The news yesterday has set shares of IRTC up 25% for the week. As of midday today, they’re trading at $75.76 apiece.
San Francisco-based iRhythm received the clearance for prior design changes via letter to file. Zio AT remains commercially available on the market to ship to customers in the U.S.
In May 2023, Zio AT was scrutinized after iRhythm received an FDA warning letter involving the mobile cardiac telemetry device. The letter, made public shortly after the company’s announcement, accused iRhythm of violations of the Federal Food, Drug, and Cosmetic Act’s rules for labeling, quality systems and medical device reporting. In at least two cases, iRhythm did not report patient deaths in the required 30-day window, and instead reported them the following year, the FDA said.
While the FDA said some responses and corrective actions from the company have been adequate, the agency had a long list of action items for the company. This added to an investigation from the U.S. Justice Department.
In August, President and CEO Quentin Blackford issued a positive update on the warning letter situation as analysts maintained their “Buy” ratings for the company in spite of the regulatory troubles. The company awaits another 510(k) approval related to the letter, though.
Company officials and analysts respond to iRhythm’s FDA nod
Blackford said the clearance “has been a priority” and demonstrates the company’s commitment to quality, compliance and performance.
“We are pleased to have received this first 510(k) clearance in line with the sequence of how we submitted the first of two 510(k)s at the beginning of this year, and we look forward to hearing about our second 510(k) in the near future,” he said in a news release. “Both 510(k) submissions are related to our ongoing remediation efforts with the FDA, and we remain committed to patient safety, physician trust in Zio AT’s clinical performance, service quality, and regulatory compliance.”
BTIG analysts Marie Thibault and Sam Eiber also viewed the announcement with optimism. They maintained a “Buy” rating for iRhythm and expect a favorable investor reaction when the market opens on Tuesday, Oct. 22. (iRhythm’s announcement came after the markets closed on Monday, Oct. 21.)
“We are pleased to see this announcement, as it helps partially lift some of the regulatory overhang on the company,” they wrote. “We expect IRTC shares to trade meaningfully higher tomorrow.”
Shares of IRTC closed Monday down 0.91% at $62.10 apiece. They got a huge boost from the announcement in after-hours trading, though, rising 16.75% to $72.50 apiece. They continued to rise, as mentioned before, on Tuesday.
(This story originally ran on Oct. 21 and was updated on Oct. 22 with the next-day stock price.)
