iRhythm Holdings, Inc (IRTC) 2025 Q4 法說會逐字稿

Hello, everyone. Thank you for attending today's iRhythm Holdings, Inc Q4 2025 earnings conference call. My name is William, and I will be your moderator today. (Operator Instructions)

At this time, I would now like to pass the conference over to our host, Stephanie Zhadkevich, Senior Director of Investor Relations with iRhythm. Stephanie?

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the fourth quarter and full year ended December 31, 2025.

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 Securities 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, 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 our business, please refer to the risk factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures and should be read together with the most directly comparable GAAP financial measures. Please refer to the tables in our earnings release and 10-K for a reconciliation of these measures to their most directly comparable GAAP financial measures. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 19, 2026.

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 Quentin Blackford, iRhythm's President and CEO.

Thank you, Stephanie. Good afternoon, everyone, and thank you for joining us. I'm pleased to be here with Dan Wilson, our Chief Financial Officer, to discuss our fourth quarter and full year 2025 performance and how we're positioning the company for 2026 and beyond. Dan will walk through our financials shortly, but I want to begin by framing where we stand today and where we're headed. 2025 was a breakout year for iRhythm.

We delivered strong volume-led revenue growth and meaningfully expanded margins as we exited the year with momentum across cardiology, primary care, innovative channels and international markets. At the same time, we strengthened the underlying platform that will fuel the next several years of value creation. Growth in the quarter and for the full year continued to be driven by volume across all channels. With growth in the fourth quarter of 27%, this marked our fifth consecutive quarter of revenue growth above 20%, reinforcing the durability of our platform and breadth of our growth drivers.

Our leadership in long-term continuous monitoring remains strong with nearly 72% share in a segment growing in the high teens, supported by more than 135 scientific publications to date. On profitability, we also made great progress as we reached a key inflection point, finishing the year with positive free cash flow results for the first time in our company's history and exceeding expectations with respect to adjusted EBITDA margins.

In the fourth quarter, adjusted EBITDA margins meaningfully exceeded the 15% goal that we have identified as we approach $1 billion in revenue, demonstrating the profitable scalability of our business, but this year was about more than financial milestones -- is about validating the strategic direction we've set, moving from episodic detection to proactive, integrated and increasingly predictive care.

The need for long-term continuous monitoring continues to grow. Arrhythmias remain episodic, often invisible until they cause downstream complications, and they are consistently missed by short duration or symptom-driven diagnostics. Data demonstrates that nearly 65% of all arrhythmias, whether symptomatic or asymptomatic are found after 48 hours of monitoring, reinforcing the need for longer duration, yet nearly 2 million short duration Holter and event monitors continue to be prescribed in the US market on an annual basis. We estimate that at least 27 million people in the US are living with significant risk of undiagnosed arrhythmias, a staggering and costly gap in care.

At the same time, the health care system is constrained. Nearly half of US counties and close to 90% of rural counties have no cardiologists. Access is not improving, which means the point of arrhythmia detection must shift. In 2025, we demonstrated the power of enabling that shift.

More than one-third of our volume originated in primary care settings, supported by our expanding footprint in integrated delivery networks, HR integrated workflows and innovative channel partnerships. We now serve approximately 40,000 primary care physicians, creating a scalable proactive care model that aligns with the growing focus on value-based care and population health. This is not a shift away from cardiology. Rather, it expands the market for these important customers as our ability to help Rule-in/Rule-out patients can enable cardiology to focus on the highest acuity patients, while primary care becomes an effective front door for earlier detection meeting the majority of our patients where they are most often being seen.

Helping to fuel this move upstream is the power of our EHR integration strategy. More than half of our volume now flows through EHR integrated accounts, and 75 of our top 100 customers are fully integrated. These integrations are not simply workflow enhancements, they create meaningful stickiness, increased prescribing consistency and drive long-term account durability.

We also advanced our predictive AI capabilities significantly in 2025. With nearly 3 billion hours of curated ECG data, we're now combining internal and external data sets such as claims and EHR information to identify patients at risk of arrhythmias before diagnosis. Early pilots through our partnership with Lucem Health show more than 85% accuracy in pre-identifying patients with clinically relevant arrhythmias.

While early, these programs reaffirm our conviction that iRhythm is positioned not just to detect disease but to help predict risk earlier and ultimately to help prevent it. Our initial programs focus on high-risk populations such as patients with diabetes, CKD, CAD, COPD, sleep and heart failure, where arrhythmias are common and costly. These programs are not just about diagnosing more patients, they are focused on doing so in a way that improves the efficiency, quality and cost of care delivery.

Zio provides a definitive diagnosis, enabling providers to stratify risk, route patients appropriately and reduce unnecessary downstream health care utilization, resulting in early indications of better patient outcomes and reduce cost of care. As an independent diagnostic provider, iRhythm delivers objective, clinically validated results that integrate directly into existing workflows and care pathways, which helps protect providers and systems and increasingly audit sensitive risk-bearing environments.

Within our MCT business, our current Zio AT offering continues to perform exceptionally well, with unit growth running more than twice the company average for the year. The strength continues to be supported by new account wins, expanding utilization within existing accounts and increased prescribing alongside Zio Monitor. This notable and sustained performance even before bringing an exciting new product to market, reinforces our view that Zio AT is a durable growth driver resonating with physicians today and that we will continue to gain market share in the near term.

Consistent with our prior comments, we are incredibly excited about our next-gen MCT device, featuring a 21-day wear time, an improved form factor aligned with our Zio Monitor and enhanced algorithms which is currently under FDA review. We remain in active dialogue with the agency as we work through their questions and continue to expect to release the product in the first half of 2027.

We believe the combination of a strong Zio AT offering today and a thoughtfully architected next-generation device sets us up to meaningfully expand our presence in the MCT market, where we hold roughly 15% market share compared to our 72% market share in long-term cardiac monitoring. Every 10 points of market share gains represents roughly $80 million to $100 million of incremental annual revenue.

International markets continue to represent a compelling long-term growth opportunity. We are now commercial in the UK, select EU markets and Japan, markets that collectively conduct over 3 million ambulatory cardiac monitoring test annually and where iRhythm holds less than 1% share. In the UK, we delivered our largest quarter of volume ever and we'll be participating in pilots under the NHS Supply Chain's Value-based Procurement Program.

In Japan, we are now generating in-country evidence to support future applications to the MHLW for reimbursement reconsideration. Across all regions, our focus remains on disciplined execution, evidence generation and Reimbursement progression as we scale these markets thoughtfully.

We've also made encouraging progress with our Sleep Pilots. Early feedback continues to reaffirm the meaningful opportunity ahead as we address long-standing challenges in the sleep diagnostic market. With nearly 40 million sleep apnea patients in the US and significant overlap with arrhythmia populations, we believe we are well positioned to extend our workflow-driven model into this adjacent space as care continues to shift upstream.

iRhythm today sits at the intersection of several powerful trends: an aging population, increasing prevalence of arrhythmias, movement toward value-based care and growing demand for proactive health management. We believe the market opportunity ahead is significantly larger than it has historically been viewed and that our platform spanning biosensors, AI and workflow, positions us well to lead that expansion.

As we enter 2026, our focus is clear and consistent: one, delivered durable volume-led growth across cardiology, primary care and innovative channels. Two, expand margins through sustained operational efficiencies and scale benefits. Three, advanced platform innovation, including our next-generation MCT and predictive AI. Four, scale international and adjacent markets with discipline and rigor and, five, maintain operational excellence and compliance in a rapidly evolving health care environment. With this focus, we are confident in our ability to execute this expansion in a way that creates long-term value for patients, physicians, providers, payers and shareholders.

Finally, as the industry grapples with heightened scrutiny around medical documentation practices, including recent attention on chart scraping behaviors, we want to be explicit about our position. iRhythm operates as an independent diagnostic provider with objective clinically validated reports that integrate directly into provider workflows.

Our product is prescribed directly by a physician and enables a confirmatory diagnosis. Our processes are designed to support accurate diagnosis while reducing administrative burden and audit exposure for providers and payers. We are an effective tool providing exactly what oversight bodies are asking for in terms of confirmed diagnosis and are excited about the potential tailwinds from the emerging expectations of a more accountable, audit-sensitive environment.

Thank you again for joining us today. 2026 marks iRhythm's 20th anniversary and represents a very important year as we aim to become a $1 billion company in 2027, whose truest measures are lives touched, innovations delivered and transformational leadership serving the patients who are counting on us.

With that, I'll now turn the call over to Dan to walk through our financial results and outlook.

Thank you, Quentin. iRhythm delivered continued strong financial performance in the fourth quarter and full year 2025, reflecting durable demand for iRhythm's Ambulatory Cardiac Monitoring Services and disciplined execution across the organization.

We delivered fourth quarter 2025 revenue of $208.9 million representing 27.1% year over year growth and full year 2025 revenue of $747.1 million, representing 26.2% growth compared to 2024. Performance was driven primarily by sustained volume demand across our customer base, reflecting continued strength in our core business and contributions from newer growth channels. While volume remains the primary driver of growth, pricing was also favorable for full year 2025 and in the fourth quarter, including improvements with our estimated collections reserves related to our market access, contracting and collection efforts executed throughout 2025.

New store growth with new store defined as accounts that have been opened for less than 12 months accounted for approximately 68% of our year over year volume growth. Home enrollment for Zio Services in the US remained consistent from prior quarters, with approximately 23% of volume in the fourth quarter.

Moving down the P&L. Gross margin in the fourth quarter was 70.9%, an increase of 90 basis points year over year and full year gross margin was 70.6%, an improvement of 170 basis points year over year. This sustainable improvement was driven by continued operational efficiencies, including manufacturing automation and workflow optimization as well as scale benefits from higher volumes, partially offset by product mix.

Fourth quarter operating expenses were $145.8 million compared to $119.2 million in the prior year period, and operating expenses for the full year 2025 were $584.7 million, an increase of 11.8%. We invested purposefully in the business to fuel near, mid- and long-term growth while delivering strong operating leverage with revenue growing meaningfully faster than operating expenses.

On the bottom line, net income for the fourth quarter was $5.6 million or $0.17 per diluted share and was the first positive quarterly net income in iRhythm's history. Net loss for the full year 2025 was $44.6 million or a loss of $1.39 per diluted share. Adjusted EBITDA for the fourth quarter was $34.3 million or 16.4% of revenue, representing a 470 basis points improvement year over year and a significant improvement in profitability.

Full year adjusted EBITDA was $68.9 million or 9.2% of revenue, representing an improvement of more than 1,000 basis points compared to 2024 and over 500 basis points if normalizing for IP R&D expenses. We generated $14.5 million of free cash flow in the fourth quarter and $34.5 million for the full year, ending 2025 with $583.8 million in cash, cash equivalents and marketable securities and providing us with substantial flexibility to support future growth initiatives.

And another milestone for iRhythm, 2025 was the first year of positive adjusted EBITDA and free cash flow in the company's history. A significant result for the company and demonstrative of the profitable growth we are focused on delivering. Looking ahead, we entered 2026 with strong momentum and a solid foundation. For the full year 2026, we expect revenue to be in the range of $870 million to $880 million, representing 16% to 18% year over year growth.

This outlook reflects sustained demand across our core business while maintaining a disciplined approach to forecasting newer and emerging channels. On a full year basis, we expect pricing to be approximately flat overall to 2025, with revenue growth driven by continued volume growth across core Zio Monitor, Zio AT, innovative channel and international.

In the first quarter of 2026, we anticipate revenue to be in the range of $193 million to $195 million, consistent with typical revenue seasonality. For gross margin, we expect the clinical operations and manufacturing efficiencies we've driven will continue to incrementally improve our gross margin profile for the full year 2026. We believe that these sustainable improvements will continue to lower our cost to serve as we leverage our fixed cost infrastructure over a higher volume of patients overtime and introduce new artificial intelligence and workflow tools.

From a profitability standpoint, we expect adjusted EBITDA margin to expand meaningfully to 11.5% to 12.5% of revenue in 2026, reflecting continued gross margin improvement and operating leverage while still investing appropriately in product innovation, commercial initiatives, international expansion and platform capabilities.

We continue to anticipate normal seasonality in our adjusted operating expense profile with higher expenses coming through in the earlier half of the year due to spend associated with corporate activities and payroll expenses. For the first quarter of 2026, we anticipate adjusted EBITDA margin to be between 3% and 4% of revenue. And lastly, we expect free cash flow to grow versus 2025 with free cash flow more heavily weighted in the second half of the year due to normal operating seasonality.

In closing, we delivered a strong fourth quarter and a transformational year in 2025. We exited the year profitably, free cash flow positive and well positioned to continue scaling the business. Our financial performance reflects the durability of our growth model, the leverage in our operating structure and the discipline in which we are investing for the future. We believe our improving financial profile is supported not only by operating leverage, but also by the growing recognition that our services can reduce downstream health care utilization, which supports durable demand and efficiency-focused care environments.

I will now turn the call back to Quentin for closing remarks.

The fourth quarter capped an exceptional year for iRhythm. In 2025, we delivered strong top line growth, expanded margins and achieve profitability and free cash flow positivity for the first time in our company's history, all while continuing to invest in innovation and long-term growth. At its core, the challenge in arrhythmia detection remains clear, a reactive symptom-driven approach continues to miss patients. Arrhythmias are episodic, often asymptomatic and frequently undetected by short duration diagnostics, leaving millions undiagnosed and contributing to avoidable downstream events. At the same time, access constraints across the health care system are intensifying, with nearly half of US counties lacking a cardiologist, the point of detection must move upstream.

We believe these forces, rising clinical need and constrained access are fundamentally reshaping our market and play directly into iRhythms' strengths. As we enter 2026, our 20 year as a company, we do so with more momentum, scale and strategic clarity than at any point in our history. Looking ahead to 2026, we are confident in our ability to deliver another year of durable volume-led growth while continuing to expand profitability.

Our focus remains on disciplined execution, expanding access through primary care and integrated networks, advancing our platform through AI and workflow innovation and investing selectively in product and international growth, all while maintaining financial discipline. We believe iRhythm is still in the early innings of unlocking a market that is far larger than historically recognized, and we are well positioned to lead that expansion in a way that creates long-term value for patients, providers, payers and shareholders.

With that, we're now happy to take your questions.

(Operator Instructions)

Joanne Wuensch, Citi Group.

I think part of what has been weighing on the stock is the language around the elimination of chart-derived diagnosis from CMS and what it might mean for Zio use? Could you please address that? And I do have a follow-up.

Joanne, thanks for being here. Thanks for the question. Yeah, I'd be happy to address that. I think that -- actually, I think there's two issues in and around Medicare to address. One is around the pricing and one is around the chart-derived diagnosis.

And I think that Zio frankly fits both of those issues really well in terms of addressing the underlying concerns that might be out there around it. When you think about chart-drive diagnosis, Zio delivers the opportunity to get to a confirmatory diagnosis, which I think is very important. Physicians are prescribing the product. Patients are wearing that product. We're getting a very clear signal from that patient of which we're then able to provide a report that can provide an opportunity for that physician to confirm a diagnosis.

And I think that's very important that it ends up integrating into the workflow and the patient records, that are then ultimately reviewed down the line from an audit perspective or any other perspective to confirm, in fact, that there was a diagnosis made.

So I think we play very well there. I'm actually very excited by some of the conversations we've had with partners out there who are using the device in that way, and I believe it's going up being a nice tailwind for us. At the same time, I think there's some concerns around just the overall pricing direction, maybe pricing not intended to be as much of an increase in the future years is what folks had anticipated.

But I think, again, what we're finding in these programs that Zio is being utilized and is that we are, in fact, reducing the cost of care for these patients and that's starting to become very clear to us. I actually think you're going to see some data that's going to get published later this year from some of these innovative channel partners who are able to demonstrate pretty clearly now that they've got a period of time under their belt of using Zio in a proactive way that is going to demonstrate the cost of caring for these populations is in fact being reduced and coming down.

And that's exciting to see. I can't wait to have that data get published and get out there, but I think it addresses the very focus of where health care is going, which is we've got to get the cost of care down and Zio is demonstrating the real ability to do that. So I think both of those have been a bit of an area of concern, and I think Zio and iRhythm itself are positioned incredibly well to address those.

Just as a quick follow-up and a different topic. Could you give guidance for what you think gross and operating margins may look like for 2026?

Yeah. Joanne, we did give formal guidance for adjusted EBITDA. That was adjusted EBITDA margin of 11.5% to 12.5% for the full year. We also gave guidance there for Q1 of 3% to 4% for Q1 '26. On gross margin, I did comment, we expect incremental improvement relative to 2025, I can tell you we're thinking that in the range of 80 to 100 basis points of improvement relative to 2025. So hopefully, that gets you there for the '26 number.

(Operator Instructions)

Vijay Kumar, Evercore ISI.

One on the guidance kind of questions, right. Look, I know this focus on CMS reimbursement. But I'm wondering, is the CMS proposal perhaps a tailwind if hospitals are doing chart-scrapping are they now being forced to use or should be using Zio Monitor in LTCM patches, right, to avoid chart-scrapping. So I'm wondering, could this be a tailwind and along those lines, what are you assuming for international growth in fiscal '26?

Thank. Maybe I'll let Dan hit on the international assumption in the guidance. With respect to your first question, and the chart-scraping comments and again, having a confirmatory diagnosis that is in the medical records. I think that is something that our partners are very focused on, again, in the discussions with them, I think that's exactly the path that they're heading down. I'm bullish on what that has the potential to mean for iRhythm in our company.

I do think that while they're going to look for ways to continue to button up and bolster sort of their evidence and documentation around anything with particular Medicare focus on it. And so I do think this ends up being a tailwind.

At the same time, we did not factor anything into our forward-looking expectations around this at this point in time. I think this is one where we'll let that play out. We'll let that show up in results. And if so, we'll talk about that in a very favorable way. But early indications, early conversations, I feel -- feel very bullish around sort of how folks are talking about the way that iRhythm and Zio can be used to address some of these concerns. We'll see how that plays but I'm excited about it. Dan, maybe you want to hit on the international.

Yeah. Vijay, so a question on international contribution within the 2026 guide. We'll tell you that we have that growing slightly ahead of overall company growth. I would say some upside there potentially, but really just getting started in a number of those markets, five of the six that we are in, were opened, call it, in the last 18 months or so. So would expect the progress we're making in '26 to really show up more meaningfully in terms of contribution as we look to '27 and beyond.

Allen Gong, JPMorgan.

Thanks for the question. So let me get one, and I kind of want to touch on some of the AI concerns that we've seen weighing on some stocks in med tech recently. I think in the past, you've talked about maybe like 20% of the customer base will want to -- want to be some of the analysis on their own. And in that case, you're not really able to build CMS for that analysis portion of the code. But if your providers are more willing to use AI and potentially do some of that analysis on their own with the help of third-party providers. Is that something that you're concerned about? And how do you address that concern?

Thanks, Allen. Look, I think we're all incredibly excited about the prospects of AI and where that can go over the future years. I think at the same time, we've been doing this for 20 years. And frankly, our platform is pretty much a closed platform. But I think what sets us apart and continues to give me confidence that we're going to have success in this area is that it's more than just a software capability. It's more than just an AI capability. It starts with the data. The AI is only as good as the data coming into it. And we have very specific purpose-built hardware that allows us to capture very clean ECG data, having a clean signal is very important.

If you're starting to bring together disparate data sets, ECG data that are very unique and different and marked in different ways. I think it's hard for that AI to truly be specific and as good as what iRhythm is able to generate and provide. You also have to keep in mind, we operate in a very highly regulated space where each of these algorithms require FDA clearance. And that clearance takes years and years of clinical validation. It takes real-world evidence, things that are measured in time frames of years, not months or quarters.

There's work to be done in and around reimbursement and workflow as well that become major barriers. You look at our past. We've done the work to establish the CPT codes. We've got CMS coverage in place, national coverage decisions. We've got commercial payer contracts that are in place and importantly, I think, deep EHR integrations.

Physicians don't just simply adopt algorithms and they're not going to just simply bolt-on a bunch of AI algorithmic capabilities onto their existing platforms. It has to fit within their workflow. And I think that's something that we continue to build out and have a tremendous focus on. We've commented on this in the past, over half of our volumes flow through integrated systems with our customers. And I think that ends up being a very important aspect of how AI will continue to get introduced into the future.

And then just given the size, and we've got 13 million patients, we got 3 billion hours. That data set is growing incredibly fast, which is going to give us the ability to stay ahead from an AI perspective. So I feel really good about our opportunity to continue to have success here and protect the business but also grow it really, really well and frankly, even take advantage of the platform that we have, where we can drop in other AI capabilities as we go into the future that I think allows us to be unique and differentiated. So I like our position here, and I feel good about it, and I think we're in a unique spot here.

Richard Newitter, Truist.

I wanted to just ask on MCT. I know it sounds like that's going to -- you guys are committing -- or recommitting to that coming commercial in the first half '27, to hear that. I guess can you just run through what exactly you need to do to get that over the finish line? At the JP Morgan conference, you talked through some enhancements and feature sets that you're going to integrate into it. Can you just remind us what those are, what's involved there and the confidence in the timeline?

Yeah. Look, nobody is more excited about MCT than we are. I can tell you that as well as our commercial team and even our customers. I think we're in a great spot right now. Clearly, Zio AT is performing incredibly well. I think it's demonstrating the ability to be very sustainable and durable in terms of its growth profile. We're now over a year of growth with that product line that is more than twice the rate of our total company. And in Q4, it was up sequentially another 10%. So the momentum in AT affords us to make some decisions in and around MCT that are in the right path for the long-term outcomes of the company versus the short-term speed, but there are some things we could do to bring it to market faster. But frankly, it's not the right thing to do.

And this is a category that's evolved quite a bit over the last two years with the FDA in terms of their expectations as well as future expectations, including even a new category code that was created within the last couple of years as well. And so I think we understand with the FDA, with future expectations are going. And one of the most notable improvements that we need to make or changes that we need to make to to our MCT submission, frankly, is getting to a mobile gateway, moving away from our old gateway that's been out there for well over a decade and going ahead and making that move to a mobile gateway today, is important. That's something that we're in discussions with the FDA on right now in terms of how to update the submission. And so we're moving down that pathway and MCT will come to market with a new gateway.

We continue to feel confident in that first half of '27 time frame, and that's the right way to think about it, excitingly, it's going to get our duration out beyond 14 days, get us to 21 days. It's going to have an enhanced algorithmic capability with it as well. With the mobile gateway, it's actually going to improve the patient's interaction and experience quite a bit, which is exciting to see as well. So better cost economics, better cost profile, better impact on gross margin over time. These are all things that are in the right long-term health of our business, and we're pursuing to be in a position where we can make those decisions versus speed to market. So feel good about it. We're excited to get MCT to market, and we're just working with the FDA now on the best way to get that done.

Brandon Vazquez, William Blair.

Maybe, Dan, for you, I wanted to go back to guidance real quick. I think you used the phrase disciplined approach to forecasting when you gave the guidance. Maybe sub talk to us a little bit about what that means, what it is, what is embedded, what are the risks and opportunities as you think about the 2026 guidance frame that you gave us?

Thanks, Brandon, for the question. So maybe we'll just start. No change to kind of our philosophy on guidance. We want to be thoughtful. We want to put something out there that we're confident that we can deliver. And as you've heard us talk about a few times now, leave some of the upside opportunities out of the guide that ultimately, if they do play through, we'll be happy and can over-deliver on that initial guidance.

In terms of kind of the different areas of contribution within that guidance, maybe starting with core U.S. monitor continue to -- that continues to fuel the majority of our growth from an absolute dollar standpoint. We're growing in line with the market, if not a bit faster than the market. We're seeing primary care continue to expand the opportunity and then certainly our remaining opportunity to continue to shift share away from legacy technology. So feel really good about kind of the durable growth there. That was a source of upside in '25, the core US monitor that there's an opportunity for that in '26 as well.

With Zio AT, you heard Quentin talk about momentum and the strength that we're seeing there. Certainly an opportunity to continue to grow our share of that segment, right, from the 15% we are today, and we're really winning kind of alongside to Zio Monitor and winning kind of as a full platform. So really encouraged what we're seeing with AT.

In '25, you did hear Quentin comment, AT was growing essentially double the company average. That isn't -- what was contemplated in the '26 guidance, really think about AT growing a bit ahead of overall company growth, but below that double company average that we saw in 2025. And then the last component I mentioned -- I talked about international earlier. The last component being innovation -- innovative channel. So continue to expect that to remain the fastest-growing channel.

What's baked into guidance is really just an incremental step-up from the run rate that we saw exiting 2025. So the run rate in Q4. If you were to annualize that, that gets you to the majority of what we've contemplated in guidance and continue to feel good about delivering that. Certainly, some upside in that channel. It's a newer part of our business, a little bit less visibility than the core business.

We want to be really thoughtful around what we baked in the guidance there. We did have some incremental partners come in, in Q4 and Q1, which puts us in a really good position to continue to grow that part of the business. So hopefully, that helps then kind of deconstruct the '26 guidance.

Marie Thibault, BTIG.

Just wanted to follow up on that question about guidance and try to see if we could learn a little bit more about what's being included in that outlook for the partnership. I wonder if you could just tell us a little bit more about the number of partners you now have that you're working with? How many might be scaling up this year after pilots last year. Any more detail in all of the focus of interest for us.

Yeah. Thank you, Marie. So I would say we -- as I just mentioned, we continue to add partners to that part of the business, the Innovative Channel business. I will tell you it will start to -- has started to blur with the core part of our business as these partners are monitoring both symptomatic and asymptomatic patients. So in terms of the number of absolute partners, we're likely not to give that kind of quarter-to-quarter, but I did mention, we've added incremental partners both in Q4 and the early part of Q1. So I feel good about where that business is headed. It's early. It's an emerging part of our business. So as we think about setting up guidance really want to make sure we're not getting ahead of ourselves there.

Nathan Treybeck, Wells Fargo.

So Quentin, just kind of as you mentioned in this quarter, you were operating a compositive. You hit 16% EBITDA margin at an annualized revenue that's below $1 billion. I guess, when can we expect you to refresh your LRP targets? And it seems like there could be pretty significant upside to those LRP targets considering that you still have remediation costs, your cost base. And Dan, just on the OpEx, it came in considerably below my forecast, I just want to understand what's going on there? And how should we think about OpEx in '26?

Yeah. Maybe I'll hit on the $1 billion and the long-range plan. I think as we get close to that in '27, certainly, Nathan, we'll take a look at refreshing what that looks like further out in the future. But look, we're going to deliver on what we said we were going to do. And as we get close to doing that, then that's going to make the right sort of sense in terms of time to reset some expectations.

I do feel very good about it. You think back four years ago, almost when we set that expectation. Certainly, a lot of things played out very differently than what we anticipated. We thought we would have had the MCT product here, frankly, a couple of years ago. But to see the way the team has been able to really drive the core business and what we've seen in our core Monitor business, what we've opened up in the innovative channel partners, what we are seeing in that MCT category, even without -- what we think is a much better product in the new MCT offering. We know that, that market share opportunity is real.

What we're validating in our Sleep pilots gives us confidence that sleep is going to be a nice contributor to us well out into the future. And so I am very excited by where the company can go and the position that we're in. But I think for the time being, let's get to the $1 billion in '27 and then we'll start to think about how we reset those expectations further out. On the profitability side, I'll let Dan speak to it, but he's done a terrific job driving the team and just identifying where those levers are at in our company. I think we've got great confidence on how we drive into the 15%, and then we know we can go beyond that, but I'll let him speak a little bit more to that.

Yeah. Thanks for the question, Nathan. So I'd say the formula for Q4 and 2026 are kind of consistent. Driving efficiencies within gross margin and G&A while reinvesting back in the business, both for commercial initiatives and as well as a number of the innovation efforts that we're focused on. So we always try to set up a balanced plan where we're driving efficiencies, really looking at gross margin. You heard my comments about gross margin stepping up incrementally in 2026.

And then within OpEx, certainly, continuing to drive leverage within that G&A line. And that's leveraging our global footprint, leveraging the global business service center that we have stood up now for the last few years. There's a number of G&A functions that are fixed and won't need to scale with volume. And then certainly, FDA remediation, as you noted, as that moderates overtime, that would be a nice source of leverage for us as well. And then we look at that and then decide what should be reinvested back into the business, both from a sales and marketing standpoint and an R&D standpoint. And look to have a balanced plan that is ultimately driving to deliver long-term value for shareholders.

If I can just follow up with one more. Just on chart-scrapping, I guess how do you expect a potential tailwind could unfold? Would it be a directive from regulators to do confirmatory diagnoses or would it be more self-driven by the providers? And then just beyond the potential near-term tailwind, are you hearing any concerns from your customers that have high Medicare Advantage population that continuing asymptomatic screening to be risky for them?

No. I would say, certainly not on the latter part of that question. As a matter of fact, in the discussions we're having with customers, and I sat with one just about two weeks ago, who's been a terrific partner of ours, they're expanding their program even further. Just they're starting to see real cost data accumulate now that their program has been in place for over a year that is demonstrating very clearly that they are able to reduce the cost of caring for these populations. So they'll end up, I believe, expanding that population, and that's going to be a nice opportunity for us, but I think it's indicative of even where the future of more of these partners end up heading. So I'm excited by where that goes.

I think your specific question on chart-scraping, I expect this is going to be much more of a self-driven behavior and change and maybe approach of some of these folks from the past. I think that they want to have the confirmatory records in the patient records, having a zero report there that demonstrates very clearly where an arrhythmia is present or not is something that bolsters their own documentation and from the discussions we've had, I I expect this will be a tailwind for us. But again, our approach has always been around these sort of things, let them play out. As they do play out as we learn more, then we can speak more about them and even roll them into forward-looking expectations when the time is right. But I think the majority of this from what I can tell and what I expect is probably more of a self-driven change in behavior as well as anticipated.

David Rescott, Baird.

Great. Congrats on all the progress in '25. Dan, you mentioned that pricing was favorable in 2025. I think you pointed to improvements in the estimated collections of reserves were a factor there. So wondering if you could maybe just unpack exactly what's going on in that front? And when you think about 2026, I think you called out pricing as being relatively flat this year. I believe there is an uplift broadly in the reimburse rate from Medicare this year in '26. So can you help us understand maybe why pricing should be flat this year relative to the Medicare uplift and then relative to some of the pricing comments you made for 2025?

Yeah. Thanks, Dave. Happy to take those questions, and maybe start -- we did start out 2025 with guidance, expecting price to be down low single digits for the year. Ultimately, the year did come in call it, up low single digits. So we weren't able to over-deliver on the price expectations and guidance that we gave for 2025.

A few things behind that, certainly, product mix was a portion of that. But as noted in that Q4 price benefit, we book a net revenue amount that is an estimate of what we expect to ultimately collect and that's gross revenue less contractual allowance. As we go through the collection cycle, we're comparing actual collections versus what was estimated and we true up our estimate kind of as appropriate. And -- that's what we saw in the fourth quarter. Our collections were running ahead of our estimates.

And so we had a true-up of, call it, low single-digit millions in the quarter. It is onetime in the quarter, but I would say the performance of our market access teams, our payer contracting, our revenue cycle operations, that performance certainly should sustain and give us a really solid foundation as we think about price in '26 and beyond.

We're not going to factor that into guidance just yet, but certainly a good tailwind for us. You did comment on the Medicare rates being up in 2026. That is specific to Zio Monitor to long-term continuous monitoring. Medicare overall is 25% of our business, as you know. In the MCT category or AT Medicare rates are slightly down year over year in 2026.

But as you put it all together, mix, channel mix, product mix, the right way to set up the year for 2026 is ultimately price being flat relative to 2025. If we can over-deliver on that, great, like we did in 2025, but we want to set up the year kind of in an appropriate way.

Michael Polark, Wolfe Research.

I want to better understand the mobile gateway comment for next gen MCT. How is this different than the existing gateway? Is this -- is this an app on a patient's own smartphone? Is that the illusion or does mobile gateway mean something different? Any color would be welcome.

Yeah. Mike, thanks for that question. I'm glad you asked it so that we can clarify. The initial version of the mobile gateway will essentially be a smart device, but able to be locked in to where it only communicates directly with our Zio AT product. So we will provide that each and every time that the Zio new Zio MCT product is shifted and delivered to a patient, and they'll use that as a way for the Zio MCT product to communicate through that gateway. But it will be locked with the potential to have a Zio App included on it. But it will not be on their own smart device.

I think that a future iteration of the product, you certainly can see us moving to a patient's own smartphone that has some other complications with it that need to be worked through. But certainly, you see that in other marketplaces, I think back to the days of CGM and DexCom certainly, we ended up going down that pathway. But that will not be the first that we had down here with Zio MCT. It will be a locked smartphone capability only to be utilized with the Zio MCT product.

David Saxon, Needham.

I had a follow-up on the innovative channel just around when the right time is to start engaging those partners around repeat monitoring. Is that something you can standardize either across the channel or partner by partner? And I mean you guys are good at generating data. So like is there any data you have internally that shows there is some value to monitoring after a certain period of time?

Yeah, I think it's a great question. And to be honest with you, I think with every one of these channel partners, the discussion is a little bit unique and different to their own practices. Some will talk about repeat testing every every 12 months, others will talk about it every three years. I do think, for the most part, everybody is talking about some sort of repeat testing, but what the frequency looks like is just too early to identify just yet. I think that importantly, once you get to a confirmatory diagnosis and you start to treat that patient, you're going to want to make sure that, that arrhythmia is either being addressed or if it's reappeared, you're going to want to know that, which naturally leads into why there would be repeat testing here.

At the same time, I think that the further we go into this, payers are understanding sort of the cost benefit associated with these monitoring programs. And I think that annual monitoring, annual patching is something that you could see start to be used from a risk perspective to identify how they even think about pricing their programs with their patient population. So there's a lot of reasons to see this move towards more of an annual sort of monitoring program, but it's still too early to speak to exactly how that's going to play out. But those are discussions that are being had, and I think there will be some aspect to annual monitoring in these partner programs.

Suraj Kalia, Oppenheimer.

Congrats on a great quarter. Can you hear me all right?

Yeah, we got you.

Perfect. So Quentin, many calls going on. Forgive me if you've already talked about this. Our math suggests you guys grew Zio AT, roughly around 30% or higher click. When you look at the bridge device, so the gateway device for Zio AT, I understand in past conversations there have been comments about like there were some concerns about -- patient concerns about the bridge device, hence this shift to cellular for the Zio MCT product, hence this delay, right?

More specifically, Quentin, can you tell us what was the challenge with the bridge device because so far, unless my math is wrong, you guys have still navigated very effectively growing at 30% clip 15% or close thereof MCT shared. Hopefully, you got my question, Quentin.

Yeah. I got it, Suraj. And thank you for the question. Just to clarify on AT and just to speak to the strength of that product, and I put this in our prepared remarks as well. It's growing at more than twice the rate of the overall company average. So for the year, our Zio AT product actually grew north of 50%. I think that's important to note just considering the success in that MCT category that we're having with a product that we know will be enhanced with the new Zio MCT offering. So our momentum there is incredibly strong.

To Dan's point earlier, we did not set up our guidance that way for 2026. But if you look at the last 5 quarters, we've demonstrated the ability to grow that at nearly twice the overall rate of our company. So we're bullish on the category for sure, and we're excited by it.

When you think about the mobile gateway, as we were working through this with the FDA, there were some questions around cybersecurity that -- we're certainly going to require us to design some incremental capabilities into our old gateway if we were going to address those questions. And the challenge of that was that, we knew we were going to have to move to a new gateway at some point in the future. And rather than take the time today to design those incremental cybersecurity features and capability into the old gateway only to obsolete it in the next round of future innovation that we would introduce after this MCT product, we made the decision to go ahead and just bring it right into a new mobile gateway that addresses the cybersecurity concerns.

So this is all around making the right decisions for the long-term health of the business. We know that we can address these. We see a clear path to getting a product approval, but it does take us to a mobile gateway sooner than what we had expected, and that requires a bit of time there. So that's contemplated in all of the the timelines that we've put out there, but getting to the new mobile gateway is going to address those concerns around the cybersecurity aspect that we would have had to have done in the old gateway just doesn't make sense to really spend the time, effort, resources, putting it into something that we knew was going to be obsoleted.

David Roman, Goldman Sachs.

Maybe you could talk a little bit more about the referral channel within the innovative partners and the extent to which you're seeing consumer-based devices drive patients into that channel, maybe the degree to which some of the false positives that come off of those devices are actually increasing testing volume? And then maybe if you can tie that back to some of the AI questions you got earlier, maybe would help just complete the picture a little bit of how to think about the implications.

Yeah. Look, it's an interesting question because I think if you look across our business, there's no question that wearable devices -- forget just the innovative channel partners. Just in general, wearable devices have tended to be a pretty good regenerator for our company, meaning that folks or patients show up in their clinicians' office with a wearable device indicating maybe there's an arrhythmia or something there that needs to be monitored. And ultimately, a Zio gets prescribed for that patient and they get to the fact that they can get a real confirmed diagnosis. And so wearables have been a terrific lead generator for us.

But you look at these innovative channel partners, whether it's a wearable or not. And quite honestly, I don't see the wearables sort of leading patients into these programs. These are programs with our innovative channel partners that they're very particular around who they're going to monitor. You think about our Lucem AI capabilities where we're identifying patient populations proactively by looking through medical records where we can say, look, we have a pretty good idea and belief that, that patient likely has an arrhythmia and then you get a patch on that patient. And those accuracy rates have been as high as 90% in these early trials.

But every one of these partners are typically profiling a population within their coverage universe, whether it's a comorbid disease, state of diabetes, COPD, CKD, sleep, you can go down the list, they're putting a patch on those patients to get to a confirmed diagnosis. That is what they're looking for.

And in the case, if (inaudible) is something that is part of their model, they want that confirmed diagnosis, documented diagnosis in their records as further support. And so I don't see the wearables as being something that's really driving the innovative channel partners at this point in time. I do think it's been a nice lead generator for us in the past, but these innovative channel partners are pretty particular around the populations that they're targeting and going after. And then what I'm encouraged by, and I think you'll see this data later this year, you're going to see some really compelling cost reduction capabilities coming out of these programs that, frankly, is allowing us to expand the programs within these channel partners. So excited about what we're seeing.

But I don't think wearables are necessarily driving innovative channel partners. I don't think wearables address what the channel partners are after. Frankly, they want an accurate confirmed diagnosis, and that's something that Zio provides, and they're leaning-in to us for that.

Stephanie Piazzola, Bank of America.

I wanted to follow up on the innovative channel partnerships and how the 2026 guide includes a step-up in the '25 exit rate and just any help on how to think about what that exit rate was I think, volume from innovative partners have been low single digits, but stepping up each quarter. So did that trend continue in Q4? And is it still around low single digits or more mid-single-digit range? And any other help on how to think about the step-up factored into 2026.

Yeah, Stephanie. Good question there. So innovative channel partner, I would continue to point to low single digits as a percentage of overall business. We did see that trend positively upward as we were going through 2025. My comments on exit rate, if you took revenue from innovative channel in Q4 and annualize that, that's essentially or gets you a good amount of what we have contemplated in guidance.

And then also mentioned, we have had new partners come on board in both Q4 and Q1. So feel good about that base of business continuing to grow. I'll reiterate though, that is an emerging part of our business. The visibility there isn't as great as it is in our core business. Each of our partners are unique in terms of how quickly they ramp their business, the patients that they're proactively monitoring.

And so for all those reasons, we're going to be thoughtful. We want to make sure we don't get ahead of ourselves. But really excited about what that business can contribute in 2026, both from a guidance standpoint as well as potentially upside.

John Young, Canaccord Genuity.

I wanted to ask on Epic Aura accounts. I don't think it was discussed. Was that the 75 number that you provided in the prepared remarks. And any commentary on volume improvements that you're seeing from Aura. And is that embedded in the core company guidance expectations for 2026? Or is that another source of potential upside?

Yeah. Good question. Epic continues to be a terrific partner for us and one that we continue to be excited about. Just to be clear, I mentioned top 75 of 100, that's all integrated systems, not just Epic system. So just to be clear, it's across all EHR platforms, but Epic is a big part of that.

Epic itself continues to perform incredibly well. I would tell you, we had a record number of Epic integrations performed in the fourth quarter. We're on pace to set another record in the first quarter of this year. So it's growing quite nicely, and the pipeline is incredibly strong, and that's going to continue to play out over the course of the year.

We know that when we get integrated with these folks, our data would tell us 6 months post integration, we see roughly a 25% increase in overall prescribing volume. We're not setting up our guidance that way. Again, I think we'd like to be thoughtful on those things and let some of those play through before we would factor all that into guidance. But the Epic partnership and the integrations associated with it have been going very, very well and I would say, ahead of plan. And we're bullish on what Q1 and the rest of this year is going to look like.

Thank you. At this time, I would now like to pass the call back over to the management team for any closing remarks.

Well, thank you. As we close, I just want to take a moment to thank the iRhythm employees around the globe. The progress that we shared today, the strong growth, expanding profitability, the increasing impact that we're making on patients, it's only made possible by their dedication, the expertise and the relentless focus that they demonstrate each and every day on doing the right thing for our patients and our customers. It's their work ethic, it's their commitment that continues to set us apart, especially as we operate in an increasingly complex environment.

And as I think ahead of entering into our 20th year, I couldn't be more proud of the team and more confident in what we're going to accomplish together. And I just want to put a big shout out to the team. Congratulations on all you've done and look forward to the future.

Thank you to the folks that are on the call today. I look forward to seeing all of you guys in the near future and look forward to a great 2026. Thank you.

Thank you. That will conclude today's call. Thank you for your participation. You may now disconnect your lines.