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iRhythm Technologies Announces Third Quarter 2020 Financial Results

2020-11-05 16:05 ET - News Release

SAN FRANCISCO, Nov. 05, 2020 (GLOBE NEWSWIRE) -- 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 September 30, 2020.

Third Quarter 2020 Summary

  • Revenue of $71.9 million
    • 31.6% increase compared to third quarter 2019
    • 41.4% increase compared to second quarter 2020
  • Gross margin was 74.7%
    • Consistent with comparable quarter in 2019
    • 510 basis point increase quarter on quarter
  • Adjusted EBITDA (defined as EBITDA less stock compensation) was positive for the first time at $14.8 million
  • Completed follow on offering generating $206.8 million in net proceeds
    • Cash and Short Term Investments of $327.2 million at quarter end
  • Recipient of National Health System funding in the United Kingdom as a winner of the Artificial Intelligence in Health and Care Award

“Our strong performance during the quarter was driven by further penetration of Zio XT in both existing and new accounts, continued ramp of Zio AT and continued utilization of our Home Enrollment service to sustain patient registration volumes in telemedicine settings. As we exited the quarter, many centers were prescribing Zio at or above the daily average we saw in February, prior to the impact of COVID-19. While the pandemic undoubtedly created unprecedented challenges, it also served to escalate awareness as to the benefits of Zio as our digital platform allows for cardiac monitoring independent of patient and physician location,” said Kevin King, CEO.

“There still remains some degree of regional variability in terms of registration volumes, and this trend significantly correlates to the new or continuing outbreaks in those areas. Nonetheless, we remain very confident in our ability to drive further market penetration, as well as the potential for expansion into the asymptomatic market following data from  important trials currently underway,” concluded King.

Third Quarter Financial Results
Revenue for the three months ended September 30, 2020 increased 31.6% to $71.9 million, from $54.7 million during the same period in 2019. The increase was primarily due to higher volumes.

Gross profit for the third quarter of 2020 was $53.7 million, or 74.7% gross margin, compared to $40.9 million, or gross margin of 74.8%, during the same period in 2019.

Operating expenses for the third quarter of 2020 were $58.5 million, compared to $59.1 million for the same period in 2019 which was a decrease of 1%.

Net loss for the third quarter of 2020 was $4.7 million, or a loss of $0.17 per share, compared with net loss of $18.3 million, or a loss of $0.72 per share, for the same period in 2019.

Total Cash and Short-Term Investment balance as of September 30, 2020 was $327.2 million.

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.

Use of Non-GAAP Financial Measures
iRhythm has supplemented its GAAP net income (loss) with a non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of the Company, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP Adjusted EBITDA to GAAP net income (loss), the most directly comparable GAAP measure, is provided in the schedule below.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with iRhythm’s financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below.

Investor Relations Contact: Media Contact:
Leigh Salvo Saige Smith
(415) 937-5404 (262) 289-7065
investors@irhythmtech.com irhythm@highwirepr.com

Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

 September 30,
 December 31,
Current assets:   
Cash and cash equivalents$95,336  $20,462 
Short-term investments231,901  120,089 
Accounts receivable, net28,955  23,867 
Inventory5,062  4,037 
Prepaid expenses and other current assets4,685  4,337 
Total current assets365,939  172,792 
Long-term investments  8,030 
Property and equipment, net32,775  26,464 
Operating lease right-of-use assets86,247  90,124 
Goodwill862  862 
Other assets11,378  7,940 
Total assets$497,201  $306,212 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$3,838  $8,243 
Accrued liabilities32,185  32,714 
Deferred revenue938  1,251 
Debt, current portion10,694  1,944 
Operating lease liabilities, current portion8,211  7,914 
Total current liabilities55,866  52,066 
Debt, noncurrent portion24,252  32,989 
Operating lease liabilities, noncurrent portion82,537  85,748 
Total liabilities162,655  170,803 
Commitments and contingencies   
Stockholders’ equity:   
Preferred Stock   
Common stock27  25 
Additional paid-in capital629,484  395,695 
Accumulated other comprehensive income68  82 
Accumulated deficit(295,033) (260,393)
Total stockholders’ equity334,546  135,409 
Total liabilities and stockholders’ equity$497,201  $306,212 

Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2020 2019 2020 2019
Revenue, net$71,944  $54,673  $186,357  $155,448 
Cost of revenue18,232  13,785  49,779  38,570 
Gross profit53,712  40,888  136,578  116,878 
Operating expenses:       
Research and development8,768  13,499  29,725  28,031 
Selling, general and administrative49,701  45,649  140,945  125,876 
Total operating expenses58,469  59,148  170,670  153,907 
Loss from operations(4,757) (18,260) (34,092) (37,029)
Interest expense(384) (409) (1,145) (1,258)
Other income, net569  396  1,311  1,066 
Loss before income taxes(4,572) (18,273) (33,926) (37,221)
Income tax provision105  20  253  47 
Net loss$(4,677) $(18,293) $(34,179) $(37,268)
Net loss per common share, basic and diluted$(0.17) $(0.72) $(1.25) $(1.50)
Weighted-average shares, basic and diluted28,050,210  25,247,831  27,358,096  24,818,482 

Reconciliation of Net Loss to Adjusted EBITDA
(In thousands)

 Three Months Ended
September 30,
Net loss$(4,677)
Income tax provision105  
Depreciation and Amortization1,702  
Interest expense223  
Stock-based compensation17,444  
Adjusted EBITDA$14,797  

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