iRhythm recently released its latest 10-Q, showing a company still centered on ambulatory cardiac monitoring in the U.S. Its business is built around patch-based ECG monitoring services and related software used to detect arrhythmias, including Zio Monitor, Zio XT, Zio AT, and the Zio ECG Utilization Software System. The company also has a development collaboration with BioIS on additional sensor technologies, and it says it was incorporated in 2006 and is headquartered in San Francisco.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
iRhythm said its core business is the design, development, and commercialization of device-based technology for ambulatory cardiac monitoring, which it believes helps clinicians diagnose certain arrhythmias more quickly and efficiently than traditional approaches. Its system pairs a 14-day wearable biosensor with cloud-based analytics, and the company said it has supported physician and patient use of the technology since FDA clearance in 2009. Since then, it has provided more than 12 million patient reports and collected over 3 billion hours of curated heartbeat data.
Revenue came primarily from third-party payors and CMS, with healthcare institutions making up the rest. For the three months ended March 31, 2026, contracted third-party payors accounted for 53% of revenue, CMS for 26%, healthcare institutions for 15%, and non-contracted third-party payors for 6%. Those shares were 53%, 24%, 17%, and 6%, respectively, in the prior-year period.
Adjusted EBITDA moved sharply higher. iRhythm reported Adjusted EBITDA of $14.1 million for the quarter ended March 31, 2026, compared with negative $2.6 million a year earlier. The company’s net loss narrowed to $13.9 million from $30.7 million.
Revenue increased 26% year over year to $199.4 million from $158.7 million. iRhythm said the gain was driven mainly by higher service volume, with total revenue volume for both Zio Monitor and Zio AT increasing across existing and new accounts in its third-party payor, CMS, and healthcare institution customer groups. It also said larger healthcare enterprise accounts using both Zio Monitor and Zio AT contributed to the increase.
Gross profit rose to $141.4 million from $109.2 million, while gross margin improved as revenue growth outpaced cost of revenue. Cost of revenue increased 17% to $58.0 million from $49.5 million.
Operating expenses increased 11% to $157.5 million from $141.8 million. Research and development was essentially flat at $21.4 million, compared with $21.5 million a year earlier. Selling, general and administrative expense rose 13% to $135.9 million from $120.0 million.
Loss from operations narrowed to $16.2 million from $32.6 million. Interest and other income, net, totaled $2.8 million, up from $2.5 million. Interest income was $4.9 million, interest expense was $3.3 million, and other income, net was $1.2 million.
Before taxes, iRhythm reported a loss of $13.4 million, compared with $30.0 million in the prior-year quarter. The income tax provision was $0.5 million, down from $0.7 million.
The company said macroeconomic pressures remain a factor in its business, pointing to delayed receivables, supply chain disruptions, commodity price increases, tariffs, inflation, labor tightness, and weaker demand. It also said hospitals are dealing with staffing shortages, supply chain issues, higher operating costs, and tighter budgets, while payors are increasingly challenging utilization and reimbursement.
iRhythm said it has responded by increasing use of its home enrollment service, which lets patients receive and wear the single-use Zio patch without visiting a healthcare facility. It also noted that its hybrid work arrangements and a sublease decision previously led to impairment charges on right-of-use assets, leasehold improvements, and furniture and fixtures, and that additional real estate-related impairment charges remain possible.
Revenue recognition continues to rely on estimates of amounts ultimately realized, based on submitted claims, payments received, reimbursement arrangements, and historical collections. The company said revenue can be affected by adjudications with contracted and non-contracted payors and by annual CMS reimbursement updates.
On costs, iRhythm said cost of revenue includes direct labor, materials, tariffs, equipment and infrastructure expenses, amortization of internal-use software, overhead, royalties, and shipping. It expects cost of revenue to rise with higher volumes, but said some of that pressure could be offset by volume discounts, scan-time algorithms, process improvements, automation, and workflow enhancements.
It also said research and development costs are expected to rise as it hires more personnel for new products, product enhancements, and clinical evidence. Selling, general and administrative costs include payroll, commissions, travel, consulting, public relations, direct marketing, tradeshow expenses, legal and accounting fees, recruiting, bad debt expense, and patient claims processing fees. As a result of these announcements, the company's shares have moved 0.73% on the market, and are now trading at a price of $122.35. For the full picture, make sure to review iRhythm's 10-Q report.
