iRhythm Holdings, Inc.

Hello and welcome to the iRhythm Technologies Inc Q1 2024 earnings conference call. My name is Terry and I will be the conference operator today. All lines have been placed on mute to prevent any background noise. You will have an opportunity to ask questions today and you can do this by pressing star followed by one on your telephone keypad. I would now like to hand over to Stephanie Zuckovich, 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 first quarter ended March 31st, 2024. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws pursuant to the safe harbor provisions of the Private Security 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, and 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 a business, please refer to the risk factor section on the 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 noticed, all references to financial metrics are presented on a non-GAAP basis. The presentation of 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 in 10-Q for reconciliation of these measures to the most directly comparable GAAP financial measures. Unless otherwise noted, all references to financial measures in this call, other than revenue, refer to non-GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today. May 2nd, 2024. 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. Bryce Bobzien, our Chief Financial Officer, and Dan Wilson, our EVP of Corporate Development and Investor Relations, Join me on today's call. My prepared remarks today cover business updates during the first quarter of 2024, as well as our annual outlook. I'll then turn the call over to Bryce to provide a detailed review of our first quarter financial results and updated 2024 guidance. During the first quarter of 2024, we achieved revenue of $131.9 million, representing 18.4% growth compared to the first quarter of 2023. Over half a million registrations in Q1 contributed to another quarter of record revenue volume, while our average selling prices remained steady with the prior year. Drivers of growth continued to come from the focus of our land and expand strategy by going deeper and broader within existing accounts, as well as a meaningful contribution from new account openings. The first quarter was again a strong quarter of new account onboarding as we matched our highest ever quarter for new account openings for ZIO long-term continuous monitoring. reflective of our team's ability to capitalize on our pipeline opportunities and providing confidence in our 2024 outlook. Our teams drove solid momentum during the first quarter as we have seen strong market demand for our Xeo products and services thus far in Q2 as well. These factors have resulted in our updating of annual revenue guidance reflecting our ongoing confidence in the underlying fundamentals of the core business and optimism for continued market capture in 2024. Our excitement for the primary care channel continues to grow as our two-pronged approach to opening that opportunity gains traction. As a reminder, we are approaching this opportunity by working from the ground up within large health networks that our current cardiologists and electrophysiologists are a part of today, while also targeting the large national innovative primary care providers. During the quarter, we were pleased to have entered into additional partnerships with several innovative national primary care networks further demonstrating these groups' growing appreciation for Zio's ease of use, high patient compliance, and ability to deliver clinical accuracy while reducing the cost of care. Importantly, we have seen the continued uptake in utilization from these early national primary care adopters over the course of the quarter and are excited about their potential throughout the year and into 2025. Important to our growth, we have seen continued traction from within large integrated multidisciplinary care networks where Zio's value proposition as a workflow efficiency tool is clearly resonating as these networks push prescribing further up the care pathway into the primary care channel. Out of all accounts ordering the Zio services in 2023, almost half had at least one primary care prescriber in their care network. But perhaps more importantly, volume growth in 2023 from cardiologists was higher in those accounts that were part of multidisciplinary care networks and that had at least one primary care prescriber compared to accounts that did not have a primary care prescriber in their network. This diversification into different specialties is not only a driving factor in further penetration within these networks, But it is also validation that primary care is an important partner to alleviate backlogs associated with capacity constrained workflows. This has already played out at several representative IDNs where we have seen primary care participation. And we believe that we are only getting started to expand patient access to Xeo and many more of these opportunities. To continue driving this workflow efficiency for our customers and enable even more streamlined access to Zeo for our patients in the future, we were very excited to have recently announced a collaboration with Epic Aura, becoming the first medical device manufacturer to join the Epic community to use Aura. This collaboration will expand access to our Zeo services across the continuum of patient care within healthcare systems, from cardiology to primary care to hospital to home and beyond. and should help systems simplify operations while optimizing clinician workflows. Through this partnership, iRhythm and Epic will enable health systems to implement Xeo services more efficiently, and we estimate that institutions can save up to 75% of the time it typically takes to integrate Xeo services into local instances of Epic. The initial inbound interest from accounts wanting to leverage the iRhythm-Epic partnership has been terrific, And we have already started to partner with early adopters to integrate Zio services into the Aura network across their health systems. As we advance this effort, we expect to begin offering this solution to both existing and new Zio customers starting in early 2025. Further contributing to our record success has been traction in large innovative care networks where Zio has become the ambulatory cardiac monitor of choice for monitoring programs within asymptomatic patient populations. With MSTOP's economic analysis published showing the benefits of identifying patients who are at risk for undiagnosed arrhythmias before their symptoms become severe, proactive screening programs using Xeo services are gaining traction within innovative primary care groups, home health groups, and accountable care organizations. These accounts are highly focused on preventative care and value-added patient wellness programs for their members. and they have been very receptive to our strong clinical evidence demonstrating that monitoring for up to 14 days with Xeo long-term continuous monitoring service maximizes diagnostic yield compared to monitoring with Holter for 24 to 48 hours. This means that Xeo monitor services have the potential to provide the right answer the first time for those patients and better inform the care pathways for those individuals, potentially reducing downstream clinical events and the future cost of care associated with those clinical events and possibly addressing the growing capacity challenges within the health networks we serve. As a fantastic example of this, recall that we began to pilot our Know Your Rhythm program with our partner Physician Care Centers, or PCC, for clinicians to proactively screen patients to identify those that meet the NSTOP's inclusion criteria and are believed to be at the risk of undiagnosed arrhythmias to determine if they would benefit from zeomonitor services. This program was primarily designed to identify patients that may be at risk for experiencing asymptomatic AFib by implementing proactive screening guidelines according to the M-STOP's inclusion criteria. Of the initial asymptomatic patients that were ordered the XeoMonitor services in this pilot, 80% of these patients had at least one arrhythmia identified. Since there is a three times greater risk of developing heart failure and a five times greater risk of stroke if AFib is a comorbidity, We believe that early identification of AFib is crucial to develop clinical intervention strategies and reduce downstream adverse events. We are excited that this initial pilot is now transitioning into commercial launch, and we look forward to providing additional updates around this movement into the asymptomatic population as we move throughout the year. In our international business, we continue to move forward with our expansion efforts into multiple European countries, as well as Japan. During the first quarter, our teams drove strong registration growth in the UK with volumes above forecast through expansion within the private sector hospitals. These sites have recognized the value of Xeo services as having a positive impact on patient waiting times, hospital resource utilization, clinical diagnostic yield, and pathway cost savings. In parallel, we continue to advance efforts to argue for an enhanced long-term reimbursement rate in the UK. Additionally, now that we have received CE marking under EU MDR for Xeo Monitor and our Xeo system, we kicked off a market evaluation in two Spanish hospitals in March and continue to anticipate the commercial launch of the XeoMonitor services in the Netherlands, Spain, Switzerland, and Austria in the back half of 2024. In Europe, as well as Japan, we believe there remains significant unmet clinical need for improved arrhythmia detection as the prevalence of arrhythmias and stroke continues to rise with the predominant monitoring technology still being Halter monitors. In our XeoAT business, Recall that we submitted two 510 files in January. One is a catch up for changes previously made to the ZOAT system as a letter to file and a second 510 for design features and labeling updates to further address areas of focus noted in the FDA warning letter. Since these submissions early in the quarter in support of ZOAT, we have been in dialogue with the FDA and continue to believe that we could receive a clearance decision from the FDA on our submissions in the second half of 2024. In parallel, Our teams continue to work diligently to prepare for the subsequent filing for our next generation MCT product, ZioMCT, and we believe that 510 submission for that product will be submitted late in the second half of 2024. As these near and midterm opportunities are being further fostered within traditional cardiac monitoring, we have also begun to explore possibilities beyond pure arrhythmia monitoring and into natural adjacent markets. As mentioned, this past February, we have launched a sleep pilot program with approximately 5 to 10 existing iRhythm customers intended to validate the value of streamlining the current journey of getting to a sleep diagnosis for both physicians and patients. We intend to utilize our call point and establish customer relationships with a combination of cardiologists and primary care physicians to validate the potential commercial opportunity and physician desire to streamline the prescription of home sleep tests and diagnose sleep disorders with a focus on obstructive sleep apnea. The goal of this pilot is to determine if cardiologists and PCPs will prescribe a home sleep test, collect metrics such as to which patients these physicians may prescribe a home sleep test, and determine how iRhythm can best be positioned to contribute to improved care for patients with obstructive sleep apnea, including through the delivery of this service through an integrated digital platform that will provide us a differentiated ability to address what we believe have been long-term challenges in this space. We have been encouraged by the interest thus far in this initiative, especially with the rapid onboarding of customer accounts for this pilot just beginning to launch. The early forays into adjacent markets are being further supported by scientific evidence our teams and academic partners are generating in support of EKG as a critical vital sign for predictive clinical insights. As a recent example from ACC last month, study findings from our collaboration with Duke Health concluded that incorporating EKG data from long-term continuous monitoring with components of the CHAD-VASc score has greater discrimination than the existing clinical scoring system alone for the risk of heart failure hospitalization and new onset heart failure. Furthermore, authors concluded that the risk scores developed via this new model were able to more accurately predict Medicare cost in both treated and in untreated patients. These conclusions are the starting point to develop risk models that include long-term EKG data, such as that provided by Xeo Products and Services, to inform diagnosis and management of high-risk patients, while also being used by health systems and payers to develop interventions to reduce healthcare utilization and cost. As multiple vital signs and digital data assets are increasingly combined to generate these type of clinical insights, we are uniquely positioned for success far into the future. With that, I'll now turn the call over to Bryce to discuss our recent financial performance.