Full Press Release Details
iRhythm Technologies Announces Second Quarter 2017 Financial Results
Raises Guidance for Full Year 2017
SAN FRANCISCO, August 2, 2017 -- iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital health care solutions company focused on the advancement of cardiac care, today reported financial results for the three months ended June 30, 2017.
Second Quarter 2017 Financial Results
Second Quarter 2017 Business Highlights
"Second quarter results demonstrated the traction we continue to achieve with our Zio Service for ambulatory cardiac monitoring. Growth in both existing and new accounts, as well as momentum in our in-network payor contracting efforts resulted in strong revenue growth and improved gross margins. In addition, we saw growing clinical awareness, inclusion in key guidelines, and support from the international professional community acknowledging the benefits of our Zio Service," said Kevin King, CEO. "Looking ahead, I am confident in our ability to continue to execute on two key components of our growth strategy: expanding our sales channel and increasing our in-network health plan contracting."
Second Quarter Financial Results
Revenue for the three months ended June 30, 2017 increased 52% to $23.9 million, from $15.7 million during the same period of the prior year. The increase in revenue was due primarily to increased volume of the Zio Service in new and existing accounts, as well as continued success with in-network contracting efforts.
Gross profit for the second quarter of 2017 was $17.1 million, or 72% gross margin, up from $10.6 million, or 67% gross margin, in the same period of the prior year. Margin expansion is primarily attributable to productivity gains through the company's machine-learned algorithms associated with report generation, the impact from the mix shift to contracted claims, and continued reduction of device-related manufacturing costs.
Operating expenses for the second quarter of 2017 were $23.0 million, an increase of 61% compared to $14.3 million for the same period of the prior year. The increase in operating expenses was primarily driven by accelerated salesforce expansion investments and a material increase in stock-based compensation.
Loss from operations for the second quarter of 2017 was $6.4 million, compared to $4.4 million for the same period of the prior year.
Cash, cash equivalents, and investments totaled $109.8 million as of June 30, 2017.
Guidance for Full Year 2017
iRhythm projects revenue for the full year 2017 to range from $94 to $96 million, gross margins for the full year 2017 to range from 71.5% to 72.5% and operating expenses for the full year 2017 to be between $89 and $92 million. This compares to previous guidance of $88 to $92 million in revenue, 70% to 72% in gross margins, and $85 and $88 million in operating expenses for the full year 2017 provided on May 3, 2017.
Webcast and Conference Call Information
iRhythm's management team will host a conference call today beginning at 1:30 p.m. PT / 4:30 p.m. ET. Investors interested in listening to the conference call may do so by dialing (844) 348-0016 for domestic callers or (213) 358-0876 for international callers, and referencing Conference ID: 48344560 or from the webcast on the "Investor Relations" section of the company's website at: www.irhythmtech.com.
About iRhythm Technologies, Inc.
iRhythm is a commercial-stage digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distill data from millions of heartbeats into clinically actionable information. The company believes improvements in arrhythmia detection and characterization have the potential to change clinical management of patients.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements include statements regarding financial guidance. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled "Risk Factors" and elsewhere in our Form 10-K filing made with the Securities and Exchange Commission on March 31, 2017, and the Form 10-Q on May 12, 2017. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.
| Investor Relations Contact: | Media Contact: | |
| Lynn Pieper Lewis or Leigh Salvo | Aaron Murphy | |
| (415) 937-5404 | (415) 229-3331 | |
| investors@irhythmtech.com | media@irhythmtech.com |
IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
| June 30, 2017 | December 31, 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 16,249 | $ | 51,643 | ||||
| Short-term investments | 93,578 | 54,407 | ||||||
| Accounts receivable, net | 10,851 | 9,406 | ||||||
| Inventory | 1,231 | 1,390 | ||||||
| Prepaid expenses and other current assets | 1,817 | 1,671 | ||||||
| Restricted cash | 91 | 91 | ||||||
| Total current assets | 123,817 | 118,608 | ||||||
| Investments, long-term | - | 10,981 | ||||||
| Property and equipment, net | 6,166 | 4,653 | ||||||
| Goodwill | 862 | 862 | ||||||
| Other assets | 3,531 | 3,052 | ||||||
| Total assets | $ | 134,376 | $ | 138,156 | ||||
| Liabilities, Convertible Preferred Stock and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,658 | $ | 2,103 | ||||
| Accrued liabilities | 9,985 | 10,165 | ||||||
| Deferred revenue | 557 | 947 | ||||||
| Accrued interest, current portion | 525 | - | ||||||
| Debt, current portion | 1,471 | - | ||||||
| Total current liabilities | 15,196 | 13,215 | ||||||
| Debt | 31,614 | 32,227 | ||||||
| Deferred rent, noncurrent portion | 140 | 26 | ||||||
| Accrued interest, net of current portion | - | 126 | ||||||
| Total liabilities | 46,950 | 45,594 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 27 | 22 | ||||||
| Additional paid-in capital | 226,365 | 219,718 | ||||||
| Accumulated other comprehensive loss | (50 | ) | (9 | ) | ||||
| Accumulated deficit | (138,916 | ) | (127,169 | ) | ||||
| Total stockholders' equity | 87,426 | 92,562 | ||||||
| Total liabilities and stockholders' equity | $ | 134,376 | $ | 138,156 |
IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 23,854 | $ | 15,734 | $ | 45,291 | $ | 28,588 | ||||||||
| Cost of revenue | 6,744 | 5,156 | 13,081 | 9,815 | ||||||||||||
| Gross profit | 17,110 | 10,578 | 32,210 | 18,773 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 2,776 | 1,667 | 5,397 | 3,212 | ||||||||||||
| Selling, general and administrative | 20,255 | 12,608 | 37,479 | 24,129 | ||||||||||||
| Total operating expenses | 23,031 | 14,275 | 42,876 | 27,341 | ||||||||||||
| Loss from operations | (5,921 | ) | (3,697 | ) | (10,666 | ) | (8,568 | ) | ||||||||
| Interest expense | (839 | ) | (803 | ) | (1,661 | ) | (1,581 | ) | ||||||||
| Other expense, net | 316 | 64 | 580 | (413 | ) | |||||||||||
| Net loss | $ | (6,444 | ) | $ | (4,436 | ) | $ | (11,747 | ) | $ | (10,562 | ) | ||||
| Net loss per common share, basic and diluted | $ | (0.29 | ) | $ | (3.09 | ) | $ | (0.53 | ) | $ | (7.42 | ) | ||||
| Weighted-average shares used to compute net loss per common share, basic and diluted | 22,362,608 | 1,435,483 | 22,257,849 | 1,424,278 |