IRTC Q1 Earnings Call: Outperformance Driven by Zio AT and Primary Care Channel Expansion

Medical technology company iRhythm Technologies (NASDAQ: IRTC) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 20.3% year on year to $158.7 million. The company’s full-year revenue guidance of $695 million at the midpoint came in 2% above analysts’ estimates. Its non-GAAP loss of $0.96 per share was 2.5% below analysts’ consensus estimates.

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StockStory’s Take

iRhythm’s first quarter results were shaped by accelerated adoption of its Zio AT product and increasing penetration in primary care channels. CEO Quentin Blackford pointed to strong demand from both new and existing accounts, as well as record onboarding of healthcare providers, as key contributors to the robust unit volume growth. Management highlighted the growing share of long-term continuous monitoring prescriptions originating from primary care settings, emphasizing early diagnosis benefits and improved clinical outcomes for patients previously unaware of arrhythmias.

Looking ahead, the company’s updated full-year guidance reflects confidence in continued momentum from both Zio AT and undiagnosed arrhythmia monitoring through innovative channel partners. CFO Daniel Wilson stated, “Zio AT performance was a primary driver of our guidance raise, while innovative channel partners are contributing but remain an emerging opportunity.” Management acknowledged macroeconomic uncertainty but maintained that operational efficiencies, product mix, and upstream care pathway expansion are expected to drive sustainable growth for the remainder of the year.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to expansion in core U.S. markets, increased adoption among primary care providers, and strong uptake of the Zio AT product. The company also referenced momentum in international markets and ongoing operational efficiency initiatives.

• Zio AT Momentum: The Zio AT mobile cardiac telemetry device saw significant uptake, benefiting from both new and existing account additions. Management believes features like 14-day continuous wear differentiate it versus competitors, driving retention and market share gains within the MCT segment.
• Primary Care Channel Expansion: Nearly one third of long-term continuous monitoring volumes now originate from primary care physicians, up from the low 20s percent a year and a half ago. Management credits its “land-and-expand” strategy for enabling earlier detection and diagnosis of cardiac arrhythmias, particularly among patients with comorbidities who might otherwise be undiagnosed.
• Innovative Channel Partners: Contribution from value-based care partners focused on undiagnosed arrhythmia monitoring increased, though still represents a low single-digit percentage of total volume. Management described this as an early-stage but high-potential growth avenue for expanding the market beyond traditional cardiology.
• International Progress and Japan Launch: The company launched Zio in Japan, the world’s second-largest ambulatory cardiac monitoring market, albeit at reimbursement rates equivalent to existing Holter monitors. iRhythm aims to generate local clinical evidence to secure higher reimbursement in the future. European markets, especially the UK, continued to deliver record volume.
• Regulatory and Operational Focus: Ongoing remediation and compliance activities with the FDA, including addressing warning letter observations, remain a top corporate priority. Management expects to complete remediation efforts by the end of 2025 and has allocated resources to ensure uninterrupted product supply in light of tariff and supply chain uncertainties.

Drivers of Future Performance

Management’s outlook for the year centers on sustaining Zio AT momentum, expanding the primary care channel, and executing on operational efficiency, while navigating macroeconomic and reimbursement risks.

• Sustained Zio AT Growth: Expectations for continued above-average growth from the Zio AT product underpin revenue guidance, as management anticipates retention of recent share gains and further penetration in existing accounts.
• Primary Care and Innovative Partnerships: The company plans to deepen its presence in primary care and value-based care channels, aiming to address a broader population of undiagnosed arrhythmia patients and expand the total addressable market.
• Tariff and Supply Chain Risks: Management highlighted potential headwinds from tariffs on imported components and supply chain disruptions, but indicated mitigation strategies are underway, including building inventory and exploring supply chain adjustments. Pricing actions will be considered as a secondary lever.

Top Analyst Questions

• Allen Gong (JPMorgan): Asked about drivers behind the guidance raise and confidence for the rest of the year. Management cited sustained Zio AT momentum and a robust pipeline from innovative channel partners but emphasized caution in embedding emerging contributions into guidance.
• Kallum Titchmarsh (Morgan Stanley): Inquired about the stickiness of Zio AT share gains and how this frames expectations for the upcoming Zio MCT launch. CEO Quentin Blackford noted that established relationships in existing accounts and product features were key to customer retention and future cross-selling potential.
• Macauley Kilbane (William Blair): Sought clarification on the impact of Epic Aura integration for workflow efficiencies and volume growth. Management reported early signs of increased prescribing patterns but stated these benefits are not yet fully factored into guidance.
• Suraj Kalia (Oppenheimer): Requested more detail on growth across different business segments. CFO Daniel Wilson explained that Zio AT outpaced company average growth, primary care volumes now exceed one third of total, and innovative channel partners contributed a small but growing share.
• Sam Eiber (BTIG): Asked about strategies to offset tariff impacts, specifically whether price increases were under consideration. Management replied that supply chain adjustments are the primary mitigation strategy, with pricing actions as a secondary option.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the trajectory of Zio AT adoption and retention in both existing and new accounts, (2) the pace of expansion and volume contribution from primary care and innovative channel partners, and (3) progress on international launches, particularly in Japan and Europe. Execution on FDA remediation milestones and the timeline for filing and approval of the next-generation Zio MCT device will also be closely watched.

iRhythm currently trades at a forward EV-to-EBITDA ratio of 78.7×. Should you double down or take your chips? The answer lies in our free research report.

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