iRhythm Technologies
(Nasdaq: IRTC)
shares ticked up today on third-quarter results that came in mixed compared to the consensus forecast.
Shares of IRTC rose 4.4% at $82.66 apiece in mid-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — ticked up 1.7%.
The San Francisco-based cardiac monitoring technology developer posted losses of $27.1 million. That equals 89¢ per share on sales of $124.6 million for the three months ended Sept. 30, 2023.
iRhythm recorded a nearly $6 million bottom-line slide deeper into the red despite sales growth of 20%.
Adjusted to exclude one-time items, losses per share totaled 79¢. That fell 13¢ shy of expectations on Wall Street. Sales, however, beat analysts’ projections of $122.6 million.
iRhythm President and CEO Quentin Blackford said in a news release that strong volume contribution from accounts opened in the previous year, plus sustained market penetration, contributed to the company’s revenue growth.
Highlights in the quarter included the launch of the next-generation Zio monitor just before the three-month period ended. iRhythm said it also achieved record registration volumes during the period.
“While we have been thrilled with the success that Zio XT has enjoyed in the marketplace, we are even more excited about the recent commercial launch of our next-generation Zio monitor,” Blackford said. “With such incredible accomplishments over the past few months, I am encouraged by the continued execution against our long-range plan to capture our share of the immense opportunity in front of us today while also laying a solid foundation for significant profitable growth in the years to come.”
iRhythm now expects full-year revenue to growth 19%, ranging from approximately $487.5 million to $490 million. It previously projected a rise of 18% to 19% in 2023, ranging from $485 million to $490 million.
The analysts’ view
BTIG’s Marie Thibault and Sam Eiber called iRhythm’s third-quarter performance strong, maintaining a “Buy” rating. They specifically noted upcoming regulatory submissions and a positive update on the company’s outstanding FDA warning letter.
In May, the company said it received an FDA warning letter involving the Zio AT mobile cardiac telemetry device.
The letter, made public shortly after the announcement, accused iRhythm of violations of the Federal Food, Drug, and Cosmetic Act’s rules for labeling, quality systems and medical device reporting. In at least two cases, iRhythm did not report patient deaths in the required 30-day window, and instead reported them the following year, the FDA said.
While the FDA said some responses and corrective actions from the company have been adequate, the agency had a long list of action items for the company. This added to an investigation from the U.S. Justice Department.
iRhythm plans to submit a catch-up FDA 510(k) for labeling revisions previously made to Zio AT. It also plans to file an additional submission for new design features alerting patients to transmission limits. The company expects the first 510(k) submission by the end of the year.
“An update on the outstanding Zio AT FDA warning letter was largely positive,” the analysts said. “In the meantime, [iRhythm] noted Zio AT can continue to be marketed as an [mobile cardiac telemetry] device. We continue to think [iRhythm’s] sales growth, adoption within the primary care physician channel, product pipeline, and improving profitability metrics make it an attractive investment.”