iRhythm Holdings, Inc.

What they do

The company designs, develops, and commercializes device-based technology for ambulatory cardiac monitoring (ACM) services. Each iRhythm ACM System pairs a wire-free, patch-based, 14-day wearable biosensor (FDA-cleared, CE-marked, and/or Japan PMDA-approved) that continuously records ECG data with proprietary cloud-based analytic software. iRhythm provides these services from its Medicare-enrolled independent diagnostic testing facilities (IDTFs) using qualified technicians; it says it has delivered more than 13 million patient reports and collected over 3 billion hours of curated heartbeat data since its first FDA clearance in 2009. It employed approximately 2,400 regular full-time employees as of December 31, 2025.

Revenue drivers

• Contracted third-party payors — The largest payor category, at 51% of revenue in Q2 2026 and 52% in the first half of 2026, down from 52% in Q2 2025.
• Centers for Medicare & Medicaid Services (CMS) — 26% of revenue in Q2 2026 and the first half of 2026, up from 24% in the comparable 2025 periods; the 10-K cites approximately 24% of total 2025 revenue from the Medicare program.
• Healthcare institutions — Hospitals and private physician practices that purchase iRhythm Services directly; 17% of Q2 2026 revenue and 16% of first-half 2026 revenue.
• Non-contracted third-party payors — The smallest channel at 6% of Q2 2026 and first-half 2026 revenue, down from 7% in the 2025 periods.

Recent performance

Second quarter 2026 revenue was $224.2 million, up 20.1% from $186.7 million in the second quarter of 2025, driven primarily by sustained volume demand. Gross margin rose 160 basis points year over year to 72.8% on operational efficiencies, product mix, and scale benefits. GAAP net loss narrowed to $0.4 million, or $0.01 per diluted share, from a $14.2 million loss ($0.44 per diluted share) a year earlier, and Adjusted EBITDA was $43.3 million at a 19.3% margin versus a 1090-basis-point improvement. Full-year revenue has grown each year from $322.8 million in 2021 to $747.1 million in 2025, while operating cash flow turned positive at $80.9 million in 2025 from $3.4 million in 2024.

Strategy

Management is pursuing volume-led growth across cardiology, primary care, innovative channels, and international markets while expanding margins. The company entered a definitive agreement to acquire VitalConnect, Inc., a privately held provider of complementary ambulatory cardiac monitoring technology, for total consideration of approximately $287.5 million, which it expects to immediately expand its addressable market and advance its evolution into a broader cardiac monitoring and intelligence platform. It achieved FDA clearance of a third-generation algorithm expected to reduce clinician review time by approximately 50% over time and drive approximately $100 million of cumulative cost savings over the next five years. It is scaling Predictive Arrhythmia Solutions with Desert Oasis Health Care, an affiliate of Heritage Provider Network, using AI-driven predictive analytics. Management describes a disciplined approach to investment, holding Q2 2026 adjusted operating expenses roughly flat at $145.0 million versus $145.2 million a year earlier.

Risks

• Medicare reimbursement dependence — Approximately 24% of 2025 total revenue came from the Medicare program through CMS, and failure to comply with Medicare rules for IDTFs and diagnostic services could halt reimbursement or require returning funds already paid.
• Cybersecurity incident — A June 2026 threat-actor incident involving sensitive information on third-party-hosted business applications led to investigation and remediation costs in Q2 2026, expected further notification and identity-protection expenses, and several related lawsuits, though the company currently believes it is not reasonably likely to be material.
• Continued GAAP losses — The company reported net losses each year from 2021 through 2025, including $45.0 million in 2025, so sustained profitability is not yet established despite the narrowing loss.
• Reimbursement and regulatory change — CMS and commercial payor coverage and reimbursement decisions, and regulations not designed for remote diagnostic tests like iRhythm Services, could adversely affect the business and results of operations.

Outlook

Management increased fiscal year 2026 revenue guidance to $880 million to $890 million and adjusted EBITDA margin guidance to 13.0% to 14.0%. The VitalConnect acquisition, if closed, is expected to immediately expand the addressable market. The company also expects further costs tied to the June 2026 Cybersecurity Incident while it seeks reimbursement from its insurers. No assurance is given that insurance coverage will cover all losses.