iRhythm Holdings, Inc.

Good afternoon everybody and welcome to today's iRhythm Technologies Inc Q2 2022 earnings conference call. My name is Drew and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. We ask that you ask one question with one follow-up. If you happen to change your mind at all, please press star followed by two. I'm now going to hand over to Stephanie Zadvec, Director of Investor Relations. To begin, please go ahead.

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the second quarter ended June 30th, 2022. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meeting of federal securities laws pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. These are based upon our current estimates and various assumptions and reflect management's intentions, beliefs, and expectations about future events, strategies, competition, products, operating plans, and performance. These statements involve risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. for a list and description of the risks and uncertainties associated with our business. Please refer to the risk factor section of our most recent annual and quarterly reports on Form 10-K and Form 10-Q, respectively, filed with the Securities and Exchange Commission. Also during the call, we will discuss certain financial measures that have not been prepared in accordance with U.S. GAAP with respect to our non-GAAP and cash-based results, including adjusted EBITDA, adjusted operating expenses, and adjusted net loss. Unless otherwise noted, All references to financial metrics are presented on a non-GAAP basis. The presentation of this additional information should not be considered in isolation of, as a substitute for, or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and 10-Q for reconciliation of these measures to the most directly comparable GAAP financial measures. This conference call contains time-sensitive information and is accurate only as of the live broadcast today. August 4, 2022. iRhythm disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I'll turn the call over to Quinton Blackford, iRhythm's President and CEO.

Thank you, Stephanie. Good afternoon, and thank you all for joining us. Doug Devine, our Chief Operating Officer and Chief Financial Officer, and Dan Wilson, our EVP of Corporate Strategy and Development, join me on today's call. My prepared remarks today cover progress we've made throughout the first half of 2022 and discuss the near and long-term growth initiatives for our business. I'll then turn the call over to Doug to provide a detailed review of our second quarter financial results. Starting with our second quarter results, we were pleased with the performance during the quarter with revenues up 10% sequentially and 26% year-over-year. and we achieved record quarterly registrations amidst a difficult market environment. Our top line results were ahead of expectations and positioned us well for the second half of 2022 and beyond. We also continue to make progress in driving an increased focus on operational discipline, delivering nearly 200 basis points of sequential improvement in our gross margin profile. In our core U.S. commercial business, we achieved another record of quarterly registrations driven by an all-time high in number of new accounts doing business with us in the quarter. with new account openings in the second quarter up 22% compared to the first quarter of 2022. Our volume performance outperformed the market year to date, driven by our strong growth in primary care and other specialty segments, as we continue to grow our overall share of the market. While we realized our highest level of daily registrations ever in the month of June, we have already seen seasonality typical of the summer months, and there continues to be clinical staffing shortages in a challenging macroeconomic environment, which we anticipate will continue through the back half of the year. On the pricing front, we shared last month that CMS published the proposed calendar year 2023 position fee schedule, which contained proposed payment rates for the two main CPT codes related to long-term continuous ECG monitoring. In the proposed rule, CMS published data that implies payment rates ranging from $207 to $295 across the company's three IDTFs. We estimate that proposed rates will have an immaterial impact on our overall ASP in calendar year 2023 versus calendar year 2022. We are now in a public comment period that runs through early September before CMS issues a final rule anticipated in early November for implementation on January 1st, 2023. During the open comment period, we are continuing to fully participate in the rulemaking process to share relevant information as CMS finalizes their rates for calendar year 2023. Turning to updates on the innovation front, we were excited to announce that we gained 510K clearance for the clinically integrated Zeus system for the XeoWatch. This is an important early step in expanding our platform to more patients who may benefit from preventative and proactive cardiac monitoring. The Zeus system, produced in partnership with Verily, combines deep-learned algorithms with our proven and trusted ECG monitoring service in a clinical-grade, long-term, non-invasive wearable device. Using a continuous PPG AI-based algorithm, The XeoWatch not only detects AFib, but also characterizes the amount of AFib over time to calculate an AFib burden estimate with accuracy comparable to the XeoXT patch as a reference. This contextualization of patient AFib presence or absence collected through the monitoring period is important and clinically meaningful to aid in a potential diagnosis. With full integration into our Xeo service, the XeoWatch is intended to be complementary to XeoMonitor's adding a modality with longer wear times for patients who require long-term monitoring we plan to introduce the zoo system for a limited market evaluation in 2023 another highlight of our ongoing product innovation efforts the xeo monitor our next generation biosensor has demonstrated an initial positive impact on patient compliance following an initial launch several months ago while preliminary we are encouraged by the impact of this lighter smaller and thinner form factor could potentially have on our patients' experience, while also providing opportunity for greater manufacturing and scalability efficiencies. We continue to anticipate full-scale commercialization and conversion to this next generation device in 2023. And finally, we were excited to launch a new clinical resource center on our website to enable clinicians centralized access to clinical evidence, on-demand webinars, and case studies. This resource serves as a gateway to publish clinical evidence offering summaries of significant research as well as a list of more than 35 clinically relevant published articles to support the clinical validity of Zio. Furthermore, the webinar library posts on-demand educational videos featuring respected physicians and clinical staff discussing the impacts and outcomes of their experiences with Zio. And a case study section offers evidence illustrating how the Zio service has helped healthcare systems improve cardiac patient care. Turning toward progress against the pillars that we have identified for our future success, I'm excited that we have rounded out our executive leadership team to include a number of new individuals, which we believe will be important for growth and transformation of the business in the coming years. Dr. Mintu Tarakia, a recently appointed chief medical officer and chief scientific officer, has hit the ground running in his first two months to drive innovation, lead research, and evidence generation, and enhance our clinical vision. Chad Patterson, who joined the company as our new Chief Commercial Officer in late July, has extensive experience driving revenue growth through strategic sales and marketing execution in global markets, which will be leveraged as we expand geographically and into adjacent spaces. Reyna Fernandez has also recently joined iRhythm as our Chief Human Resource Officer to develop and lead implementation of strategies to support our global growth imperatives, bringing a wealth of experience in leading HR functions in large global organizations as well as companies with fast-paced, high-growth-focused environments. Finally, we are also excited to have Bryce Bobzian join us on August 8th as our new Chief Financial Officer to guide our organization through financial and operational transformation, as well as help position the company to scale internal processes as we prepare for future growth. I'm very excited to welcome these seasoned leaders into our leadership team and look forward to executing on our vision of building iRhythm into a market leader in the digital healthcare space. Finally, we are also pleased to announce that we will hold an investor day on the morning of September 21st in New York City for analysts and investors of the company. This half-day event will focus on key elements of a refreshed vision, renewed long-term business strategy, details of our growth pillars, and long-range financial targets. We appreciate that investors and stakeholders have been asking for greater granularity on these topics, and we are excited to be able to host this event in person as well as via live video webcast. In conclusion, We finished the first half of 2022 having made steady progress against our goals and in a strong position to capitalize on the sizable opportunities ahead of us to serve millions more patients. We see significant runway for growth within our core market that we serve today as we continue to shift the standard of care to Zio, the gold standard in this space. With more than $200 million of cash on the balance sheet and a clear path to being profitable, we continue to invest in our mid and long-term initiatives That will leverage our technology platform in new geographies and across new markets. We are excited about our future here at iRhythm. I'll now turn the call over to Doug to discuss our financials.