iRhythm Technologies Announces Second Quarter 2020 Financial Results

Rhea-AI Summary

iRhythm Technologies, Inc. (NASDAQ: IRTC) reported a 3% decline in revenue for Q2 2020, totaling $50.9 million, compared to $52.4 million in Q2 2019. Gross margin decreased to 69.6% from 75.2% year-over-year, with operating expenses rising 11.1% to $55.6 million. The net loss widened to $20.4 million or $0.75 per share, versus a loss of $10.7 million or $0.43 per share in the prior year. The company has not provided full-year guidance due to ongoing COVID-19 uncertainties.

Positive

• Continued delivery of Zio service without interruption despite pandemic.
• Encouraging recovery in registration rates during Q2 2020.
• Increasing traction with Zio AT indicating platform value.
• Strong cash position with total cash and short-term investments of $114.9 million.

Negative

• 3% revenue decline compared to Q2 2019.
• 20% revenue decrease compared to Q1 2020.
• Gross margin contraction of 560 basis points year-over-year.
• Operating expenses increased by 11.1% compared to Q2 2019.

SAN FRANCISCO, Aug. 06, 2020 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by iRhythm Technologies, Inc. (NASDAQ: IRTC), please note that in the table of Condensed Consolidated Statements of Operations, the rows for "Net loss per common share, basic and diluted" and "Weighted-average shares, basic and diluted" were missing. The corrected release follows:

iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care solutions company focused on the advancement of cardiac care, today reported financial results for the three months ended June 30, 2020.

Second Quarter 2020 Summary

• Revenue of $50.9 million
  - 3% decrease compared to second quarter 2019
  - 20% decrease compared to first quarter 2020

• Gross margin was 69.6%
  - 560 basis point year-over-year contraction

“Despite the challenges presented by the pandemic, we have continued to deliver our Zio service without interruption to the physicians and patients that rely on it.  Our team recognized the need for high quality care has never been greater and I could not be prouder of the commitment we have demonstrated,” said Kevin King, CEO. “Second quarter results were encouraging, despite the COVID-19 impact felt early in the quarter. We saw a steady pace of recovery in registration rates throughout the quarter that exceeded our initial expectations.

“Importantly, we believe we continued to penetrate the market and take share as an acute shift away from Holter monitoring took place.  Our digital platform is well suited to deliver services in a virtual environment, with a single-use Zio device and home enrollment capability. We expect it will remain an important component of many of our accounts’ workflows going forward. We also saw significant traction with Zio AT, signaling the increasing value our complete platform solution provides in streamlining workflows across cardiac monitoring needs. 

“While we are encouraged by our recent rebound, the macro environment remains uncertain and several market factors could result in suppressed demand through the rest of 2020. We are managing our business for the long-term with planned investments to drive growth and profitability and remain as confident as ever in the durability of our business,” concluded King.

Second Quarter Financial Results
Revenue for the three months ended June 30, 2020 decreased 3% to $50.9 million, from $52.4 million during the same period in 2019. The decrease was primarily due to lower volumes but was slightly offset by increased ASP.

Gross profit for the second quarter of 2020 was $35.4 million, or 69.6% gross margin, compared to $39.4 million, or gross margin of 75.2%, during the same period in 2019.

Operating expenses for the second quarter of 2020 $55.6 million, compared to $50.0 million for the same period in 2019 which was an increase of 11.1%. Excluding a $3.0 million milestone payment to Verily, operating expense increased 5.1% to $52.6 million.

Net loss for the second quarter of 2020 was $20.4 million, or a loss of $0.75 per share, compared with net loss of $10.7 million, or a loss of $0.43 per share, for the same period in 2019.

Total Cash and Short Term Investment balance at June 30, 2020 was $114.9M.

Guidance for Full Year 2020
As previously reported, iRhythm is not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.

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 webcast on the “Investors” section of the company’s website at: www.irhythmtech.com.

About iRhythm Technologies, Inc.
iRhythm is a leading digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distill data from millions of heartbeats into clinically actionable information. The company believes improvements in arrhythmia detection and characterization have the potential to change clinical management of patients.

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, the impact of COVID-19 on our business, market opportunity, ability to penetrate the market, operating plans and expectations for economic recovery. 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 filing made with the Securities and Exchange Commission on the Form 10-K on March 2, 2020. 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 Relations Contact:	Media Contact:
Lynn Pieper Lewis or Leigh Salvo	Saige Smith
(415) 937-5404	(262) 289-7065
investors@irhythmtech.com	irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)

	June 30,				December 31,
		2020				2019
Assets
Current assets:
Cash and cash equivalents	$	81,730			$	20,462
Investments, short-term		33,196				120,089
Accounts receivable, net		22,877				23,867
Inventory		4,989				4,037
Prepaid expenses and other current assets		3,743				4,337
Total current assets		146,535				172,792
Investments, long-term		-				8,030
Property and equipment, net		30,199				26,464
Operating lease right-of-use asset		87,758				90,124
Goodwill		862				862
Other assets		10,870				7,940
Total assets	$	276,224			$	306,212
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,012			$	8,243
Accrued liabilities		25,170				2,714
Deferred revenue		1,197				1,251
Debt, current portion		7,778				1,944
Operating lease liabilities, current portion		8,157				7,914
Total current liabilities		47,314				52,066
Debt, noncurrent portion		27,164				32,989
Operating lease liabilities, noncurrent portion		83,800				85,748
Total liabilities		158,278				170,803
Stockholders’ equity:
Preferred stock		-				-
Common stock		25				25
Additional paid-in capital		408,096				395,695
Accumulated other comprehensive gain		181				82
Accumulated deficit		(290,356	)			(260,393	)
Total stockholders’ equity	$	117,946			$	135,409
Total liabilities and stockholders’ equity	$	276,224			$	306,212

 

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

	Three Months Ended June 30,								Six Months Ended June 30,
		2020				2019				2020				2019
Revenue	$	50,878			$	52,441			$	114,413			$	100,775
Cost of Revenue		15,484				13,012				31,547				24,785
Gross Profit		35,394				39,429				82,866				75,990
Operating expense:
Research and development		12,542				7,833				20,957				14,532
Selling, general and administrative		43,014				42,161				91,244				80,227
Total operating expenses		55,556				49,994				112,201				94,759
Loss from operations		(20,162	)			(10,565	)			(29,335	)			(18,769	)
Interest expense		(381	)			(440	)			(761	)			(849	)
Other income		237				295				742				670
Loss before income taxes		(20,306	)			(10,710	)			(29,354	)			(18,948	)
Income tax provision		131				15				148				27
Net loss	$	(20,437	)		$	(10,725	)		$	(29,502	)		$	(18,975	)
Net loss per common share, basic and diluted	$	(0.75	)		$	(0.43	)		$	(1.09	)		$	(0.77	)
Weighted-average shares, basic and diluted		27,176,601				24,724,808				27,008,236				24,600,250

 

FAQ

What were iRhythm's revenue results for Q2 2020?

iRhythm reported revenue of $50.9 million for Q2 2020, a 3% decrease compared to Q2 2019.

How did net loss change for iRhythm in Q2 2020?

The net loss increased to $20.4 million or $0.75 per share in Q2 2020, compared to a loss of $10.7 million or $0.43 per share in Q2 2019.

What is the gross margin reported by iRhythm for Q2 2020?

iRhythm reported a gross margin of 69.6% for Q2 2020, down from 75.2% in the same quarter of 2019.

Did iRhythm provide financial guidance for 2020?

No, iRhythm did not provide financial guidance for 2020 due to uncertainties related to COVID-19.