iRhythm Technologies Stock

iRhythm Technologies Inc. is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. The company's principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services.

Since first receiving clearance from the U.S. Food and Drug Administration (FDA) for its technology in 2009, the company has supported physician and patient use of its technology and provided ambulatory cardiac monitoring services from its Medicare-enrolled independent diagnostic testing facilities (IDTFs) and with its qualified technicians. The company provided its Zio ambulatory cardiac monitoring services, including long-term continuous monitoring, short-term continuous monitoring, and mobile cardiac telemetry (MCT) monitoring services (collectively, the Zio Services), using its Zio Systems.

Each Zio System combines an FDA-cleared and CE-marked, wire-free, patch-based, 14-day wearable biosensor that continuously records electrocardiogram (ECG) data with a proprietary, FDA-cleared, CE-marked cloud-based data analytic software to help physicians monitor patients and diagnose arrhythmias. Since receiving FDA clearance, the company has provided the Zio Services to over six million patients and have collected over 1.8 billion hours of curated heartbeat data.

Products and Services

Zio Systems and Zio Services

The Zio Systems and Zio Services deliver a patient-friendly design that enables between 98%-99% patient compliance with minimal ECG data noise or artifact, thereby potentially delivering superior clinical accuracy to physicians diagnosing arrhythmias and reducing the cost of care for healthcare systems by avoiding costly downstream adverse events. The company has developed a proprietary system that combines an FDA-cleared and CE-marked wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data, with auto proprietary FDA-cleared and CE-marked cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias (collectively, the Zio System). The company offers three Zio System options - the Zio Monitor System, the Zio XT System, and the Zio AT System.

The Zio Service Monitoring Solutions

The Zio Monitor System is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (the Zio Monitor patch) that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software (ZEUS) System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS System. The Zio XT System is the previous generation of the Zio Monitor System and is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (the Zio XT patch) that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio XT patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS System.

The Zio Monitor patch incorporates a breathable adhesive construct, which enhances the patient experience by removing moisture otherwise captured next to the patient's skin, as well as Bluetooth communication capabilities and improved

The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of a patch ECG monitor (the Zio AT patch) that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, but which also incorporates the Zio AT wireless gateway that provides connectivity between the Zio AT patch and the ZEUS System during the patient wear period. The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT patch application and collects and transmits data from the Zio AT patch to the cloud via a long-term evolution (LTE) cellular protocol.

The company supports physician and patient use of its Zio Systems through its Medicare-enrolled IDTF and certified cardiographic technicians (CCTs), who perform the technical monitoring services associated with a physician's order for long-term continuous monitoring or MCT monitoring services. Long-term continuous monitoring and MCT services are diagnostic medical procedures typically ordered by physicians for patients not suspected of having life-threatening arrhythmias, but who are suspected of having infrequent, difficult-to-detect, or asymptomatic arrhythmias. When physicians order long-term continuous monitoring services with the company's Zio System, its biosensor technology collects an uninterrupted, long-term continuous recording of ECG data for up to 14 days and delivers a comprehensive end-of-wear report, which includes specific arrhythmia events detected by the ZEUS algorithm upon return of the Zio Monitor patch or Zio XT patch (and with the Zio AT patch, each, a Zio patch) and analysis of the stored data by qualified technicians. A Zio patch typically collects approximately 1.5 million heartbeats of data for each patient during a single wear period of up to 14 consecutive days.

After the company receives the Zio patch at its IDTF, the ECG data is uploaded to its secure cloud and preliminary findings are generated by its proprietary FDA-cleared deep learning algorithms. Each report is then validated by CCTs and sent to the patient's prescribing physician who may access the Zio report on the company's proprietary, web-based portal, referred to as ZioSuite, and also through its Electronic Health Record (EHR) connections or ZioSuite mobile apps. The company's technicians also notify physicians of potential urgent arrhythmias according to the ordering physician's specified notification criteria.

For its MCT services, the Zio AT patch and wireless gateway also offer the additional capability of providing actionable transmissions during the wear period to assist physicians in diagnosing and treating patients in situations where their physician has determined that there is a medical need to receive more timely, clinically actionable information. For the MCT services, physicians will receive daily reports, routine reports, and notifications from CCTs if there are significant events that meet predetermined and physician-specified notification criteria.

While wearing a Zio patch, patients can mark when symptoms occur by pressing a trigger button on the device and separately recording contextual data like activities and circumstances in a written symptom diary or digitally via the myZio application. This allows physicians to match symptoms and activity with ECG-based findings. The Zio patches are not available for sale outside of use with the company's Zio Services. The Zio patches include the following features patented clear, flexible, lightweight, wire-free design; unobtrusive and inconspicuous profile; proprietary adhesive backing designed to keep the Zio patch securely in place for the duration of the prescribed wear period; water-resistant functionality, allowing patients to shower, sleep, and perform normal daily activities, including moderate exercise; hydrogel electrodes and a compliant mechanical design to deliver a clear ECG with minimal artifact from movement; large symptom button, or patient trigger, that is easy to find and press; indicated single application wear period of up to 14 days (for longer prescribed wear periods for MCT services, additional Zio AT patches and gateways can be provided); and sufficient battery power for the entire wear period, without the need to recharge or replace batteries.

Zio Watch

A clinical need and an opportunity exists to expand the company's Zio platform into clinical grade wrist-worn wearables to detect and characterize Afib while integrating with clinicians' workflows. As part of this expansion strategy, the company partnered with Verily to develop their Verily Study Watch wearable device into a clinical platform. The company has since developed the Zio Watch (Study Watch with Irregular Pulse Monitor) with its clinically integrated ZEUS System, a new health solution that is intended to be integrated into clinical care delivery and to assist healthcare providers in identifying and monitoring Afib. In July 2022, the company received FDA clearance on the clinically integrated ZEUS System, the AI algorithm and solution component of the Zio Watch. Also in July 2022, Verily received FDA clearance for the Zio Watch (Study Watch with Irregular Pulse Monitor). In addition to Zio Watch, the company is evaluating potential opportunities to leverage its PPG algorithms and ZEUS System with other PPG based wrist-worn wearables and intend to initiate market evaluation or clinical studies with one or more wearables in 2024.

The iRhythm Difference

The company's Zio Services utilize advanced FDA-cleared artificial intelligence (AI) with a deep-learned algorithm to detect arrhythmias. As published in Nature Medicine in 2019, Hannun et al. used data from the Zio XT Service to develop a deep-neural network capable of diagnosing arrhythmias at a high diagnostic performance similar to that of expert cardiologists. The deep-neural network model met or exceeded the performance of cardiologists for 12 types of arrhythmia classes and recapitulated the misclassifications made by cardiologists.

Strategy

The key elements of the company's strategy include further penetrating and expanding the U.S. ambulatory cardiac monitoring market; pursuing international expansion opportunities; exploring adjacent market opportunities; and advancing its system portfolio and core technology offering.

Sales and Marketing

The company directly markets its Zio Services in the United States to healthcare professional through its internal organization comprised of sales representatives, field billing specialists, and customer experience representatives. The company's sales team focuses on initial introduction of the Zio Services to those participants that are instrumental to the decision-making process for ambulatory cardiac monitoring, which include physician practices and healthcare systems. The company also focuses on continuing efforts to ensure healthcare professionals are knowledgeable about the clinical benefits and economic value of the Zio Services. The company continues to invest in its sales force and focus on ensuring it optimizes the structure of its U.S. sales organization to expand the current customer account base and support adoption of the Zio Services.

The company markets its Zio Services to a variety of physician specialties including general cardiologists, electrophysiologists, primary care physicians, neurologists, and other physician specialists who diagnose and manage care for patients with arrhythmias. The company has found success focusing on integrated delivery networks (IDNs), in which large networks of facilities and providers work together to offer a continuum of care to a specific geographic area or market. Focusing on sales to IDNs gives the company the opportunity to conduct a holistic sale for health systems interested in making value-based purchasing decisions.

In January 2021, the company established a small direct sales and clinical infrastructure in Bagshot, Surrey in England to service the U.K. market. The company has since focused efforts on the introduction of the Zio Services using the Zio XT System into new accounts and market access efforts, in particular through orders made by NHS Trusts and Hospitals. In addition, the company is exploring sales opportunities and market access in Japan, Switzerland, the Netherlands, and Spain.

Competition

In providing its Zio Services, the company competes with BioTelemetry, Inc. (acquired by Royal Philips), Preventice Solutions, Inc. (acquired by Boston Scientific, Inc.), and Bardy Diagnostics, Inc. (acquired by Baxter International, Inc.) to offer remote cardiac monitoring technology and also function as diagnostic service providers. The company also competes with companies that sell traditional, 24-to-48-hour Holter monitors, including GE Healthcare, Philips Healthcare, Mortara Instrument, Inc., Spacelabs Healthcare Inc., and Welch Allyn Holdings, Inc. (acquired by Hill-Rom Holdings, Inc. which was acquired by Baxter International, Inc.).

Third-Party Reimbursement

The company receives revenue for the Zio Services primarily from third-party payors, which include commercial payors and government agencies, such as the Centers for Medicare & Medicaid Services (CMS). Third-party payors require the company to identify the service for which it is seeking reimbursement by using a Current Procedural Terminology (CPT) code set maintained by the American Medical Association (AMA).

For the year ended December 31, 2023, the company received approximately 86% of its revenue through third-party payors, which includes approximately 25% of its total revenue from the Medicare program. The company's clinical centers are enrolled in the Medicare program as IDTFs, which allows it to bill CMS directly for its Zio Services. To maintain enrollment, the company must meet the CMS IDTF supplier standards, including having an independent medical director for oversight and qualified technicians who support the analysis of ECG data captured by the Zio patches as part of its Zio Services.

Research and Development

The company's research and development expenses were $60.2 million for the year ended December 31, 2023.

Collaboration with Verily

On September 3, 2019, the company entered into a Development Collaboration Agreement with Verily Life Sciences LLC, an Alphabet Company (VLS) and Verity Ireland Limited (VIL, and together with VLS, Verily).

Research and Development

The company's research and development expenses included $60.2 million during the year ended December 31, 2023.

Intellectual Property

As of December 31, 2023, the company owned, or retained an exclusive license to, forty-two issued patents from the U.S. Patent Office (USPTO), ten issued patents from the Japanese Patent Office, three issued patents from the Australian Patent Office, four issued patents from the Canadian Patent Office, six issued patents from the European Patent Offices, five issued patents from the Korean Patent Office, and two issued patents from the Chinese Patent Office. The company's U.S. issued patents as of December 31, 2023 are set to expire over a range of years, from November 2028 to August 2041, subject to any extensions. As of December 31, 2023, the company had forty-eight pending patent applications globally, including eleven in the United States, seven in the European Patent Office, seven in Japan, two Patent Cooperation Treaty (PCT) international applications, six in Australia, four in each of Korea, China, and India, and three in Canada.

As of December 31, 2023, the company's trademark portfolio contained U.S. trademark registrations for the marks MyZIO, ZIO, ZIO SUITE, ZIO AT, and IRHYTHM and pending U.S. trademark applications for the marks KNOW YOUR RHYTHM BY ZIO, KNOW YOUR RHYTHM, ZIO and ZIO MCT. It also contained registered trademarks for the mark IRHYTHM in Australia, the EU, Austria, Canada, China, Denmark, Finland, France, Germany, Japan, Italy, Norway, Sweden, Switzerland, and the U.K. It further contained trademark registrations for the mark ZIO in Australia, Canada, China, the EU, Japan, Norway, and Switzerland. It also contained trademark registrations for the mark MYZIO in Canada, the U.K., and the EU, trademark registrations for the mark ZIO MCT in the U.K. and the EU, and trademark registrations for the mark ZIOSUITE in the U.K. and the EU.

Regulation

The company's facilities in Illinois, California, and Texas are enrolled in the Medicare program as IDTFs, defined by CMS as entities independent of a hospital or physician's office in which diagnostic tests are performed by licensed or certified non-physician personnel under appropriate physician supervision. The company's business is subject to compliance with these laws. The most significant of these laws for the company's business include the federal Anti-Kickback Statute (the AKS) and the federal False Claims Act (the FCA).

Because the company develops and manufactures the medical device technology used in the Zio Services (the hardware and software elements that FDA regulates as devices), it is subject to extensive and ongoing regulation by FDA under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and its implementing regulations, as well as other federal and state regulatory bodies in the United States.

The company has registered appropriate facilities with FDA as a medical device specification developer, manufacturer, or designated complaint handling unit. The company has also obtained a manufacturing license from the California Department of Public Health (CDPH). The company is subject to unannounced inspections by FDA and the Food and Drug Branch of CDPH to determine its compliance with the QSR and other regulations, and these inspections may include the manufacturing facilities of its suppliers.

The company's business is subject to foreign, federal, and state privacy and security laws concerning the collection, use, analysis, retention, storage, protection, transfer, disclosure, and/or disposal of individually identifiable information including, without limitation, the General Data Protection Regulation (GDPR), the Health Insurance Portability and Accountability Act of 1996, as amended by the final regulations promulgated pursuant to the Health Information Technology for Economic and Clinical Health Act (HITECH), found in the American Recovery and Reinvestment Act of 2009 (collectively, HIPAA), the Telephone Consumer Protection Act, the CAN-SPAM Act, and state privacy, consumer protection, and breach notification laws.

The company's manufacturing operations are subject to regulatory requirements of FDA's Quality System Regulation (QSR) for medical devices authorized for manufacturing and sale in the United States, the Medical Devices Directive 93/42/EEC ("MDD") and the Medical Devices Regulation 2017/745 of the European Parliament and of the Council (EU MDR), which is required for doing business in the EU, and the UK Medical Device Regulations 2002 (as amended) (UK MDR). The company is also subject to applicable requirements relating to the environment, waste management, and health and safety matters, including measures relating to the release, use, storage, treatment, transportation, discharge, disposal, sale, labeling, collection, recycling, treatment, and remediation of hazardous substances. The Affordable Care Act (ACA) substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the company's industry. Any changes to, or repeal of, the ACA may have a material adverse effect on the company's results of operations. The UKCA requirement became effective on January 1, 2021 and the company has obtained a UKCA mark with the BSI, which also serves as it's the U.K. Approved Body, for the Zio XT System and the Zeus System. The company is also registered with the UK's Care Quality Commission ("CQC") to carry out diagnostic and screening procedures.

The company's manufacturing facilities are also ISO certified (EN ISO 13485:2016). The company has registered its device establishments with FDA and with the UK's Medicines & Healthcare products Regulatory Agency (MHRA). Additional EU registrations may be sought in 2024 in EU member states by the company's EU authorized representative as appropriate.

Additionally, the EU Notified Body and UK Approved Body regularly audit the company's manufacturing, design, and operational facilities to ensure ongoing ISO 13485 and EU MDR compliance and periodically audit technical design files in accordance with the EU MDR in order to maintain its CE mark or issue a CE mark or UKCA mark for new or updated devices.

History

iRhythm Technologies, Inc. was founded in 2006. The company was incorporated in the state of Delaware in 2006.