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iRhythm Holdings, Inc.

iRhythm Holdings, Inc.IRTCEarnings & Financial Report

Nasdaq · Health Care · Surgical & Medical Instruments & Apparatus

iRhythm Holdings is a digital healthcare company focused on cardiac care, developing and commercializing wearable ambulatory heart monitoring devices paired with AI-powered analytical tools. It primarily serves healthcare providers and patients across the United States, helping to detect undiagnosed arrhythmias such as atrial fibrillation through convenient long-term heart rhythm tracking that delivers actionable clinical insights.

What changed in iRhythm Holdings, Inc.'s 10-K — 2024 vs 2025

Top changes in iRhythm Holdings, Inc.'s 2025 10-K

636 paragraphs added · 589 removed · 469 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

114 edited+53 added−58 removed67 unchanged
Cardiac Arrhythmias and the Ambulatory Cardiac Monitoring Market Cardiac Arrhythmias Every year, millions of patients experience symptoms potentially associated with cardiac arrhythmias, a condition in which the electrical impulses that coordinate heartbeats do not occur properly, causing the heart to beat too quickly, too slowly, or irregularly.
Cardiac Arrhythmias and the Ambulatory Cardiac Monitoring Market Every year, millions of patients experience symptoms potentially associated with cardiac arrhythmias, a condition in which the electrical impulses that coordinate heartbeats do not occur properly, causing the heart to beat too quickly, too slowly, or irregularly.
FDA requires each manufacturer to make this determination initially, but FDA can review any such decision and can disagree with a manufacturer’s determination. If FDA disagrees with the determination not to seek a new 510(k) clearance or PMA approval, the FDA may retroactively require a new 510(k) clearance or PMA approval.
FDA requires each manufacturer to make this determination initially, but FDA can review any such decision and can disagree with a manufacturer’s determination. If FDA disagrees with the determination not to seek a new 510(k) clearance or PMA approval, FDA may retroactively require a new 510(k) clearance or PMA approval.
The Zio Monitor System and the Zeus System are currently marked in the EU under our CE mark under the EU MDR issued by the British Standards Institution ("BSI") in December 2023.
The Zio monitor System and ZEUS are currently marked in the EU under our CE mark under the EU MDR issued by the British Standards Institution ("BSI") in December 2023.
Board and Management Oversight The Compensation and Human Capital Management Committee of our Board of Directors has oversight of human capital management, including our approach to talent recruiting, development, progression and retention, culture, human health and safety, and total rewards.
Board and Management Oversight The compensation and human capital management committee of our board of directors has oversight of our culture and human capital management, including our approach to talent recruiting, development, progression and retention, culture, human health and safety, and total rewards.
These include: • the FDA’s QSR, which requires manufacturers, including their suppliers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the product lifecycle, including the manufacturing process; • labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved, or off-label uses, including parameters around manufacturer communications with payors and healthcare professionals; • medical device reporting regulations, which require that manufacturers report to FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device recalls, which require that manufacturers report to FDA any recall of a medical device, provided the recall was initiated to either reduce a risk to health posed by the device, or to remedy a violation of the FD&C Act caused by the device that may present a risk to health; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • FDA’s QMSR, which requires manufacturers, including their suppliers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the product lifecycle, including the manufacturing process; • labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved, or off-label uses, including parameters around manufacturer communications with payors and healthcare professionals; • medical device reporting regulations, which require that manufacturers report to FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device recalls, which require that manufacturers report to FDA any recall of a medical device, provided the recall was initiated to either reduce a risk to health posed by the device, or to remedy a violation of the FD&C Act caused by the device that may present a risk to health; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
This is why we strive to be open to new ideas, take intelligent risks, act with a sense of urgency, and learn from failure. • Collaborate to win. Prioritizing collective success delivers astounding results, so we aim to think holistically and strategically, develop relationships proactively, and work as one team. 19 • Strive for better.
This is why we strive to be open to new ideas, take intelligent risks, act with a sense of urgency, and learn from failure. • Collaborate to win. Prioritizing collective success delivers astounding results, so we aim to think holistically and strategically, develop relationships proactively, and work as one team. • Strive for better.
In addition, we have entered into licenses in the ordinary course of business relating to a wide array of technologies or other intellectual property rights or assets. 15 We hold patents and pending patent applications in the United States and other parts of the world which, in aggregate, we believe to be of importance in the operation of our business.
In addition, we have entered into licenses in the ordinary course of business relating to a wide array of technologies or other intellectual property rights or assets. We hold patents and pending patent applications in the United States and other parts of the world which, in aggregate, we believe to be of importance in the operation of our business.
Focusing on sales to these customer programs gives us the opportunity to conduct a holistic sale for health systems interested in making value-based purchasing decisions. In January 2021, we established a small direct sales and clinical infrastructure in Bagshot, Surrey in England to service the UK market.
Focusing on sales to these customer programs gives us the opportunity to conduct a holistic sale for health systems interested in making value-based purchasing decisions. 12 In January 2021, we established a small direct sales and clinical infrastructure in Bagshot, Surrey in England to service the UK market.
We are subject to risks related to privacy and security regulation. For further details on these risks, see “Risk Factors,” below. 18 European Union and United Kingdom In the European Union, the system of regulating medical devices operates by way of a certification for each medical device.
We are subject to risks related to privacy and security regulation. For further details on these risks, see “Risk Factors,” below. European Union and United Kingdom In the European Union, the system of regulating medical devices operates by way of a certification for each medical device.
Physicians may also prescribe implantable loop recorders, which are implanted underneath the patient’s skin in a minimally invasive, hospital-based procedure and record ECG data similar to cardiac event monitors but are intended for monitoring up to 3 years.
Physicians may also prescribe implantable loop 5 recorders, which are implanted underneath the patient’s skin in a minimally invasive, hospital-based procedure and record ECG data similar to cardiac event monitors but are intended for monitoring up to 3 years.
To maintain enrollment, we must meet the CMS IDTF supplier standards, including having an independent medical director for oversight and qualified technicians who support the analysis of ECG data captured by the Zio patches as part of our Zio Services.
To maintain enrollment, we must meet the CMS IDTF supplier standards, including having an independent medical director for oversight and qualified technicians who support the analysis of ECG data captured by the Zio patches as part of our iRhythm Services.
The United States has historically been the primary focus of the delivery of our services, but based on our operations we are subject to a range of laws and regulations outside the United States, and we expect the complexity of the global regulatory landscape to which we are subject to continue to increase. U.S.
The United States has historically been the primary focus of the delivery of our services, but based on our operations we are subject to a range of laws and regulations outside the United States, and we expect the complexity of the global regulatory landscape to which we are subject to continue to increase. 16 U.S.
The Zio XT System is the previous generation of the Zio Monitor System and is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (the “Zio XT patch”) that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio XT patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS System.
The Zio XT System is the previous generation of the Zio monitor System and is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (“Zio XT”) that records the electric signal from the heart continuously for up to 14 days and ZEUS, which supports the capture and analysis of ECG data recorded by the Zio XT at the end of the wear period, including specific arrhythmia events detected by ZEUS.
Food and Drug Administration Because we develop and manufacture the medical device technology used in the Zio Services (the hardware and software elements that FDA regulates as “devices”), we are subject to extensive and ongoing regulation by FDA under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) and its implementing regulations, as well as other federal and state regulatory bodies in the United States.
Food and Drug Administration Because we develop and manufacture the medical device technology used in the iRhythm Services (the hardware and software elements that FDA regulates as “devices”), we are subject to extensive and ongoing regulation by FDA under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) and its implementing regulations, as well as other federal and state regulatory bodies in the United States.
We purchase certain components and materials used in manufacturing from single sources due to quality considerations, costs, or constraints resulting from regulatory or other requirements. As of December 31, 2024, those single sources include suppliers of application-specific integrated circuits used in our transmitters, seals used for the applicators, and certain polymers used to synthesize polymeric membranes for our sensors.
We purchase certain components and materials used in manufacturing from single sources due to quality considerations, costs, or constraints resulting from regulatory or other requirements. As of December 31, 2025, those single sources include suppliers of application-specific integrated circuits used in our transmitters, seals used for the applicators, and certain polymers used to synthesize polymeric membranes for our sensors.
Our sales team focuses on initial introduction of the Zio Services to those participants that are instrumental to the decision-making process for ambulatory cardiac monitoring, which include physician practices and healthcare systems. We also focus on continuing efforts to ensure healthcare professionals are knowledgeable about the clinical benefits and economic value of the Zio Services.
Our sales team focuses on initial introduction of our iRhythm Services to those participants that are instrumental to the decision-making process for ambulatory cardiac monitoring, which include physician practices and healthcare systems. We also focus on continuing efforts to ensure healthcare professionals are knowledgeable about the clinical benefits and economic value of the iRhythm Services.
All CMS programs are subject to statutory and regulatory changes, retroactive and prospective rate adjustments, administrative rulings, interpretations of policy, intermediary determinations, and government funding restrictions, all of which may materially increase or decrease the rate of program payments to healthcare facilities and other healthcare providers, including those paid for our Zio Services.
All CMS programs are subject to statutory and regulatory changes, retroactive and prospective rate adjustments, administrative rulings, interpretations of policy, intermediary determinations, and government funding restrictions, all of which may materially increase or decrease the rate of program payments to healthcare facilities and other healthcare providers, including those paid for our iRhythm Services.
Competition The market for remote cardiac monitoring is competitive, characterized by rapid change resulting from technological advances, scientific discoveries, and other market activities of industry participants. In providing our Zio Services, we compete with BioTelemetry, Inc. (acquired by Royal Philips), Preventice Solutions, Inc. (acquired by Boston Scientific, Inc.), and Bardy Diagnostics, Inc.
Competition The market for remote cardiac monitoring is competitive, characterized by rapid change resulting from technological advances, scientific discoveries, and other market activities of industry participants. In providing our iRhythm Services, we compete with BioTelemetry, Inc. (acquired by Royal Philips), Preventice Solutions, Inc. (acquired by Boston Scientific, Inc.), and Bardy Diagnostics, Inc.
As we continue to contract with more commercial payors and the patient population ages into eligibility for the Medicare Advantage program, we believe more of our revenue will convert to commercial payor billing. Our clinical centers are enrolled in the Medicare program as IDTFs, which allows us to bill CMS directly for our Zio Services.
As we continue to contract with more commercial payors and the patient population ages into eligibility for the Medicare Advantage program, we believe more of our revenue will convert to commercial payor billing. Our clinical centers are enrolled in the Medicare program as IDTFs, which allows us to bill CMS directly for our iRhythm Services.
Our manufacturing facilities are also ISO certified (EN ISO 13485:2016). We have registered our device establishments with FDA and with the UK’s Medicines & Healthcare products Regulatory Agency (“MHRA”). Additional EU registrations may be sought in 2025 in EU member states by our EU authorized representative as appropriate.
Our manufacturing facilities are also ISO certified (EN ISO 13485:2016). We have registered our device establishments with FDA and with the UK’s Medicines & Healthcare products Regulatory Agency (“MHRA”). Additional EU registrations may be sought in EU member states in the future by our EU authorized representative as appropriate.
We are subject to risks related to the U.S. fraud and abuse laws and other healthcare compliance requirements described above, as well as others that are or may be adopted in future. For further details on these risks, see “Risk Factors,” below. U.S.
We are subject to risks related to U.S. and international fraud and abuse laws and other healthcare compliance requirements described above, as well as others that are or may be adopted in future. For further details on these risks, see “Risk Factors,” below. U.S.
When physicians order long-term continuous monitoring services with our Zio System, our biosensor technology collects an uninterrupted, long-term continuous recording of ECG data for up to 14 days and delivers a comprehensive end-of-wear report, which includes specific arrhythmia events detected by the ZEUS algorithm upon return of the Zio Monitor patch or Zio XT patch (and with the Zio AT patch, each, a “Zio patch”) and analysis of the stored data by qualified technicians.
When physicians order long-term continuous monitoring services with our iRhythm ACM System, our biosensor technology collects an uninterrupted, long-term continuous recording of ECG data for up to 14 days and delivers a comprehensive end-of-wear report, which includes specific arrhythmia events detected by the ZEUS algorithm upon return of Zio monitor or Zio XT (and with Zio AT, each, a “Zio patch”) and analysis of the stored data by qualified technicians.
CMS has established guidelines for the coverage and reimbursement of certain products, supplies, and services, including ambulatory cardiac monitoring services. In general, Medicare will only reimburse ambulatory cardiac monitoring services, such as our Zio Services, that are reasonable and necessary for the diagnosis or treatment of patients.
CMS has established guidelines for the coverage and reimbursement of certain products, supplies, and services, including ambulatory cardiac monitoring services. In general, Medicare will only reimburse ambulatory cardiac monitoring services, such as our iRhythm Services, that are reasonable and necessary for the diagnosis or treatment of patients.
ZioSuite web portal via desktop or mobile application For the Zio MCT Services, the Zio AT patch and wireless gateway also offer the additional capability of providing actionable transmissions during the wear period to assist physicians in diagnosing and treating patients in situations where their physician has determined that there is a medical need to receive more timely, clinically actionable information.
ZioSuite Web Portal Via Desktop or Mobile Application For the Zio MCT Services, Zio AT and its wireless gateway also offer the additional capability of providing actionable transmissions during the wear period to assist physicians in diagnosing and treating patients in situations where their physician has determined that there is a medical need to receive more clinically actionable information during wear.
We have initiatives that aim to increase customer productivity by optimizing workflow through easier patient enrollment, report access, and interpretation, in addition to integrating the reports from our Zio Services directly into EHRs. • Data analytics.
We have initiatives that aim to increase customer productivity by optimizing workflow through easier patient enrollment, report access, and interpretation, in addition to integrating the reports from our iRhythm Services directly into EHRs. • Data analytics.
The Zio Service Monitoring Solutions The Zio Monitor System is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (the “Zio Monitor patch”) that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software (“ZEUS”) System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS System.
The Zio Monitoring Solutions The Zio monitor System is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (“Zio monitor”) that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software (“ZEUS”), which supports the capture and analysis of ECG data recorded by the Zio monitor at the end of the wear period, including specific arrhythmia events detected by ZEUS.
The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT patch application and collects and transmits data from the Zio AT patch to the cloud via a long-term evolution (“LTE”) cellular protocol.
The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT application on the patient and collects and transmits data from the Zio AT to the cloud via a long-term evolution (“LTE”) cellular protocol.
During 2023, we published internally our Environmental, Health, and Safety Policy Statement demonstrating our ongoing commitment to the highest standards of environmental, health, and safety performance. We consistently track and evaluate recordable incident rates associated with our various facilities locations.
In 2023, we published internally our Environmental, Health, and Safety Policy Statement demonstrating our ongoing commitment to the highest standards of environmental, health, and safety performance. We consistently track and evaluate recordable incident rates associated with our various facilities locations.
Atrial fibrillation and heart failure share many antecedent risk factors, and approximately 40% of people with either Afib or heart failure will develop the other condition. Total cost for heart failure in the U.S. are expected to reach $70 billion by 2030. • Patients with hypertension, with an estimated prevalence of over 120 million in the United States.
Atrial fibrillation and heart failure share many antecedent risk factors, and approximately 40% of people with either Afib or heart failure will develop the other condition. Total costs for heart failure in the U.S. are expected to reach $70 billion by 2030. ◦ Patients with hypertension, with an estimated prevalence of over 120 million in the United States in 2020.
We have found success focusing on integrated delivery networks (“IDNs”), in which large networks of facilities and providers work together to offer a continuum of care to a specific geographic area or market, as well as with risk-bearing entities as our Zio Systems become a key tool in population health management.
We have found success focusing on integrated delivery networks (“IDNs”), in which large networks of facilities and providers work together to offer a continuum of care to a specific geographic area or market, as well as with risk-bearing entities as our iRhythm ACM Systems become a key tool in population health management.
We market our Zio Services to a variety of physician specialties including general cardiologists, electrophysiologists, primary care physicians, neurologists, and other physician specialists who diagnose and manage care for patients with arrhythmias.
We market our iRhythm Services to a variety of physician specialties including general cardiologists, electrophysiologists, primary care physicians, neurologists, and other physician specialists who diagnose and manage care for patients with arrhythmias.
CMS has set certain performance standards that every IDTF must meet in order to obtain or maintain its billing privileges. We are also regulated as a medical device manufacturer because of our role in the design, development, and manufacturing of the Zio Systems used in our Zio Services.
CMS has set certain performance standards that every IDTF must meet in order to obtain or maintain its billing privileges. We are also regulated as a medical device manufacturer because of our role in the design, development, and manufacturing of the iRhythm ACM Systems used in our iRhythm Services.
We are evaluating potential opportunities to leverage our PPG algorithms and ZEUS System with other PPG-based wearables, and we intend to further pursue development opportunities on a wearable platform in the future.
We 9 are evaluating potential opportunities to leverage our PPG algorithms and ZEUS System with PPG-based wearables, and we intend to further pursue development opportunities on a wearable platform in the future.
We continue to invest in our sales force and focus on ensuring we optimize the structure of our U.S. sales organization to expand the current customer account base and support adoption of the Zio Services.
We continue to invest in our sales force and focus on ensuring we optimize the structure of our U.S. sales organization to expand the current customer account base and support adoption of the iRhythm Services.
Under the terms of the License Agreement, we paid BioIS an upfront fee of $15.0 million in cash consideration in acceptance of the initial transfer of certain licensed technologies and data following the execution of the License Agreement.
Under the terms of the License Agreement, iRhythm Technologies paid BioIS an upfront fee of $15.0 million in cash consideration in acceptance of the initial transfer of certain licensed technologies and data following the execution of the License Agreement.
Additionally, as part of any settlement, the government will often require the entity to enter into a corporate integrity agreement, which imposes certain ongoing compliance, certification, and reporting obligations.
Additionally, as part of any settlement, the government will occasionally require the entity to enter into a corporate integrity agreement, which imposes certain ongoing compliance, certification, and reporting obligations.
The Zio patches include the following features: • patented clear, flexible, lightweight, wire-free design; • unobtrusive and inconspicuous profile; • proprietary adhesive backing designed to keep the Zio patch securely in place for the duration of the prescribed wear period; • water-resistant functionality, allowing patients to shower, sleep, and perform normal daily activities, including moderate exercise; • hydrogel electrodes and a compliant mechanical design to deliver a clear ECG with minimal artifact from movement; • large symptom button, or patient trigger, that is easy to find and press; • indicated single application wear period of up to 14 days (for longer prescribed wear periods for MCT services, additional Zio AT patches and gateways can be provided); and • sufficient battery power for the entire wear period, without the need to recharge or replace batteries.
The Zio patch monitors include the following features: • patented clear, flexible, lightweight, wire-free design; • unobtrusive and inconspicuous profile; • proprietary adhesive backing designed to keep the patch-based monitor device securely in place for the duration of the prescribed wear period; • water-resistant functionality, allowing patients to shower, sleep, and perform normal daily activities, including moderate exercise; • hydrogel electrodes and a compliant mechanical design to deliver a clear ECG with minimal artifact from movement; • large symptom button, or patient trigger, that is easy to find and press; • indicated single application wear period of up to 14 days (for longer prescribed wear periods for MCT services, additional Zio ATs and gateways can be provided); and • sufficient battery power for the entire wear period, without the need to recharge or replace batteries.
We facilitate sessions around our core competencies, interview skills, and coaching practices, and we offer a toolbox on our intranet with resources for employees and managers across the employee lifecycle. 21
We facilitate sessions around our core competencies, interview skills, and coaching practices, and we offer a toolbox on our intranet with resources for employees and managers across the employee lifecycle. 22
According to the AHA, stroke costs the United States an estimated $34.5 billion each year in healthcare costs and lost productivity and is a leading cause of serious long-term disability. Between 15% and 20% of people who have strokes also have Afib.
According to the American Heart Association ("AHA"), stroke costs the United States an estimated $34.5 billion each year in healthcare costs and lost productivity and is a leading cause of serious long-term disability. Between 15% and 20% of people who have strokes also have Afib.
Our U.S. issued patents as of December 31, 2024 are set to expire over a range of years, from November 2028 to August 2041, subject to any extensions.
Our U.S. issued patents as of December 31, 2025, are set to expire over a range of years, from November 2028 to August 2041, subject to any extensions.
Zio AT Patch and Wireless Gateway We support physician and patient use of our Zio Systems through our Medicare-enrolled IDTF and qualified technicians, who perform the technical monitoring services associated with a physician’s order for long-term continuous monitoring or MCT monitoring services.
Zio AT and Wireless Gateway We support physician and patient use of our iRhythm ACM Systems through our Medicare-enrolled IDTF and qualified technicians, who perform the technical monitoring services associated with a physician’s order for long-term continuous monitoring or MCT monitoring services.
A Zio patch typically collects approximately 1.5 million heartbeats of data for each patient during a single wear period of up to 14 consecutive days. 7 After we receive the Zio patch at our IDTF, the ECG data is uploaded to our secure cloud and preliminary findings are generated by our proprietary FDA-cleared deep learning algorithms.
A Zio patch typically collects approximately 1.5 million heartbeats of data for each patient during a single wear period of up to 14 consecutive days. 8 After we receive a Zio monitor device at our IDTF, the ECG data is uploaded to our secure cloud and preliminary findings are generated by our proprietary FDA-cleared deep learning algorithms.
Furthermore, the Zio Monitor patch incorporates a breathable adhesive construct, which enhances the patient experience by removing moisture otherwise captured next to the patient’s skin, as well as Bluetooth communication capabilities and improved processing efficiency. 6 Zio Monitor Patch and Zio XT Patch The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of a patch ECG monitor (the “Zio AT patch”) that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, but which also incorporates the Zio AT wireless gateway that provides connectivity between the Zio AT patch and the ZEUS System during the patient wear period.
Furthermore, Zio monitor incorporates a breathable adhesive construct, which enhances the patient experience by removing moisture otherwise captured next to the patient’s skin, as well as Bluetooth communication capabilities and improved processing efficiency. 7 Zio monitor Device and Zio XT Device The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of a patch-based ECG monitor (“Zio AT”) that records the electric signal from the heart continuously for up to 14 days and ZEUS, but which also incorporates the Zio AT wireless gateway that provides connectivity between Zio AT and ZEUS during the patient wear period.
In connection with the License Agreement, we also purchased an aggregate of $40.0 million of convertible promissory notes from BioIS (the “Convertible Notes”), of which $20.0 million (“Milestone Notes”) were designated for satisfaction of our regulatory milestone payment obligations.
In connection with the License Agreement, iRhythm Technologies also purchased an aggregate of $40.0 million of convertible promissory notes from BioIS (the “Convertible Notes”), of which $20.0 million (“Milestone Notes”) were designated for satisfaction of our regulatory milestone payment obligations.
Human Capital As of December 31, 2024, we had approximately 2,000 employees globally. We believe in creating a flexible, productive, and globally connected dispersed workforce. Our work model is comprised of employees spanning remote, hybrid, and fully onsite work arrangements. Work arrangements are determined based on the needs of the role, nature of work, and regulatory requirements.
Human Capital As of December 31, 2025, we had approximately 2,400 employees globally. We believe in creating a flexible, productive, and globally connected dispersed workforce. Our work model is comprised of employees spanning remote, hybrid, and fully onsite work arrangements. Work arrangements are determined based on the needs of the role, nature of work, and regulatory requirements.
The Zio Monitor patch is 72% smaller, 62% lighter, and 23% thinner than our Zio XT patch, attributes which have contributed to a positive impact on patient experience, including improved patient satisfaction, and associated improvement in device wear times.
Zio monitor is 72% smaller, 62% lighter, and 23% thinner than Zio XT, attributes which have contributed to a positive impact on patient experience, including improved patient satisfaction, and associated improvement in device wear times.
We currently offer three Zio System options — the Zio Monitor System, the Zio XT System, and the Zio AT System. Zio ECG monitors are designed to provide high-quality, accurate data with patient compliance for up to 14 days of wear time. 1-6 1. Data on file. iRhythm Technologies; 2022-2023. 2. Data on file. iRhythm Technologies; 2019. 3.
We currently offer three iRhythm ACM System options — the Zio monitor System, the Zio XT System, and the Zio AT System. ACM monitors are designed to provide high-quality, accurate data with patient compliance for up to 14 days of wear time. 1-6 MKT1915.01. 1. Data on file. iRhythm Technologies; 2022-2023. 2. Data on file. iRhythm Technologies; 2019. 3.
This is supported by more than 125 original scientific research manuscripts and a robust, growing body of clinical evidence by third-party researchers.
This is supported by more than 135 original scientific research manuscripts and a robust, growing body of clinical evidence by third-party researchers.
ITEM 1: BUSINESS Company Background iRhythm Technologies Inc. 1 is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease.
ITEM 1: BUSINESS Company Background iRhythm is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease.
We believe the principal competitive factors in our market include: • ease of use, comfort, and unobtrusiveness of the device for the patient; • quality and clinical validation of the deep-learned algorithms used to detect arrhythmias; • concise and comprehensive reports supporting efficient physician interpretation; • ease of use of service workflow for physicians and supporting clinicians; • digital tools for data management, including the myZio mobile app, website tools, and EHR integration; • contracted rates with third-party payors; • government reimbursement rates associated with our Zio Services and supporting Zio Systems; • quality of clinical data and publications in peer-reviewed journals; 13 • size, experience, knowledge, and training of sales and marketing teams; • availability and reliability of sales representatives and customer support services; • workflow protocols for solution implementation in existing care pathways; • reputation of existing device manufacturers and diagnostic service providers; and • relationships with physicians, hospitals, administrators, and other third-party payors.
We believe the principal competitive factors in our market include: • ease of use, comfort, and unobtrusiveness of the device for the patient; • quality and clinical validation of the deep-learned algorithms used to detect arrhythmias; • concise and comprehensive reports supporting efficient physician interpretation; • ease of use of service workflow for physicians and supporting clinicians; • digital tools for data management, including the myZio mobile app, website tools, and EHR integration; • contracted rates with third-party payors; • government reimbursement rates associated with our iRhythm Services and supporting iRhythm ACM Systems; • quality of clinical data and publications in peer-reviewed journals; • size, experience, knowledge, and training of sales and marketing teams; • availability and reliability of sales representatives and customer support services; • workflow protocols for solution implementation in existing care pathways; • reputation of existing device manufacturers and diagnostic service providers; and • relationships with physicians, hospitals, administrators, and other third-party payors. 13 Manufacturing and Quality Assurance We currently manufacture our iRhythm ACM Systems, including the Zio monitor System and Zio AT System, in our leased facility in Cypress, California.
We frequently provide support to third parties conducting clinical studies that further support the benefits of the Zio System, including clinical research in areas such as obstructive sleep apnea, hypertension, predictive features, and patient wearables. • Continuing to solidify our footprint in digital healthcare.
We frequently provide support to third parties conducting clinical studies that further support the benefits of the iRhythm ACM Systems, including clinical research in areas such as obstructive sleep apnea, hypertension, predictive features, and patient wearables. • Continuing to solidify our footprint in digital healthcare.
Ambulatory Cardiac Monitoring Overview The ambulatory cardiac monitoring (“ACM”) market is well-established in the United States with an estimated 6.5 million diagnostic tests performed annually with meaningful expansion anticipated in the coming years due to an aging population, a rising number of heart-related disorders globally, and broader acceptance of innovative medical technologies.
Ambulatory Cardiac Monitoring Overview The ACM market is well-established in the United States with an estimated 6.9 million diagnostic tests performed in 2025 with meaningful expansion anticipated in the coming years due to an aging population, a rising number of heart-related disorders globally, and broader acceptance of innovative medical technologies.
(acquired by Baxter International, Inc.) to offer remote cardiac monitoring technology and also function as diagnostic service providers. We also compete with companies that sell traditional, 24-to-48-hour Holter monitors, including GE Healthcare, Philips Healthcare, and Spacelabs Healthcare Inc., as well as Mortara Instrument, Inc. and Welch Allyn Holdings, Inc.
(acquired by Hill-Rom Holdings, Inc. now part of Baxter International, Inc.) ("BardyDx") to offer remote cardiac monitoring technology and also function as diagnostic service providers. We also compete with companies that sell traditional, 24-to-48-hour Holter monitors, including GE Healthcare, Philips Healthcare, and Spacelabs Healthcare Inc., as well as Welch Allyn Holdings, Inc. ("Welch Allyn") and Mortara Instrument, Inc.
These competitors and potential competitors may introduce new products and services that more directly compete with our Zio Services and Zio Systems. Future competition may also come from manufacturers of wearable fitness products or large information technology companies focused on general health and wellness.
These competitors and potential competitors may introduce new products and services that directly or indirectly compete with our iRhythm Services and iRhythm ACM Systems. Future competition may also come from manufacturers of wearable fitness products or large information technology companies focused on general health and wellness.
Our principal executive offices are located at 699 8th Street, Suite 600, San Francisco, California 94103, and our telephone number is (415) 632-5700. Our common stock is listed on The Nasdaq Global Select Market under the symbol “IRTC”, and we employ approximately 2,000 regular full-time employees as of December 31, 2024.
Our principal executive offices are located at 699 8th Street, Suite 600, San Francisco, California 94103, and our telephone number is (415) 632-5700. Our common stock is listed on The Nasdaq Global Select Market under the symbol “IRTC,” and we employ approximately 2,400 regular full-time employees as of December 31, 2025.
For the MCT services, physicians will receive daily reports, routine reports, and notifications from qualified technicians if there are significant events that meet predetermined and physician-specified notification criteria.
For the Zio MCT Services, physicians will receive daily reports, routine reports, and notifications from qualified technicians if there are clinically actionable events that meet predetermined and physician-specified notification criteria.
These CPT codes are subject to periodic change and update, which will impact the reimbursement rates for our Zio Services. For the year ended December 31, 2024, we received approximately 84% of our revenue through third-party payors, which includes approximately 24% of our total revenue from the Medicare program.
These CPT codes are subject to periodic change and update, which will impact the reimbursement rates for our iRhythm Services. For the year ended December 31, 2025, we received approximately 83% of our revenue through third-party payors, which includes approximately 24% of our total revenue from the Medicare program.
Third-Party Reimbursement We receive revenue for the Zio Services primarily from third-party payors, which include commercial payors and government agencies, such as the Centers for Medicare & Medicaid Services (“CMS”). Third-party payors require us to identify the service for which we are seeking reimbursement by using a Current Procedural Terminology (“CPT”) code set maintained by the American Medical Association (“AMA”).
Third-Party Reimbursement We receive revenue for the iRhythm Services primarily from third-party payors, which include commercial payors and government agencies, such as the CMS. Third-party payors require us to identify the service for which we are seeking reimbursement by using a Current Procedural Terminology (“CPT”) code set maintained by the American Medical Association (“AMA”).
Since the most common type of Afib occurs intermittently, we believe that long-term continuous monitoring with patch-based technology, such as with the Zio patch technology that is part of our Zio Systems, can more accurately measure Afib burden as it captures the patient’s heartbeat data is captured continuously through the wear period.
Since the most common type of Afib occurs intermittently, we believe that long-term continuous monitoring with patch-based technology, such as with our monitor technology that is part of our iRhythm ACM Systems, can more accurately measure Afib burden as it captures the patient’s heartbeat data is captured continuo usly through the wear period.
Using our repository of ambulatory ECG patient data, we will continue to look for ways to create value-driving opportunities in digital healthcare, such as expansion of indications for the Zio System, new therapeutic discoveries, development of an analytical engine for ambulatory consumers, other medical data and payor and provider decision support, and the potential for more complete system integration with large health systems.
Using our repository of ambulatory ECG patient data, as well as our partnerships in the broader chronic disease space, we will continue to look for ways to create value-driving opportunities in digital healthcare, such as expansion of indications for the iRhythm ACM Systems, new therapeutic discoveries, development of an analytical engine for ambulatory consumers, other medical data and payor and provider decision support, and the potential for more complete system integration with large health systems.
We believe the calculated Afib burden is only as good as the data available for analysis during the monitoring period.
We believe the calculated Afib burden is only as good as the data available for analysis d uring the monitoring period.
Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology. Since first receiving clearance from the U.S.
Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology.
We are investing heavily to build in-house tools and resources to support managers and employees. Our core competencies are the foundation for programs and tools being developed to identify top talent, prepare future managers and leaders, and provide equal access to growth opportunities. We offer a variety of training opportunities, whether focused on building vocational, management, or leadership skills.
Our core competencies are the foundation for programs and tools being developed to identify top talent, prepare future managers and leaders, and provide equal access to growth opportunities. We offer a variety of training opportunities, whether focused on building vocational, management, or leadership skills.
For additional information on third-party reimbursement, please see our Risk Factor titled “If reimbursement or other payment for our Zio Services is reduced or modified in the United States, including through cost containment measures or changes to policies with respect to coding, coverage, and pricing, our business could suffer.” Research and Development We focus our research and development efforts on improvement of our Zio System and Zio Services in alignment with our strategy.
For additional information on third-party reimbursement, please see our Risk Factor titled “If reimbursement or other payment for our iRhythm Services is reduced or modified in the United States, including through cost containment measures or changes to policies with respect to coding, coverage, and pricing, our business could suffer.” Research and Development We focus our research and development efforts on the ongoing development and expansion of patch-based monitoring devices and related services in alignment with our strategy.
We are focused on improving and enhancing our back-end, deep-learning analytic platform, building on our core competency in data analytics. • Developing clinical evidence .
We are focused on improving and enhancing our back-end, deep-learning analytic platform, building on our core competency in data analytics to drive improved speed and accuracy. • Developing clinical evidence .
As of December 31, 2024, we owned, or retained an exclusive license to, 46 issued patents from the U.S.
As of December 31, 2025, we owned, or retained an exclusive license to, 59 issued patents from the U.S.
(“BioIS”), pursuant to which (i) we will receive a perpetual fully paid up license to certain of BioIS’ intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services, and (ii) each party agreed to negotiate in good faith a supply agreement for pulse oximetry hardware.
(“BioIS”), pursuant to which (i) iRhythm Technologies will receive a perpetual fully paid up license to certain of BioIS’ intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including (x) an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services and (y) a limited, non-exclusive license to develop and commercialize products and services for use in unattended, home-based diagnostic testing and assessment of sleep apnea, and (ii) iRhythm Technologies and BioIS agreed to negotiate in good faith a supply agreement for pulse oximetry hardware.
Failure to comply with applicable regulatory requirements can result in enforcement action by FDA, which may include any of the following sanctions: • warning letters, fines, injunctions, consent decrees, and civil penalties; • repair, replacement, refunds, recall, or seizure of our products; • operating restrictions, partial suspension, or total shutdown of production; • refusing our requests for 510(k) clearance or PMA approval of new products, new intended uses, or modifications to existing products; • withdrawing 510(k) clearance or PMA approvals that have already been granted; and • criminal prosecution.
We are subject to unannounced inspections by FDA and the Food and Drug Branch of CDPH to determine our compliance with FDA's QMSR and other regulations, and these inspections may include the manufacturing facilities of our suppliers. 18 Failure to comply with applicable regulatory requirements can result in enforcement action by FDA, which may include any of the following sanctions: • warning letters, fines, injunctions, consent decrees, and civil penalties; • repair, replacement, refunds, recall, or seizure of our products; • operating restrictions, partial suspension, or total shutdown of production; • refusing our requests for 510(k) clearance or PMA approval of new products, new intended uses, or modifications to existing products; • withdrawing 510(k) clearance or PMA approvals that have already been granted; and • criminal prosecution.
We offer health benefits, a 401(k) plan with company match, paid time off and family leave, an Employee Stock Purchase Plan for employees in the United States, which allows them to purchase our stock at a discount, and an employee wellness program that is generally available to employees and their families globally with a variety of support services. 20 Workforce Development The growth and success of our employees is one of our top priorities as it impacts our overall company performance.
We offer health benefits, a 401(k) plan with company match, paid time off and family leave, an Employee Stock Purchase Plan for employees in the United States and the United Kingdom, which allows them to purchase our stock at a discount, and an employee wellness program that is generally available to employees and their families globally with a variety of support services.
The Zio patches are not available for sale outside of use with our Zio Services.
The Zio patch monitors are not available for sale outside of use with our iRhythm Services.
Total Rewards We believe that we employ a fair and merit-based total compensation system, and we evaluate our compensation programs regularly to help ensure that our employees are compensated fairly for their work while fostering a pay-for-performance culture that is aligned with the interests of our stockholders.
Total Rewards We believe that we employ a fair and merit-based total compensation system, and we evaluate our compensation programs regularly to help ensure that our employees are compensated fairly for their work while fostering a pay-for-performance culture that is aligned with the interests of our stockholders. 21 We believe that we offer our employees competitive benefits that follow industry standards and support physical, mental, and financial wellness.
In clinical settings, we believe that this approach could reduce the number of misdiagnosed computerized ECG interpretations and improve the efficiency of expert human ECG interpretation by accurately triaging or prioritizing the most urgent conditions. Long-term, continuous monitoring maximizes diagnostic yield 1 1, Turakhia et al. Diagnostic Utility of a Novel Leadless Arrhythmia Monitoring Device.
In clinical settings, we believe that this approach could reduce the number of misdiagnosed computerized ECG interpretations and improve the efficiency of expert human ECG interpretation by accurately triaging or prioritizing the most urgent conditions. Long-term, continuous monitoring maximizes diagnostic yield 1 MKT1915.01. 1, Turakhia MP, Hoang DD, Zimetbaum P, et al.
The most significant of these laws for our business include the federal Anti-Kickback Statute (the “AKS”) and the federal False Claims Act (the “FCA”). 16 Anti-Kickback Laws Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for purchasing, ordering, or recommending, or arranging for, the purchase or order of items or services (or referrals of the same) reimbursable by a federal healthcare program.
Anti-Kickback Laws Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for purchasing, ordering, or recommending, or arranging for, the purchase or order of items or services (or referrals of the same) reimbursable by a federal healthcare program.
Each report is then validated by qualified technicians and sent to the patient’s prescribing physician who may access the Zio report on our proprietary, web-based portal, referred to as ZioSuite, and also through our Electronic Health Record (“EHR”) connections or ZioSuite mobile apps. Our technicians also notify physicians of potential urgent arrhythmias according to the ordering physician’s specified notification criteria.
Each report is then validated by qualified technicians and sent to the patient’s prescribing physician who may access the Zio report on our proprietary, web-based portal, referred to as ZioSuite, and also through our Electronic Health Record (“EHR”) connections or ZioSuite mobile apps.
The Milestone Notes, plus accrued and unpaid interest, if any, shall be cancelled, if outstanding, upon the achievement of the regulatory milestones up through December 31, 2026.
The Milestone Notes, plus accrued and unpaid interest, if any, shall be cancelled, if outstanding, upon the achievement of these regulatory milestones up through December 31, 2026. In June 2025, BioIS achieved the first of two regulatory milestones.
Additionally, the EU Notified Body and UK Approved Body regularly audit our manufacturing, design, and operational facilities to ensure ongoing ISO 13485 and EU MDR compliance and periodically audit technical design files in accordance with the EU MDR in order to maintain our CE mark or issue a CE mark or UKCA mark for new or updated devices.
We are also registered with the UK’s Care Quality Commission to carry out diagnostic and screening procedures. 19 Additionally, the EU Notified Body and UK Approved Body regularly audit our manufacturing, design, and operational facilities to ensure ongoing ISO 13485 and EU MDR compliance and periodically audit technical design files in accordance with the EU MDR in order to maintain our CE mark or issue a CE mark or UKCA mark for new or updated devices.
Additionally, for out-of-network or cash pay patients, we may be subject to state and federal surprise billing laws that impose limits on amounts that can be charged to such patients and/or the amount we can receive for out-of-network services from commercial payors.
Any changes to, or repeal of, the ACA may have a material adverse effect on our results of operations. 17 Additionally, for out-of-network or cash pay patients, we may be subject to state and federal surprise billing laws that impose limits on amounts that can be charged to such patients and/or the amount we can receive for out-of-network services from commercial payors.
Food and Drug Administration (“FDA”) for our technology in 2009, we have supported physician and patient use of our technology and provided ambulatory cardiac monitoring services from our Medicare-enrolled independent diagnostic testing facilities (“IDTFs”) and with our qualified technicians.
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ambulatory cardiac monitoring ("ACM") services from our Medicare-enrolled independent diagnostic testing facilities (“IDTFs”) with our qualified technicians.
Because of the significant federal funding involved, the government actively enforces a number of laws and regulations to eliminate fraud and abuse in federal healthcare programs. Our business is subject to compliance with these laws.
Because of the significant federal funding involved, the government actively enforces a number of laws and regulations to eliminate fraud and abuse in federal healthcare programs. Our business is subject to compliance with these laws. The most significant of these laws for our business include the federal Anti-Kickback Statute (the “AKS”) and the federal False Claims Act (the “FCA”).
The UKCA requirement became effective on January 1, 2021, and we have obtained a UKCA mark with the BSI, which also serves as our UK Approved Body, for the Zio XT System and the Zeus System. We are also registered with the UK’s Care Quality Commission to carry out diagnostic and screening procedures.
The UKCA requirement became effective on January 1, 2021, and we have obtained a UKCA mark with the BSI, which also serves as our UK Approved Body, for Zio XT and ZEUS.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Part 806, regarding a Zio AT labeling correction involving additions and modifications to the Zio AT labeling precautions relating to the device’s maximum transmission limits during wear, and also to the need for healthcare providers to complete registration to initiate monitoring services.
Part 806, regarding a Zio AT labeling correction involving additions and modifications to Zio AT labeling precautions relating to the device’s maximum transmission limits during wear, and also to the need for healthcare providers to complete registration to initiate monitoring services.
FDA classified this field action as a Class II Recall following our initial 806 report a nd although we believe we have completed the distribution of the Advisory Notice to our identified impacted customers, and we requested the closure of this field action in March 2023, the status remains open in the public FDA recall database. and FDA has not yet confirmed the termination or completion of this recall to us . • Our May 25, 2023 receipt of a warning letter from FDA alleging non-conformities to regulations for medical devices, including medical device reporting requirements, relating to our Zio AT System and medical device quality system requirements.
FDA classified this field action as a Class II Recall following our initial 806 report a nd although we believe we have completed the distribution of the Advisory Notice to our identified impacted customers and requested the closure of this field action in March 2023, the status remains open in the public FDA recall database. and FDA has not yet confirmed the termination or completion of this recall to us . • Our May 25, 2023 receipt of a warning letter from FDA alleging non-conformities to regulations for medical devices, including medical device reporting requirements, relating to our Zio AT System and medical device quality system requirements.
In the ordinary course of our business, we collect, use and store, and transmit confidential and sensitive data, such as our proprietary business information and that of our suppliers, contractors, customers, vendors and others, as well as personal information, including health information, of these parties and of our patients.
In the ordinary course of our business, we collect, use and store, and transmit confidential and sensitive data, such as our proprietary business information and that of our suppliers, contractors, customers, vendors and others, as well as personal data, including health information, of these parties and of our patients.
Our reliance on third-party vendors subjects us to a number of risks, including: • inability to obtain adequate supply in a timely manner or on commercially reasonable terms, including due to our reliance on a single supplier for certain critical components and materials for which, in some cases, there are relatively few alternative sources of supply; • modifications to, or discontinuation of, a vendor’s operations due to natural disasters, labor disruptions, human error, infrastructure failure, pandemics, military conflicts, or political or economic disruption, which may adversely impact our operations or otherwise lead to interruption of or shortage or delays in supply, including shortages impacting our printed circuit board assembly; • production delays related to the evaluation and testing of products from alternative suppliers and corresponding regulatory qualifications; • inability of the manufacturer or supplier to comply with our quality criteria and specifications and, where applicable, the QSR, state regulatory authorities, and, in some cases, the Notified Body audits; • miscommunication of design specifications due to errors/omissions by either the vendor or our company, resulting in delayed delivery of acceptable materials or components for incorporation into our devices or recall of finished products; • delays in device shipments resulting from quality issues or defects, reliability issues, or a supplier’s failure to consistently produce quality components; • price fluctuations due to a lack of long-term supply arrangements with our suppliers for key components; • inability to control the quality of products manufactured by third parties; • delays in delivery by our suppliers due to changes in demand from us or their other customers; and • delays in obtaining required materials and components that are in short supply within the time frames we require, at an affordable cost, or at all.
Our reliance on third-party vendors subjects us to a number of risks, including: • inability to obtain adequate supply in a timely manner or on commercially reasonable terms, including due to our reliance on a single supplier for certain critical components and materials for which, in some cases, there are relatively few alternative sources of supply; • modifications to, or discontinuation of, a vendor’s operations due to natural disasters, labor disruptions, human error, infrastructure failure, pandemics, military conflicts, or political or economic disruption, which may adversely impact our operations or otherwise lead to interruption of or shortage or delays in supply, including shortages impacting our printed circuit board assembly; • production delays related to the evaluation and testing of products from alternative suppliers and corresponding regulatory qualifications; • inability of the manufacturer or supplier to comply with our quality criteria and specifications and, where applicable, the QMSR, state regulatory authorities, and, in some cases, the Notified Body audits; • miscommunication of design specifications due to errors/omissions by either the vendor or our company, resulting in delayed delivery of acceptable materials or components for incorporation into our devices or recall of finished products; • delays in device shipments resulting from quality issues or defects, reliability issues, or a supplier’s failure to consistently produce quality components; • price fluctuations due to a lack of long-term supply arrangements with our suppliers for key components; • inability to control the quality of products manufactured by third parties; • delays in delivery by our suppliers due to changes in demand from us or their other customers; and • delays in obtaining required materials and components that are in short supply within the time frames we require, at an affordable cost, or at all.
If we are unable to develop new services and related devices, applications, or features, or improve our algorithms due to constraints, such as insufficient cash resources, high employee turnover, inability to hire personnel with sufficient technical skills, inability or delay to obtain FDA marketing authorization or regulatory clearances in the EU and the UK, or a lack of other research and development resources, we may not be able to maintain our competitive position compared 31 to other companies.
If we are unable to develop new services and related devices, applications, or features, or improve our algorithms due to constraints, such as insufficient cash resources, high employee turnover, inability to hire personnel with sufficient technical skills, inability or delay to obtain FDA marketing authorization or regulatory clearances in the EU and the UK, or a lack of other research and development resources, we may not be able to maintain our competitive position compared to other companies.
The market price of our common stock is influenced by many factors that are beyond our control, including the following: • securities analyst coverage or lack of coverage of our common stock or changes in their estimates of our financial performance; • variations in quarterly operating results; • future sales of our common stock by our stockholders; • investor perception of us and our industry; • announcements by us or our competitors of significant agreements, acquisitions, or capital commitments or service or product launches or discontinuations; • changes in market valuation or earnings of our competitors; • negative business or financial announcements regarding our partners; • regulatory actions; • legislation and political conditions; • cybersecurity events; • global health pandemics, such as the COVID-19 pandemic; • terrorist acts, acts of war, or periods of widespread civil unrest, including ongoing geopolitical conflicts, such as the war in Ukraine and conflict in the Middle East; and • general economic, industry, and market conditions, including inflation, interest rate volatility, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, potential instability in the global banking system, and fluctuating foreign currency exchange rates.
The market price of our common stock is influenced by many factors that are beyond our control, including the following: • securities analyst coverage or lack of coverage of our common stock or changes in their estimates of our financial performance; • variations in quarterly operating results; • future sales of our common stock by our stockholders; • investor perception of us and our industry; • announcements by us or our competitors of significant agreements, acquisitions, or capital commitments or service or product launches or discontinuations; • changes in market valuation or earnings of our competitors; • negative business or financial announcements regarding our partners; • regulatory actions; • legislation and political conditions; • cybersecurity events; • global health pandemics, such as the COVID-19 pandemic; • terrorist acts, acts of war, or periods of widespread civil unrest, including ongoing geopolitical conflicts, such as the war in Ukraine and conflicts in the Middle East and Venezuela; and • general economic, industry, and market conditions, including inflation, interest rate volatility, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, potential instability in the global banking system, and fluctuating foreign currency exchange rates.
Depending on the billing arrangement and applicable law, we bill several types of entities and payors, including federal healthcare programs, third-party commercial payors, healthcare providers, and healthcare institutions, which may have different billing requirements, coverage criteria, procedures, or expectations. We also bill insured patients for co-payments, co-insurance, and deductible amounts, as well as bill self-pay patients directly.
Depending on the billing arrangement and applicable law, we bill several types of entities and payors, including federal healthcare programs, third-party commercial payors, healthcare providers, and healthcare institutions, which may have different billing 26 requirements, coverage criteria, procedures, or expectations. We also bill insured patients for co-payments, co-insurance, and deductible amounts, as well as bill self-pay patients directly.
The third decision extended the statute of limitations within which entities may challenge agency actions. These cases may result in increased litigation by industry against regulatory agencies and impact how such agencies choose to pursue enforcement and compliance actions. However, the specific, lasting effects of these decisions, which may vary within different judicial districts and circuits, is unknown.
The third decision extended the statute of limitations within which entities may challenge agency actions. These cases may result in increased litigation by industry parties against regulatory agencies and impact how such agencies choose to pursue enforcement and compliance actions. However, the specific, lasting effects of these decisions, which may vary within different judicial districts and circuits, is unknown.
In addition, we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters. 55 If we are not effective in addressing ESG matters affecting our business, or setting and meeting relevant ESG goals, our reputation and financial results may suffer. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
In addition, we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters. If we are not effective in addressing ESG matters affecting our business, or setting and meeting relevant ESG goals, our reputation and financial results may suffer. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
An increase in the reporting of events associated with the use of our products and services from us or others and any delays to the filing of reports may increase regulator and public scrutiny, especially given that these reports are typically publicly available information in most jurisdictions, including the United States, which could harm our business.
An increase in the reporting of events associated with the use of our products and services from us or others and any delays to 29 the filing of reports may increase regulator and public scrutiny, especially given that these reports are typically publicly available information in most jurisdictions, including the United States, which could harm our business.
These losses, among other things, may have an adverse effect on our stockholders’ equity and the value of our common stock. We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all. Our operations have consumed substantial amounts of cash since inception.
These losses, among other things, may have an adverse effect on our stockholders’ equity and the value of our common stock. 45 We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all. Our operations have consumed substantial amounts of cash since inception.
Further, if we fail to comply with applicable privacy laws, we could face civil and criminal penalties, or claims for breach of contract. In the United States, there are numerous federal and state patient and consumer, privacy and data security laws and regulations governing the collection, use, disclosure, protection and breach of personal information.
Further, if we fail to comply with applicable privacy laws, we could face civil and criminal penalties, or claims for breach of contract. In the United States, there are numerous federal and state patient and consumer, privacy and data security laws and regulations governing the collection, use, disclosure, protection and breach of personal data.
Further, the federal healthcare programs may impose suspensions on both payment and participation in response to allegations of fraud or other noncompliance. 25 Other controls imposed by CMS and commercial payors designed to reduce costs, commonly referred to as “utilization review,” may also affect our operations.
Further, the federal healthcare programs may impose suspensions on both payment and participation in response to allegations of fraud or other noncompliance. Other controls imposed by CMS and commercial payors designed to reduce costs, commonly referred to as “utilization review,” may also affect our operations.
The outcome of litigation to enforce our intellectual property rights in patents, copyrights, trade secrets, or trademarks is highly unpredictable, could result in substantial costs and diversion of resources, and could have a material adverse effect on our business, financial condition, and results of operations regardless of the final outcome of such litigation.
The outcome of litigation to enforce our intellectual property rights in patents, copyrights, trade secrets, or trademarks is highly unpredictable, could result in substantial costs and diversion of resources, and could have a material adverse effect on our business, financial condition, and results of operations regardless of the final 51 outcome of such litigation.
Any claims against us, whether meritorious or not, can be time-consuming, result in costly litigation, be harmful to our reputation, require significant management attention, and divert significant resources. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate and subject to change.
Any claims against us or our subsidiaries, whether meritorious or not, can be time-consuming, result in costly litigation, be harmful to our reputation, require significant management attention, and divert significant resources. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate and subject to change.
Furthermore, the laws of foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. 48 Risks Related to Privacy and Security Cybersecurity risks, including those involving network security breaches, services interruptions and other incidents affecting the confidentiality, integrity or availability of our data and systems, could result in the compromise of confidential data or critical systems and give rise to potential harm to our patients, remediation costs and other expenses, expose us to liability under HIPAA, breach notification laws, consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.
Furthermore, the laws of foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. 52 Risks Related to Privacy and Security Cybersecurity risks, including those involving network security breaches, services interruptions and other incidents affecting the confidentiality, integrity or availability of our data and systems, could result in the compromise of confidential data or critical systems and give rise to potential harm to our patients, remediation costs and other expenses, expose us to liability under HIPAA, breach notification laws, consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.
Securities class action litigation could result in substantial costs and a diversion of our management’s attention and resources. Anti-takeover effects of our charter documents and Delaware law could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our common stock.
Securities class action litigation could result in substantial costs and a diversion of our management’s attention and resources. 56 Anti-takeover effects of our charter documents and Delaware law could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our common stock.
Delivery of the Zio XT patch to one of our clinical centers may be subject to disruption to the USPS delivery infrastructure. Further, for the MCT monitoring services utilizing our Zio AT System, we rely on the provision of cellular communication services for the timely transmission of patient information and reportable events.
Delivery of the Zio XT to one of our clinical centers may be subject to disruption to the USPS delivery infrastructure. Further, for the MCT monitoring services utilizing our Zio AT System, we rely on the provision of cellular communication services for the timely transmission of patient information and reportable events.
Any of the foregoing consequences could seriously harm our business and our financial results. Further, in June 2024, the U.S. Supreme Court reversed its longstanding approach under the Chevron doctrine, which provided for judicial deference to regulatory agencies, including FDA.
Any of the foregoing consequences could seriously harm our business and our financial results. Further, in 2024 the U.S. Supreme Court reversed its longstanding approach under the Chevron doctrine, which provided for judicial deference to regulatory agencies, including FDA.
If we discover additional weaknesses in our system of internal financial and accounting controls and procedures, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. Our internal control over financial reporting will not prevent or detect all errors and all fraud.
If we discover weaknesses in our system of internal financial and accounting controls and procedures, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. Our internal control over financial reporting will not prevent or detect all errors and all fraud.
As a result, we are subject to several foreign, federal and state laws and regulations protecting the use, disclosure and confidentiality of certain personal information, namely individually identifiable information, and restricting the use and disclosure of that information. These laws include foreign, federal and state healthcare privacy laws, telehealth laws, breach notification laws and consumer protection laws.
As a result, we are subject to several foreign, federal and state laws and regulations protecting the use, disclosure and confidentiality of certain personal data, namely individually identifiable information, and restricting the use and disclosure of that information. These laws include foreign, federal and state healthcare privacy laws, telehealth laws, breach notification laws and consumer protection laws.
Several factors make the billing and collection process uncertain, including differences between the submitted claim price for our Zio Services and the reimbursement rates of payors; compliance with complex federal and state regulations related to billing the Medicare and Medicaid programs and collecting co-payments, co-insurance, and deductible amounts from patients and other guarantors; the effect of patient co-payments, co-insurance, and deductible amounts, which may vary depending on the timing of the claim relative to the insured’s annual policy year; differences in coverage policies, criteria, and billing requirements among payors; and incorrect or missing patient history, indications, or billing information and delays in verifying and resolving the same.
Several factors make the billing and collection process uncertain, including differences between the submitted claim price for our iRhythm Services and the reimbursement rates of payors; compliance with complex federal and state regulations related to billing the Medicare and Medicaid programs and collecting co-payments, co-insurance, and deductible amounts from patients and other guarantors; the effect of patient co-payments, co-insurance, and deductible amounts, which may vary depending on the timing of the claim relative to the insured’s annual policy year; differences in coverage policies, criteria, and billing requirements among payors; and incorrect or missing patient history, indications, or billing information and delays in verifying and resolving the same.
These difficulties include challenges supporting certain operations and activities with more than one service provider, integrating technologies (including IT systems and processes, procedures, policies and operations), and retaining key personnel. These activities are complex and time-consuming and involve delays or additional and unforeseen expenses.
These difficulties include challenges supporting certain operations and activities with more than one service provider, integrating technologies (including IT systems and processes, procedures, policies and operations), and retaining key personnel. These activities are complex and time-consuming and can involve delays or additional and unforeseen expenses.
For example, FDA raised questions in the warning letter issued on May 25, 2023 regarding certain changes and modifications to the Zio AT System for which we did not make 510(k) submissions, and rather documented our analysis in letters to file.
For example, FDA raised questions in the warning letter issued on May 25, 2023 regarding certain changes and modifications to Zio AT for which we did not make 510(k) submissions, and rather documented our analysis in letters to file.
We also cannot assure that a review of our business by courts or regulatory authorities would not result in a determination that adversely affects our revenue and operating results. 38 Our business could be negatively impacted by changes in the United States political environment.
We also cannot assure that a review of our business by courts or regulatory authorities would not result in a determination that adversely affects our revenue and operating results. Our business could be negatively impacted by changes in the United States political environment.
We also expect that our general and administrative expenses will continue to increase due to, among other things, the operational and regulatory burdens applicable to medical service providers that are public companies. As a result, we expect to continue to incur operating losses in the future.
We also expect that our general and administrative expenses will continue to increase due to, among other things, the operational and regulatory burdens applicable to medical service providers that are public companies. As a result, we may continue to incur operating losses in the future.
These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. 51 Securities class action litigation has often been brought against public companies that experience periods of volatility in the market prices of their securities.
These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. Securities class action litigation has often been brought against public companies that experience periods of volatility in the market prices of their securities.
We cannot give any assurances that FDA will be satisfied with our response, the actions taken to resolve the concerns raised in the warning letter or the more recent 483 observations, or the expected date for the resolution of such matters.
We cannot give any assurances that FDA will be satisfied with our response, the actions taken to resolve the concerns raised in the warning letter or the more recent 483 observations, or the expected date for the resolution of such matters by FDA.
For example, when the patient returns the Zio Monitor patch to us at the end of the patient wear period, we provide the Zio Monitor services, which include the end of service report based on the data stored on the Zio Monitor patch, after which we submit a claim to the relevant payor or to the patient for the services rendered.
For example, when the patient returns a Zio monitor to us at the end of the patient wear period, we provide the Zio monitor services, which include the end of service report based on the data stored on the Zio monitor, after which we submit a claim to the relevant payor or to the patient for the services rendered.
We typically experience reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this is the result of physicians and patients taking vacations, and patients electing to delay our monitoring services during the summer months and holidays.
We typically experience reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this 44 is the result of physicians and patients taking vacations, and patients electing to delay our monitoring services during the summer months and holidays.
We have recently (following, and in alignment with, discussion with FDA) submitted an updated 510(k) to address Zio AT Device modifications that were, prior to our receipt of the warning letter, previously documented in letters to file.
We have recently (following, and in alignment with, discussion with FDA) submitted an updated 510(k) to address Zio AT modifications that were, prior to our receipt of the warning letter, previously documented in letters to file.
For long-term continuous monitoring utilizing our Zio XT System, for example, requires the physical return of the Zio XT patch to one of our clinical centers and we predominantly rely on the U.S. Postal Service (“USPS”) to perform this delivery service.
For long-term continuous monitoring utilizing our Zio XT System, for example, requires the physical return of the Zio XT to one of our clinical centers and we predominantly rely on the U.S. Postal Service (“USPS”) to perform this delivery service.
Although patent and intellectual property disputes in the healthcare and medical devices area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and would likely include ongoing royalties.
Although patent and intellectual property disputes in the healthcare and medical devices 49 area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and would likely include ongoing royalties.
The amount of funding we may need will depend on many factors, including: • the revenue generated by our Zio Services; • the costs, timing, and risks of delay of additional regulatory approvals; • the expenses we incur in manufacturing, developing, selling, and marketing our Zio Services; • our ability to scale our manufacturing operations to meet demand for the Zio Systems used in our current and any future Zio Services or other offerings; • the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; • the rate of progress and cost of our clinical trials and other development activities; • the success of our research and development efforts; • the emergence of competing or complementary technologies; • the terms and timing of any collaborative, licensing, and other arrangements that we may establish; • the cost of ongoing compliance with legal and regulatory requirements, and third-party payors’ policies; • the cost of obtaining and maintaining regulatory or payor clearance or approval for our current or future offerings including those integrated with other companies’ products; and • the acquisition of business, products, and technologies.
The amount of funding we may need will depend on many factors, including: • the revenue generated by our iRhythm Services; • the costs, timing, and risks of delay of additional regulatory approvals; • the expenses we incur in manufacturing, developing, selling, and marketing our iRhythm Services; • our ability to scale our manufacturing operations to meet demand for the iRhythm ACM Systems used in our current and any future iRhythm Services or other offerings; • the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; • the rate of progress and cost of our clinical trials and other development activities; • the success of our research and development efforts; • the emergence of competing or complementary technologies; • the terms and timing of any collaborative, licensing, and other arrangements that we may establish; • the cost of ongoing compliance with legal and regulatory requirements, and third-party payors’ policies; • the cost of obtaining and maintaining regulatory or payor clearance or approval for our current or future offerings including those integrated with other companies’ products; and • the acquisition of business, products, and technologies.
Such production or service delays or shortfalls may be caused by many factors, including the following: • while we intend to continue to expand our manufacturing capacity, our production processes may have to change to accommodate this growth, potentially involving significant capital expenditures; • we may experience technical challenges to increasing manufacturing capacity, including in connection with equipment design, automation, validation and installation, contractor issues and delays, licensing and permitting delays or rejections, materials procurement, manufacturing site expansion, problems with production yields, and quality control and assurance; • key components of our Zio Systems are provided by a sole or single supplier or limited number of suppliers, and we do not maintain large inventory levels of these components; if we experience a shortage or quality issues in any of these components, we would need to identify and qualify new supply sources, which could increase our expenses and result in manufacturing delays; • the extent to which we become dependent upon others for the manufacture of our Zio Systems which could adversely affect our future profit margins and our ability to market our Zio Services; • global demand and supply factors concerning commodity components common to all electronic circuits, including Zio Systems, could result in shortages that manifest as extended lead times for circuit boards, which could limit our ability to sustain and/or grow our business; • we may experience a delay in completing validation and verification testing for new production processes and/or equipment at our manufacturing facilities; 29 • to increase our manufacturing output significantly and scale our services, we will have to attract and retain qualified employees for our operations; and • in response to unexpectedly rapid growth of our business, clinical operations capacity may not meet demand while new resources are being recruited and trained, which could negatively impact our volume capacity for our Zio Services.
Such production or service delays or shortfalls may be caused by many factors, including the following: • while we intend to continue to expand our manufacturing capacity, our production processes may have to change to accommodate this growth, potentially involving significant capital expenditures; • we may experience technical challenges to increasing manufacturing capacity, including in connection with equipment design, automation, validation and installation, contractor issues and delays, licensing and permitting delays or rejections, materials procurement, manufacturing site expansion, problems with production yields, and quality control and assurance; • key components of our iRhythm ACM Systems are provided by a sole or single supplier or limited number of suppliers, and we do not maintain large inventory levels of these components; if we experience a shortage or quality issues in any of these components, we would need to identify and qualify new supply sources, which could increase our expenses and result in manufacturing delays; 31 • the extent to which we become dependent upon others for the manufacture of our iRhythm ACM Systems which could adversely affect our future profit margins and our ability to market our iRhythm Services; • global demand and supply factors concerning commodity components common to all electronic circuits, including iRhythm ACM Systems, could result in shortages that manifest as extended lead times for circuit boards, which could limit our ability to sustain and/or grow our business; • we may experience a delay in completing validation and verification testing for new production processes and/or equipment at our manufacturing facilities; • to increase our manufacturing output significantly and scale our services, we will have to attract and retain qualified employees for our operations; and • in response to unexpectedly rapid growth of our business, clinical operations capacity may not meet demand while new resources are being recruited and trained, which could negatively impact our volume capacity for our iRhythm Services.
Rapid expansion in personnel could impact our capacity to manufacture our Zio patches, market, sell, and support our Zio Services, and analyze the data to produce Zio reports, which could result in inefficiencies and unanticipated costs, impacts to our Zio Services, including our Zio patches, and disruptions to our service operations.
Rapid expansion in personnel could impact our capacity to manufacture our Zio patches, market, sell, and support our iRhythm Services, and analyze the data to produce Zio reports, which could result in inefficiencies and unanticipated costs, impacts to our iRhythm Services, including our Zio patches, and disruptions to our service operations.
If our effective tax rates were to increase, particularly in the United States, or in other jurisdictions implementing legislation to reform existing tax legislation, including the UK, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our financial condition, operating results, and cash flows could be adversely affected. 45 We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incur additional expense.
If our effective tax rates were to increase, particularly in the United States, or in other jurisdictions implementing legislation to reform existing tax legislation, including the UK, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our financial condition, operating results, and cash flows could be adversely affected. 48 We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incur additional expense.
However, such methods may not be adequate to protect us or permit us to gain or maintain a competitive advantage. For example, our patent applications may not issue as patents in a form that will be advantageous to us, or at all.
However, such methods may not be adequate to protect us or permit us to gain or maintain a competitive advantage. 50 For example, our patent applications may not issue as patents in a form that will be advantageous to us, or at all.
Our operations and performance may vary based on worldwide economic and political conditions, which have been adversely impacted by continued global economic uncertainty, political instability, and military hostilities in multiple geographies, including ongoing geopolitical conflicts such as the war in Ukraine and conflict in the Middle East, domestic and global inflationary trends, interest rate volatility, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, potential instability in the global banking system, global supply shortages, and a tightening labor market.
Our operations and performance may vary based on worldwide economic and political conditions, which have been adversely impacted by continued global economic uncertainty, political instability, and military hostilities in multiple geographies, including ongoing geopolitical conflicts such as the war in Ukraine and conflicts in the Middle East and Venezuela, domestic and global inflationary trends, interest rate volatility, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, potential instability in the global banking system, global supply shortages, and a tightening labor market.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. 53 We are subject to counterparty risk with respect to the capped call transactions.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. We are subject to counterparty risk with respect to the capped call transactions.
Communication-related laws require consent prior to certain communications and provide a specified monetary damage award or fine for each violation which could result in particularly significant damage awards or fines.
Communication-related laws may require consent prior to certain communications and provide a specified monetary damage award or fine for each violation which could result in particularly significant damage awards or fines.
Such adverse consequences may include an inability to secure additional contracts with commercial payors, reluctance by physicians to order our Zio Services due to concerns that patients may face significant out-of-pocket expenses associated with an out-of-network IDTF, a decline in the amount that we are reimbursed for our services, less predictable revenue, and an increase in the efforts and resources necessary to obtain reimbursement for our services on a claim-by-claim basis.
Such adverse consequences may include an inability to secure additional contracts with commercial payors, reluctance by physicians to order our iRhythm Services due to concerns that patients may face significant out-of-pocket expenses associated with an out-of-network IDTF, a decline in the amount that we are reimbursed for our services, less predictable revenue, and an increase in the efforts and resources necessary to obtain reimbursement for our services on a claim-by-claim basis.
A determination that there have been violations of the TCPA or other statutes regulating communications with patients could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business. 40 While most of our revenue results from claims submitted to payors for diagnostic medical procedures, we offer, and are looking to expand, alternative payment and service delivery models.
A determination that there have been violations of the TCPA or other statutes regulating communications with patients could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business. 43 While most of our revenue results from claims submitted to payors for diagnostic medical procedures, we offer, and are looking to expand, alternative payment and service delivery models.
Risks Related to Our Industry, Business and Operations Reimbursement by Medicare is highly regulated and subject to change, and our failure to comply with applicable regulations, including regulations not designed for remote diagnostic tests like our Zio Services, could prevent us from receiving reimbursement under the Medicare program and some commercial payors, subject us to penalties, and adversely affect our reputation, business, and results of operations.
Risks Related to Our Industry, Business and Operations Reimbursement by Medicare is highly regulated and subject to change, and our failure to comply with applicable regulations, including regulations not designed for remote diagnostic tests like our iRhythm Services, could prevent us from receiving reimbursement under the Medicare program and some commercial payors, subject us to penalties, and adversely affect our reputation, business, and results of operations.
Cybersecurity threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or service providers to criminal or other unauthorized threat actors, including state-sponsored attacks. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, and contractors.
Cybersecurity threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or service providers to criminal or other unauthorized threat actors, including state-sponsored attackers. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, and contractors.
If one or more holders elect to convert their 2029 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than cash in lieu of any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their 2029 Notes, unless we elect to satisfy our conversion oblig ation by delivering solely shares of our common stock (other than cash in lieu of any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
Factors that might cause quarterly fluctuations in our operating results include: • our inability to manufacture an adequate supply of our Zio Systems to support demand for our Zio Services at appropriate quality levels and acceptable costs; • possible delays in our research and development programs or in the completion of any third-party clinical trials relating to our Zio Services; • a lack of acceptance of our Zio Services, including our Zio Systems, by physicians and potential patients; • the inability of patients to receive reimbursements from third-party payors; • the purchasing patterns of physicians and patients, including as a result of seasonality; • failures to comply with regulatory requirements, which could lead to withdrawal of our Zio Services, including our Zio Systems, from the market; • our failure to continue the commercialization of our Zio Services; • competition; • inadequate financial and other resources; and • global business, political, and economic conditions, including inflation, interest rate volatility, cybersecurity events, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, potential instability in the global banking system, political instability, and military hostilities, including ongoing geopolitical conflicts, such as the war in Ukraine and conflict in the Middle East.
Factors that might cause quarterly fluctuations in our operating results include: • our inability to manufacture an adequate supply of our iRhythm ACM Systems to support demand for our iRhythm Services at appropriate quality levels and acceptable costs; • possible delays in our research and development programs or in the completion of any third-party clinical trials relating to our iRhythm Services; • a lack of acceptance of our iRhythm Services, including our iRhythm ACM Systems, by physicians and potential patients; • the inability of patients to receive reimbursements from third-party payors; • the purchasing patterns of physicians and patients, including as a result of seasonality; • failures to comply with regulatory requirements, which could lead to withdrawal of our iRhythm Services, including our iRhythm ACM Systems, from the market; • our failure to continue the commercialization of our iRhythm Services; • competition; • inadequate financial and other resources; and • global business, political, and economic conditions, including inflation, interest rate volatility, cybersecurity events, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, potential instability in the global banking system, political instability, and military hostilities, including ongoing geopolitical conflicts, such as the war in Ukraine and conflicts in the Middle East and Venezuela.
Executing on our follow-up actions, commitments to FDA, and remediation activities will require significant time, attention, and resources that might otherwise be applied to future product development activities and initiatives, and could result in delays or changes to these plans. Our commitments will also require a high degree of attention to design strategy and compliance going forward.
Executing on our follow-up actions, commitments to FDA, and remediation activities have and continue to require significant time, attention, and resources that might otherwise be applied to future product development activities and initiatives, and could result in delays or changes to these plans. Our commitments will also require a high degree of attention to design strategy and compliance going forward.
Although in all three scenarios there is the potential that a patient will not return the device(s) at the conclusion of the wear period, home hookups historically result in a higher likelihood that the patient will fail to return his or her device, which negatively impacts our financial condition when we are unable to provide the Zio Services.
Although in all three scenarios there is the potential that a patient will not return the device(s) at the conclusion of the wear period, home hookups historically result in a higher likelihood that the patient will fail to return his or her device, which negatively impacts our financial condition when we are unable to provide the iRhythm Services.
We have and expect to continue to incur significant research and development, sales and marketing, regulatory, and other expenses as we expand our marketing efforts to increase the prescription of our Zio Services, expand existing relationships with physicians, obtain regulatory clearances or approvals for our current or future services and related devices, conduct clinical trials on our existing and future services, and develop new services or add new features to our existing Zio Services.
We have and expect to continue to incur significant research and development, sales and marketing, regulatory, and other expenses as we expand our marketing efforts to increase the prescription of our iRhythm Services, expand existing relationships with physicians, obtain regulatory clearances or approvals for our current or future services and related devices, conduct clinical trials on our existing and future services, and develop new services or add new features to our existing iRhythm Services.
In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, cyberattack, or telecommunications failure, we may be unable to continue our operations and may endure system and service interruptions, reputational harm, delays in development of our Zio Systems and Zio Services, breaches of data security, and loss of critical data, all of which could cause us to experience higher attrition, losses, and additional costs to maintain or resume operations, or otherwise have an adverse effect on our business and operating results.
In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, cyberattack, or telecommunications failure, we may be unable to continue our operations and may endure system and service interruptions, reputational harm, delays in development of our iRhythm ACM Systems and iRhythm Services, breaches of data security, and loss of critical data, all of which could cause us to experience higher attrition, losses, and additional costs to maintain or resume operations, or otherwise have an adverse effect on our business and operating results.
We have entered into a development and collaboration agreement in the past to develop certain next-generation Afib screening, detection, or monitoring devices to enhance our Zio Services, which could involve combining our technology platforms and capabilities with those of a third party, and we intend to enter into similar development and collaboration agreements with third parties in the future.
We have entered into a development and collaboration agreement in the past to develop certain next-generation Afib screening, detection, or monitoring devices to enhance our iRhythm Services, which could involve combining our technology platforms and capabilities with those of a third party, and we intend to enter into similar development and collaboration agreements with third parties in the future.
Our Zio System patches and gateways are provided to patients either (1) during in-office visits with a healthcare provider or (2) remotely via at-home hookup. We have also seen hybrid situations where accounts, in response to staffing shortages, provide in-clinic Zio device packages to patients for application at home.
Our iRhythm ACM System patches and gateways are provided to patients either (1) during in-office visits with a healthcare provider or (2) remotely via at-home hookup. We have also seen hybrid situations where accounts, in response to staffing shortages, provide in-clinic Zio device packages to patients for application at home.
As a result, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 52 Risks Related to Our Debt Our indebtedness could adversely affect our financial health and our ability to respond to changes in our business.
As a result, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 57 Risks Related to Our Debt Our indebtedness could adversely affect our financial health and our ability to respond to changes in our business.
We also may have to reduce sales, marketing, customer support, or other resources devoted to our Zio Services. Any of these factors could harm our business and financial condition. Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.
We also may have to reduce sales, marketing, customer support, or other resources devoted to our iRhythm Services. Any of these factors could harm our business and financial condition. Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.
Our failure to comply with the applicable Medicare regulations, or regulators’ disagreement with our interpretation of the regulations as applied to indirect tests, such as the Zio Services, could result in the discontinuation of our reimbursement under the Medicare program, a requirement to return funds already paid to us, civil monetary penalties, criminal penalties, and/or exclusion from the Medicare program.
Our failure to comply with the applicable Medicare regulations, or regulators’ disagreement with our interpretation of the regulations as applied to indirect tests, such as the iRhythm Services, could result in the discontinuation of our reimbursement under the Medicare program, a requirement to return funds already paid to us, civil monetary penalties, criminal penalties, and/or exclusion from the Medicare program.
The market for remote cardiac monitoring products and services is competitive, characterized by rapid change resulting from technological advances, scientific discoveries, and other market activities of industry participants. Our Zio Services compete with a variety of products and services that provide alternatives for remote cardiac monitoring, including traditional, short-term Holter monitors and event monitors.
The market for remote cardiac monitoring products and services is competitive, characterized by rapid change resulting from technological advances, scientific discoveries, and other market activities of industry participants. Our iRhythm Services compete with a variety of products and services that provide alternatives for remote cardiac monitoring, including traditional, short-term Holter monitors and event monitors.
If any of the analysts who cover us issues an adverse or misleading opinion regarding us, our business model, our intellectual property, or our stock performance, or if any third-party preclinical studies and clinical trials involving our Zio Services or our results of operations fail to meet the expectations of analysts, our stock price would likely decline.
If any of the analysts who cover us issues an adverse or misleading opinion regarding us, our business model, our intellectual property, or our stock performance, or if any third-party preclinical studies and clinical trials involving our iRhythm Services or our results of operations fail to meet the expectations of analysts, our stock price would likely decline.
If we do not dedicate sufficient resources to establishing contracts with commercial payors and supporting payors’ reimbursement determinations by demonstrating the clinical value of our Zio Services through studies and physician adoption, we may encounter several adverse consequences that could compromise the commercial success of our business.
If we do not dedicate sufficient resources to establishing contracts with commercial payors and supporting payors’ reimbursement determinations by demonstrating the clinical value of our iRhythm Services through studies and physician adoption, we may encounter several adverse consequences that could compromise the commercial success of our business.
While there are barriers that would challenge new entrants or existing competitors from developing products that compete directly with the devices used in our Zio Services, these barriers can be overcome. Demand for our Zio Services and future related devices or services could be diminished by equivalent or superior products and technologies offered by competitors.
While there are barriers that would challenge new entrants or existing competitors from developing products that compete directly with the devices used in our iRhythm Services, these barriers can be overcome. Demand for our iRhythm Services and future related devices or services could be diminished by equivalent or superior products and technologies offered by competitors.
Our business relies on orders from licensed healthcare providers, and the continuing clinical acceptance and adoption of our Zio Services depends upon strong working relationships with healthcare providers, including physicians. These relationships, interactions, and arrangements are subject to a high degree of scrutiny by government regulators and enforcement bodies.
Our business relies on orders from licensed healthcare providers, and the continuing clinical acceptance and adoption of our iRhythm Services depends upon strong working relationships with healthcare providers, including physicians. These relationships, interactions, and arrangements are subject to a high degree of scrutiny by government regulators and enforcement bodies.
Regarding patients for whom we have received a valid order for our Zio Services, we may send or make text messages, emails, phone calls, and other communications for various informational, business purposes, including to confirm accurate demographic and payor information or to assist a patient via a home hookup.
Regarding patients for whom we have received a valid order for our iRhythm Services, we may send or make text messages, emails, phone calls, and other communications for various informational, business purposes, including to confirm accurate demographic and payor information or to assist a patient via a home hookup.
Future significant changes in the healthcare systems in the United States or elsewhere could also have a negative impact on the demand for our current and future products and services. These include changes that may reduce reimbursement rates for our products and changes that may be proposed or implemented by the current or future laws or regulations.
Future significant changes in the healthcare systems in the United States or elsewhere could also have a negative impact on the demand for our current and future products and services. These include changes that may limit coverage or reduce reimbursement rates for our products and changes that may be proposed or implemented by the current or future laws or regulations.
If we are unable to increase orders for our Zio Services, expand reimbursement for our Zio Services, or successfully develop and commercialize new services and related devices, our revenue and our ability to achieve and sustain profitability would be impaired. The market for remote cardiac monitoring solutions is highly competitive.
If we are unable to increase orders for our iRhythm Services, expand reimbursement for our iRhythm Services, or successfully develop and commercialize new services and related devices, our revenue and our ability to achieve and sustain profitability would be impaired. The market for remote cardiac monitoring solutions is highly competitive.
In addition, the trading prices for our common stock and the common stocks of other medical service providers been highly volatile as a result of macroeconomic conditions, including inflation, interest rate volatility and ongoing geopolitical conflicts, such as the war in Ukraine and conflict in the Middle East.
In addition, the trading prices for our common stock and the common stocks of other medical service providers been highly volatile as a result of macroeconomic conditions, including inflation, interest rate volatility and ongoing geopolitical conflicts, such as the war in Ukraine and conflicts in the Middle East and Venezuela.
If we fail to obtain and maintain IDTF enrollment or accreditation and certification, our Zio Services may no longer be reimbursed by those commercial payors, which could have a material adverse impact on our reputation, business, and results of operations.
If we fail to obtain and maintain IDTF enrollment or accreditation and certification, our iRhythm Services may no longer be reimbursed by those commercial payors, which could have a material adverse impact on our reputation, business, and results of operations.
We are in various stages of research and development for other diagnostic and/or screening solutions and new indications for our technology and our Zio Services; however, there can be no assurance that we will be able to successfully develop and commercialize any new services and related devices.
We are in various stages of research and development for other diagnostic and/or screening solutions and new indications for our technology and our iRhythm Services; however, there can be no assurance that we will be able to successfully develop and commercialize any new services and related devices.
Our ability to compete effectively depends on our ability to distinguish our company and our Zio Services from our competitors and their products and services, and includes such factors as safety and effectiveness; acute and long-term outcomes; ease of use; price; physician, hospital, and clinic acceptance; and third-party reimbursement.
Our ability to compete effectively depends on our ability to distinguish our company and our iRhythm Services from our competitors and their products and services, and includes such factors as safety and effectiveness; acute and long-term outcomes; ease of use; price; physician, hospital, and clinic acceptance; and third-party reimbursement.
We also cannot predict the extent to which FDA and SEC regulations, policies, and decisions may become subject to increasing legal challenges, delays, and changes. 44 Compliance with requirements of being a public company may strain our resources and divert management’s attention.
We also cannot predict the extent to which FDA and SEC regulations, policies, and decisions may become subject to increasing legal challenges, delays, and changes. 47 Compliance with requirements of being a public company may strain our resources and divert management’s attention.
We are subject to extensive compliance requirements for the quality, design, safety, performance, and post-market surveillance of the medical devices we manufacture for use in our Zio Services, and for vigilance on complaint-handling, escalation, assessment, and reporting of adverse events and malfunctions.
We are subject to extensive compliance requirements for the quality, design, safety, performance, and post-market surveillance of the medical devices we manufacture for use in our iRhythm Services, and for vigilance on complaint-handling, escalation, assessment, and reporting of adverse events and malfunctions.
If we are unable to innovate successfully, our services and related devices could become obsolete and our revenue would decline as our customers prescribe or purchase our competitors’ services. In order to remain competitive, we must continue to develop new product offerings and enhancements to our Zio Services.
If we are unable to innovate successfully, our services and related devices could become obsolete and our revenue would decline as our customers prescribe or purchase our competitors’ services. In order to remain competitive, we must continue to develop new product offerings and enhancements to our iRhythm Services.
We can provide no assurance that we will be successful in fully recognizing the strategic value of our ECG database, expanding the indications for our Zio Services, developing new services and related devices, or commercializing them in ways that achieve market acceptance.
We can provide no assurance that we will be successful in fully recognizing the strategic value of our ECG database, expanding the indications for our iRhythm Services, developing new services and related devices, or commercializing them in ways that achieve market acceptance.
If reimbursement or other payment for our Zio Services is reduced or modified in the United States or in our international markets, including through cost containment measures or changes to policies with respect to coding, coverage, and pricing, our business could suffer.
If reimbursement or other payment for our iRhythm Services is reduced or modified in the United States or in our international markets, including through cost containment measures or changes to policies with respect to coding, coverage, and pricing, our business could suffer.
While common in the healthcare industry, the outsourcing of billing and collections activities to third-party vendors requires diligent monitoring and oversight to ensure the completeness, accuracy, and propriety of the claims submitted to federal healthcare programs and other third-party commercial payors for our Zio Services.
While common in the healthcare industry, the outsourcing of billing and collections activities to third-party vendors requires diligent monitoring and oversight to ensure the completeness, accuracy, and propriety of the claims submitted to federal healthcare programs and other third-party commercial payors for our iRhythm Services.
Any of these disruptions may render it difficult or temporarily impossible for us to provide some or all our Zio Services and bill for those services, adversely affecting our operating results, causing significant distraction for management, and negatively impacting our business reputation.
Any of these disruptions may render it difficult or temporarily impossible for us to provide some or all our iRhythm Services and bill for those services, adversely affecting our operating results, causing significant distraction for management, and negatively impacting our business reputation.
If adequate funds are not available, we may not be able to commercialize our Zio Services at the rate we desire and/or we may have to delay the development or commercialization of our Zio Services or license to third parties the rights to commercialize services or technologies that we would otherwise seek to commercialize.
If adequate funds are not available, we may not be able to commercialize our iRhythm Services at the rate we desire and/or we may have to delay the development or commercialization of our iRhythm Services or license to third parties the rights to commercialize services or technologies that we would otherwise seek to commercialize.
A severe or prolonged economic downturn or period of global political instability could drive hospitals and other healthcare professionals to tighten budgets and curtail spending, which could in turn negatively impact rates at which physicians prescribe our Zio Services.
A severe or prolonged economic downturn or period of global political instability could drive hospitals and other healthcare professionals to tighten budgets and curtail spending, which could in turn negatively impact rates at which physicians prescribe our iRhythm Services.
In instances where FDA, an EU/UK Notified/Approved Body, the PMDA or the Swiss regulatory body disagrees with our internal analysis and decision that a new or additional approval or marketing authorization or certification is not needed for any such modifications, we may be required to recall and/or stop the distribution of the impacted Zio System and/or correct the labeling for such Zio System.
In instances where FDA, an EU/UK Notified/Approved Body, the PMDA or the Swiss regulatory body disagrees with our internal analysis and decision that a new or additional approval or marketing authorization or certification is not needed for any such modifications, we may be required to recall and/or stop the distribution of the impacted iRhythm ACM System and/or correct the labeling for such iRhythm ACM System.
If we are unable to keep up with demand for our Zio Services, our revenue could be impaired, market acceptance for our Zio Services could be harmed, and physicians may instead order our competitors’ services. As demand for our Zio Services increases, we may encounter production or service delays or shortfalls.
If we are unable to keep up with demand for our iRhythm Services, our revenue could be impaired, market acceptance for our iRhythm Services could be harmed, and physicians may instead order our competitors’ services. As demand for our iRhythm Services increases, we may encounter production or service delays or shortfalls.
We have limited visibility as to when we will receive payment for our Zio Services with non-contracted payors and we or our third party billing vendors must appeal any negative payment decisions, which often delays collections further.
We have limited visibility as to when we will receive payment for our iRhythm Services with non-contracted payors and we or our third party billing vendors must appeal any negative payment decisions, which often delays collections further.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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On top of annual information security awareness training for our employees, we also provide focused training for certain departments. Our security training incorporates awareness of cyber threats (including malware, ransomware, and social engineering attacks), password hygiene, and incident reporting process, as well as physical security best practices.
On top of annual information security awareness training for our employees, we also provide focused training for certain departments. Our security training incorporates awareness of cyber threats 61 (including malware, ransomware, and social engineering attacks), password hygiene, and incident reporting process, as well as physical security best practices.
Additionally, the audit committee monitors our progress to address cybersecurity risks and opportunities, as well as cybersecurity incident response and recovery metrics. Our management also periodically engages external service providers to conduct objective assessments of our cybersecurity program, and results of such assessments are directly reported to the audit committee.
Additionally, the audit committee monitors our progress to address cybersecurity risks and opportunities, as well as 62 cybersecurity incident response and recovery metrics. Our management also periodically engages external service providers to conduct objective assessments of our cybersecurity program, and results of such assessments are directly reported to the audit committee.
For more information regarding cybersecurity risks that we face and potential impacts on our business related thereto, see the risk factor titled “Cybersecurity risks, including those involving network security breaches, services interruptions and other incidents affecting the confidentiality, integrity or availability of our data and systems, could result in the compromise of confidential data or critical data systems and give rise to potential harm to our patients, remediation and other expenses, expose us to liability under HIPAA, breach notification laws, consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.” Governance As described above, our board of directors has an important role in the oversight of the Company’s cybersecurity risk management and strategy, with certain components of such oversight, including matters related to the security of and risks related to computerized information and technology systems, delegated to the audit committee.
For more information regarding cybersecurity risks that we face and potential impacts on our business related thereto, see the risk factor titled “Cybersecurity risks, including those involving network security breaches, services interruptions and other incidents affecting the confidentiality, integrity or availability of our data and systems, could result in the compromise of confidential data or critical systems and give rise to potential harm to our patients, remediation costs and other expenses, expose us to liability under HIPAA, breach notification laws, consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations." Governance As described above, our board of directors has an important role in the oversight of our cybersecurity risk management and strategy, with certain components of such oversight, including matters related to the security of and risks related to computerized information and technology systems, delegated to the audit committee.
To ensure appropriate and consistent risk evaluation and decision-making processes among our Cybersecurity and Global Risk & Integrity departments, we utilize an Adjusted Risk Rating (“ARR”) system that considers certain attributes that represent impact to the Company, and we prioritize our actions based on our ARR system.
To ensure appropriate and consistent risk evaluation and decision-making processes among our Cybersecurity and Global Risk & Integrity departments, we utilize an Adjusted Risk Rating (“ARR”) system that considers certain attributes that represent impact to iRhythm, and we prioritize our actions based on our ARR system.
Our board of directors has an important role in the oversight of the Company’s cybersecurity risk management and strategy and has delegated certain components of such oversight related to the security of and risks related to computerized information and technology systems across the company, as well as by risk area (including privacy, data security, and cybersecurity matters), to the audit committee, which regularly interacts with our Chief Information Security Officer (“CISO") and Chief Risk Officer (“CRO”).
Our board of directors has an important role in the oversight of our cybersecurity risk management and strategy and has delegated certain components of such oversight related to the security of and risks related to computerized information and technology systems across the organization, as well as by risk area (including privacy, data security, and cybersecurity matters), to the audit committee, which regularly interacts with our Chief Information Security Officer ("CISO") and Chief Risk Officer ("CRO").
Finally, the audit committee reports out to the larger board of directors periodically on the company’s cybersecurity risks and posture. 57
Finally, the audit committee reports out to the larger board of directors periodically on our cybersecurity risks and posture.
The results of such internal and external assessments, audits, and reviews are reported to the audit committee and the board of directors, and we adjust our cybersecurity policies, standards, processes, and practices as necessary based on the information provided by these assessments, audits, and reviews. 56 In addition to the assessment of internal cybersecurity risks, we have implemented processes to oversee and identify risks from cybersecurity threats associated with our use of third-party service providers that have access to our data and systems, including payors and IDTFs.
The results of such internal and external assessments, audits, and reviews are reported to the audit committee and the board of directors, and we adjust our cybersecurity policies, standards, processes, and practices as necessary based on the information provided by these assessments, audits, and reviews.
Added
In addition to the assessment of internal cybersecurity risks, we have implemented processes to oversee and identify risks from cybersecurity threats associated with our use of third-party service providers that have access to our data and systems, including payors and IDTFs.

Item 2. Properties

Properties — owned and leased real estate

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Location Primary Use Approximate Square Footage Lease Expiration Year San Francisco, California Corporate Headquarters and Clinical Center 117,600 2031 Cypress, California Corporate Office and Manufacturing Facilities 68,900 2032 Deerfield, Illinois Corporate Office and Clinical Center 44,600 2033 Manila, Philippines Corporate Office 24,000 2028 Houston, Texas Clinical Center 20,300 2027 Solana Beach, California Corporate Office 16,800 2032 London, United Kingdom Corporate Office and Clinical Center 9,000 2029
Location Primary Use Approximate Square Footage Lease Expiration Year San Francisco, California Corporate Headquarters and Clinical Center 117,600 2031 Cypress, California Corporate Office and Manufacturing Facilities 68,900 2032 Deerfield, Illinois Corporate Office and Clinical Center 44,600 2033 Manila, Philippines Corporate Office 24,000 2028 Houston, Texas Clinical Center 20,300 2027 Solana Beach, California Corporate Office 16,800 2032 London, United Kingdom Corporate Office and Clinical Center 7,600 2029
ITEM 2. PROPERTIES The following table summarizes the facilities leased as of December 31, 2024, including the location and size of each principal facility and their designated use. We believe that these facilities are sufficient to meet our current and anticipated future needs.
ITEM 2. PROPERTIES The following table summarizes the facilities leased as of December 31, 2025, including the location and size of each principal facility and their designated use. We believe that these facilities are sufficient to meet our current and anticipated future needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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On October 7, 2024, a second amended complaint was filed to include events from the recent FDA inspections, but otherwise included the same claims under the Exchange Act. On December 10, 2024, the defendants filed a motion to dismiss.
On October 7, 2024, a second amended complaint was filed against the defendants to include events from the recent FDA inspections, but otherwise included the same claims under the Exchange Act. On December 10, 2024, the defendants filed a motion to dismiss.
On March 26, 2021, we received a grand jury subpoena from the U.S. Attorney’s Office for the Northern District of California requesting information related to communications with the Food and Drug Administration and our products and services. On September 13, 2021, we received a second subpoena requesting additional information.
On March 26, 2021, iRhythm Technologies received a grand jury subpoena from the U.S. Attorney’s Office for the Northern District of California requesting information related to communications with the Food and Drug Administration and our products and services. On September 13, 2021, iRhythm Technologies received a second subpoena requesting additional information.
Our board members and certain of our current and former executives were named as defendants in two complaints filed as stockholder derivative actions in the United States District Court for the District of Delaware and the United States District Court for the Northern District of California, respectively. We are named as a nominal defendant in both complaints.
Our board members and certain of our current executives and former executives of iRhythm Technologies were named as defendants in two complaints filed as stockholder derivative actions in the United States District Court for the District of Delaware and the United States District Court for the Northern District of California, respectively. iRhythm Technologies is named as a nominal defendant in both complaints.
We believe this lawsuit is without merit and plan to defend ourselves vigorously. At this time, we are unable to predict the eventual scope, duration or outcome of the aforementioned proceedings. See also Part I, Item 1A “Risk Factors — Risks Related to Other Legal and Regulatory Matters” for more information on these matters. ITEM 4.
We believe BardyDx’s allegations of patent infringement are without merit and plan to defend iRhythm Technologies vigorously. At this time, we are unable to predict the eventual scope, duration, or outcome of the aforementioned proceedings. See also Part I, Item 1A “Risk Factors — Risks Related to Other Legal and Regulatory Matters” for more information on these matters. ITEM 4.
On July 1, 2024, the DOJ filed with the United States District Court for the Northern District of California a Petition for Order to Show Cause and Application for Enforcement with respect to the production of certain documentary materials which we assert are protected by legal privileges.
We are cooperating fully on these matters. 63 On July 1, 2024, the DOJ filed with the United States District Court for the Northern District of California a Petition for Order to Show Cause and Application for Enforcement against iRhythm Technologies with respect to the production of certain documentary materials which iRhythm Technologies asserts are protected by legal privileges.
The cases make similar allegations to those in the securities class action complaint described above and both cases have both been stayed pending the resolution of motion to dismiss briefing in the securities class action. W e believe the above securities class action and derivative lawsuits to be without merit and plan to continue to defend ourselves vigorously.
The cases make similar allegations to those in the securities class action complaint described above and both derivative cases have been stayed pending the resolution of the securities class action. We believe the above securities class action and derivative lawsuits to be without merit and plan to continue to defend iRhythm Technologies vigorously.
MINE SAFETY DISCLOSURES Not applicable. 59 PART II
MINE SAFETY DISCLOSURES Not applicable. 64 PART II
On April 4, 2023, we received a Subpoena Duces Tecum from the Consumer Protection Branch, Civil Division of the U.S. Department of Justice (the “DOJ”), requesting production of various documents regarding our products and services. We are cooperating fully on these matters.
On April 4, 2023, iRhythm Technologies received a Subpoena Duces Tecum from the Consumer Protection Branch, Civil Division of the U.S. Department of Justice (the “DOJ”), requesting production of various documents regarding iRhythm Technologies' products and services.
Devine, our Chief Commercial Officer Chad Patterson, our former Chief Technology Officer Mark Day, and our Chief Medical Officer, Chief Scientific Officer, and Executive Vice President of Product Innovation Mintu Turakhia as defendants.
On July 19, 2024, an amended complaint was filed, naming iRhythm Technologies, Mr. Blackford, Mr. Bobzien, Mr. Devine, our Chief Commercial and Product Officer Chad Patterson, iRhythm Technologies' former Chief Technology Officer Mark Day, and our Chief Medical Officer, Chief Scientific Officer, and Executive Vice President of Advanced Technologies, Mintu Turakhia, as defendants.
On February 6, 2024, a putative class action lawsuit was filed in the United States District Court for the Northern District of California alleging that we and our current Chief Executive Officer, Quentin Blackford, our former Chief Financial Officer, Brice Bobzien, and our former Chief Financial Officer and former Chief Operating Officer, Mr.
On February 6, 2024, a putative class action lawsuit was filed in the United States District Court for the Northern District of California alleging that our wholly-owned subsidiary, iRhythm Technologies, and our current Chief Executive Officer, Quentin Blackford, iRhythm Technologies' former Chief Financial Officer, Brice Bobzien, and its former Chief Financial Officer and former Chief Operating Officer, Douglas Devine violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder, and seeks unspecified damages purportedly sustained by the class.
We filed a motion to dismiss Welch Allyn’s willful infringement claims on April 11, 2024. Welch Allyn filed an amended complaint on April 24, 2024 that continued to allege that our Zio devices infringe certain of its patents and that our infringement was willful.
On February 20, 2024, Welch Allyn filed a complaint against iRhythm Technologies in the United States District Court for the District of Delaware, which was amended on April 24, 2024, alleging that its Zio devices infringe certain of Welch Allyn's patents and that its infringement was willful.
On December 10, 2024, Bardy Diagnostics, Inc. (“BardyDx”), a subsidiary of Hill-Rom Holdings, Inc. now part of Baxter International, Inc., filed a lawsuit against us in the United States District Court for the District of Delaware, alleging that our Zio Monitor patch infringes one of its patents.
Welch Allyn seeks money damages and attorneys’ fees. We believe this lawsuit is without merit and plan to defend iRhythm Technologies vigorously. On December 10, 2024, BardyDx filed a lawsuit against iRhythm Technologies in the United States District Court for the District of Delaware, alleging that our Zio monitor infringes one of its patents.
On December 26, 2024, BardyDx filed an amended complaint alleging that the Company's Zio Monitor patch infringes two of its patents. We are preparing to file a response to the allegations found in the amended complaint no later than March 3, 2025. BardyDx seeks money damages and attorneys’ fees.
On December 26, 2024, BardyDx filed an amended complaint alleging that our Zio monitor infringes two of BardyDx's patents.
Welch Allyn filed a second amended complaint adding additional patent claims on February 14, 2025. The Company is preparing to file a response to the allegations found in the second amended complaint no later than March 21, 2025. Welch Allyn seeks money damages and attorneys’ fees. We believe this lawsuit is without merit and plan to defend ourselves vigorously.
On March 21, 2025, iRhythm Technologies filed a response to the allegations found in the second amended complaint, denying all allegations of patent infringement and asserting defenses including patent invalidity. On October 14, 2025, Welch Allyn filed a third amended complaint adding back claims for willful infringement.
Removed
Devine violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder, and seeks unspecified damages purportedly sustained by the class. On July 19, 2024, an amended complaint was filed, naming us, Mr. Blackford, Mr. Bobzien, Mr.
Added
On June 3, 2025, the Court granted in part the defendants’ motion to dismiss, including the dismissal of all individual defendants except for Mr. Blackford. On November 3, 2025, the plaintiff filed a motion to certify the case as a class action, which the defendants later opposed by motion. Discovery is ongoing.
Removed
We defended our privilege assertions over such materials in our response to the DOJ’s petition. The matter has been briefed, and oral argument is scheduled for March 6, 2025. 58 On February 20, 2024, Welch Allyn, Inc.
Added
On May 30, 2025, following a hearing on the issue, the District Court ordered iRhythm Technologies to disclose certain of the documents, finding that iRhythm Technologies had waived its asserted legal privileges. We have appealed the District Court's order to the Ninth Circuit Court of Appeals.
Removed
(“Welch Allyn”), a subsidiary of Hill-Rom Holdings, Inc. now part of Baxter International, Inc., filed a lawsuit against us in the United States District Court for the District of Delaware, alleging that our Zio devices infringe certain of its patents and that the Company’s infringement was willful.
Added
On July 17, 2025, the Ninth Circuit Court of Appeals stayed the District Court's production order until the appeal is resolved. Both parties submitted initial briefing on the merits, and iRhythm Technologies' reply brief to the government is due in late February 2026. We intend to continue to defend iRhythm Technologies' privilege assertions over the documents at issue.
Removed
We filed a motion to dismiss Welch Allyn’s willful infringement allegations found in the amended complaint on May 22, 2024 and a hearing on the motion to dismiss was held on January 28, 2025. After hearing arguments, the Court granted our motion and the willful infringement claims in the amended complaint were dismissed without prejudice.
Added
Regardless of the outcome of the appeal or the potential disclosure of the documents at issue, it is not clear what, if any, action the DOJ may take following resolution of the dispute over legal privileges.
Added
On December 12, 2025, we received a civil investigative demand from DOJ’s Civil Division’s Commercial Litigation Branch seeking information and documents related to Zio AT and our associated claims for reimbursement. We have cooperated, and are continuing to cooperate, fully in connection with these matters.
Added
Thereafter, iRhythm Technologies successfully petitioned the District Court to dismiss the willful infringement claims without prejudice. On February 14, 2025, Welch Allyn filed a second amended complaint adding additional patent claims.
Added
On October 28, 2025, iRhythm Technologies filed a motion to dismiss the willful infringement claims, and that motion remains pending. On December 23, 2024, iRhythm Technologies filed a petition with the USPTO seeking Inter Partes Review ("IPR") of the Welch Allyn patents asserted in the original complaint.
Added
The IPR petitions became subject to a new consideration for “discretionary denial” of IPRs first announced by the USPTO after iRhythm Technologies filed its petitions.
Added
Under this new basis, iRhythm Technologies' IPRs were denied institution. iRhythm Technologies filed a Petition for Director review, seeking to vacate the denial in July 2025, but the Petition was denied. iRhythm Technologies subsequently filed for Ex Parte Reexamination on four of the Welch Allyn patents being asserted, and the USPTO instituted re-examination of those four patents on January 20, 2026.
Added
On June 11, 2025, BardyDx filed a second amended complaint alleging that our Zio monitor infringes four of BardyDx’s patents. iRhythm Technologies filed responses to the allegations found in the complaint and the amended complaints, denying all allegations of patent infringement, asserting defenses including patent invalidity, and asserting patent infringement counterclaims, which allege that BardyDx’s Carnation Ambulatory Monitor patch infringes five of the Company's patents.
Added
BardyDx filed an answer to iRhythm Technologies' counterclaims and filed counterclaims for declaratory judgment for non-infringement and invalidity of the patents asserted by iRhythm Technologies. On September 5, 2025, iRhythm Technologies filed a motion for leave to amend its counterclaims to allege infringement of two additional patents, and that motion remains pending.
Added
On January 22, 2026, BardyDx filed a motion to amend its pleadings to assert inequitable conduct with respect to two patents of iRhythm Technologies, and that motion also remains pending. Both parties seek money damages and attorneys’ fees for the alleged infringement of their patents.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The following graph shows the total stockholder return of an investment of $100 in cash at market close on December 31, 2019, through December 31, 2024 for (i) our common stock, (ii) the NASDAQ Composite Index (U.S.), and (iii) the S&P Healthcare Equipment Select Industry.
The following graph shows the total stockholder return of an investment of $100 in cash at market close on December 31, 2020, through December 31, 2025 for (i) our common stock, (ii) the NASDAQ Composite Index (U.S.), and (iii) the S&P Healthcare Equipment Select Industry.
Performance Graph This graph is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing of iRhythm Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Performance Graph This graph is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information for Common Stock Our common stock is traded on The Nasdaq Global Select Market under the symbol “IRTC”. As of February 13, 2025, there were 345 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information for Common Stock Our common stock is traded on The Nasdaq Global Select Market under the symbol “IRTC”. As of February 16, 2026, there were 490 holders of record of our common stock.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 iRhythm Technologies, Inc. $ 100.00 $ 348.38 $ 172.84 $ 137.57 $ 157.20 $ 132.43 NASDAQ Composite $ 100.00 $ 144.92 $ 177.06 $ 119.45 $ 172.77 $ 223.87 S&P Healthcare Equipment Select Industry $ 100.00 $ 133.15 $ 137.80 $ 105.61 $ 99.63 $ 105.04 60 Securities Authorized for Issuance under Equity Compensation Plans Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Part III, Item 12 of this Annual Report on Form 10-K.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 iRhythm $ 100.00 $ 49.61 $ 39.49 $ 45.12 $ 38.01 $ 74.80 NASDAQ Composite Index $ 100.00 $ 122.18 $ 82.43 $ 119.22 $ 154.48 $ 187.14 S&P Healthcare Equipment Select Industry $ 100.00 $ 103.50 $ 79.32 $ 74.82 $ 78.89 $ 78.69 65 Securities Authorized for Issuance under Equity Compensation Plans Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Part III, Item 12 of this Annual Report on Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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GAAP”), which requires us to make judgments, estimates, and assumptions. See Note 2, Summary of Significant Accounting Policies, in the notes to the Consolidated Financial Statements, which describes our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements.
GAAP”), which requires us to make judgments, estimates, and assumptions. See Note 2, Summary of Significant Accounting Policies, in the notes to our Consolidated Financial Statements, which describes our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements.
The Zio XT System is the previous generation of the Zio Monitor System and is a prescription-only, remote ECG monitoring system that consists of the Zio XT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio XT patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm.
The Zio XT System is the previous generation of the Zio monitor System and is a prescription-only, remote ECG monitoring system that consists of the Zio XT that records the electric signal from the heart continuously for up to 14 days and ZEUS, which supports the capture and analysis of ECG data recorded by the Zio XT at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm.
The Zio Monitor System is a prescription-only, remote ECG monitoring system that consists of the Zio Monitor patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm.
The Zio monitor System is a prescription-only, remote ECG monitoring system that consists of the Zio monitor that records the electric signal from the heart continuously for up to 14 days and ZEUS, which supports the capture and analysis of ECG data recorded by the Zio monitor at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm.
Revenue may be impacted by the outcome of adjudications with contracted and non-contracted payors, as well as changes in CMS reimbursement rates that are updated annually. Cost of Revenue Cost of revenue includes direct labor, material costs, equipment and infrastructure expenses, amortization of internal-use software, allocated overhead, royalties, and shipping and handling.
Revenue may be impacted by the outcome of adjudications with contracted and non-contracted payors, as well as changes in CMS reimbursement rates that are updated annually. Cost of Revenue Cost of revenue includes direct labor, material costs, tariffs, equipment and infrastructure expenses, amortization of internal-use software, allocated overhead, royalties, and shipping and handling.
The net proceeds from the offering, after deducting initial purchasers’ discounts and costs directly related to the offering, were approximately $643.8 million. The initial conversion rate of the 2029 Notes is 6.7927 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $147.22 per share, subject to adjustments.
The net proceeds from the offering, after deducting initial purchasers’ discounts and estimated costs directly related to the offering, were $643.8 million. The initial conversion rate of the 2029 Notes is 6.7927 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $147.22 per share, subject to adjustments.
The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of the Zio AT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, but which also incorporates 69 the Zio AT wireless gateway that provides connectivity between the patch and the ZEUS System during the patient wear period.
The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of Zio AT which records the electric signal from the heart continuously for up to 14 days and ZEUS, but which also incorporates the Zio AT wireless gateway that provides connectivity between the patch and ZEUS during the patient wear period.
We expect increases to the cost of revenues due to increases to materials and electronics components pricing, labor rates, shipping rates, amortization of capitalized internal-use software, along with increases in the general level of inflation and potential tariffs on imports (which may complicate and increase costs associated with our supply chain).
We expect increases to the cost of revenues due to increases to materials and electronics components pricing, labor rates, shipping rates, amortization of capitalized internal-use software, along with increases in the general level of inflation and tariffs on imports (which may complicate and increase costs associated with our supply chain).
We have adapted our Zio Services to meet the immediate needs of physicians, customers, and patients and significantly increased the utilization of our home enrollment service, which allows patients to receive and wear the single-use Zio patch without going to a healthcare facility.
We have adapted our iRhythm Services to meet the immediate needs of physicians, customers, and patients and significantly increased the utilization of our home enrollment service, which allows patients to receive and wear the single-use Zio patch without going to a healthcare facility.
The Zio AT service revenue is recognized under two performance obligations — the patient wear period and delivery of electronic Zio reports. We recognize as revenue the amount of consideration to which we expect to be entitled in exchange for performing our service.
The Zio AT service revenue is recognized under two performance obligations — the patient wear period and delivery of electronic Zio reports. 75 We recognize as revenue the amount of consideration to which we expect to be entitled in exchange for performing our service.
In addition, we used approximately $80.2 million of the net proceeds from the offering for the repayment in full of the indebtedness outstanding from the Initial Loan of the Braidwell Term Loan Facility (as each such term is defined below).
In addition, we used approximately $80.2 million of the net proceeds from the offering for the repayment in full of the indebtedness outstanding from the Initial Tranche of the Braidwell Term Loan Facility (as each such term is defined below).
The final step in the Zio Services is the delivery of an electronic Zio report to the prescribing physician with a summary of preliminary findings. Our Zio Monitor services are generally billable when the Zio report is issued to the physician.
The final step in the iRhythm Services is the delivery of an electronic Zio report to the prescribing physician with a summary of preliminary findings. Our Zio monitor services are generally billable when the Zio report is issued to the physician.
The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT patch application and collects and transmits data from the Zio AT patch to the cloud via a LTE protocol.
The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT application and collects and transmits data from the Zio AT to the cloud via a LTE protocol.
In determining the amount to accrue for the Zio Services (including a delivered report), we consider factors such as claim payment history from both payors and patient, available reimbursement, including whether there is a contract between us and the payor or healthcare institution and historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments.
In determining the amount to accrue for the iRhythm Services (including a delivered report), we consider factors such as claim payment history from both payors and patient, available reimbursement, including whether there is a contract between us and the payor or healthcare institution and historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments.
Adjustments to these estimates for actual experience are also recorded as an adjustment to bad debt expense. 70 For healthcare institutions, the transaction price is determined based on negotiated rates, and we have historical experience collecting substantially all of these contracted rates. Historical cash collections indicate that it is probable that substantially all of the transaction price will be received.
Adjustments to these estimates for actual experience are also recorded as an adjustment to bad debt expense. 76 For healthcare institutions, the transaction price is determined based on negotiated rates, and we have historical experience collecting substantially all of these contracted rates. Historical cash collections indicate that it is probable that substantially all of the transaction price will be received.
Revenue Recognition We have developed proprietary systems that combine a wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data, with a proprietary cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias. We currently offer three Zio System options—the Zio Monitor System, the Zio XT System, and the Zio AT System.
Revenue Recognition We have developed proprietary systems that combine a wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data, with a proprietary cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias. We currently offer three iRhythm ACM System options—the Zio monitor System, the Zio XT System, and the Zio AT System.
Each Zio XT patch and Zio Monitor patch includes a PCBA, and each Zio AT patch includes a PCBA and gateway board, the cost of which is amortized over the expected useful life of the board.
Each Zio XT and Zio monitor includes a PCBA, and each Zio AT includes a PCBA and gateway board, the cost of which is amortized over the expected useful life of the board.
The proceeds include the full exercise of the option granted by us to the initial purchasers of the 2029 Notes to purchase up to an additional $86.3 million aggregate principal amount of notes. Interest on the 2029 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024.
The proceeds include the full exercise of the option granted to the initial purchasers of the 2029 Notes to purchase up to an additional $86.3 million aggregate principal amount of notes. Interest on the 2029 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024.
Our principal business is the design, development, and commercialization of device-based technology to provide remote cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology.
Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology.
We believe that our current cash, cash equivalents, and marketable securities balances, together with income to be derived from the sales of our Zio Services, will be sufficient to meet our liquidity requirements for at least the next 12 months.
We believe that our current cash, cash equivalents, and marketable securities balances, together with income to be derived from the sales of our iRhythm Services, will be sufficient to meet our liquidity requirements for at least the next 12 months.
During the first quarter of 2024, we experienced a temporary delay in the billing of our contracted and non-contracted payer customers, performed by our third-party claims processing vendor. The delay was due to a cybersecurity incident experienced by Change Healthcare, a division of UnitedHealth Group, which our third-party vendor engages for services relating to billing and collections.
During the first quarter of 2024, we experienced a temporary delay in the billing of our contracted and non-contracted payer customers, performed by our third-party claims processing vendor. The delay was due to a cybersecurity incident experienced by Change Healthcare, a division of UnitedHealth Group, in which our third-party vendor did engage for services relating to billing and collections.
On January 3, 2024, in connection with the entry into the Braidwell Credit Agreement, we used approximately $37.8 million of the net proceeds for the repayment in full of the $35.0 million outstanding principal balance as well as interest, fees and expenses associated with terminating the agreement.
SVB Term Loan On January 3, 2024, in connection with the entry into the Braidwell Credit Agreement, we used approximately $37.8 million of the net proceeds for the repayment in full of the $35.0 million outstanding principal balance as well as interest, fees and expenses associated with terminating the agreement.
Acquired In-Process Research and Development Expenses Our in-process research and development acquired in an asset acquisition for use in research and development activities with no alternative future use is expensed in the consolidated statements of operations.
Acquired In-Process Research and Development Expenses Our in-process research and development (“IPR&D”) acquired in an asset acquisition for use in research and development activities with no alternative future use is expensed in the consolidated statements of operations.
The 2029 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. We used approximately $72.4 million of the net proceeds from the offering to pay the cost of the 2029 Capped Calls, as described below.
The 2029 Notes may be settled in cash, stock, or a combination thereof, solely at the discretion of iRhythm Technologies. We used approximately $72.4 million of the net proceeds from the offering to pay the cost of the 2029 Capped Calls, as described below.
We experienced an improvement in gross margin from 2023 to 2024, and continue to focus on improving gross margins in the future, while navigating through the macroeconomic and supply chain headwinds discussed above that we expect to face. Research and Development Expenses We expense research and development costs as they are incurred.
We experienced an improvement in our gross margin from 2023 to 2025, and continue to focus on improving annual gross margins in the future, while navigating through the macroeconomic and supply chain headwinds discussed above that we expect to face. Research and Development Expenses We expense research and development costs as they are incurred.
In connection with the offering of the 2029 Notes, we entered into the privately negotiated capped call transactions (the “2029 Capped Calls”) with certain financial institutions. The 2029 Capped Calls will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes, the number of shares of our common stock that will initially underlie the 2029 Notes.
In connection with the offering of the 2029 Notes, iRhythm Technologies entered into the privately negotiated capped call transactions (the “2029 Capped Calls”) with certain financial institutions. The 2029 Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes, the number of shares of our common stock that underlie the 2029 Notes.
We typically experience reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this is the result of physicians and patients taking vacations and patients electing to delay our monitoring services during the summer months or holidays.
We have historically experienced reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this is the result of physicians and patients taking vacations and patients electing to delay our monitoring services during the summer months or holidays.
The following are Zio Services shown as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Contracted third-party payors 53 % 54 % 55 % Centers for Medicare and Medicaid 24 % 25 % 25 % Healthcare institutions 16 % 14 % 14 % Non-contracted third party payors 7 % 7 % 6 % Key Business Metric Non-GAAP Financial Measure Adjusted EBITDA is a key measure we use to assess our financial performance and it is also used for internal planning and forecasting purposes.
The following are iRhythm Services shown as a percentage of revenue: Year Ended December 31, 2025 2024 2023 Contracted third-party payors 52 % 53 % 54 % Centers for Medicare and Medicaid 24 % 24 % 25 % Healthcare institutions 17 % 16 % 14 % Non-contracted third party payors 7 % 7 % 7 % 66 Key Business Metric Non-GAAP Financial Measure Adjusted EBITDA is a key measure we use to assess our financial performance and it is also used for internal planning and forecasting purposes.
Each Zio System combines an FDA-cleared, CE-marked and Japan PMDA-approved wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data with a proprietary, FDA-cleared, CE-marked cloud-based data analytic software to help physicians monitor patients and diagnose arrhythmias.
Each iRhythm ACM System combines a wire-free, patch-based, 14-day wearable biosensor (FDA-cleared, CE-marked and/or Japan PMDA-approved, as applicable) that continuously records ECG data with a proprietary, cloud-based data analytic software (FDA-cleared, CE-marked, and Japan PMDA-approved) to help physicians monitor patients and diagnose arrhythmias.
While we substantially cleared the billing backlog as of the end of the first quarter of 2024, the delay in billing resulted in a temporary delay in our cash collections. As of December 31, 2024, we have received a significant portion of our cash collections from the delayed billings.
While we substantially cleared the billing backlog as of the end of the first quarter of 2024, the delay in billing resulted in a temporary delay in our cash collections. We have received the majority of our cash collections from the delayed billings.
The increase was related to the early extinguishment of both the SVB Loan Agreement and the Braidwell Term Loan Facility during the first quarter of 2024. See Note 9, Debt, to our Consolidated Financial Statements for more information.
The loss was related to the early extinguishment of both the SVB Loan Agreement and the Braidwell Term Loan Facility (each as defined below) during the first quarter of 2024. See Note 9, Debt, to our Consolidated Financial Statements for more information.
The increase was offset by $37.8 million associated with the payment of the SVB Loan Agreement and related termination costs, payment of $5.6 million associated with the Braidwell Term Loan Facility debt issuance and termination costs, payment of $17.4 million associated with debt issuance costs for our 2029 Notes, payment of $72.4 million for the purchase of the 2029 Capped Calls, and payment of $25.0 million for the repurchase of shares of our common stock. 1.50% Senior Convertible Notes due 2029 On March 7, 2024, we completed an offering of $661.3 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 1.50% and a maturity date of September 1, 2029.
The decrease was offset by $37.8 million associated with the payment of the SVB Loan Agreement and related termination costs, payment of $5.8 million associated with the Braidwell Term Loan Facility debt issuance and termination costs, payment of $17.4 million associated with debt issuance costs for the 2029 Notes, payment of $72.4 million for the purchase of the 2029 Capped Calls, and payment of $25.0 million for the repurchase of shares of our common stock during the year ended December 31, 2024. 73 1.50% Senior Convertible Notes due 2029 On March 7, 2024, iRhythm Technologies completed an offering of $661.3 million aggregate principal amount of 2029 Notes with a stated interest rate of 1.50% and a maturity date of September 1, 2029.
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of our technology and provided ambulatory cardiac monitoring services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our Zio Services using our Zio Systems.
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ACM services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our iRhythm Services using our iRhythm ACM Systems.
We also used approximately $25.0 million of the net proceeds from the offering to repurchase 229,252 shares of our common stock at a purchase price of $109.05 per share in privately negotiated transactions effected through one of the initial purchasers or its affiliate.
We also used approximately $25.0 million of the net proceeds from the offering to repurchase 229,252 shares of our common stock at a purchase price of $109.05 per share in privately negotiated transactions effected through one of the initial purchasers or its affiliate. No principal payments are due on the 2029 Notes prior to maturity.
We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operational performance across our historical financial periods.
We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operational performance across our historical financial periods. In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance.
Direct labor includes payroll-related costs including stock-based compensation involved in manufacturing, clinical data curation, and customer service. Material costs include both the disposable materials costs of the Zio patches and amortization of the re-usable printed circuit board assemblies (“PCBAs”).
Direct labor includes payroll-related costs including stock-based compensation involved in manufacturing, clinical data curation, and customer service. Material costs include both the disposable materials costs of the Zio patches and amortization of the PCBAs.
Interest Expense Interest expense increased by $9.2 million to $12.8 million during the year ended December 31, 2024, as compared to $3.7 million during the year ended December 31, 2023.
Interest Expense Interest expense increased by $0.3 million to $13.2 million during the year ended December 31, 2025, as compared to $12.8 million during the year ended December 31, 2024.
The Milestone Notes, plus accrued and unpaid interest, if any, shall be cancelled, if outstanding, upon the achievement of the regulatory milestones up through December 31, 2026.
The Milestone Notes, plus accrued and unpaid interest, if any, shall be cancelled, if outstanding, upon the achievement of these regulatory milestones up through December 31, 2026. In June 2025, BioIS achieved the first of two regulatory milestones.
On March 7, 2024, we repaid our outstanding indebtedness to Braidwell, and completed an offering of $661.3 million aggregate principal amount of our 2029 Notes. See Note 9, Debt, to our Consolidated Financial Statements for more information.
See Note 8, Commitments and Contingencies, to our Consolidated Financial Statements for more information. • Debt interest and principal payments - On March 7, 2024, we completed an offering of $661.3 million aggregate principal amount of the 2029 Notes. See Note 9, Debt, to our Consolidated Financial Statements for more information.
Other Income (Expense), Net Other income (expense), net increased by $1.5 million to $1.3 million during the year ended December 31, 2024, as compared to other income (expense), net $(0.2) million during the year ended December 31, 2023.
Other Income, Net Other income, net increased by $4.2 million, or 334%, to $5.4 million during the year ended December 31, 2025, as compared to $1.3 million during the year ended December 31, 2024.
No principal payments are due on the 2029 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2029 Notes includes customary terms and covenants, including certain events of default after which the 2029 Notes may be due and payable immediately.
Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the Indenture includes customary terms and covenants, including certain events of default after which the 2029 Notes may be due and payable immediately. On January 12, 2026, we implemented the Holding Company Transaction.
On March 7, 2024, in conjunction with the issuance of the 2029 Notes, we used approximately $80.2 million of the net proceeds for the repayment in full of the $75.0 million outstanding Initial Loan and $5.2 million for interest, fees and expenses associated with terminating the Braidwell Credit Agreement.
Our net proceeds from the Initial Loan were approximately $35.0 million, after deducting costs, fees and expenses, and repayment of our existing term loan from Silicon Valley Bank, as discussed below. 74 On March 7, 2024, in conjunction with the issuance of the 2029 Notes, we used approximately $80.2 million of the net proceeds for the repayment in full of the $75.0 million outstanding Initial Loan and $5.2 million for interest, fees and expenses associated with terminating the Braidwell Credit Agreement.
Contingent consideration obligations incurred in connection with acquired in-process research and development assets are recorded at fair value, with changes in fair value recorded to acquired in-process research and development expenses in the consolidated statements of operations.
Contingent Consideration Certain agreements we entered into involve payments that are contingent upon the achievement of milestones. Contingent consideration obligations incurred in connection with acquired in-process research and development assets are recorded at fair value, with changes in fair value recorded to acquired in-process research and development expenses in the consolidated statements of operations.
We estimated the fair value of the ROU asset related to the vacant office lease by discounting the estimated undiscounted future cash flows using the average lease capitalization rate, plus average inflation rate, for other lease transactions in the local area during the year. 71 Contingent Consideration Certain agreements we entered into involve payments that are contingent upon the achievement of milestones.
We estimated the fair value of the ROU asset related to the vacant office lease by discounting the estimated undiscounted future cash flows using the average lease capitalization rate, plus average inflation rate, for other lease transactions in the local area during the year.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $32.9 million, or 9%, to $418.6 million during the year ended December 31, 2024, as compared to $385.6 million during the year ended December 31, 2023.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $74.0 million, or 18%, to $492.6 million during the year ended December 31, 2025, as compared to $418.6 million during the year ended December 31, 2024.
Under the terms of the License Agreement, during the third quarter of 2024 we paid BioIS an upfront fee of $15.0 million in cash consideration in acceptance of the initial transfer of certain licensed technologies and data following the execution of the License Agreement.
Under the terms of the License Agreement, during the third quarter of 2024 we paid BioIS an upfront fee of $15.0 million in cash consideration.
Interest Income Interest income increased by $15.6 million to $21.9 million during the year ended December 31, 2024, as compared to $6.4 million during the year ended December 31, 2023.
Interest Income Interest income decreased by $0.4 million to $21.5 million during the year ended December 31, 2025, as compared to $21.9 million during the year ended December 31, 2024.
PCBA Valuation We reuse PCBAs in each wearable Zio Monitor patch, Zio XT patch, and Zio AT patch, as well as the wireless gateway used in conjunction with the Zio AT patch.
PCBA Valuation We reuse PCBAs in each wearable Zio monitor, Zio XT, and Zio AT, as well as the wireless gateway used in conjunction with Zio AT. As PCBAs are used in a wearable Zio monitor, Zio XT, or Zio AT, a portion of the cost of the PCBA is recorded as a cost of revenue.
Interest Expense Interest expense is attributable to borrowings under our loan agreements and 2029 Notes. See Note 9, Debt, in the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K (the “Consolidated Financial Statements”) for further information on our loan agreements.
See Note 9, Debt, in the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K (the “Consolidated Financial Statements”) for further information on our loan agreements. Loss on Extinguishment of Debt Loss on extinguishment of debt reflects the losses incurred in the early repayment of debt.
On August 30, 2024, we entered into a License Agreement with BioIS, pursuant to which (i) we will receive a perpetual fully paid up license to certain of BioIS’ intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services, and (ii) the parties agreed to negotiate in good faith a supply agreement for pulse oximetry hardware.
We continue to expand our product development program into other clinical-grade wearables to detect and characterize arrhythmias while integrating with clinicians' workflows. 72 On August 30, 2024, we entered into a Technology License Agreement (as amended, the “License Agreement”) with BioIS, pursuant to which (i) we will receive a perpetual fully paid up license to certain of BioIS’ intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including (x) an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services, and (y) a limited, non-exclusive license to develop and commercialize products and services for use in unattended, home-based diagnostic testing and assessment of central and obstructive sleep apnea, and (ii) iRhythm and BioIS agreed to negotiate in good faith a supply agreement for pulse oximetry hardware.
We expect cost of revenue to increase in absolute dollars as our revenue increases due to increased direct labor, direct materials, and variable spending, as well as amortization of internal-use software, partially offset by economies of scale in relation to fixed costs such as overhead and facilities costs.
We expect cost of revenue to increase in absolute dollars as our revenue increases due to increased direct labor, direct materials, and variable spending, as well as amortization of internal-use software, partially offset by economies of scale in relation to fixed costs such as overhead and facilities costs. 68 Our gross margin has been and will continue to be affected by a variety of factors, including increased contracting with third-party payors and institutional providers.
We may identify additional charges and gains to exclude from Adjusted EBITDA that are significant in nature which may impact period to period comparability and do not represent the ongoing results of the business. Other companies, including other companies in our industry, may not use this measure or may calculate this measure differently, limiting its usefulness as a comparative measure.
We may identify additional charges and gains to exclude from Adjusted EBITDA that are significant in nature which may impact period to period comparability and do not represent the ongoing results of the business.
The increase in interest expense was primarily attributable to the $75.0 million Braidwell Term Loan Facility (as defined below) borrowed and repaid during the first quarter of 2024, as well as the $661.3 million 2029 Notes borrowed in March 2024. Loss on Extinguishment of Debt Loss on extinguishment of debt was $7.6 million during the year ended December 31, 2024.
The increase in interest expense during the year ended December 31, 2025, is primarily attributable to the $661.3 million 2029 Notes borrowed in March 2024. 71 Loss on Extinguishment of Debt Loss on extinguishment of debt was $7.6 million during the year ended December 31, 2024.
In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance. 61 We define Adjusted EBITDA for a particular period as net loss before income tax provision, depreciation and amortization, interest expense, interest income and as further adjusted for stock-based compensation expense, changes in fair value of strategic investments, impairment and restructuring charges, business transformation costs, and loss on extinguishment of debt.
We define Adjusted EBITDA for a particular period as net loss before income tax provision, depreciation and amortization, interest expense, and interest income and as further adjusted for stock-based compensation expense, changes in fair value of strategic investments, impairment charges, business transformation costs, certain intellectual property litigation expenses and settlements, and loss on extinguishment of debt.
The increase in research and development expenses during the twelve months ended December 31, 2024 was primarily due to higher headcount-related costs (including stock-based compensation), consulting costs to support regulatory affairs, product development, and legal matters, and further development, enhancement and functionality of our current and future product offerings.
The increase in research and development expenses during the year ended December 31, 2025 was primarily due to higher employee-related costs (including stock-based compensation), which include supporting ongoing FDA remediation and sustaining activities, product development consulting costs, and costs to further development, enhancement, and functionality of our current and future product offerings.
The following table summarizes our cash flows for the years indicated (in thousands): Year Ended December 31, 2024 2023 $ Change Net cash provided by (used in) operating activities $ 3,390 $ (50,101) $ 53,491 Net cash used in investing activities (122,983) (1,209) (121,774) Net cash provided by financing activities 511,381 8,820 502,561 Operating Activities During the year ended December 31, 2024, cash provided by operating activities was $3.4 million, as compared to $50.1 million cash used in operating activities during the year ended December 31, 2023.
The following table summarizes our cash flows for the years indicated (in thousands): Year Ended December 31, 2025 2024 $ Change Net cash provided by operating activities $ 80,863 $ 3,390 $ 77,473 Net cash used in investing activities (277,056) (122,983) (154,073) Net cash provided by financing activities 12,607 511,381 (498,774) Operating Activities During the year ended December 31, 2025, cash provided by operating activities was $80.9 million, as compared to $3.4 million cash provided by operating activities during the year ended December 31, 2024.
The increase was primarily attributed to $661.3 million in proceeds received from the issuance of our 2029 Notes.
The decrease was primarily attributed to $661.3 million in proceeds from the issuance of the 2029 Notes during the year ended December 31, 2024.
Our gross margin has been and will continue to be affected by a variety of factors, including increased contracting with third-party payors and institutional providers. We have in the past been able to increase our pricing as third-party payors become more familiar with the benefits of the Zio Services and move to contracted pricing arrangements.
We have in the past been able to increase our pricing as third-party payors become more familiar with the benefits of the iRhythm Services and move to contracted pricing arrangements.
Offsetting these increases in uses of cash was a decrease in property and equipment expenditures of $6.5 million. Financing Activities During the year ended December 31, 2024, cash provided by financing activities was $511.4 million, an increase of $502.6 million, as compared to $8.8 million provided by financing activities during the year ended December 31, 2023.
Financing Activities During the year ended December 31, 2025, cash provided by financing activities was $12.6 million, a decrease of $498.8 million, as compared to $511.4 million provided by financing activities during the year ended December 31, 2024.
Under the terms of the Development Agreement, we agreed to make milestone payments to Verily up to an aggregate of $12.75 million upon achievement of various development and regulatory milestones.
Under the terms of the Development Collaboration Agreement dated September 3, 2019, as amended, between us and Verily Life Sciences LLC ("VLS") and Verily Ireland Limited ("VIL" and together with VLS, "Verily"), we agreed to make milestone payments to Verily up to an aggregate of $12.75 million upon achievement of various development and regulatory milestones.
Revenue, net Revenue increased by $99.2 million, or 20%, to $591.8 million during the year ended December 31, 2024, as compared to $492.7 million during the year ended December 31, 2023. The increase in revenue was primarily attributable to increases in the volume of Zio Services resulting from increased demand. Average selling price remained relatively stable period over period.
Revenue, net Revenue increased by $155.3 million, or 26%, to $747.1 million during the year ended December 31, 2025, as compared to $591.8 million during the year ended December 31, 2024. The increase in revenue was primarily attributable to increases in the volume of iRhythm Services resulting from increased demand.
We estimated undiscounted future cash flows from our vacant office lease based on our intent and ability to sub-lease the vacant office space which we had ceased using and estimated future sub-lease income considering the local real estate market conditions. We also factored into the estimate the amount of time to identify a tenant and to enter into an agreement.
If an asset is determined to be impaired, the impairment is measured by the amount that the carrying value of the asset exceeds its fair value. 77 We estimated undiscounted future cash flows from our vacant office lease based on our intent and ability to sub-lease the vacant office space which we had ceased using and estimated future sub-lease income considering the local real estate market conditions.
Acquired In-Process Research and Development Acquired IPR&D expense was $32.4 million during the year ended December 31, 2024. The expense was related to the Technology License Agreement (the “License Agreement”) we entered into with BioIntelliSense, Inc. (“BioIS”) during the third quarter of 2024. See Note 8, Commitments and Contingencies, in the notes to our Consolidated Financial Statements for further details.
The decrease in Acquired IPR&D expense for the year ended December 31, 2025 was due to the Technology License Agreement (the “License Agreement”) that we entered into with BioIntelliSense, Inc. (“BioIS”) during the third quarter of 2024.
We receive revenue for the Zio Services primarily from third-party payors, which include contracted third-party payors and CMS. The remainder of our revenue comes from healthcare institutions, which are typically hospitals or private physician practices, who purchase the Zio Services from us directly.
The remainder of our revenue comes from healthcare institutions, which are typically hospitals or private physician practices, who purchase the iRhythm Services from us directly. We rely on third-party billing partners to submit patient claims and collect from commercial payors, certain government agencies, and patients.
The increase in selling, general, and administrative expenses was primarily attributable to third-party patient claims processing fees and legal fees, offset by reductions in stock-based compensation and professional fees to support scaling the organization.
The increase in selling, general and administrative expenses was primarily attributable to increases in headcount-related costs (including stock-based compensation), legal and professional fees, provisions for credit losses, and claims processing fees.
During the year ended December 31, 2024, we recorded an impairment charge of $0.6 million related to internal-use software in development not expected to be completed.
During the fourth quarter of 2025, we recorded an additional $2.0 million of impairment charges related to capitalized internal-use software projects in development not expected to be completed and placed in-service.
As of December 31, 2024, we held $17.4 million of contingent consideration liabilities related to development milestones from the acquisition of licensed technologies from BioIS. The expected probability of achievement of those milestones has been estimated at 75% - 90% as of December 31, 2024.
As of December 31, 2025, we held $20.4 million of contingent consideration liabilities related to development milestones from the acquisition of licensed technologies from BioIS. In June 2025, BioIS achieved the first of two regulatory milestones.
See Note 9, Debt, in the notes to our Consolidated Financial Statements for further information on our loss on extinguishment of debt. 64 Results of Operations Comparison of the Years Ended December 31, 2023, and 2022 For discussion related to the results of operations and changes in financial condition for fiscal 2023 compared to fiscal 2022 refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2023 Annual Report on Form 10-K, which was filed with the SEC on February 22, 2024.
Other Income (Expense), Net Other income (expense), net consists primarily of changes in fair value of our strategic loan and equity investments, as well as realized and unrealized foreign currency exchange gains or losses. 69 Results of Operations Comparison of the Years Ended December 31, 2024, and 2023 For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2024 compared to the year ended December 31, 2023 refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 20, 2025.
The following table presents a reconciliation of Net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA (in thousands): Year Ended December 31, 2024 2023 2022 Net loss 1 $ (113,289) $ (123,406) $ (116,155) Interest expense 12,821 3,650 4,138 Interest income (21,938) (6,353) (2,350) Changes in fair value of strategic investments (1,902) — — Income tax provision 565 750 269 Depreciation and amortization 20,715 16,348 13,405 Stock-based compensation 75,978 77,204 57,740 Impairment and restructuring charges 641 11,078 26,608 Business transformation costs 11,072 15,866 5,082 Loss on extinguishment of debt 7,589 — — Adjusted EBITDA $ (7,748) $ (4,863) $ (11,263) 1 Net loss for the year ended December 31, 2024 includes $32.4 million of acquired in-process research and development expense.
The following table presents a reconciliation of Net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA (in thousands): Year Ended December 31, 2025 2024 2023 Net loss 1 $ (44,551) $ (113,289) $ (123,406) Interest expense 13,154 12,821 3,650 Interest income (21,521) (21,938) (6,353) Changes in fair value of strategic investments (5,711) (1,902) — Income tax provision 953 565 750 Depreciation and amortization 20,742 20,715 16,348 Stock-based compensation 88,283 75,978 77,204 Impairment charges 4,458 641 11,078 Business transformation costs 3,033 11,072 15,866 Intellectual property litigation expenses 2 10,070 — — Loss on extinguishment of debt — 7,589 — Adjusted EBITDA $ 68,910 $ (7,748) $ (4,863) 1 Net loss for the year ended December 31, 2025 and 2024 includes $3.0 million and $32.4 million of acquired in-process research and development expense, respectively. 2 Excludes third-party attorneys' fees and expenses associated with patent litigation brought against the Company by Welch Allyn, Inc. and Bardy Diagnostics, Inc., subsidiaries of Baxter International, Inc. 67 Macroeconomic Factors Our future results of operations and liquidity could be materially adversely affected by macroeconomic factors contributing to delays in payments of outstanding receivables, supply chain disruptions, including shortages, tariffs on imports, and inflationary pressure, uncertain or reduced demand, and the impact of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers.
The increase was primarily attributable to the changes in the fair value of our strategic debt and equity investments recognized during the year ended December 31, 2024. 66 Liquidity and Capital Resources Overview As of December 31, 2024, we had cash and cash equivalents of $419.6 million, marketable securities of $116.0 million, and accounts receivable of $79.9 million.
The increase was primarily attributable to the changes in the fair value of our strategic debt and equity investments recognized during the year ended December 31, 2025.
Comparison of the Years Ended December 31, 2024, and 2023 Year Ended December 31, 2024 % Revenue 2023 % Revenue $ Change % Change (dollars in thousands, except percentages)* Revenue, net $ 591,839 100 % $ 492,681 100 % $ 99,158 20 % Cost of revenue 184,308 31 % 160,875 33 % 23,433 15 % Gross profit 407,531 69 % 331,806 67 % 75,725 23 % Operating expenses: Research and development 71,459 12 % 60,244 12 % 11,215 19 % Acquired in-process research and development 32,371 5 % — — % 32,371 N/M Selling, general and administrative 418,565 71 % 385,645 78 % 32,920 9 % Impairment and restructuring charges 641 — % 11,078 2 % (10,437) (94) % Total operating expenses 523,036 88 % 456,967 92 % 66,069 14 % Loss from operations (115,505) (20) % (125,161) (25) % 9,656 (8) % Interest and other income (expense), net: Interest income 21,938 4 % 6,353 1 % 15,585 245 % Interest expense (12,821) (2) % (3,650) (1) % (9,171) 251 % Loss on extinguishment of debt (7,589) (1) % — — % (7,589) N/M Other income (expense), net 1,253 — % (198) — % 1,451 (733) % Total interest and other income (expense), net 2,781 — % 2,505 1 % 276 11 % Loss before income taxes (112,724) (19) % (122,656) (25) % 9,932 (8) % Income tax provision 565 — % 750 — % (185) (25) % Net loss $ (113,289) (19) % $ (123,406) (25) % $ 10,117 (8) % N/M - Not meaningful * Certain numbers expressed may not sum due to rounding.
Comparison of the Years Ended December 31, 2025, and 2024 Year Ended December 31, 2025 % Revenue 2024 % Revenue $ Change % Change (dollars in thousands, except percentages)* Revenue, net $ 747,138 100 % $ 591,839 100 % $ 155,299 26 % Cost of revenue 219,888 29 % 184,308 31 % 35,580 19 % Gross profit 527,250 71 % 407,531 69 % 119,719 29 % Operating expenses: Research and development 84,610 11 % 71,459 12 % 13,151 18 % Acquired in-process research and development 3,036 — % 32,371 5 % (29,335) (91) % Selling, general and administrative 492,553 66 % 418,565 71 % 73,988 18 % Impairment charges 4,458 1 % 641 — % 3,817 595 % Total operating expenses 584,657 78 % 523,036 88 % 61,621 12 % Loss from operations (57,407) (8) % (115,505) (20) % 58,098 (50) % Interest and other income Interest income 21,521 3 % 21,938 4 % (417) (2) % Interest expense (13,154) (2) % (12,821) (2) % (333) 3 % Loss on extinguishment of debt — — % (7,589) (1) % 7,589 N/M Other income, net 5,442 1 % 1,253 — % 4,189 334 % Total interest and other income 13,809 2 % 2,781 — % 11,028 397 % Loss before income taxes (43,598) (6) % (112,724) (19) % 69,126 (61) % Income tax provision 953 — % 565 — % 388 69 % Net loss $ (44,551) (6) % $ (113,289) (19) % $ 68,738 (61) % N/M - Not meaningful * Certain numbers expressed may not sum due to rounding.
Other significant expenses include professional fees for legal and accounting services, consulting fees, recruiting fees, bad debt expense, third-party patient claims processing fees, business transformation, and travel expenses. 63 Interest Income Interest income consists of interest income received on our cash and cash equivalents and marketable securities.
Other significant expenses include professional fees for legal and accounting services, consulting fees, recruiting fees, bad debt expense, third-party patient claims processing fees, business transformation, and travel expenses. Impairment Charges Impairment charges consist of amounts recorded to write down the carrying value of long-lived assets to fair value.
We earn revenue from the provision of our Zio Services primarily from contracted third-party payors, CMS, and healthcare institutions. A small percentage of our revenue is from non-contracted third-party payors. We recognize revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which considers the amount submitted for payment and the amount received.
We recognize revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which considers the amount submitted for payment and the amount received. These estimates require significant judgment by management.
The increase was attributable to higher market interest rates earned from our cash, cash equivalents and marketable securities, as well as an increase in the average invested balances during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily as a result of the borrowing under the 2029 Notes in March 2024.
The decrease was attributable to lower interest rates on invested balances, as compared to the same period in 2024, offset by higher average invested balances in 2025, primarily as a result of the borrowing under the 2029 Notes in March 2024.
Impairment and Restructuring Charges Impairment and restructuring expenses decreased by $10.4 million, or 94%, to $0.6 million during the year ended December 31, 2024, as compared to $11.1 million during the year ended December 31, 2023.
Acquired In-Process Research and Development Acquired IPR&D expenses decreased by $29.3 million, or 91%, to $3.0 million during the year ended December 31, 2025, as compared to $32.4 million during the year ended December 31, 2024.
Recent Accounting Guidance For a description of recently issued accounting guidance that is applicable to our financial statements, see Note 2, Significant Accounting Policies, to the Consolidated Financial Statements.
Recent Accounting Guidance For a description of recently issued accounting guidance that is applicable to our financial statements, see Note 2, Significant Accounting Policies, to the Consolidated Financial Statements. Guarantor Information In connection with the Holding Company Transaction, on January 12, 2026, we, as guarantor, iRhythm Technologies, and U.S. Bank Trust Company, National Association, entered into the First Supplemental Indenture.
Our hybrid work arrangements and decision to pursue a sublease for our leased San Francisco headquarters resulted in an impairment of our right-of-use (“ROU”) asset and related leasehold improvements and furniture and fixtures during the years ended December 31, 2023 and 2022.
Our hybrid work arrangements and decision to pursue a sublease have previously resulted in an impairment of our right-of-use asset and related leasehold improvements and furniture and fixtures. As we continue to evaluate our global real estate footprint, we may incur additional impairment charges related to real property lease agreements.
The increase in cash used in investing activities was primarily attributable to a net decrease in the change in marketable securities of $59.3 million, an increase of $54.0 million related to the purchase of strategic loan investments, and the acquisition of in-process research and development from BioIS of $15.0 million.
The increase in cash used in investing activities was primarily attributable to a net increase in the change in marketable securities of $211.4 million, primarily from an increase in the purchases of marketable securities of $347.9 million offset by an increase in maturities of marketable securities of $136.5 million.
Since receiving FDA clearance, we have provided the Zio Services to over eight million patients and have collected over 2 billion hours of curated heartbeat data.
Since receiving FDA clearance, we have provided the iRhythm Services via more than twelve million patient reports and have collected almost 3 billion hours of curated heartbeat data. We receive revenue for our iRhythm Services primarily from third-party payors, which include contracted third-party payors and CMS.
Cash provided by operating activities increased by $53.5 million primarily attributable to a reduction in our loss from operations, favorable impacts from decreases in prepaid and other current assets, and favorable impacts from a reduction in other long-term assets, primarily from lower levels of purchases of PCBAs. 67 Investing Activities During the year ended December 31, 2024, cash used in investing activities was $123.0 million, an increase of $121.8 million as compared to cash used in investing activities of $1.2 million during the year ended December 31, 2023.
Investing Activities During the year ended December 31, 2025, cash used in investing activities was $277.1 million, an increase of $154.1 million as compared to cash used in investing activities of $123.0 million during the year ended December 31, 2024.
During the twelve months ended December 31, 2024, we incurred $11.1 million of business transformation costs primarily related to severance, professional fees, and third-party merger and acquisition fees. During the twelve months ended December 31, 2023, we incurred $15.9 million of business transformation costs primarily related to severance and professional fees, to drive efficiencies and streamline our global operations.
Our business transformation costs for both periods primarily related to severance, professional fees, and third-party merger and acquisition fees. Impairment Charges Impairment expenses increased by $3.8 million, or 595%, to $4.5 million during the year ended December 31, 2025, as compared to $0.6 million during the year ended December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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See Note 9, Debt, in the notes to our Consolidated Financial Statements for further information on our debt. Foreign Currency Exchange Rate Sensitivity We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. dollars, particularly in British Pound Sterling, Philippine Pesos, Euros, and Swiss Francs.
See Note 9, Debt, in the notes to our Consolidated Financial Statements for further information on our debt. Foreign Currency Exchange Rate Sensitivity We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. dollars, particularly in British Pound Sterling, Philippine Pesos, Euros, Swiss Francs and Japanese Yen.
As of December 31, 2024 and 2023, we do not consider this risk to be material. We do not utilize any forward foreign exchange contracts, although we may choose to do so in the future. All foreign transactions settle on the applicable spot exchange basis at the time such payments are made.
As of December 31, 2025 and 2024, we do not consider this risk to be material. We do not utilize any forward foreign exchange contracts, although we may choose to do so in the future. All foreign transactions settle on the applicable spot exchange basis at the time such payments are made.
The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. In the event our foreign currency denominated assets, liabilities, sales, or expenses increase, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. 73
The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. In the event our foreign currency denominated assets, liabilities, sales, or expenses increase, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. 79
A hypothetical 10% change in interest rates would have had a $2.2 million and an $0.6 million impact to interest income for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 we had $661.3 million in outstanding aggregate principal amount of fixed rate debt relating to our 2029 Notes.
A hypothetical 10% change in interest rates would have had a $2.2 million impact to interest income for the years ended December 31, 2025 and 2024. As of December 31, 2025 we had $661.3 million in outstanding aggregate principal amount of fixed rate debt relating to our 2029 Notes.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.
Such interest-earning instruments carry a degree of interest rate risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.
Accordingly, we do not have economic interest rate exposure on the 2029 notes. However, changes in interest rates could impact the fair market value of the 2029 Notes. The estimated fair value of our 2029 Notes as of December 31, 2024 was $641.2 million.
Accordingly, we do not have economic interest rate exposure on the 2029 Notes. However, changes in interest rates could impact the fair market value of the 2029 Notes. The estimated fair value of the 2029 Notes as of December 31, 2025 was $924.1 million.
A hypothetical 10% change in interest rates during the year ended December 31, 2023 would have resulted in an immaterial impact on our Consolidated Financial Statements. 72 Market Price Sensitive Instruments The 2029 Capped Calls are expected generally to reduce potential dilution to our common stock upon conversion of the 2029 Notes and/or offset any cash payments that we could be required to make in excess of the principal amount of converted 2029 Notes, with such reduction and/or offset subject to a cap.
Market Price Sensitive Instruments The 2029 Capped Calls are expected generally to reduce potential dilution to our common stock upon conversion of the 2029 Notes and/or offset any cash payments that we could be required to make in excess of the principal amount of converted 2029 Notes, with such reduction and/or offset subject to a cap.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks in the ordinary course of our business. These risks primarily include risk related to interest rate sensitivities and foreign currency exchange rate sensitivity.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks in the ordinary course of our business.
Interest Rate Sensitivity We had cash, cash equivalents and marketable securities of $535.6 million and $133.8 million as of December 31, 2024 and 2023, respectively; which consisted of bank deposits, money market funds and U.S. government securities. Such interest-earning instruments carry a degree of interest rate risk.
These risks primarily include risk related to interest rate sensitivities and foreign currency exchange rate sensitivity. 78 Interest Rate Sensitivity We had cash, cash equivalents and marketable securities of $583.8 million and $535.6 million as of December 31, 2025 and 2024, respectively; which consisted of bank deposits, money market funds and U.S. government securities.
Removed
As of December 31, 2023 we had total outstanding debt of $35.0 million, net of debt issuance costs relating to the 2022 Term Loans. The SVB Loan Agreement carried a variable interest rate based on the “Prime Rate” published by The Wall Street Journal.

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