iRhythm Technologies Announces Fourth Quarter and Full Year 2023 Financial Results
- Strong revenue growth of 17.7% in Q4 2023 and 19.9% in full year 2023
- Net loss increased in Q4 2023, but improvements in adjusted EBITDA were seen
- Significant progress in Zio monitor transition and record new account onboarding
- Upcoming data presentations at a prestigious medical event
- CEO emphasized revenue growth, international expansion efforts, and operational improvements in 2023
- Positive outlook for 2024 with plans for continued growth and value creation
- Decrease in gross margin in Q4 2023 compared to the same period in 2022
- Net loss increase in Q4 2023 and full year 2023
- Sequential increase in operating expenses in Q4 2023 driven by impairment charge and other costs
Insights
The reported financial results by iRhythm Technologies indicate a robust year-over-year revenue growth of 19.9% for the full year 2023, which is a positive signal for investors as it reflects the company's ability to increase sales and expand its customer base. However, the decline in gross margin, both for the fourth quarter and the full year, suggests increasing costs relative to sales, which could be a concern if the trend continues. The increased net loss for the year, despite higher revenues, points to scalability challenges that the company needs to address to achieve profitability.
From a liquidity perspective, the reduction in cash, cash equivalents and marketable securities is noteworthy. It may raise questions about the company's cash burn rate and the need for potential future financing. The provided guidance for 2024, with an anticipated increase in revenue and improved gross and adjusted EBITDA margins, is optimistic and suggests that management expects operational efficiency gains and continued growth momentum.
Considering the operational highlights, the record new account onboarding and the transition to the newest generation ambulatory cardiac monitor demonstrate iRhythm's success in penetrating the market and suggests a strong adoption rate of their products. The company's focus on product innovation and expansion into new markets, including international territories, is a strategic move to diversify revenue streams and reduce dependency on the core U.S. market. However, the international expansion comes with regulatory, market acceptance and operational risks that need to be managed effectively.
The company's strategy to explore new business models and adjacent market opportunities could lead to additional revenue sources but also requires careful consideration of market dynamics and customer needs. The upcoming data presentations at the American College of Cardiology's Annual Scientific Session & Expo may further validate the clinical utility of iRhythm's products and potentially bolster their market position.
The clinical relevance of iRhythm's Zio service is crucial, as it represents a long-term continuous monitoring solution for cardiac patients. The company's innovation in this space, particularly with the newest generation of the Zio monitor, indicates a commitment to improving patient outcomes and staying at the forefront of digital health technology. The increased patient registrations suggest that the medical community recognizes the value of iRhythm's offerings.
However, it is important to monitor how the increase in headcount-related costs, aimed at scaling clinical operations, will translate into improved service delivery and customer satisfaction. The impairment charge related to the San Francisco office lease also reflects the broader economic environment and its impact on asset valuations. These factors, combined with the net loss, underscore the importance of balancing growth with cost management in the healthcare technology sector.
SAN FRANCISCO, Feb. 22, 2024 (GLOBE NEWSWIRE) -- 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, 2023.
Fourth Quarter 2023 Financial Highlights
- Grew fourth quarter 2023 patient registrations in excess of
22% compared to the fourth quarter 2022 - Revenue of
$132.5 million , a17.7% increase compared to fourth quarter 2022 - Gross margin of
66.0% , a 390 basis point decrease compared to fourth quarter 2022 - Net loss of
$38.7 million , an$18.5 million increased loss compared to fourth quarter 2022 - Adjusted EBITDA of
$2.4 million , a$1.3 million improvement compared to fourth quarter 2022 - Cash, cash equivalents and marketable securities of
$133.8 million at December 31, 2023, a$24.7 million reduction from September 30, 2023
Full Year 2023 Financial Highlights
- Revenue of
$492.7 million , a19.9% increase compared to full year 2022 - Gross margin of
67.3% , a 120 basis point decrease compared to full year 2022 - Net loss of
$123.4 million , a$7.3 million increased loss compared to full year 2022 - Adjusted EBITDA of (
$4.9) million , reflecting a$6.4 million improvement compared to full year 2022
Recent Operational Highlights
- Second highest quarter of Zio long-term continuous monitoring new account openings in the United States during the fourth quarter and record full year of new account onboarding during 2023
- Zio monitor transition progressing with
67% of long-term continuous monitoring registrations now being for our newest generation ambulatory cardiac monitor - Upcoming data presentations at the American College of Cardiology's Annual Scientific Session & Expo in Atlanta, GA, from April 6-8, 2024
"This past year was truly transformational for iRhythm as we made significant strides to advance our mission in our core U.S. market while advancing multiple initiatives that set us up for future growth,” said Quentin Blackford, iRhythm’s President and CEO. “We realized
"In 2024, we expect to continue bringing our platform technology to as many patients who can benefit through continued commercial execution, product innovation, expansion into new markets, pilots in exciting new business models, and exploration into new adjacent market opportunities. As we continue to bring our Zio services to millions of patients globally and scale the business, we could not be more excited by our unique position in this fast-growing market and our ability to drive value for patients, physicians, health systems, and shareholders," concluded Mr. Blackford.
Fourth Quarter 2023 Financial Results
Revenue for the three months ended December 31, 2023, increased
Gross profit for the fourth quarter of 2023 was
Operating expenses for the fourth quarter of 2023 were
Net loss for the fourth quarter of 2023 was
Full Year 2023 Financial Results
Revenue for the year ended December 31, 2023, increased
Gross profit for the year was
Operating expenses for the year were
Net loss for 2023 was
Cash, cash equivalents and short-term investments were
2024 Guidance
iRhythm projects revenue for the full year 2024 to grow to approximately
Webcast and Conference Call Information
iRhythm’s management team will host a conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET. Investors interested in listening to the conference call may do so by accessing the live and archived webcast of the event, which will be available on the investors section of the Company’s website at 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 Measures
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted 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 2024 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 business 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
- business 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, 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 22, 2024. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.
Investor Contact
Stephanie Zhadkevich
(919) 452-5430
investors@irhythmtech.com
Media Contact
Saige Smith
(262) 289-7065
irhythm@highwirepr.com
IRHYTHM TECHNOLOGIES, INC.
Consolidated Balance Sheets
(In thousands, except par value)
| December 31, | |||||||
| 2023 | 2022 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 36,173 | $ | 78,832 | |||
| Marketable securities | 97,591 | 134,312 | |||||
| Accounts receivable, net | 61,484 | 49,918 | |||||
| Inventory | 13,973 | 15,155 | |||||
| Prepaid expenses and other current assets | 21,591 | 10,555 | |||||
| Total current assets | 230,812 | 288,772 | |||||
| Property and equipment, net | 104,114 | 75,670 | |||||
| Operating lease right-of-use assets | 49,317 | 60,666 | |||||
| Goodwill | 862 | 862 | |||||
| Other assets | 48,039 | 22,252 | |||||
| Total assets | $ | 433,144 | $ | 448,222 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 5,543 | $ | 7,517 | |||
| Accrued liabilities | 83,362 | 65,497 | |||||
| Deferred revenue | 3,306 | 3,051 | |||||
| Operating lease liabilities, current portion | 15,159 | 13,031 | |||||
| Total current liabilities | 107,370 | 89,096 | |||||
| Debt, noncurrent portion | 34,950 | 34,935 | |||||
| Other noncurrent liabilities | 1,012 | 1,307 | |||||
| Operating lease liabilities, noncurrent portion | 79,715 | 83,072 | |||||
| Total liabilities | 223,047 | 208,410 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 31 | 28 | |||||
| Additional paid-in capital | 855,784 | 762,380 | |||||
| Accumulated other comprehensive loss | (112 | ) | (396 | ) | |||
| Accumulated deficit | (645,606 | ) | (522,200 | ) | |||
| Total stockholders’ equity | 210,097 | 239,812 | |||||
| Total liabilities and stockholders’ equity | $ | 433,144 | $ | 448,222 | |||
IRHYTHM TECHNOLOGIES, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
| (Unaudited) Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue, net | $ | 132,511 | $ | 112,617 | $ | 492,681 | $ | 410,921 | |||||||
| Cost of revenue | 45,085 | 33,910 | 160,875 | 129,289 | |||||||||||
| Gross profit | 87,426 | 78,707 | 331,806 | 281,632 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 15,416 | 12,675 | 60,244 | 46,610 | |||||||||||
| Selling, general and administrative | 100,114 | 86,730 | 385,645 | 322,198 | |||||||||||
| Impairment and restructuring charges | 11,078 | — | 11,078 | 26,608 | |||||||||||
| Total operating expenses | 126,608 | 99,405 | 456,967 | 395,416 | |||||||||||
| Loss from operations | (39,182 | ) | (20,698 | ) | (125,161 | ) | (113,784 | ) | |||||||
| Interest expense | (941 | ) | (1,013 | ) | (3,650 | ) | (4,138 | ) | |||||||
| Interest and other income, net | 1,679 | 1,586 | 6,155 | 2,036 | |||||||||||
| Loss before income taxes | (38,444 | ) | (20,125 | ) | (122,656 | ) | (115,886 | ) | |||||||
| Income tax provision | 255 | 73 | 750 | 269 | |||||||||||
| Net loss | $ | (38,699 | ) | $ | (20,198 | ) | $ | (123,406 | ) | $ | (116,155 | ) | |||
| Net loss per common share, basic and diluted | $ | (1.26 | ) | $ | (0.67 | ) | $ | (4.04 | ) | $ | (3.88 | ) | |||
| Weighted-average shares, basic and diluted | 30,702 | 30,151 | 30,528 | 29,916 | |||||||||||
IRHYTHM TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(In thousands, except per share data)
(Unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Adjusted EBITDA reconciliation: | ||||||||||||||||
| Net loss | $ | (38,699 | ) | $ | (20,198 | ) | $ | (123,406 | ) | $ | (116,155 | ) | ||||
| Income tax provision | 255 | 73 | 750 | 269 | ||||||||||||
| Depreciation and amortization | 4,914 | 3,475 | 16,348 | 13,405 | ||||||||||||
| Interest expense | 941 | 1,013 | 3,650 | 4,138 | ||||||||||||
| Interest income | (1,734 | ) | (1,422 | ) | (6,353 | ) | (2,350 | ) | ||||||||
| Stock-based compensation | 23,846 | 15,793 | 77,204 | 57,740 | ||||||||||||
| Impairment and restructuring charges | 11,078 | — | 11,078 | 26,608 | ||||||||||||
| Business transformation costs | 1,772 | 2,335 | 15,866 | 5,082 | ||||||||||||
| Adjusted EBITDA | $ | 2,373 | $ | 1,069 | $ | (4,863 | ) | $ | (11,263 | ) | ||||||
| Adjusted net loss reconciliation: | ||||||||||||||||
| Net loss, as reported | $ | (38,699 | ) | $ | (20,198 | ) | $ | (123,406 | ) | $ | (116,155 | ) | ||||
| Impairment and restructuring charges | 11,078 | — | 11,078 | 26,608 | ||||||||||||
| Business transformation costs | 1,772 | 2,335 | 15,866 | 5,082 | ||||||||||||
| Adjusted net loss | $ | (25,849 | ) | $ | (17,863 | ) | $ | (96,462 | ) | $ | (84,465 | ) | ||||
| Adjusted net loss per share reconciliation: | ||||||||||||||||
| Net loss per share, as reported | $ | (1.26 | ) | $ | (0.67 | ) | $ | (4.04 | ) | $ | (3.88 | ) | ||||
| Impairment and restructuring charges | 0.36 | — | 0.36 | 0.89 | ||||||||||||
| Business transformation costs | 0.06 | 0.08 | 0.52 | 0.17 | ||||||||||||
| Adjusted net loss per share | $ | (0.84 | ) | $ | (0.59 | ) | $ | (3.16 | ) | $ | (2.82 | ) | ||||
| Weight-average shares, basic and diluted | 30,702 | 30,151 | 30,528 | 29,916 | ||||||||||||
| Adjusted operating expenses reconciliation: | ||||||||||||||||
| Operating expenses, as reported | $ | 126,608 | $ | 99,405 | $ | 456,967 | $ | 395,416 | ||||||||
| Impairment and restructuring charges | (11,078 | ) | — | (11,078 | ) | (26,608 | ) | |||||||||
| Business transformation costs | (1,772 | ) | (2,335 | ) | (15,866 | ) | (5,082 | ) | ||||||||
| Adjusted operating expenses | $ | 113,758 | $ | 97,070 | $ | 430,023 | $ | 363,726 | ||||||||
FAQ
What was the revenue growth for iRhythm Technologies in Q4 2023?
What was the net loss for iRhythm Technologies in Q4 2023?
What were the operational highlights mentioned in the press release?
What did the CEO emphasize about the company's performance in 2023?
What is the revenue guidance for iRhythm Technologies for the full year 2024?
