iRhythm Holdings, Inc. Common Stock 2026 Q2 Earnings Call

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, involve risks and uncertainties, and actual results may differ materially. These statements are made as of today, August 6th, 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. 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 VitalConnect, 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 VitalConnect, which we announced today. We have followed VitalConnect 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.

VitalConnect brings a complementary and comprehensive platform that supports four 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. VitalConnect reinforces our commitment to innovation in ambulatory cardiac monitoring and adds an FDA-cleared platform with a patient monitoring service up to 30 days, four-in-one device functionality, flexible service models, live looking capabilities, and multi-vital 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 MCT segment. This is a large market segment, and customer needs vary considerably by workflow, site of care, and patient population.

Adding VitalConnect'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 VitalConnect creates a complementary set of solutions to serve different MCT customers and patients. VitalConnect 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 multi-vital 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 VitalConnect'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 MCT strategy. We remain committed to both Zio AT and Zio MCT. Because the MCT 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 point, 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 VitalConnect to ensure a rapid and successful integration of VitalConnect's product 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 healthcare 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 two commercial agreements through our partnership with Lucem that combine predictive identification workflows with iRhythm monitoring solutions. These partnerships are intended to support earlier diagnosis and intervention, 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 healthcare cost. 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 healthcare system through this pathway. To support that care journey, we recently launched our first-ever targeted direct-to-patient initiatives through the PatientPoint 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, 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 early 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. In Japan, the higher reimbursement rate we discussed last quarter became effective on June 1st. 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 under-penetrated 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 healthcare system.