Business Context and Reporting Period
Company: iRhythm Holdings, Inc. (formerly iRhythm Technologies, Inc.)
Filing Type: Form 10-Q (Unaudited)
Period Ended: June 30, 2026
Business Overview: iRhythm is a leading digital healthcare company providing ambulatory cardiac monitoring (ACM) services via its Zio wearable biosensor and cloud-based analytics. The company operates as a single reportable segment. On January 12, 2026, the company implemented a holding company structure, with iRhythm Holdings, Inc. as the parent and iRhythm Technologies, Inc. as the operating subsidiary.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Revenue, Net | $224,172 | $186,687 | $423,562 | $345,364 |
| Gross Profit | $163,205 | $132,857 | $304,558 | $242,073 |
| Gross Margin | 72.8% | 71.2% | 71.9% | 70.1% |
| Net Loss | $(381) | $(14,218) | $(14,314) | $(44,918) |
| Adjusted EBITDA | $43,298 | $15,696 | $57,397 | $13,061 |
| Cash & Equivalents | $246,679 | $236,012 | $246,679 | $236,012 |
| Marketable Securities | $344,595 | $347,751 | $344,595 | $347,751 |
| Total Debt (Convertible Notes) | $651,096 | $649,504 | $651,096 | $649,504 |
| Operating Cash Flow (YTD) | $24,907 | $19,768 | $24,907 | $19,768 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 20% year-over-year (YoY) in Q2 2026 and 23% YoY for the six months ended June 30, 2026. Growth was driven by increased volume of Zio monitor and Zio AT services across third-party payors, CMS, and healthcare institutions.
- Profitability Improvement: Net loss narrowed significantly to $0.4 million in Q2 2026 from $14.2 million in Q2 2025. Adjusted EBITDA improved to $43.3 million from $15.7 million.
- Operating Expenses: Selling, General, and Administrative (SG&A) expenses increased 4% YoY in Q2, primarily due to higher marketing costs, legal fees, and provisions for credit losses. Research and Development (R&D) expenses decreased 6% YoY due to lower headcount-related costs.
- One-Time Items: The company recorded a $14.0 million litigation settlement expense (net of expected insurance recoveries) in Q2 2026 related to a securities class action. This contrasts with a $2.5 million impairment charge recorded in Q2 2025 related to internal-use software.
Guidance, Outlook, Risks, and Unusual Items
- Acquisition of Vital Connect: On August 5, 2026, the company entered a definitive agreement to acquire Vital Connect, Inc. for $287.5 million ($237.5 million cash, $50.0 million stock). The deal is subject to regulatory approval and expected to close by end of 2026.
- Legal Settlements:
- Securities Litigation: Settled a putative class action for $45.0 million (recorded in Q2 2026). Approximately $40.0 million is expected to be recovered via insurance.
- Patent Litigation: On July 31, 2026, settled patent disputes with Baxter/Welch Allyn/BardyDx for $50.0 million. This payment is a subsequent event and will be recognized in Q3 2026.
- Cybersecurity Incident: In June 2026, a threat actor improperly obtained sensitive information from third-party-hosted business applications. The company incurred $0.7 million in costs in Q2 2026. Three class-action lawsuits have been filed regarding this incident.
- Regulatory Risks: The company faces ongoing scrutiny from the FDA regarding quality system requirements and medical device reporting. It is also subject to DOJ investigations regarding Zio AT reimbursement claims.
- Reimbursement: Revenue relies heavily on third-party payors (52% contracted commercial, 26% CMS). Changes in CMS reimbursement rates or commercial payor contracts pose significant risks.
Investor Verification Checklist
- Insurance Recoveries: Verify the timing and certainty of the ~$40 million insurance recovery related to the securities litigation settlement.
- Vital Connect Integration: Assess the financial impact and integration risks of the pending $287.5 million acquisition, including the $9 million reverse termination fee risk.
- Cybersecurity Liability: Monitor the status of the three class-action lawsuits filed regarding the June 2026 data breach and potential additional remediation costs.
- Regulatory Status: Track the resolution of ongoing FDA inspections (Form 483 observations) and DOJ civil investigative demands regarding Zio AT billing.
- Debt Conversion: Review the terms of the $661.3 million 1.50% Senior Convertible Notes due 2029, specifically the conversion price ($147.22) and potential dilution.