly in undiagnosed unaware populations and some of the economic data that's coming together that is quite compelling around the impact of finding these arrhythmias more proactively. So some move very quick, some take longer. I think as we get more experience here, we'll have more confidence to know exactly how to guide to it into the future. But for the time being, as Dan shared earlier, we're going to take a little bit of a wait-and-see approach on some of these without getting way ahead of ourselves.

Our next question comes from Marie Thibault with the company, BTIG.

This is Sam on for Marie. Maybe I can ask about the latest and any updates with the FDA on the remediation efforts for the warning letter and 483s?

No, it's a good question. There hasn't been a whole lot of communication through the shutdown with the FDA, particularly from a remediation perspective. As a matter of fact, I can share with you that the FDA has been clear with us that they've asked for that to more or less be put on hold and reengage with them on remediation after the shutdown is remediated or lifted, which I think is a good sign. Our understanding is through the shutdown, these folks are focused on the more critical sort of matters and the fact that we've been asked to pick it back up once the shutdown is through is encouraging.

There's not been any communication with respect to MCT at this point in time. We are -- as we shared, we've submitted it. They have it, but there's been no communication around it, which is why I think for us, as we think about 2026, it's just prudent to think about that as a year where we'll wait for some more clarity around MCT before we would put it into any expectations out there in the new year.

So that's where things sit at this point in time. Obviously, if things change with respect to any communication or feedback, we'll let you know. I think it's important to recognize we're not changing anything from our continued efforts to remediate our internal systems. As you might recall, we agreed and made the decision that we were going to go above and beyond what the FDA had asked us to remediate as part of the warning letter and the 483s. We've been doing that. All of those efforts will be complete here by the end of the year.

The other thing we committed to, and this has already started, is we've launched the external review/audit of our quality systems by an independent third party that we were doing on our own. We communicated that to the FDA, and we've also communicated we'd be willing to share those things with the FDA. That's gotten started. It's off to a good start. It's early, but it's demonstrating the good progress we've made, and that will continue on through the remainder of the year.

Our next question comes from Suraj Kalia with the company, Oppenheimer.

Quentin, can you hear me all right?

Yes, yes.

Perfect. Gentlemen, congrats on a fantastic quarter. Quentin, many calls going on. So forgive me if you've already touched on this. The innovative channels, the 100 or so, I thought I heard that, that you cited. Quentin, this question comes up with clients and maybe you can articulate it. What is the incremental patient pool you see in this cohort, the types of patients, symptomatic, asymptomatic, how should we think about it and the durability of this channel so that we can sort of size what is the incremental pull-through? Once again, gentlemen, congrats on a great quarter.

Thanks, Suraj. I appreciate it. One of the most encouraging things in this innovative channel effort has been the realization that these folks are monitoring more and more of the asymptomatic, undiagnosed, unaware population. There are a few partners who have targeted symptomatic patients, but we've even seen a few of those move from symptomatic into asymptomatic after recognizing the success that they're having with it. So that's encouraging, and I think it's a great data point that validates that the asymptomatic population is ultimately going to be monitored here.

We believe there's roughly 27 million patients in the U.S. alone who are unaware, certainly undiagnosed, maybe confusing their symptoms with other comorbid disease states like type 2 diabetics, COPD or CKD. One of the things that's interesting that we're discovering in a lot of the data that we're capturing in the research we're doing is that just looking retrospectively over the last 5 to 6 years, nearly 90%, this is an incredible stat. Nearly 90% of patients who are either a type 2 diabetic, have COPD or CKD and ultimately get diagnosed with an arrhythmia. Nearly 90% of them were never monitored prior to that diagnosis, which just speaks to the incredible opportunity to get out there and proactively monitor these unaware, undiagnosed populations, maybe even asymptomatic populations.

And what's encouraging is with the innovative channel partners is most of these programs are focused on these comorbid disease states. It also leads into sort of what we're doing around Lucem that we talked about last quarter in terms of developing these algorithmic capabilities to look across large data sets, particularly these comorbid data sets and looking through the medical records, finding these patients who are likely to have an arrhythmia, get a patch on them and then with a high degree of accuracy, certainly diagnose arrhythmias. And some of these early pilots that we've run, we've seen those yields 80% to 90% in terms of who we think has an arrhythmia, get a patch on them and find out that they do, in fact, have the arrhythmia.

It's important once we diagnose them that now we help reduce the cost of caring for those patients. But the majority of the cost that these partners are saving is a reduction in ER visits, hospital visits, reduction in length of stay in the hospital. These are all things that these partners understand very, very well, and I think speaks to the durability of the channel itself as they see the benefits that are going to continue to accrue for them.

Our next question comes from David Rescott with the company, Baird.

Congrats on the really good quarter here. I wanted to ask on the margin front, the profitability front. Obviously, you had really great progress on are now expecting to hit free cash flow profitability this year, and my guess is that extends into 2026. But when you think about some of the moving pieces around Zio MCT the drag there on the gross margin line, maybe some pickup with the downgradable capabilities you have with MCT. I believe with MCT, you're going to be running on the same product manufacturing line, I believe, as what Monitor is. I recall that being talked about in the past.

So I'm just trying to get a sense for how we should be thinking about this margin trajectory into -- toward that 15% goal that you called out for 2027. When you think about the pieces from MCT coming in and the scale benefits and this innovative channel partner business ramping as a percent of the business?

Yes, David, thanks for the question. So you're right, there are a number of moving pieces there. I think maybe breaking it down first starting with gross margin. We do feel -- continue to feel good about the guidance that we had previously for 2027, where we called out 72% to 73% gross margin in 2027. Obviously, we haven't provided '26 guidance yet. You heard the comments for 2025 being slightly above 2024, so call that low 70%.

So feel really good about that path to 72% to 73% with all the different moving pieces, right? There's benefits from manufacturing automation as we scale the business, as we get Zio MCT on the same platform as Zio Monitor and then just continued efficiencies all around the business. So still feel good about that 72% to 73% gross margin.

And similarly, with adjusted EBITDA, you've heard us talk about a cadence of, call it, 400 basis points of margin expansion year-to-year. We're set to deliver that this year relative to 2024 and feel good about that cadence continuing into next year and beyond. So absolutely still feel good about those targets that we provided for 2027.

Our next question comes from Stephanie Piazzola with the company, Bank of America.

Congrats on a good quarter. You talked about the early work you're doing in sleep diagnostics. So I just wanted to follow up if there's any more color you can provide about how you're thinking about that opportunity, any potential economics of a multi-sensing platform and some of the next steps that you're taking there?

Yes. Stephanie, thanks for the question. Sleep is something that we certainly have a lot of excitement around. I think the overlap of just cardiac arrhythmia and sleep is a natural one. We see it in our customer channel already. We see it in our patients as well. And it's a great deal of overlap in the customers we're already serving that are ordering these home sleep tests. And so I think there's a natural opportunity for us to step in here and really disrupt that space, but at the same time, really improve the workflow and the efficiency for our physician customers, but also for the patient who many times has a pretty cumbersome experience.

So we're excited to be able to do that. I think you're going to see us step into it in a couple of different ways, and I'm not going to get into the real specific efforts that are going underway from a competitive perspective, but I think there's ability to see even within our patient population today and the EKG data that we're capturing where there's a likelihood of sleep disease likely being present. I think that's good information to help our physicians understand and ultimately leads into testing opportunities. And then ultimately, we want to get to where we can have a diagnostic capability right off of the platform on the chest, and that's the multi-sensing effort or opportunity that you mentioned, and that's enabled by some of the BioIntelliSense’s licensed IP that we made last year.

So those development efforts are going on as we speak. I think that's a couple of years away in terms of having a diagnostic product, but I think there are a lot of things that we can do ahead of time that can really create some nice opportunity for us within the sleep channel. As a matter of fact, we've got pilots that are beginning to launch in the back part of this year and will run over the course of next year that we'll continue to learn from and help us get even better in this space and excited with where it can take us.

Our next question comes from Max Kruszeski with the company, William Blair.

Max on for Brandon. Congrats on a nice quarter here. Quentin, I think you had mentioned in your prepared remarks that 76 out of your top 100 customers have EHR integration and that these integrated accounts see an average increase in utilization of about 25% within the first 6 months. Can you just give us some color on, a, what's driving this? B, how durable is that 25% beyond the 6 months? And how is this 25% evolved compared to some of the earlier accounts you guys had EHR integration with?

Yes. Well, look, one of the things that's been unique with integrations is our announced relationship with Epic that we communicated a little over a year ago and really started to step into it in the first half of this year and is really hitting its stride now. And I think I mentioned we've got 30 accounts integrated, and there's another 65 that are in the pipeline that are specific to Epic itself. And when I made the comment around an increase of about 25% 6 months post integration, that's really around the Epic integrations.

And so I want to be clear about that. But a lot of it comes down to workflow, making it as simple as the click of a button within their EMR system to be able to order a Zio to have the Zio report pushed right into that EMR system without having to manually upload or transfer files to have everything right there is incredibly important to our physician customers. One of the things that we love about the integration is that once it's integrated, the entire network of whether it's primary care, whether it's cardiology, whether it's EP, whether it's hospital, they see within their instance of Epic, Zio right there in the instance of it, right?

So the workflow can become very easy across all channels within these IDNs. And it ultimately ends up enabling the push up into primary care to happen in an easy way. Sometimes the pushback we get with trying to move prescribing patterns up into primary care is that the primary care physician isn't comfortable reading the report and diagnosing. Well, within these integrated accounts, the primary care physician can prescribe the device, the device can be worn, the report can be put right into the integrated system. And then the cardiologist or the electrophysiologist can come into the system without ever seeing a patient read the report and diagnose whether they see an arrhythmia there or not. And then they can even make sort of workflow decisions of do I want to see that patient or do I not. That's a huge enabler when it comes to pushing care further up the care pathway. And that's a big part of why we see the EHR integrated accounts grow the way that they do and have the success that they do. And it's also why we spend a lot of time and effort working to integrate our accounts as we go. Very seldom.

I'm not sure I could give you one example of where an integrated account once integrated has ever left working with iRhythm. And so this is very important to us and something you're going to see us continue to pour into.

Our next question comes from Zachary Day with the company, Canaccord Genuity.

Congrats on the quarter. On Zio MCT, I know you're not guiding anything financially. But once you have the approval in hand, what is the launch strategy for it? Is it going to be mainly targeted to new accounts and you're going to carry the momentum of AT into those accounts? Maybe just how are you thinking about it?

Yes. Good question, and I appreciate it. As we think about sort of guidance, maybe let me just take a step back relative to that for a second. I'll tell you, we've never been more bullish around the business as we are right now. I think the structural growth drivers in the business are the strongest that we've ever seen. And I think it's demonstrated by the record quarter that we put up with Monitor with AT, innovative channels, even EHR integrated accounts. But when it comes to guidance, when it comes to next year, you're going to see us take an approach that, frankly, is very similar to the approach that we took this year. It's not going to be any different. I think that's one that is very thoughtful. It's going to be prudent. It's going to be calibrated and mindful of the tougher comps that come in, but also being mindful of those things that are really dependent on external timelines like MCT being dependent on the approval from the FDA.

In that case, we're not going to put it into our expectations for 2026. And so we'll let that sort of play out as upside. I know where the Street is sitting at right now. I feel good with where the Street is sitting at 17%. I think you're probably going to see us come out and guide to 2026, probably somewhere around that 16% to 18% range that leaves upside with these external factors like MCT being dependent on FDA approval or innovative channels sort of making their decisions when they're going to adapt and when they're going to ultimately step into working together.

So we're going to be thoughtful around guidance. We're going to not get ahead of ourselves here. We're going to be responsible and that's how we're going to set up the year. I have not been more excited heading into a new year than what I am right now as we look ahead to 2026. I think there are more drivers in the business, more new features that are going to be introduced into the commercial teams that are going to drive great momentum, but we're not going to get ahead of ourselves either as we head into the new year.

Our next question comes from Daniel Downes with the company, Goldman Sachs.

Just want to add to David's earlier question and how we should think about your reinvestment priorities as you transition to becoming a positive free cash flow business. Just noting your current cash position of almost $600 million. I guess as a follow-up to that, what level of investment do you expect will be required ahead of the Zio MCT launch once approved?

Yes. Thanks, Daniel. This is Dan. I can take that question, and Quentin could fill in anything he'd like. So really very similar to this year, we have been actively reinvesting back into the business. You just heard Quentin remark that next year is setting up really well from kind of an innovation standpoint, and that's through some of the investments that we've been making this year and we'll continue to make next year. Obviously, Zio MCT has been at kind of the forefront of that as we got to submission there with the FDA. We have the multi-vitals platform that we continue to work on and are excited about. And then as Quentin mentioned earlier, some of the initiatives around sleep.

That's kind of on the innovation side. And then I'd also say we're making investments operationally as well, right? So AI has been important from a service delivery standpoint that will continue to be, but also starting to embed AI within the organization and really look for those opportunities to scale the business as efficiently as we can. And so that's really how we look at where to invest in the business. As you noted, certainly have the balance sheet to make those investments. And now that we're tipping into free cash flow positive, we have a lot of flexibility there.

Our next question comes from Gene Mannheimer with the company, Freedom Capital Markets.

Great quarter. I just wanted to follow up on the earlier point about your development in the sleep diagnostics. Just for my edification, are you suggesting that any new product for sleep would it be -- would it leverage the same or similar form factor as your Zio MCT today?

I think, Gene, thanks for the question. But I think, yes, you're thinking about that exactly the right way. The intent ultimately is for us to get to where we can identify, diagnose sleep right off of the exact same platform that we have today. And I think that provides with it a lot of economic benefit. You can almost imagine a future, if you will, where somebody might wear the cardiac -- or sorry, might wear the Zio for cardiac arrhythmia monitoring and then maybe we suspect sleep disease and they end up wearing that similar patch to diagnose sleep as well.

The cost profile for us really doesn't change in that scenario, but the ability to diagnose multiple things could become quite interesting. And so ultimately, we want to serve the patient as well as we can and provide them with as much information as possible. We think that there's a lot of overlap with cardiac and sleep and that there's just natural synergy there. If we can do it off of the same platform, I think there's real financial synergy in that. And so that is the ultimate goal.

Our next question comes from Nathan Treybeck with the company, Wells Fargo.

I just had one follow-up on something that was mentioned on this call. So I think Zio MCT is going to be downgradable to an event monitor, correct me if I'm wrong. I just want to understand what percentage of your Zio AT scripts today are not reimbursed? And being able to downgrade that to an event monitor eventually, does that improve your mix of reimbursed scripts? And I guess, your outlook for the MCOT ASP going forward?

Yes, it's a great question, Nathan. Again, we're super excited with that MCT category. I think the biggest reason that we see folks choose not to work with iRhythm today is primarily around duration of report being 14 days and getting out to 21 days is going to be important for us, and I think it's going to close a lot of those gaps that the customers who are not working with us yet are requesting.

There is the downgradable aspect. We're going to have that option. It's going to be at our option to enact that or not. How we commercialize that, I think, is something we're going to continue to work through. I'm not real certain yet exactly how we'll commercialize it. We don't have a lot of AT business that we're not capturing the revenue on, although we've been pretty intentional about not serving those customers that are looking to really downgrade the capability, but it does happen where MCT might get denied and then you're left with needing the downgrade or you just aren't able to recognize the revenue. So there is a little bit of that with us.

We'll figure out how we're going to commercialize the downgrade aspect if we do, but the functionality will absolutely be there in what we submitted to the FDA, and it's going to be left to us in terms of how we decide to commercialize it. We're not certain just yet.

At this time, there are no more questions registered in queue. I'd like to pass the conference back over to the management team for closing remarks.

Well, thanks again for joining us today. We couldn't be more proud of what the iRhythm team continues to accomplish. We're executing with discipline. We're driving innovation. We're delivering profitable growth, all while staying true to our mission of transforming patient care. We're entering the final quarter of the year with strong momentum and a great confidence in the road that sits ahead of us. The future of our company has never been brighter than what it is today. So thank you for your support. Thank you for joining us today, and we'll see you on the road.

That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.

Okay. Welcome. Thanks for everyone joining day 2 of BMS Global Healthcare Conference. I'm Patrick. I run the U.S. med tech team. For those of you who don't know, disclosures. Very exciting. morganstanley.com/researchdisclosures. Not the most thrilling thing, but what is thrilling is to have iRhythm here. Thanks to Quentin, who's CEO and decided to join for some reason, probably because he doesn't know me well enough to notice fair way yet. But thanks for joining.

Thanks for having us.

I might just dive right in, in the core LTCM market. I think there was quite a lot of shock. I had one of my teammates opened the door to my office on the Q2 and with deep surprised at the number you guys printed given it's so far above where people expected it to be. But you flagged that 2/3 of that beat was really the core base business. For those who are less familiar in the audience, maybe you could like elaborate a little bit what drove that large LTM?

Yes, I would love to. Certainly, we were very excited with the momentum that we saw sort of pick up a bit in that core business. But beyond that, we saw a lot of great momentum in the innovative channel business as well. The ZIO AT business line performed incredibly well also. So there was a lot of big drivers in that quarter. But you're right, 2/3 of the beat came out of that core business. And I think if you parse that apart what was encouraging to us was we saw it coming out of really 2 aspects of it.

When we think about the core business, we have our same-store business line that we monitor very closely, we saw the momentum there actually pick up a bit. But the real strength continue to come out of the new accounts that we were onboarding. And I think -- I call it the quality of the new account. It's really not the quality, but it's the size of the new account. The average prescribing volume per account has really stepped up in a meaningful way.

And I think there's a couple of reasons for that. One, I think when you just think about our ability to convert these accounts, we're now able to go into these large networks and flip an entire network at a single time. Historically, we would go into these large networks pitching for the business, but we would have to convert 2, 3 accounts at a time and then convert the next 2, 3 accounts. And a lot of these networks have no interest really in working with multiple vendors for a period of time, but they're going to convert, they want to convert the entire book of business.

And we really built out the size, scale, capability to do that about a year ago, and we've started to see the meaningful fruits of that. And so the size of the new account that we're converting is higher or larger than what we've seen historically. And I think that just speaks to our scale and capability. And we continue to see a lot of those in the pipeline that are very intriguing to us and continue to have success in that.

So the size of the new account was much larger. I think the data that we continue to publish the clinical data, the CAMELOT data that's out there, the AVALON data that's out there. You just saw some recent data with the AMALFI study, continues to articulate the value of proactive monitoring, the value of monitoring with Zio relative to any of our competitive offerings. It just demonstrates that it's a far superior product.

It's a faster time to diagnosis. It's a higher diagnostic yield. It's a lower retest rate. And it's also much lower or lighter health care resource utilization costs associated with when you're using Zio versus any of our competitive products. And I think that's resonating really well with this population. Finally, the last piece of it, the one that I probably get the most excited about is just we are seeing a real move even in our large established networks that we're serving today, a move towards primary care within their practices.

And what's happening in that situation is we've opened the door through cardiology. We've opened it through electrophysiology. We've leveraged that relationship to have them bring the primary care physician within their network to the prescribing table, if you will. A lot of times, that primary care physician is not comfortable diagnosing, but the way we overcome that is with our integrated systems, we can put the report right into the system. Primary care can prescribe, the cardiology EP can go in, interpret the report, diagnose, and the product almost starts to become used like a rule in and rule out tool for these networks.

And if the cardiologist EP sees something in that report, and they want to see that patient, they go ahead and have them referred on to cardiology or EP. If they don't, then they go down a different pathway. So it starts to address some of the capacity concerns that we're seeing in our same-store accounts.

And what's really, really encouraging about it is once that's established and now the card or the EP is seeing a better profiled candidate, they're able to provide a better service to that patient whether that's more procedures for them as a practice, whatever it might be, post procedure monitoring actually starts to pick up again in terms of Zio. So now you see the overall account begin to really lift in ways that we hadn't seen historically. That's exciting. I think that's got a lot of legs to it. We're in the early innings of that, but that's what's really driving sort of that core business.

How critical -- I mean, you sort of alluded to it, but CAMELOT and AVALON. Was that the key to unlock this? Is this like a data-driven?

It's amazing to see sort of how that is opening doors to have these conversations. We're now at the point where folks are getting their hands on it. They're proactively calling in saying, look, we'd like to have a discussion around this. We want to understand it better. What are you -- what is this report telling us? Or what is this trial telling us? And we're able to have that discussion. And it certainly leads to the opportunity to open the doors, convert the business, whether it's coming through the lens of the physician or if it's coming from the top decision-makers in these networks who are seeing the ability to get a better outcome, it's kind of coming from both angles.

I mean on the topic of trials because you're talking about trials, I have no idea how much people will pay attention, but I thought the AMALFI readout of the ERC was super interesting. I mean maybe for those who are less familiar with it or missed it because there's a lot going on there, a little bit of a background on that trial and roughly what your takes from it were.

Yes. So the AMALFI trial was an important one for us. We ran it out of the U.K. where we're trying to demonstrate the value of monitoring in a home enrollment setting, right? So avoiding the patient from ever having to come into the clinic, can we find diagnosed arrhythmias at a rate comparable to those who are coming into the clinic? Or is there a very different experience, right?

And this is particularly important in that U.K. market because the backlog to see a cardiologist, in some cases, is 5, 6, 7 months. I mean we were just -- we're talking about the one account right now. They've got 3,000 patients in their backlog that they're trying to work through.

And so what we're trying to prove is that the ability to find the arrhythmias is high in a home enrollment setting. And what we found there was thousand patients -- thousands of patients that we were looking at, both in the one side of it that used the home enrollment approach with the Zio versus just traditional lines of care, which was going into the clinic was that with ZIO in a home enrollment setting, we actually found AFib at a rate of about 6.8% compared to just north of 5% in the traditional arm.

Importantly, patients who wore the device out of the 14 days, I think the average order period is 13.9 days out of 14 days. So they're getting the full experience. We're getting all of the heartbeat data that we need to define the arrhythmia. And importantly, we're finding arrhythmias a whole lot sooner. On average, we found them in about 100 days in the home enrollment side of the study compared to north of 500 days in the traditional care pathway.

That's very important when you think about it over a year of difference in terms of time frame to diagnose and what happens in that patient's journey over the course of that year can be incredibly costly, both to the patients in terms of their health outcomes, but also to the system in terms of what episodes of care they might be dealing with, right?

So very encouraging to us. I think it continues to demonstrate home enrollment as a place. We are seeing home enrollment continue to grow in our overall business. We're up to about 23%, 24% of our volume comes through home enrollment. Interestingly, primary care, these innovative channel partners are leveraging home enrollment as well back here in the States. But I think what we were able to show is that it's a very attractive way to get after large populations of folks that need monitoring.

I live in the U.S. now, but my father-in-law has amyloidosis, so I can definitely speak in the U.K. to the backlog.

See a cardiologist [indiscernible]. It's incredibly tough. It's pretty bad.

The strength that we saw in Q2, just given the nature of what your business is and pulling new accounts on, why wouldn't we expect that to continue to manifest through the bulk of the second half of the year? I mean, surely, that should remain very strong.

I think that it will. I don't think there's any reason that we wouldn't expect to see it. Part of the increase to the guide that we passed through in the full year was certainly the Q2 beat, but then there was an increase in both our Q3 and Q4 expectation as well as we raised the full year well in excess of the Q2 beat. And in part, part of that is coming from the core business, right? So we do expect that momentum to continue to be strong.

I think one thing that just philosophically, we try to be very thoughtful about is we don't want to get ahead of ourselves in some of these aspects of the business that are a little bit less predictable. The core business, I think we understand it well. I think there's new accounts, we understand well. Where there's a little bit less predictability is around the innovative channel partner.

And so our approach there is we'll forecast what we see coming into the business that we're doing and transacting business with today. But there's new accounts that we expect that are going to convert and come online in Q3 and Q4, we're going to wait to see those come online and then we'll talk about them. Same with ZIO AT, right? We saw that momentum stick with us through Q1, Q2. We ended up passing some of that through in the back part of the year. We'll continue to monitor it. But we've been really pleased with that AT business.

We'll definitely get on to MCT there. Were you surprised by the ZIO AT strength?

Yes, we were, to be honest with you. What's interesting about it is we're sort of growing that AT business today at the rates that we used to grow it at prior to when the warning letter was issued, right? And I think the warning letter certainly took a little bit of the air out of our sales at the time. I don't think AT is the right product to truly go flip the majority of the market that I think we have a right to go win. I mean, we have 70% of the long-term cardiac monitoring market, yet we only have about 12% of the MCT market with our AT product.

I think to really close that gap or catch up, we need MCT. But I do think AT is back to growing at some of those prior rates. We had a little bit of competitive hiccup back in Q3 of last year that opened the door to let us bring AT back in, but it did perform and has performed better than what we thought. But I think it also speaks to the opportunity that sits ahead with ZIO MCT because where we saw a lot of the AT success and where we continue to see it is we place a large emphasis on integrating with our accounts.

When we integrate, I'm not sure I can give you a single account that's ever left working with iRhythm after going through the effort of integrating a system. So we try to integrate more than 50% of our accounts. We're working hard at getting there. We have 70% market share in the LTCM category, 12% in MCT. With an integrated account, what we found through that competitive disruption was it was very easy to swap AT into that integration so that they could start to use a different product when the competitive product was not available.

That bodes well for when we launch MCT because I think we can drop it right into a lot of these integrated accounts and have some quick early wins and success. The challenge with AT that we get from our customers is that, well, it's only 14 days of monitoring. We need to get closer to 30 days. MCT is going to close that gap. So I'm bullish on what that can look like, but that's another one. I think let's get it in the market, let it play out. Let's see how it does, and then we'll talk about the real potential of where it can go.

I mean we're kind of on MCT now, so it sort of makes sense. I mean 21 days is a big improvement. How much does the remaining 9 matter?

I think it's meaningful. I think when you go out and you do the market research, and we've done a ton of effort and work around this, it's getting north of 20 days sufficient. And the feedback that we get is that it is. Most of the -- up to 30 days is sort of -- it started with the CMS code around CMS or around the CPT code for MCT. And it's very clear, it's up to 30 days. It doesn't require 30 days. It just says up to 30 days. And a lot of the physician practices sort of look at that and say, okay, I got to be up to 30 days.

When you really get into it, what you find out for most of them is we got to be north of 20, right? And so 21 days is something that we can do very easily off of a single patch. We can do it off of a single gateway device that doesn't have to be recharged, which we believe to be important. And so we think we really addressed that gap pretty meaningfully. Now if we launch MCT and a customer really wants 30 days, we'll give them 2 patches, get them to 30 days, right? We're not going to lose the opportunity. But our intel would tell us that we would get out -- or we're going to get after the majority of the market at 21 days.

Not to put you on the spot, but time lines on MCT, you guys are saying, I think you used the phrase imminent maybe in some meetings.

It's actually, I'm excited to say it's been filed. So we are on file now. And it's off and running with the FDA.

So that's great news.

That's great news. Shout out to the team to get that done. We got that on file today. So well done.

That's great news. That's awesome to hear. I mean, to your point on the LTCM share relative to MCT, like how do you think about the analog of the 70% there versus the 12-ish today on the other side, is 70% the right way to look at it? Or it's a very different kind of a market in its own way? How should we think about peak share, whatever that means?

We would love to have 70% of it, right? I mean every 10 points of share gains is potentially $100 million of incremental revenue for us on an annual basis. So we're going to go after that as aggressively as we can. But we also realize like our biggest competitors, their primary market is the MCT market, right? So they're going to protect that aggressively as I would, too. But I think we have a real right to win there. I mean we have 70% market share in long-term cardiac monitoring.

We are in the vast majority of these accounts already. They know iRhythm. They know Zio. We are integrated with them in many system integrations, Epic is only going to continue to build upon those integrations. It's very easy to put a ZIO MCT product right into their offering, right, and make it very seamless to use. So I'm bullish. You hear us talk about getting to 25% and then 35%. That's a couple of hundred million dollars of incremental annual revenue.

I don't know that we ever get to 70% with these large competitors protecting their space. But we're going to go after it, for sure, and we'll see where we get to.

How much of wear time and proportional amount of data upload is limited by the battery? How much engineering-wise, is that the biggest?

Yes. That's the biggest issue, but it resides primarily on the gateway, right? So we got Bluetooth capability that takes you from the device to the gateway and then we're pushing to the cloud, right? And it's the battery there that limits the power or the power consumption is what limits the duration of life. I actually think there's a model out there where the patients are okay recharging that gateway. I mean they're recharging smartphones all the time. If we can get this thing to communicate with a smart device and then push up through that connection, that's one way to get around it.

It's really about can we keep it to a single patch on the patient? And I do think, and we're doing wear studies as we speak that even go beyond 21 days that could get us a longer duration of monitoring. So if that's what the customer really, really wants, we want to find a way to meet them there. If that's what they want out of the gate today, we'll send a second patch. Our competitors today are sending 4 patches. Usually, they send 2 and then if the folks want to monitor for a longer duration and get into week 3 and week 4, they send another patch behind it, right?

So even 2 patches, I guess, if you want 21 and another 9 days or so, you're probably a better experience than what our competitors are offering. So...

So I'm [indiscernible] my Apple watch is telling me it's time to stand. I'm going to ignore it. But flipping on to that, maybe if we could talk a little bit about asymptomatic. It's a topic that comes up a fair bit. I used this argument when we were doing the heatflow IPO, but we screen for colonoscopies structurally with patients, but heart attacks, coronary artery disease, all that side of things, rhythm disorders, I mean it's kind of the #1 killer in the U.S. is in cardiology really. So big picture, how are you thinking about asymptomatic and your role within that?

Yes. I think asymptomatic is going to be a big driver of growth for this company in the future. I think we're struggling a little bit sort of trying to understand how do we predict exactly when it's going to come online and to what degree and how fast. I mean, we're seeing some traction there already. About 3% of our prescribing volume in Q1 came from the innovative channel partners, which is predominantly asymptomatic monitoring, right? So we saw that step up again in Q2 and expect that will continue to grow. But how fast that adoption goes is a little bit hard for us to identify.

We talk often about Signify was one of our early customers there. It took them 18 months to get to a nationwide program. Then we talked about the likes of CenterWell, and it took them 90 days to get to a nationwide program. So the pace of ramp, just how quickly they go is something we're still trying to learn. We believe there's probably 27 million folks in the U.S. alone who have undiagnosed or are completely unaware that they have arrhythmias.

I think what's fascinating is when you start to dig into that, you find out that a vast majority of those 27 million folks exist in roughly 4 disease states. They're type 2 diabetics. They have COPD or they have CKD or they have OSA. We're working aggressively to target those comorbid disease states and proactively monitor those populations. This goes down the path a little bit of what we talked about back on Q2. We made a small investment in a firm by the name of Lucem where we're developing AI. It's proprietary AI to ourselves, exclusive to ourselves in cardiac that we can proactively go to these at-risk entities, leverage the power of the algorithms across their EMRs and look for markers in their patient history that would tell us that, that patient is likely to have an arrhythmia.

And then we put a patch on monitor them, diagnose them and then we provide care or help, ensure that care is provided to reduce the downstream cost of caring for that patient. What's encouraging is in some of these early trials, the first 1,000 patients that we ran through sort of this algorithm criteria, found that about 920 patients actually had an arrhythmia. So north of 90% hit rate.

The second one that we went after, we opened the aperture just a little bit. We're still north of 80% hit rate. So more than 800 out of the 1,000 patients that we put a patch on did in fact have an arrhythmia. So -- and then we're in the middle of a third trial as we speak, and it's early, but I can tell you we're 100% out of the first handful of folks that have come back in terms of hit rate of who actually had no arhythmias versus who we thought.

I think that's going to become very important to how we think about opening up this 27 million patient population. I think if we can go into these payers with a high degree of accuracy, identify which of their patients likely have arrhythmias, get a patch on them, diagnose it, now they can treat them very differently. It's interesting when we're looking at the type 2 diabetic population. Outside of a physician's office, the most common place that a type 2 diabetic will get diagnosed with an arrhythmia is in the emergency room.

And it's always -- not always, but the majority time is tied into a circulatory related event, right? We can bend that curve. And if we can just impact 1 patient for a provider or a payer, that's about $17,000 per patient that we're saving that system, right? So we believe we have a real ability to sort of bend that cost curve, and we're excited about getting after, but I think that's how you're going to open up the asymptomatic market. A dialysis patient costs $100,000 a year for Medicare to just keep going.

And most clinics have a team, a cardiology team because so many of the patients just code out in the chair. So if you have that sense ahead of time, that word a lot of that, right, and get ahead of it, we can avoid a lot of them, right? Yes. Get ahead of it.

Yes, that makes a lot of sense. That's really interesting. I mean when you're having these discussions with the payers, I mean this in the best path way. Your product is not particularly expensive in terms of an absolute dollar [indiscernible] what is preventing them from that engagement? Is it just that there's a million things to do, and they just haven't thought about that population management side today, like what's the...

No, there's a couple of things that come up. Yes, they've got a lot of different priorities. And there have been situations where we pitch our program. They're very interested in it, but it comes back to because it's not the top priority, right? And so let's talk about it in 6 months or 12 months. That has occurred. One of the big challenges we run into is we don't have the physician capacity to prescribe and then follow up with these patients. So even if we diagnose and learned that they had it, we can't provide the care to ensure we reduce the cost of caring for that patient downstream.

And we've come up with some creative ways to address that. We bring alongside ourselves a third-party virtual cardiology capability. That one can prescribe the Zio if you'd like them to or any patch for that matter, if you'd like them to. And two, once diagnosed, we can hand them over to the spiritual cardiology capability and ensure that we're managing that patient to reduce the cost of caring for them over the next 12 months or so, right, or as long as you want to go, but we're really intent on trying to get costs down within 12 months.

That has opened the door tremendously. Of all the 12 innovative channel partners that we've signed, every one of them has required this wraparound service capability. In the 40 accounts that we're in active discussions with right now, the majority of those are wanting to have that discussion around that holistic program. So to me, this is more than just offering a device to identify diagnosed disease. It's sort of an entire program that we're bringing to the table that I think it's highly unique, differentiated that is very compelling to them and can help address their constraints, particularly around capacity or wraparound care afterwards that allows them to step into it much earlier, much quicker.

That's so interesting. I mean when you're thinking about that wraparound care and that side of things, there is not an element of just communicating to the patient. Even just the knowledge they have paroxysmal AFib or whatever. Isn't that highly material from that -- you could just drink a bit less.

They'll change. Yes, health habits, right? Just the awareness of knowing, I think, is something every patient probably wants to know. But the payer system wants to know that there's a change in that behavior, right? And so what are we able to do to help ensure that we do change that behavior, and that system can, in fact, realize a reduction in the cost of caring for the patient. I think that's so critical for us. I mean we spend a lot of time trying to measure, monitor, identify, communicate the ability to reduce the downstream costs. Because what I don't want to do is open this channel up, end up diagnosing a whole lot more arrhythmia, but then the cost of care is not changing one bit.

And it's going to be viewed as we're just adding incremental cost. We've got to be careful not to let that be the argument that ever wins the day. And so we're pretty deliberate about following cost of care, identifying where the cost savings are coming from and helping our partners understand that.

I'm going to ask you about a meeting question, which is basically, we started by saying AVALON and CAMELOT open up for you guys a lot of doors that didn't exist before. And when you think about the asymptomatic side of things, Sometimes, we get the question around wearables and well, you're aware, I will see that cheap wearables and how that competes. But is the existence of the data side just and the fact that, that opened the door is evidence that in order to have a meaningful position in the asymptomatic, you need a data set, a history, you can't be a consumer-facing product.

Yes, I think the data is incredibly important, right? And I think you got to be more than just a wellness sort of device. I think most positions for them to change their course of therapy is going to want to get to a diagnosis of something, right? So not being able to get to a formal diagnosis off of a traditional wearable like you're discussing here. I think it's something that holds that back. And what we find is with the Apple Watch is a great example. It's probably one of the best lead generators that we found in our Zio business over the last several years.

Folks show up. I got my Apple Watch telling me that I've got an arrhythmia or dangerous arhythmia that you need to take a look at, put a Zio on, right? That works very well for us, we're fine with that scenario, and I think it's actually helped open up the market.

We were talking before about the PCPs and getting them involved in that side. How does for you and your guys' perspective, how does servicing that group with -- how do you approach it differently so when you think about the core cardiologists?

Yes. For us, there's 2 ways that we go after primary care. And the first is in the large integrated health networks that we're already in. So here, we're leveraging the relationship at our territory manager, our key account manager, customer service folks that they already have with the cardiologists and the EP within the network. And we're leveraging that relationship to have the cards and the EPs actually begin to bring the primary care physician into the discussion.

And a lot of times, I mean we don't even have to approach the card and the EPs to have them already reaching out to primary care to say we want the prescribing to happen a lot sooner. We're in a backlog. We're not seeing patients for 3 or 4 months. We don't want patients to leave our network and go somewhere else. How do we make sure we're seeing the right folks? Well, let's get a patch on them earlier and then we'll identify who we need to see sooner versus later.

So that's one approach in the large systems we're already in is just leveraging existing relationships, our existing PMs, the power of the cardiologists, the EP within the network and have them move us further up the care pathway. That's one way. The other way is through the innovative channel partners. And that's very much more of a high-level strategic account level sale, right? And here, we're talking whether it's the CFO, whether it's the CEO, whether it's the head of strategy or large corporate projects, we're having those discussions at the executive level and then they're pushing it down through their channels.

So in that scenario, literally, you've got a group of call it, maybe up to 10 folks. So we aren't quite at 10 folks in the company now, we'll probably get somewhere close to it. But it's roughly 10 folks who are out there really selling at a high enterprise-wide level versus sort of on the ground trying to convince one physician versus the next versus the next. I think this approach of innovative channels and then within health networks we're in, probably get us to 60%, 65% coverage of primary care in the states. While we're doing that, I think word of mouth is going to continue to grow in the primary care space around the ease of use of using patch-based technologies that I think inbound interest will continue to grow.

I think we'll serve the majority of the market. We'll see where it goes. It definitely is going to be enough to keep us busy for the next several years. And if we've got to think differently at that point in time to get after the remaining 30%, 40%, then we look at it. But I think there's a lot of different ways we can do that. I mean there's partnering opportunities with folks who have large primary care network or sales channels, we drop our product in the bag in a #2 position, I think there's ways to get after it, right, that we don't have to go build a large commercial force.

Obviously, U.S. conference U.S. place, but just to pivot a little bit outside of the U.S., Japan, obviously, a huge market and a huge opportunity. I know you're a parity on pricing, but how do you think about or reimbursement, I should say. How do you think about the opportunities set in Japan?

It's an exciting market. It's the second largest market in terms of the volume of the inventory cardiac monitoring that's taking place, a little over 1.5 million tests being prescribed every single year. So we want to be there. We're excited to be there. We did a lot of work on the clinical and the medical side, getting up to the point of launching into the market where we had tremendous support from the Japanese Heart Rhythm Society. We had a high medical need designation bestowed upon the Zio product in particular, not even long-term product monitoring but Zio in particular, which I thought was a big differentiator.

Unfortunately, sort of the clinical medical side is very disconnected from the reimbursement authorities, right? And so I don't think we got a lot of credit for a lot of the data that we were able to demonstrate that showed superior outcomes, and therefore, we didn't get a reimbursement level we had hoped for. We decided to go ahead and go into that market at the Holter rate code. We could have decided not to. Ultimately, I thought it was the best thing to go ahead and get into that market, start to seed it. A lot of what the reimbursement authorities were asking for was sort of head-to-head data of our product versus a local Japanese manufacturered Holter device on the Japanese population.

So the best way to get at that in my mind was to get right in the market and let's just start going head to head, and we'll start tracking and monitoring those outcomes. And we'll present that back to them in the first half of next year. My hope is we see a reimbursement rate more reflective of the value that we're bringing. I think at the current rate today, it's probably just around a $200 million market. And if we can get the rate that we believe we probably add to, it's is probably a $500-plus million market, right?

So we're certainly excited by it. The one thing that I think ends up being a little bit of an advantage in going in at the Holter rate is you don't have this argument of, well, it's more expensive, so I'm going to continue to use the old technology. I mean we're at parity now. So there's a real opportunity to come in very quickly, build a base, go head to head, demonstrate superior outcomes and then argue for a higher rate. So we'll give it a shot.

I mean maybe to push on that a little bit, the -- even a parity in that way, I still don't really get being comparatively new to this, I covered Philips for like 15 years, but why are people still using Holter monitors? It's a bit of a weird conundrum. Is it just like the inertia in the system, it just takes time.

I think that's a little bit -- that's a part of the Japanese culture, right? And it's a very loyal culture. They're loyal to their own relationships, vendor relationships. We've been doing business with these folks for a long period of time. They've been trained up in this way is what they know. I think there's a lot to overcome on that. Now when you sit down, I think when -- the last time I was over there just before launch, it was impressive to look across the room and see all the folks from the Japanese Heart Rhythm Society from the very senior leaders, the President of the society all the way down through their fellows sort of in the room supporting our efforts to get into the market.

So it's not going to be the lack of sort of that high-level support that we need. It's going to be changing behaviors. It's going to be education. It's going to be those sort of things. And it's no different than the early times in the U.S. market.

But even in the U.S., there's still this like weird sleeve that refuses.

There's still 1.5 million, right, short-term Holters being prescribed. It's kind of silly. I mean, you've got data now that would tell you 65%, nearly 65% of all arrhythmias, even in a symptomatic population that get diagnosed happen after 48 hours. Why are we still prescribing short duration 48 hours or less Holter monitors? This is silly. There's 1.5 million of them out there, right, and another 0.5 million of event. I mean there's close to a $500 million market still serving those older technologies.

So I think that will shift. I don't know that you're never going to get them completely out of the market, but there's no reason for them to continue to be north of 1 million, 1.5 million prescriptions every single year. So there's such a better way to get at this. But it comes back to it's what they're used to. We've got to educate them. A lot of this happens out in rural settings, right?

So how do you get out to find these folks. But there's a path there. We'll get there. But it is surprising to see how much still happens through that [indiscernible].

You do a lot of these meetings, you do a lot of cash outs and things like that. You got a lot of questions. Are there anything that you are surprised you don't get asked or that the market is so fixated on that compared to what you're focused on internally that it doesn't -- just doesn't feel out?

I think -- I think for the most part, our folks understand the story pretty well. The thing that we don't get asked a lot that I suspect we'll start to get asked more, but we're certainly spending a lot of time internally on this is just building up the platform. I think we have a real right to win and sleep. I think we will absolutely get to the point where we can diagnose sleep disease off of the chest. I think as we push hard in the primary care, one of the big ideas that I have around that is that if we can get the primary care and if we can make it as easy to find arrhythmias as we have, but transfer that over into other disease states like sleep disease, I think we have a right to win there.

And I think that we will win there. And so we're pushing full steam ahead internally on developing that capability, ultimately submitting something to the FDA here in the future that will give us the ability to diagnose sleep off of the same patch. Potentially, you end up looking at a scenario where all of a sudden, your average revenue per pass goes from $300 today to $500 in the future. I love what that does in the margin profile of the business.

So I wish we talked more about that probably. I understand why we don't. There's a lot in the core business that we had to solve over the last 18, 24 months. I feel great about where we're at with the FDA at this point. I feel great that they know where we're taking the product profile and into the future, but I suspect we'll probably start talking more about that into the future. But I think that's just a tremendous opportunity for us.

Is there a partnership doable with one of the OSA players and...

Yes, I think -- look, I don't have any interest in offering up a therapeutic in this space. But I have all the interest in the world of sort of leveraging the relationships they might have to help us diagnose earlier and then hand them over to those folks, right? So I think there's great opportunity there. I think those are discussions there they're active, right? We have them. I think we're not quite ready yet. Well, we don't have a diagnostic tool just yet. When we do, I think some of those things can move at a faster pace, but I think it makes all the sense in the world that if we're going to go find this disease, we need to make sure the patients and new systems that we're finding it with, again, a system is not super interested in just diagnosing more, not knowing what to do with it.

But if we can couple that with a therapeutic offering or a journey for that patient to get the care they need, I think now you're starting to offer something really valuable to these folks. So yes, I think there's a pathway there at some point.

Love it. Quentin, thank you so much.

Yes. Thanks for having us.

Thanks.