San Francisco-based iRhythm submitted two updates to the mobile cardiac telemetry device following an FDA warning letter last year. The letter, made public shortly after the company’s announcement, accused iRhythm of violations related to rules for labeling, quality systems and medical device reporting. The FDA said that, in at least two cases, iRhythm did not report patient deaths in the required 30-day window, and instead reported them the following year.
iRhythm received the first FDA clearance for design changes made to Zio AT last week. The system remains available to ship in the U.S. and the company plans to make the product enhancements cleared by the FDA available in 2025.
“This clearance is related to enhancements to our Zio AT product, including design features and labeling updates intended to address areas of concern specific to Zio AT that were noted in a 2023 FDA warning letter to the company,” said Quentin Blackford, iRhythm president and CEO. “We believe these features that were subject to this clearance advance our technology for the benefit of patients, physicians, and healthcare systems who rely on our Zio AT services. At all times, we remain committed to patient safety, physician trust in Zio AT’s clinical performance, service quality, and regulatory compliance.”
A negative response to other news, though
Despite the positive update on Zio AT, shares of IRTC took a hit before the market opened today, falling 11.4% to $67.15 apiece. This likely comes in response to the company’s third-quarter earnings report, which were mixed compared to the consensus forecast but the company divulged that regulatory efforts on the Zio AT front mean its FDA submission for Zio MCT, another product, is being pushed back to the third quarter of 2025.
iRhythm previously planned to submit the Zio Mobile Cardiac Telemetry (MCT) system to the FDA by the end of 2024. However, with the remediation efforts related to Zio AT, the company pushed back the timeline to the second half of next year.
The work to remedy Zio AT had already delayed the company’s planned Zio MCT efforts prior to this change. With the initial plans for a 2024 submission, the company was looking at a 2025 market introduction for the MCT version.
“This filing delay for Zio MCT is a negative surprise that comes with higher spend (that is likely to be offset by other cuts), and could have been a ~$10M revenue opportunity from 2025,” BTIG analysts Marie Thibault and Sam Eiber said in response to the submission setback.
iRhythm reports third-quarter earnings
The company reported losses of $46.2 million. That equals $1.48 per share on sales of $147.5 million for the three months ended Sept. 30, 2024.
iRhythm recorded a 70.3% bottom-line slide on a sales increase of 18.4%.
Adjusted to exclude one-time items, losses per share came in at $1.26. That fell well shy of projections averaging losses per share of 57¢ on Wall Street. Sales, however, topped the forecast as experts expected $146.7 million in revenue.
“The third quarter of 2024 was an exceptional quarter of execution as our teams drove significant demand in our core business, made substantial progress in expanding our Zio services into global markets, and established an important licensing agreement with an external partner to drive future platform capabilities for long term growth,” said Blackford. “We were also very pleased to be able to celebrate one million patients having been registered for Zio monitor – our newest generation, long-term continuous monitoring system – in October and have officially launched our first commercial account using Aura – Epic’s specialty diagnostics and devices suite.”
iRhythm projects full-year revenue grwoth between $582.5 million and $587.5 million, marking 18%-19% growth.
Thibault and Eiber say the core business at iRhythm remains healthy and reiterate their “Buy” rating.
“The full-year 2024 sales outlook continues to look achievable to us,” the analysts wrote. “We reiterate our Buy rating but expect investor frustration from another unanticipated delay in regulatory timelines.”
