Business Context and Reporting Period
Company: iRhythm Holdings, Inc. (successor to iRhythm Technologies, Inc.)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: iRhythm is a leading digital healthcare company providing ambulatory cardiac monitoring (ACM) services via the Zio patch-based biosensor and cloud-based analytics. The company operates as a single segment focused on detecting, predicting, and preventing cardiac arrhythmias. On January 12, 2026, the company implemented a holding company structure, with iRhythm Holdings, Inc. becoming the parent of iRhythm Technologies, Inc.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue, Net | $747.1 million | $591.8 million | +26% |
| Gross Profit | $527.3 million | $407.5 million | +29% |
| Gross Margin | 71% | 69% | +200 bps |
| Net Loss | $(44.6) million | $(113.3) million | -61% (Improvement) |
| Adjusted EBITDA | $68.9 million | $(7.7) million | Turnaround to Profit |
| Operating Cash Flow | $80.9 million | $3.4 million | +2,280% |
| Cash & Marketable Securities | $583.8 million | $535.6 million | N/A |
| Long-Term Debt (2029 Notes) | $661.3 million (Principal) | $661.3 million (Principal) | N/A |
Note: The company reported a net loss of $44.6 million for 2025, a significant improvement from the $113.3 million loss in 2024. Adjusted EBITDA turned positive at $68.9 million, driven by revenue growth and reduced operating losses.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased by $155.3 million (26%) primarily due to higher volume of iRhythm Services, particularly from larger healthcare enterprise accounts and significant growth in the Zio AT (mobile cardiac telemetry) product mix.
- Cost of Revenue: Increased by 19% to $219.9 million, driven by higher headcount, component costs (including tariffs), and amortization of PCBAs, partially offset by economies of scale.
- Operating Expenses: Total operating expenses increased by 12% to $584.7 million. Selling, General, and Administrative (SG&A) expenses rose 18% due to headcount, legal fees, and $10.1 million in intellectual property litigation costs. Research and Development (R&D) increased 18% to $84.6 million.
- Acquired IPR&D: Expenses decreased 91% to $3.0 million from $32.4 million in 2024, as the large upfront charge for the BioIntelliSense (BioIS) license agreement occurred in the prior year.
- Impairment Charges: Increased to $4.5 million from $0.6 million, primarily due to the write-down of capitalized internal-use software for the Zio Watch project and other software projects not expected to be completed.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Outlook
Management expects to continue investing in sales, marketing, and R&D to expand market penetration and develop new products. The company believes its current cash, cash equivalents, and marketable securities are sufficient to meet liquidity requirements for at least the next 12 months. Strategic focus remains on expanding into primary care, international markets (UK, EU, Japan), and adjacent clinical opportunities such as sleep apnea and heart failure.
Key Risks and Contingencies
- Regulatory & FDA Actions: The company faces ongoing scrutiny from the FDA regarding quality system requirements and medical device reporting. The company received Form 483 observations in July 2024 and a warning letter in May 2023. While the company has submitted responses and obtained clearances for certain design updates, there is a risk of further enforcement actions, including consent decrees or recalls.
- Legal Proceedings:
- DOJ Investigation: The Department of Justice issued a civil investigative demand in December 2025 regarding Zio AT and reimbursement claims. The company is cooperating fully.
- Patent Litigation: Active lawsuits with Welch Allyn and BardyDx (subsidiaries of Baxter International) alleging patent infringement. The company denies these allegations and has filed counterclaims.
- Securities Litigation: A putative securities class action lawsuit is ongoing, alleging violations of the Exchange Act related to FDA inspections and disclosures.
- Reimbursement Risk: Approximately 24% of revenue comes from Medicare. Changes in CMS reimbursement rates, coverage policies (LCDs), or billing regulations could materially impact financial results.
- Debt Obligations: The company has $661.3 million in 1.50% Convertible Senior Notes due 2029. Following the January 2026 holding company transaction, holders may convert notes through March 4, 2026.
Unusual Items
- Strategic Investments: The company recorded a $5.7 million gain in fair value of strategic investments (primarily BioIS) in 2025.
- Verily Termination: The company terminated its development collaboration with Verily Life Sciences in 2025, resulting in $11.0 million in milestone payments and a $2.5 million impairment charge related to the Zio Watch software.
Investor Verification Checklist
- FDA Compliance Status: Verify the current status of the FDA warning letter and Form 483 observations, specifically whether any consent decrees or further enforcement actions have been initiated.
- DOJ Investigation: Monitor developments regarding the December 2025 civil investigative demand from the DOJ concerning Zio AT billing and reimbursement practices.
- Patent Litigation Outcomes: Track the progress of the patent infringement lawsuits with Welch Allyn and BardyDx, including the status of Inter Partes Reviews (IPR) and Ex Parte Reexaminations.
- Reimbursement Rates: Confirm the impact of the January 1, 2026, CMS reimbursement rate updates on future revenue projections.
- Convertible Note Conversion: Assess the potential dilution or cash settlement impact if holders of the 2029 Notes exercise their conversion rights following the holding company transaction.
- Contractual Allowances: Review the $46.6 million contractual allowance balance and the assumptions used to estimate denied claims, as this is a critical audit matter.