iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health
care company focused on creating trusted solutions that detect,
predict, and prevent disease, today reported financial results for
the three months and full year ended December 31, 2022.
Fourth Quarter 2022 Financial Highlights
- Revenue of $112.6 million, a 37.7% increase compared to fourth
quarter 2021
- Gross margin of 69.9%, a 720 basis point improvement compared
to fourth quarter 2021
- Net loss of $20.2 million, a $12.3 million improvement compared
to fourth quarter 2021
- Adjusted EBITDA of $1.1 million, an $18.4 million improvement
compared to fourth quarter 2021
- Cash, cash equivalents and short-term investments of $213.1
million at December 31, 2022, a $9.6 million increase from
September 30, 2022
Full Year 2022 Financial Highlights
- Revenue of $410.9 million, a 27.3% increase compared to full
year 2021
- Gross margin of 68.5%, a 238 basis point increase compared to
full year 2021
- Net loss of $116.2 million, reflecting an increase of $14.8
million compared to full year 2021
- Adjusted EBITDA of negative $11.3 million, reflecting a $24.4
million improvement compared to full year 2021
Recent Operational Highlights
- CMS Medicare Physician Fee Schedule Final Rule for Calendar
Year 2023 ("CMS Final Rule") released, which contained national
rates for CPT codes that iRhythm uses to seek reimbursement for its
Zio® XT service
- Health economic analysis of iRhythm’s mSToPS trial, presented
at AHA in November 2022, showed that Zio® XT demonstrated gain in
quality adjusted life expectancy while providing excellent value to
healthcare systems by enabling early diagnosis after proactive
screening for atrial fibrillation in an at-risk population1
- FDA clearance gained for software modifications to iRhythm's
clinically integrated Zio ECG Utilization Software ("ZEUS") System,
including an update to add atrial fibrillation burden estimates to
Zio® AT daily reports
- Upcoming data presentations at the American College of
Cardiology's 72nd Annual Scientific Session Together With World
Heart Federation's World Congress of Cardiology in New Orleans, LA,
from March 4 - 6, 2023
"We were pleased with the significant progress made throughout
2022 to advance our mission in the core symptomatic U.S. market
while laying a strong foundation for future growth in our strategic
pillars,” said Quentin Blackford, iRhythm’s President and CEO. “We
recognized more than 27% revenue growth for the full year, driven
by strong volume contributions in addition to pricing tailwinds. We
are also beginning to realize value from our increased focus on
operational discipline, achieving positive adjusted EBITDA in the
fourth quarter and more than 800-basis points of improvement in
adjusted EBITDA margin for the full year 2022 compared to 2021.
With another record of new Zio XT account openings in the fourth
quarter, the issuance of the CMS Final Rule, and tangible progress
made towards our pillars for long-term growth, I could not be more
pleased with the ability of our entire organization to advance our
mission to transform healthcare."
"Entering 2023, we believe that we are well positioned to
continue driving significant value for patients, physicians,
healthcare systems and our stakeholders. We are effectively
navigating the operational headwinds highlighted in the latter part
of 2022 and are guiding to another year of notable growth in 2023.
We anticipate a number of significant and exciting catalysts
throughout 2023, and I am truly excited by the opportunities we
have to bring our innovative services to more patients across the
world," concluded Mr. Blackford.
Fourth Quarter 2022 Financial
ResultsRevenue for the three months ended December 31,
2022, increased 37.7% to $112.6 million, from $81.8 million during
the same period in 2021. The increase was primarily driven by Zio
XT volume and continued Zio AT expansion as well as improved CMS
reimbursement rates.
Gross profit for the fourth quarter of 2022 was
$78.7 million, up from $51.3 million during the same period in
2021, while gross margins were 69.9%, up from 62.7% during the same
period in 2021. The increase in gross margin was primarily due to
higher per unit average selling prices and lower fixed costs per
unit driven by higher unit volumes, partially offset by higher
material and freight costs.
Operating expenses for the fourth quarter of
2022 were $99.4 million, compared to $83.5 million for the same
period in 2021 and $92.0 million in Q3 2022. The sequential
increase in operating expenses was due to variable expenses related
to higher revenues and investments for scale.
Net loss for the fourth quarter of 2022 was
$20.2 million, or a loss of $0.67 per share, compared with net loss
of $32.5 million, or a loss of $1.10 per share, for the same period
in 2021.
Full Year 2022
Financial Results
Revenue for the year ended December 31, 2022,
increased 27.3% to $410.9 million, from $322.8 million in 2021. The
increase in revenue was primarily due to increased volume of Zio
services provided as a result of increased demand as well as
improved CMS reimbursement rates.
Gross profit for the year was $281.6 million, up
from $213.6 million in 2021, while gross margin was 68.5%, up from
66.2% in 2021.
Operating expenses for the year were $395.4
million, an increase of 26.1% compared to 2021. The increase was
mainly due to higher professional fees and compensation to support
growth in our operations as well as restructuring, impairment, and
transformation costs.
Net loss for 2022 was $116.2 million, or a loss
of $3.88 per share, compared with net loss of $101.4 million, or a
loss of $3.46 per share in 2021.
Cash, cash equivalents and short-term
investments were $213.1 million as of December 31, 2022.
2023 Guidance iRhythm projects
revenue for the full year 2023 to grow approximately 16% to 18%
compared to prior year results, ranging from $475 million to $485
million. Gross margin for the full year 2023 is expected to range
from 69% to 70% and adjusted operating expenses are expected to
range between $415 and $425 million. Adjusted EBITDA margin for the
full year 2023 is expected to range from approximately negative
0.5% to 0.5% of revenues.
Webcast and Conference Call
InformationiRhythm’s management team will host a
conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET.
Investors interested in listening to the conference call may do so
by accessing the live and archived webcast of the event, which will
be available on the investors section of the Company’s website at
investors.irhythmtech.com.
About iRhythm Technologies,
Inc.iRhythm is a leading digital health care company that
creates trusted solutions that detect, predict, and prevent
disease. Combining wearable biosensors and cloud-based data
analytics with powerful proprietary algorithms, iRhythm distills
data from millions of heartbeats into clinically actionable
information. Through a relentless focus on patient care, iRhythm’s
vision is to deliver better data, better insights, and better
health for all.
Use of Non-GAAP Financial MeasuresWe refer to
certain financial measures that are not recognized under U.S.
generally accepted accounting principles (GAAP) in this press
release, including adjusted EBITDA, adjusted net loss, adjusted net
loss per share and adjusted operating expenses. We use these
non-GAAP financial measures for financial and operational
decision-making and as a means to evaluate period-to-period
comparisons. See the schedules attached to this press release for
additional information and reconciliations of such non-GAAP
financial measures. We have not reconciled our adjusted operating
expenses and adjusted EBITDA estimates for full year 2023 because
certain items that impact these figures are uncertain or out of our
control and cannot be reasonably predicted. Accordingly, a
reconciliation of adjusted operating expenses and adjusted EBITDA
estimates is not available without unreasonable effort.
Adjusted EBITDA excludes non-cash operating charges for
stock-based compensation, depreciation and amortization as well as
non-operating items such as interest income, interest expense,
impairment and restructuring charges, and transformation costs.
We exclude the following items from non-GAAP financial measures
for adjusted net loss, adjusted net loss per share and adjusted
operating expenses:
- impairment and restructuring charges, and
- transformation costs to scale the organization.
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 and
the Private Securities Litigation Reform Act of 1995. These
statements include statements regarding financial guidance, market
opportunity, the potential impact of Medicare reimbursement rates
for the CPT codes primarily relied upon for the Company’s Zio XT
services, ability to penetrate the market, anticipated productivity
improvements and expectations for growth. Such statements are based
on current assumptions that involve risks and uncertainties that
could cause actual outcomes and results to differ materially. These
risks and uncertainties, many of which are beyond our control,
include risks described in the section entitled “Risk Factors” and
elsewhere in our filings made with the Securities and Exchange
Commission, including those on the Form 10-K expected to be filed
on or about February 23, 2023. These forward-looking statements
speak only as of the date hereof and should not be unduly relied
upon. iRhythm disclaims any obligation to update these
forward-looking statements.
iRhythm Investor
Contact:Stephanie Zhadkevich(919)
452-5430investors@irhythmtech.com
iRhythm Media Contact:Morgan Mathis(310)
528-6306irhythm@highwirepr.com
- Reynolds et. al. AHA Scientific Sessions. Circulation.
2022;146:A10560.
IRHYTHM TECHNOLOGIES,
INC.Condensed Consolidated Balance
Sheets(In
thousands)(unaudited)
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
78,832 |
|
|
$ |
127,562 |
|
Short-term investments |
|
134,312 |
|
|
|
111,569 |
|
Accounts receivable, net |
|
49,918 |
|
|
|
46,430 |
|
Inventory |
|
15,155 |
|
|
|
10,268 |
|
Prepaid expenses and other current assets |
|
10,555 |
|
|
|
9,693 |
|
Total current assets |
|
288,772 |
|
|
|
305,522 |
|
Property and equipment, net |
|
75,670 |
|
|
|
55,944 |
|
Operating lease right-of-use
assets |
|
60,666 |
|
|
|
84,587 |
|
Goodwill |
|
862 |
|
|
|
862 |
|
Other assets |
|
22,252 |
|
|
|
16,052 |
|
Total assets |
$ |
448,222 |
|
|
$ |
462,967 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
7,517 |
|
|
$ |
10,509 |
|
Accrued liabilities |
|
65,497 |
|
|
|
51,486 |
|
Deferred revenue |
|
3,051 |
|
|
|
3,049 |
|
Debt, current |
|
— |
|
|
|
11,667 |
|
Operating lease liabilities, current |
|
13,031 |
|
|
|
11,142 |
|
Total current liabilities |
|
89,096 |
|
|
|
87,853 |
|
Debt, noncurrent |
|
34,935 |
|
|
|
9,690 |
|
Other noncurrent
liabilities |
|
1,307 |
|
|
|
697 |
|
Operating lease liabilities,
noncurrent |
|
83,072 |
|
|
|
85,212 |
|
Total liabilities |
|
208,410 |
|
|
|
183,452 |
|
Stockholders’ equity: |
|
|
|
Preferred Stock |
|
— |
|
|
|
— |
|
Common stock |
|
28 |
|
|
|
27 |
|
Additional paid-in capital |
|
762,380 |
|
|
|
685,594 |
|
Accumulated other comprehensive loss |
|
(396 |
) |
|
|
(61 |
) |
Accumulated deficit |
|
(522,200 |
) |
|
|
(406,045 |
) |
Total stockholders’ equity |
|
239,812 |
|
|
|
279,515 |
|
Total liabilities and
stockholders’ equity |
$ |
448,222 |
|
|
$ |
462,967 |
|
|
|
|
|
|
|
|
|
IRHYTHM TECHNOLOGIES,
INC.Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(unaudited)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue, net |
$ |
112,617 |
|
|
$ |
81,804 |
|
|
$ |
410,921 |
|
|
$ |
322,825 |
|
Cost of revenue |
|
33,910 |
|
|
|
30,521 |
|
|
|
129,289 |
|
|
|
109,258 |
|
Gross profit |
|
78,707 |
|
|
|
51,283 |
|
|
|
281,632 |
|
|
|
213,567 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
12,675 |
|
|
|
11,870 |
|
|
|
46,610 |
|
|
|
38,671 |
|
Selling, general and administrative |
|
86,730 |
|
|
|
71,612 |
|
|
|
322,198 |
|
|
|
274,839 |
|
Impairment and restructuring charges |
|
— |
|
|
|
— |
|
|
|
26,608 |
|
|
|
— |
|
Total operating expenses |
|
99,405 |
|
|
|
83,482 |
|
|
|
395,416 |
|
|
|
313,510 |
|
Loss from operations |
|
(20,698 |
) |
|
|
(32,199 |
) |
|
|
(113,784 |
) |
|
|
(99,943 |
) |
Interest expense |
|
(1,013 |
) |
|
|
(248 |
) |
|
|
(4,138 |
) |
|
|
(1,169 |
) |
Other income, net |
|
1,586 |
|
|
|
15 |
|
|
|
2,036 |
|
|
|
118 |
|
Loss before income taxes |
|
(20,125 |
) |
|
|
(32,432 |
) |
|
|
(115,886 |
) |
|
|
(100,994 |
) |
Income tax provision |
|
73 |
|
|
|
59 |
|
|
|
269 |
|
|
|
367 |
|
Net loss |
$ |
(20,198 |
) |
|
$ |
(32,491 |
) |
|
$ |
(116,155 |
) |
|
$ |
(101,361 |
) |
Net loss per common share,
basic and diluted |
$ |
(0.67 |
) |
|
$ |
(1.10 |
) |
|
$ |
(3.88 |
) |
|
$ |
(3.46 |
) |
Weighted-average shares, basic
and diluted |
|
30,150,501 |
|
|
|
29,439,175 |
|
|
|
29,915,720 |
|
|
|
29,331,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IRHYTHM TECHNOLOGIES,
INC.Reconciliation of Financial
Information(In
thousands)(unaudited)
Reconciliation of Net Loss to Adjusted
EBITDA:
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net loss |
|
$ |
(20,198 |
) |
|
$ |
(32,491 |
) |
|
$ |
(116,155 |
) |
|
$ |
(101,361 |
) |
Income tax provision |
|
|
73 |
|
|
|
59 |
|
|
|
269 |
|
|
|
367 |
|
Depreciation and
amortization |
|
|
3,475 |
|
|
|
3,058 |
|
|
|
13,405 |
|
|
|
9,842 |
|
Interest expense |
|
|
1,013 |
|
|
|
202 |
|
|
|
4,138 |
|
|
|
1,169 |
|
Interest income |
|
|
(1,422 |
) |
|
|
— |
|
|
|
(2,350 |
) |
|
|
(249 |
) |
Stock-based compensation |
|
|
15,793 |
|
|
|
11,876 |
|
|
|
57,740 |
|
|
|
54,527 |
|
Impairment and restructuring
charges |
|
|
— |
|
|
|
— |
|
|
|
26,608 |
|
|
|
— |
|
Transformation costs |
|
|
2,335 |
|
|
|
— |
|
|
|
5,082 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
1,069 |
|
|
$ |
(17,296 |
) |
|
$ |
(11,263 |
) |
|
$ |
(35,705 |
) |
Reconciliation of GAAP to Non GAAP Financial
Information:
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted net loss
reconciliation: |
|
|
|
|
|
|
|
|
Net loss, as reported |
|
$ |
(20,198 |
) |
|
$ |
(32,491 |
) |
|
$ |
(116,155 |
) |
|
$ |
(101,361 |
) |
Impairment and restructuring
charges, as reported |
|
|
— |
|
|
|
— |
|
|
|
26,608 |
|
|
|
— |
|
Transformation costs |
|
|
2,335 |
|
|
|
— |
|
|
|
5,082 |
|
|
|
— |
|
Adjusted net loss |
|
$ |
(17,863 |
) |
|
$ |
(32,491 |
) |
|
$ |
(84,465 |
) |
|
$ |
(101,361 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net loss per
share reconciliation: |
|
|
|
|
|
|
|
|
Net loss per share, as
reported |
|
$ |
(0.67 |
) |
|
$ |
(1.10 |
) |
|
$ |
(3.88 |
) |
|
$ |
(3.46 |
) |
Impairment and restructuring
charges, as reported |
|
|
— |
|
|
|
— |
|
|
|
0.89 |
|
|
|
— |
|
Transformation costs |
|
|
0.08 |
|
|
|
— |
|
|
|
0.17 |
|
|
|
— |
|
Adjusted net loss per
share |
|
$ |
(0.59 |
) |
|
$ |
(1.10 |
) |
|
$ |
(2.82 |
) |
|
$ |
(3.46 |
) |
Weight-average shares, basic
and diluted |
|
|
30,150,501 |
|
|
|
29,439,175 |
|
|
|
29,915,720 |
|
|
|
29,331,010 |
|
|
|
|
|
|
|
|
|
|
Adjusted operating
expense reconciliation: |
|
|
|
|
|
|
|
|
Operating expense, as
reported |
|
$ |
99,405 |
|
|
$ |
83,482 |
|
|
$ |
395,416 |
|
|
$ |
313,510 |
|
Impairment and restructuring
charges |
|
|
— |
|
|
|
— |
|
|
|
(26,608 |
) |
|
|
— |
|
Transformation costs |
|
|
(2,335 |
) |
|
|
— |
|
|
|
(5,082 |
) |
|
|
— |
|
Adjusted operating
expense |
|
$ |
97,070 |
|
|
$ |
83,482 |
|
|
$ |
363,726 |
|
|
$ |
313,510 |
|
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