iRhythm Holdings, Inc.
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ITEM 1: BUSINESS
Company Background
iRhythm is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology.
Each iRhythm product offering combines a wire-free, patch-based, 14-day wearable biosensor (United States Food and Drug Administration (“FDA”)-cleared, Conformité Européenne (“CE”)-marked and Japan Pharmaceuticals and Medical Devices Agency ("PMDA")-approved, as applicable) that continuously records electrocardiogram ("ECG") data with a proprietary cloud-based data analytic software (also FDA-cleared, CE-marked and Japan PMDA-approved, as applicable) (such biosensor and software together, an "iRhythm ACM System") to help physicians monitor patients and diagnose arrhythmias.
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ambulatory cardiac monitoring ("ACM") services from our Medicare-enrolled independent diagnostic testing facilities (“IDTFs”) with our qualified technicians. We have provided ambulatory cardiac monitoring services, including long-term continuous monitoring (“LTCM”) services ("LTCM Services"), short-term continuous monitoring, and mobile cardiac telemetry (“MCT”) monitoring services ("MCT Services" and collectively, the “iRhythm Services”), using the iRhythm ACM System. LTCM services and MCT Services are medical procedures typically ordered by physicians for patients not suspected of having life-threatening arrhythmias, but who are suspected of having infrequent, difficult-to-detect, or asymptomatic arrhythmias. Since receiving FDA clearance, we have provided iRhythm Services via more than twelve million patient reports and have collected almost three billion hours of curated heartbeat data.
iRhythm Technologies was incorporated in the state of Delaware in September 2006 and its successor registrant iRhythm Holdings was incorporated in the state of Delaware in December 2025. Our principal executive offices are located at 699 8th Street, Suite 600, San Francisco, California 94103, and our telephone number is (415) 632-5700. Our common stock is listed on The Nasdaq Global Select Market under the symbol “IRTC,” and we employ approximately 2,400 regular full-time employees as of December 31, 2025.
Our website address is https://www.irhythmtech.com, and our investor relations website is located at https://investors.irhythmtech.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act are available free of charge on our investor relations website as soon as reasonably practicable after we file such material with the SEC.
iRhythm investors and others should note that we announce material information to the public about our company, products, and services, and other issues through a variety of means – including via our website, our investor relations website, press releases, SEC filings, and public conference calls – to achieve broad, non-exclusionary distribution of information to the public and to comply with our disclosure obligations under Regulation FD. We encourage our investors and others to review the information we make public in these locations as such information could be deemed material. Please note that this information may be updated from time to time.
Cardiac Arrhythmias and the Ambulatory Cardiac Monitoring Market
Every year, millions of patients experience symptoms potentially associated with cardiac arrhythmias, a condition in which the electrical impulses that coordinate heartbeats do not occur properly, causing the heart to beat too quickly, too slowly, or irregularly. There are many different types of arrhythmias which are typically categorized based on where in the heart they originate - in either the atria or ventricles - and their speed - tachycardia for fast rhythms, bradycardia for slow rhythms. The causes of arrhythmias are diverse, and they can be triggered by conditions such as heart disease, high blood pressure, electrolyte imbalances, drug use, or stress. Some arrhythmias may not show symptoms, while others may lead to dizziness, shortness of breath, fainting, or chest pain. The Centers for Medicare and Medicaid Services' ("CMS") Hierarchical Condition Categories (HCC 96) defines actionable arrhythmias as abnormal heart rhythms detected via monitoring that require clinical intervention, such as medication adjustment, anticoagulation, catheter ablation, or device implantation.
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Cardiac arrhythmias affect approximately 1.5% to 5% of the global population, with atrial fibrillation ("Afib") being the most common. Afib causes the upper chambers of the heart to beat irregularly and blood not to flow properly to the lower chambers of the heart. It is estimated that more than 50 million patients worldwide have Afib with at least one-third of these patients presenting as asymptomatic at the time of their diagnosis. This condition contributes to an estimated 350,000 deaths globally each year. In the United States, the prevalence of Afib is estimated to be approximately 4.5% of people, or approximately 10.6 million adults diagnosed with Afib in 2019, and more than 450,000 hospitalizations occur each year in the United States because of Afib. Because Afib is more common among people over the age of 60, these numbers are expected to increase as the U.S. population ages. In Europe, the prevalence of arrhythmias is also expected to continue to rise with Afib affecting approximately 12.9 million people in the EU in 2021, and projections indicating the number could double by 2050–2060.
Atrial Fibrillation and Stroke
Early detection of heart rhythm disorders, such as Afib and other clinically relevant arrhythmias, supports appropriate medical intervention and can help avoid more serious downstream medical events, including stroke. In 2021, it was estimated that the age-adjusted US stroke death rate as an underlying cause of death was approximately 41.1 per 100,000, and there were approximately 7.4 million deaths attributable to stroke worldwide. Afib is the leading risk factor for stroke because Afib can cause blood to collect in the heart and potentially form a clot, which can then travel to the brain possibly resulting in an ischemic stroke. While individuals with Afib are approximately five times more likely to suffer a stroke, the American Stroke Association (“ASA”) estimated in 2022 that up to 80% of second clot-related strokes may be preventable. According to the American Heart Association ("AHA"), stroke costs the United States an estimated $34.5 billion each year in healthcare costs and lost productivity and is a leading cause of serious long-term disability. Between 15% and 20% of people who have strokes also have Afib.
We believe early detection of Afib is critical to optimizing patient care, delivering earlier treatment to help avoid further adverse clinical events, managing symptoms caused by Afib, and reducing the total public health burden of treating stroke. The AHA and ASA have published treatment guidelines for patients diagnosed with Afib to manage heart rhythm and rate and to support stroke prevention. These early treatments include medications such as oral anticoagulants, treatment with anti-arrhythmic drugs, and interventions such as cardiac ablation therapy to help control heart rhythm and rate.
Afib burden, or the amount of time a patient spends in Afib during the period of time the patient is wearing a heart monitor, has been identified in the clinical community as a clinically relevant measure for helping to determine appropriate and effective therapeutic interventions to manage patients with Afib and for assessing stroke risk. We believe the calculated Afib burden is only as good as the data available for analysis during the monitoring period. Since the most common type of Afib occurs intermittently, we believe that long-term continuous monitoring with patch-based technology, such as with our monitor technology that is part of our iRhythm ACM Systems, can more accurately measure Afib burden as it captures the patient’s heartbeat data is captured continuously through the wear period.
Ambulatory Cardiac Monitoring Overview
The ACM market is well-established in the United States with an estimated 6.9 million diagnostic tests performed in 2025 with meaningful expansion anticipated in the coming years due to an aging population, a rising number of heart-related disorders globally, and broader acceptance of innovative medical technologies. Traditional ambulatory cardiac monitoring devices used by physicians for diagnosing patients with suspected arrhythmias – such as traditional, 24-to-48-hour Holter and cardiac event monitors – are constrained by short-term monitoring times, non-continuous data collection and reporting, cumbersome equipment, and/or lower patient compliance. For example, patients often remove traditional monitors when sleeping, showering, or exercising, which can lead to a failure to capture critical data and result in incomplete diagnoses and repeat testing, which in turn can result in suboptimal patient care and higher costs to the health system.
Arrhythmia symptoms are generally monitored either in a physician’s office or healthcare facility, or with the ambulatory cardiac monitoring services. Typically, physicians will administer a resting ECG test in their offices to record and analyze the electrical impulses of patients’ hearts. If physicians determine that patients require monitoring for a longer wear period to generate a diagnosis, they have historically prescribed an ambulatory cardiac monitoring device such as a traditional Holter monitor, which is a non-invasive, battery-powered device that typically records data continuously for 24 to 48 hours. For longer term (i.e., up to 30 days) event driven monitoring, physicians may prescribe ambulatory cardiac event monitoring services, including MCT services, which record ECG data upon auto-detection (i.e., asymptomatic events) and/or patient activation (i.e., symptomatic events) and may transmit such data wirelessly to a monitoring center like an IDTF. Physicians may also prescribe implantable loop
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recorders, which are implanted underneath the patient’s skin in a minimally invasive, hospital-based procedure and record ECG data similar to cardiac event monitors but are intended for monitoring up to 3 years.
If the diagnosis is not definitive following the first monitoring period, physicians may prescribe a repeat traditional, 24-to-48-hour Holter monitoring test or, alternatively, event monitoring services, MCT, or implantable loop recorders. Physicians use frequency and acuity of symptoms to determine which monitoring device to prescribe. Some physicians own their own ambulatory cardiac monitoring devices and provide ambulatory monitoring services directly to their patients, while others outsource these services to third-party providers, including IDTFs.
Opportunities in Monitoring for Undiagnosed Arrhythmias
A substantial portion of patients with clinically actionable arrhythmias, including atrial fibrillation, remain undiagnosed due to the intermittent and often asymptomatic nature of these conditions. We estimate that in 2025 approximately 27 million individuals in the United States may be at elevated risk for undiagnosed arrhythmias. Undiagnosed and untreated arrhythmias may result in significantly higher healthcare resource utilization and cost, potentially avoidable serious medical events, and poorer outcomes. Real-world evidence across Medicare and commercially-insured populations indicates that patients with arrhythmias experience higher rates of emergency department visits, inpatient hospitalizations, readmissions, and overall healthcare expenditures compared to similar patients without arrhythmias, particularly among those with comorbid conditions such as type 2 diabetes ("T2D"), chronic obstructive pulmonary disease ("COPD"), chronic kidney disease, and others.
Clinical studies and guideline updates support the use of extended ambulatory monitoring to improve detection of arrhythmias compared to short-duration monitoring modalities. Evidence from randomized trials and real-world claims analyses suggests that earlier identification of arrhythmias using long-term continuous monitoring is associated with fewer acute care events and a shift toward more appropriate outpatient management over time. We believe iRhythm is uniquely positioned to address this opportunity through our scalable service model, long-term continuous monitoring capabilities, extensive clinical evidence base, and proprietary artificial intelligence. Our services are increasingly utilized by innovative, value-based and risk-bearing care organizations seeking to proactively identify arrhythmias within defined patient populations, particularly those with elevated clinical risk.
Furthermore, peer-reviewed real-world evidence demonstrates that proactive ACM generates meaningful healthcare cost savings, particularly in high-risk populations. Studies published in 2024 and 2025 examining patients with T2D and COPD found that patients who developed arrhythmias incurred 1.6–1.8x higher annual costs of care — up to $46,484 versus $30,802 for patients with both T2D and COPD — driven by hospitalization and emergency department visit rates more than two times higher than matched controls. Importantly, T2D patients monitored with ambulatory ECG devices experienced 70% fewer hospitalizations, 44% fewer 30-day readmissions, and nearly 50% fewer emergency department visits compared to unmonitored patients, while monitored COPD patients with arrhythmia saw approximately 30% lower hospitalization incidence and related costs, demonstrating that earlier detection meaningfully bends the cost curve in these patient cohorts.
However, not all monitoring modalities deliver equivalent value. The Cardiac Ambulatory Monitor EvaLuation of Outcomes and Time to Events (“CAMELOT”) study of 287,789 Medicare beneficiaries and the Assessment of Variation in AmbuLatory Cardiac MONitoring (“AVALON”) study of 428,707 commercially insured patients found that LTCM with Zio achieved the highest diagnostic yield, the shortest time to diagnosis, and the lowest total healthcare expenditures, while Holter monitors were 50% less likely, event monitors 42% less likely to detect a specified arrhythmia, and LTCM competing devices 1.4x to 4.3x more likely to require costly retesting. CAMELOT further demonstrated that long-term continuous monitoring was associated with 180 fewer emergency department visits, 80 fewer inpatient hospitalizations, and 920 fewer outpatient visits per 1,000 patients compared to Holter. As the market leader delivering more than 70% of LTCM services in the United States as of 2025, we believe our Zio platform is uniquely positioned to deliver this value as payers increasingly prioritize diagnostic accuracy and first-test resolution to reduce total cost of care.
Over time, we intend to support targeted, evidence-based monitoring strategies that leverage data-driven risk stratification and integrate seamlessly into existing clinical workflows. These efforts are designed to expand access to care, improve clinical outcomes, and inform future growth opportunities, while remaining aligned with our disciplined approach to investment, commercialization, and regulatory compliance.
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Our Products and Services
Our iRhythm ACM Systems deliver a proprietary, patient-friendly design that enables between 98%-99% patient compliance with minimal ECG data noise or artifact, and the iRhythm Services thereby potentially deliver high clinical accuracy to enable physicians diagnosing arrhythmias and reducing the cost of care for healthcare systems by avoiding costly downstream adverse events. We currently offer three iRhythm ACM System options — the Zio monitor System, the Zio XT System, and the Zio AT System.
ACM monitors are designed to provide high-quality, accurate data with patient compliance for up to 14 days of wear time.1-6
MKT1915.01. 1. Data on file. iRhythm Technologies; 2022-2023. 2. Data on file. iRhythm Technologies; 2019. 3. Data on file. iRhythm Technologies; 2022. 4. Zio XT Clinical Reference Manual, iRhythm Technologies. 5. Zio AT Clinical Reference Manual. iRhythm Technologies. 6. Zio monitor Instructions for Use. iRhythm Technologies. *Continuous, uninterrupted refers to the recording of ECG data. Zio AT Gateway transmissions may be impacted by a variety of factors. See Product Labeling for more information. †Zio AT is contraindicated for critical care patients. ‡Do not use Zio AT for patients with symptomatic episodes where variations in cardiac performance could result in immediate danger to the patient or when real-time or in-patient monitoring should be prescribed. Refer to the Zio AT labeling and Clinical Reference Manual for full contraindications.
The Zio Monitoring Solutions
The Zio monitor System is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (“Zio monitor”) that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software (“ZEUS”), which supports the capture and analysis of ECG data recorded by the Zio monitor at the end of the wear period, including specific arrhythmia events detected by ZEUS. The Zio XT System is the previous generation of the Zio monitor System and is a prescription-only, remote ECG monitoring system that consists of a patch ECG monitor (“Zio XT”) that records the electric signal from the heart continuously for up to 14 days and ZEUS, which supports the capture and analysis of ECG data recorded by the Zio XT at the end of the wear period, including specific arrhythmia events detected by ZEUS.
Zio monitor is 72% smaller, 62% lighter, and 23% thinner than Zio XT, attributes which have contributed to a positive impact on patient experience, including improved patient satisfaction, and associated improvement in device wear times. Furthermore, Zio monitor incorporates a breathable adhesive construct, which enhances the patient experience by removing moisture otherwise captured next to the patient’s skin, as well as Bluetooth communication capabilities and improved processing efficiency.
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Zio monitor Device and Zio XT Device
The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of a patch-based ECG monitor (“Zio AT”) that records the electric signal from the heart continuously for up to 14 days and ZEUS, but which also incorporates the Zio AT wireless gateway that provides connectivity between Zio AT and ZEUS during the patient wear period. The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT application on the patient and collects and transmits data from the Zio AT to the cloud via a long-term evolution (“LTE”) cellular protocol.
Zio AT and Wireless Gateway
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in Item 1 of Part I of this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.”
Overview
We are a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology.
Each iRhythm ACM System combines a wire-free, patch-based, 14-day wearable biosensor (FDA-cleared, CE-marked and/or Japan PMDA-approved, as applicable) that continuously records ECG data with a proprietary, cloud-based data analytic software (FDA-cleared, CE-marked, and Japan PMDA-approved) to help physicians monitor patients and diagnose arrhythmias.
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ACM services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our iRhythm Services using our iRhythm ACM System. Since receiving FDA clearance, we have provided the iRhythm Services via more than 13 million patient reports and have collected over 3 billion hours of curated heartbeat data.
We receive revenue for our iRhythm Services primarily from third-party payors, which include contracted third-party payors and CMS. The remainder of our revenue comes from healthcare institutions, which are typically hospitals or private physician practices, who purchase the iRhythm Services from us directly. We rely on third-party billing partners to submit patient claims and collect from commercial payors, certain government agencies, and patients.
The following are iRhythm Services shown as a percentage of revenue:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Contracted third-party payors | 51% | 52% | 52% | 52% | ||||||||||||||||||
Centers for Medicare & Medicaid Services | 26% | 24% | 26% | 24% | ||||||||||||||||||
| Healthcare institutions | 17% | 17% | 16% | 17% | ||||||||||||||||||
| Non-contracted third-party payors | 6% | 7% | 6% | 7% | ||||||||||||||||||
Cybersecurity Incident
In June 2026, a threat actor improperly obtained certain sensitive information of ours maintained on certain third-party-hosted business applications (the “Cybersecurity Incident”). We promptly activated our cybersecurity response plan and launched an investigation with the support of external advisors and cybersecurity experts to assess and contain the threat, and, as of the date of the filing of this Quarterly Report on Form 10-Q, we have not identified evidence of ongoing unauthorized access to our systems.
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During the second quarter of 2026, we incurred losses related to the unauthorized activity, including investigation and remediation costs. We maintain cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cybersecurity Incident. While we expect to incur further expenses related to the Cybersecurity Incident, inclusive of customer and patient notifications and identity protection, we plan to seek reimbursement of some of these losses by submitting claims to our insurers. There can be no assurance that such coverage will be sufficient to cover all losses we may incur, and the exact timing and amount of any such reimbursements is not known at this time. As of the date of the filing of this Quarterly Report on Form 10-Q, we believe that the Cybersecurity Incident is not reasonably likely to have a material impact on our financial condition or results of operations. For more information about risks relating to the impact of the Cybersecurity Incident, see Item 1A. “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.
We have also been named as a defendant in several lawsuits related to the Cybersecurity Incident (Refer to Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).
Key Business Metric
Non-GAAP Financial Measure
Adjusted EBITDA is a key measure we use to assess our financial performance and it is also used for internal planning and forecasting purposes. We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operational performance across our historical financial periods. In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance.
We define Adjusted EBITDA for a particular period as net income (loss) before income tax provision, depreciation and amortization, interest expense, and interest income and as further adjusted for stock-based compensation expense, changes in fair value of strategic investments, impairment charges, business transformation costs, certain intellectual property litigation expenses, certain corporate litigation settlements (net of expected insurance recoveries), costs related to the Cybersecurity Incident (net of expected insurance recoveries), and loss on extinguishment of debt. Business transformation costs include costs associated with professional services, employee termination and relocation, third-party merger and acquisition, integration, and other costs to augment and restructure the organization, inclusive of both outsourced and offshore resources.
Adjusted EBITDA is a non-GAAP financial measure and is presented for supplemental informational purposes only and should not be considered as an alternative or substitute to financial information presented in accordance with GAAP. This measure has certain limitations in that it does not include the impact of certain expenses that are reflected in our unaudited condensed consolidated statements of operations that are necessary to run our business. We may identify additional charges and gains to exclude from Adjusted EBITDA that are significant in nature which may impact period to period comparability and do not represent the ongoing results of the business. Other companies, including other companies in our industry, may not use this measure or may calculate this measure differently than as presented in this Quarterly Report on Form 10-Q, limiting its usefulness as a comparative measure.
The following table presents a reconciliation of Net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA (in thousands):
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| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Net loss1 | $ | (381) | $ | (14,218) | $ | (14,314) | $ | (44,918) | ||||||||||||||
| Interest expense | 3,294 | 3,278 | 6,584 | 6,551 | ||||||||||||||||||
| Interest income | (4,776) | (5,321) | (9,655) | (10,240) | ||||||||||||||||||
| Changes in fair value of strategic investments | (822) | (2,152) | (2,269) | (2,995) | ||||||||||||||||||
| Income tax provision (benefit) | — | (183) | 500 | 482 | ||||||||||||||||||
| Depreciation and amortization | 5,222 | 5,105 | 10,264 | 10,315 | ||||||||||||||||||
| Stock-based compensation | 20,039 | 22,827 | 41,530 | 46,171 | ||||||||||||||||||
| Impairment charges | — | 2,479 | — | 2,479 | ||||||||||||||||||
| Business transformation costs | 1,158 | 925 | 1,504 | 1,428 | ||||||||||||||||||
| Intellectual property litigation expenses | 4,928 | 2,956 | 8,617 | 3,788 | ||||||||||||||||||
| Litigation settlements | 13,950 | — | 13,950 | — | ||||||||||||||||||
| Cybersecurity incident | 686 | — | 686 | — | ||||||||||||||||||
| Adjusted EBITDA | $ | 43,298 | $ | 15,696 | $ | 57,397 | $ | 13,061 | ||||||||||||||
1 Net loss for the three and six months ended June 30, 2026 includes $0.3 million and $0.6 million of acquired in-process research and development expense, and $1.7 million and $2.0 million for the three and six months ended June 30, 2025, respectively.
Macroeconomic Factors
Our future results of operations and liquidity could be materially adversely affected by macroeconomic factors contributing to delays in payments of outstanding receivables, supply chain disruptions or shortages, commodity price increases, tariffs on imports, and inflationary pressure, uncertain or reduced demand, a tightening labor market, and the impact of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers.
The current macroeconomic environment is impacting our customers, both financially and operationally. Hospitals are experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care. Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs, interest rate volatility make access to credit more expensive, and unrealized losses decrease available cash reserves. As a consequence of the financial pressures and decreased profitability, some hospitals have indicated that they are lowering their capital investment plans and tightening their operational budgets. Private and government payors around the world are increasingly challenging the utilization and overall cost charged for medical products and services. The containment of healthcare costs has become a priority of governments on a global basis. Private and government payors may decline to cover and reimburse for claims or portions of claims. Climate-related events, including the increasing frequency of extreme weather events, natural disasters, or other catastrophic events may cause damage or disruption to our domestic or global customers or our operations, which could have an adverse effect on our business, operating results, and financial condition.
We have adapted our iRhythm Services to meet the immediate needs of physicians, customers, and patients and significantly increased the utilization of our home enrollment service, which allows patients to receive and wear the single-use Zio patch without going to a healthcare facility.
Our hybrid work arrangements and decision to pursue a sublease have previously resulted in an impairment of our right-of-use asset and related leasehold improvements and furniture and fixtures. As we continue to evaluate our global real estate footprint, we may incur additional impairment charges related to real property lease agreements.
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Revenue, net
The majority of our revenue is derived from provision of our iRhythm Services to customers in the United States. We earn revenue from the provision of our iRhythm Services primarily from contracted third-party payors, CMS, and healthcare institutions. A small percentage of our revenue is from non-contracted third-party payors.
We recognize revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which considers the amount submitted for payment and the amount received. These estimates require significant judgment by management. In determining the amount to accrue for the iRhythm Services (including a delivered report), we consider factors such as claim payment history from both payors and patient, available reimbursement, including whether there is a contract between us and the payor or healthcare institution and historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments.
We have historically experienced reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this is the result of physicians and patients taking vacations and patients electing to delay our monitoring services during the summer months or holidays. Revenue may be impacted by the outcome of adjudications with contracted and non-contracted payors, as well as changes in CMS reimbursement rates that are updated annually.
Cost of Revenue
Cost of revenue includes direct labor, material costs, tariffs, equipment and infrastructure expenses, amortization of internal-use software, allocated overhead, royalties, and shipping and handling. Direct labor includes payroll-related costs including stock-based compensation involved in manufacturing, clinical data curation, and customer service. Material costs include both the disposable materials costs of the Zio patches and amortization of the PCBAs. Each Zio XT and Zio monitor includes a PCBA, and each Zio AT includes a PCBA and gateway board, the cost of which is amortized over the expected useful life of the board. We expect cost of revenue to increase in absolute dollars as our revenue increases due to increased direct labor, direct materials, and variable spending, as well as amortization of internal-use software, partially offset by economies of scale in relation to fixed costs such as overhead and facilities costs.
Our gross margin has been and will continue to be affected by a variety of factors, including increased contracting with third-party payors and institutional providers. We have in the past been able to increase our pricing as third-party payors become more familiar with the benefits of the iRhythm Services and move to contracted pricing arrangements. We expect increases to the cost of revenues due to increases to materials and electronics components pricing, labor rates, shipping rates, amortization of capitalized internal-use software, along with increases in the general level of inflation and tariffs on imports (which may complicate and increase costs associated with our supply chain). We expect to partially offset these increases by reduced costs from obtaining volume purchase discounts for our material costs, implementing scan-time algorithms and process improvements,
automating manufacturing assembly and packaging, and through software-driven and other workflow enhancements to reduce labor costs. We experienced an improvement in our gross margin from 2023 to 2025, and continue to focus on improving annual gross margins in the future, while navigating through the macroeconomic and supply chain headwinds discussed above that we expect to face.
Research and Development Expenses
We expense research and development costs as they are incurred. Research and development expenses include payroll-related costs, including stock-based compensation, consulting services, clinical studies, laboratory supplies, milestone payments and allocated facility overhead costs. We expect our research and development costs to increase in absolute dollars as we hire additional personnel to develop new product and service offerings, product enhancements, and clinical evidence.
Acquired In-Process Research and Development Expenses
Our in-process research and development (“IPR&D”) acquired in an asset acquisition for use in research and development activities with no alternative future use is expensed in the unaudited condensed consolidated statements of operations.
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Selling, General and Administrative Expenses
Our sales and marketing expenses consist of payroll-related costs, including stock-based compensation, sales commissions, travel expenses, consulting, public relations costs, direct marketing, tradeshow and promotional expenses, and allocated facility overhead costs.
Our general and administrative expenses consist primarily of payroll-related costs for executive, finance, legal and administrative personnel, including stock-based compensation. Other significant expenses include professional fees for legal and accounting services, consulting fees, recruiting fees, bad debt expense, third-party patient claims processing fees, business transformation, and travel expenses.
Litigation Settlements
Litigation settlements consist of amounts recorded to settle outstanding claims against us, net of expected insurance recoveries.
Impairment Charges
Impairment charges consist of amounts recorded to write down the carrying value of long-lived assets to fair value.
Interest Income
Interest income consists of interest income received on our cash and cash equivalents and marketable securities.
Interest Expense
Interest expense is attributable to borrowings under our 2029 Notes. See Note 8, Debt, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our debt.
Other Income, Net
Other income, net consists primarily of changes in fair value of our strategic loan and equity investments, as well as realized and unrealized foreign currency exchange gains or losses.
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Results of Operations
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) * | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue, net | $ | 224,172 | $ | 186,687 | $ | 37,485 | 20 | % | $ | 423,562 | $ | 345,364 | $ | 78,198 | 23 | % | |||||||||||||||||||||||||||||||
| Cost of revenue | 60,967 | 53,830 | 7,137 | 13 | % | 119,004 | 103,291 | 15,713 | 15 | % | |||||||||||||||||||||||||||||||||||||
| Gross profit | 163,205 | 132,857 | 30,348 | 23 | % | 304,558 | 242,073 | 62,485 | 26 | % | |||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | 19,843 | 21,012 | (1,169) | (6) | % | 41,201 | 42,531 | (1,330) | (3) | % | |||||||||||||||||||||||||||||||||||||
| Acquired in-process research and development | 299 | 1,698 | (1,399) | (82) | % | 595 | 1,994 | (1,399) | (70) | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 131,655 | 126,376 | 5,279 | 4 | % | 267,539 | 246,333 | 21,206 | 9 | % | |||||||||||||||||||||||||||||||||||||
| Litigation settlements | 13,950 | — | 13,950 | N/M | 13,950 | — | 13,950 | N/M | |||||||||||||||||||||||||||||||||||||||
Impairment charges | — | 2,479 | (2,479) | N/M | — | 2,479 | (2,479) | N/M | |||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 165,747 | 151,565 | 14,182 | 9 | % | 323,285 | 293,337 | 29,948 | 10 | % | |||||||||||||||||||||||||||||||||||||
| Loss from operations | (2,542) | (18,708) | 16,166 | (86) | % | (18,727) | (51,264) | 32,537 | (63) | % | |||||||||||||||||||||||||||||||||||||
| Interest and other income, net: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 4,776 | 5,321 | (545) | (10) | % | 9,655 | 10,240 | (585) | (6) | % | |||||||||||||||||||||||||||||||||||||
| Interest expense | (3,294) | (3,278) | (16) | — | % | (6,584) | (6,551) | (33) | 1 | % | |||||||||||||||||||||||||||||||||||||
| Other income, net | 679 | 2,264 | (1,585) | (70) | % | 1,842 | 3,139 | (1,297) | (41) | % | |||||||||||||||||||||||||||||||||||||
| Total interest and other income, net | 2,161 | 4,307 | (2,146) | (50) | % | 4,913 | 6,828 | (1,915) | (28) | % | |||||||||||||||||||||||||||||||||||||
| Loss before income taxes | (381) | (14,401) | 14,020 | (97) | % | (13,814) | (44,436) | 30,622 | (69) | % | |||||||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | — | (183) | 183 | N/M | 500 | 482 | 18 | 4 | % | ||||||||||||||||||||||||||||||||||||||
| Net loss | $ | (381) | $ | (14,218) | $ | 13,837 | (97) | % | $ | (14,314) | $ | (44,918) | $ | 30,604 | (68) | % | |||||||||||||||||||||||||||||||
N/M - Not meaningful
* Certain numbers expressed may not sum due to rounding.
Revenue, net
Revenue, net increased by $37.5 million, or 20%, to $224.2 million during the three months ended June 30, 2026, as compared to $186.7 million during the three months ended June 30, 2025. Revenue, net increased by $78.2 million, or 23%, to $423.6 million during the six months ended June 30, 2026, as compared to $345.4 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase in revenue was primarily attributable to an increase in volume of iRhythm Services resulting from increased demand. In particular, during the three and six months ended June 30, 2026, total revenue volume for both Zio monitor and Zio AT grew, compared to the prior year, resulting from existing and new account growth within our third-party payors, CMS, and healthcare institutions customer groups. We have experienced higher volumes from larger healthcare enterprise accounts which utilize both Zio monitor and Zio AT.
Overall average selling price increased modestly during the three and six months ended June 30, 2026, as compared to the prior year period, driven primarily by Zio monitor volume across our customer base. In the three and six months ended June 30, 2026, we experienced contractual allowance reserve improvements resulting from improved market access, contracting execution, and collection performance. During the three and six months ended June 30, 2025, we recognized higher contractual allowance reserves, resulting from billing disruptions due to the Change Healthcare cybersecurity incident in the first quarter of 2024, as well as higher payor claim denials. Additionally, during the three and six months ended June 30, 2026, we also experienced annual reimbursement increases across certain payor categories, including CMS, as compared to the same periods during 2025.
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Cost of Revenue
Cost of revenue increased by $7.1 million, or 13%, to $61.0 million during the three months ended June 30, 2026, as compared to $53.8 million during the three months ended June 30, 2025. Cost of revenue increased by $15.7 million, or 15%, to $119.0 million during the six months ended June 30, 2026, as compared to $103.3 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase was primarily due to increases in material component costs (inclusive of tariffs), amortization costs related to Zio monitor and Zio AT PCBA, material and PCBA scrap costs, headcount-related costs, and freight costs associated with the increase in volume of iRhythm Services. During the first half of 2026, we experienced lower per unit costs relating to manufacturing efficiencies, primarily relating to Zio monitor.
Research and Development Expenses
Research and development expenses decreased by $1.2 million, or 6%, to $19.8 million during the three months ended June 30, 2026, as compared to $21.0 million during the three months ended June 30, 2025. Research and development expenses decreased by $1.3 million, or 3%, to $41.2 million during the six months ended June 30, 2026, as compared to $42.5 million during the six months ended June 30, 2025. The decrease in research and development expenses for the three and six months ended June 30, 2026 was primarily due to lower headcount-related costs (including stock-based compensation), which support ongoing FDA remediation and sustaining activities, product development consulting, and further development, enhancement, and functionality of our current and future product offerings.
Acquired In-Process Research and Development Expenses
Acquired IPR&D expenses decreased by $1.4 million, or 82%, to $0.3 million during the three months ended June 30, 2026, as compared to $1.7 million during the three months ended June 30, 2025. Acquired IPR&D expenses decreased by $1.4 million, or 70%, to $0.6 million during the six months ended June 30, 2026, as compared to $2.0 million during the six months ended June 30, 2025. During the three and six months ended June 30, 2025, we recognized additional IPR&D expense as a result of recognizing an increase in our contingent consideration liability related to regulatory milestones. See Note 5, Fair Value Measurements, and Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $5.3 million, or 4%, to $131.7 million during the three months ended June 30, 2026, as compared to $126.4 million during the three months ended June 30, 2025. Selling, general and administrative expenses increased by $21.2 million, or 9%, to $267.5 million during the six months ended June 30, 2026, as compared to $246.3 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase in selling, general, and administrative expenses was primarily attributable to increases in marketing and promotional costs, legal and professional fees for litigation matters, provisions for credit losses, and claims processing fees. The increase was offset by lower headcount-related costs (including stock-based compensation). Intellectual property litigation costs relating to our patent litigation with Welch Allyn, Inc. (“Welch Allyn”) and Bardy Diagnostics, Inc. (“BardyDx”), wholly-owned subsidiaries of Baxter International, Inc. (“Baxter”), during the three and six months ended June 30, 2026 were $4.9 million and $8.6 million, respectively, as compared to $3.0 million and $3.8 million for the three and six months ended June 30, 2025, respectively. Business transformation costs for the three and six months ended June 30, 2026 were $1.2 million and $1.5 million, respectively, as compared to $0.9 million and $1.4 million for the three and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2026, we incurred $0.7 million related to the Cybersecurity Incident.
Litigation Settlements
During the three and six months ended June 30, 2026, we recorded a litigation settlement expense, net of expected insurance recoveries, of $14.0 million associated with the settlement of a putative class action lawsuit. See Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Impairment Charges
Impairment charges were nil during the three and six months ended June 30, 2026, as compared to $2.5 million during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system. We do not intend to commercially launch the Zio Watch.
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Interest Income
Interest income decreased by $0.5 million to $4.8 million during the three months ended June 30, 2026, as compared to $5.3 million during the three months ended June 30, 2025. Interest income decreased by $0.6 million to $9.7 million during the six months ended June 30, 2026, as compared to $10.2 million during the six months ended June 30, 2025. The decrease for the three and six months ended June 30, 2026 was primarily attributable to lower interest rates on invested balances, as compared to the same period in 2025, offset by higher average invested balances in 2026.
Interest Expense
Interest expense remained flat during the three and six months ended June 30, 2026, as compared to $3.3 million and $6.6 million during the three and six months ended June 30, 2025, respectively. The interest expense is primarily attributable to the 2029 Notes borrowed in March 2024.
Other Income, Net
Other income, net decreased by $1.6 million to $0.7 million during the three months ended June 30, 2026, as compared to $2.3 million during the three months ended June 30, 2025. Other income, net decreased by $1.3 million to $1.8 million during the six months ended June 30, 2026, as compared to $3.1 million during the six months ended June 30, 2025. The decreases were primarily attributable to the changes in the fair value of our strategic loan investments recognized during the three and six months ended June 30, 2025.
Income Tax Provision (Benefit)
No income tax expense was recognized during the three months ended June 30, 2026, as compared to an income tax benefit of $0.2 million during the three months ended June 30, 2025, representing an increase in the income tax provision of $0.2 million. Income tax provision remained flat for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The income tax provision for each of the three and six-month periods primarily relates to state and foreign taxes.
On July 4, 2025, legislation referred to as the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA makes certain provisions of the Tax Cuts and Jobs Act of 2017 permanent and makes changes to some U.S. corporate tax provisions, many of which have different effective dates. Key corporate tax provisions of the OBBBA include the restoration of 100% bonus depreciation, the introduction of new Section 174A permitting immediate expensing of domestic research and experimental expenditures, modifications to Section 163(j) interest expense limitations, and the expansion of Section 162(m) aggregation requirements. We continue to evaluate the impact of the OBBBA, but do not expect the OBBBA to have a material impact on our effective tax rate.
Liquidity and Capital Resources
Overview
As of June 30, 2026, we had cash and cash equivalents of $246.7 million, marketable securities of $344.6 million, and accounts receivable, net of $84.3 million. We continuously review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the current macroeconomic environment, including inflation, interest rate volatility, and potential instability in the global banking system. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds.
We believe that our current cash, cash equivalents, and marketable securities balances, together with income to be derived from the sales of our iRhythm Services, will be sufficient to meet our liquidity requirements for at least the next 12 months.
On September 3, 2019, we entered into a Development Collaboration Agreement with Verily Life Sciences LLC, an Alphabet company (“VLS”) and Verily Ireland Limited (“VIL” and together with VLS, “Verily”) (such Development Collaboration Agreement, as amended by Amendment No. 1 dated April 26, 2021 and Amendment No. 2 dated January 24, 2022, the “Development Agreement”). The Development Agreement involved joint development and production of intellectual property between us and Verily.
In August 2025, we and Verily mutually terminated the Development Agreement, subject to our continued rights to a license to certain intellectual property associated with a mobile app developed under the Development Agreement. During the year ended 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system.
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On August 30, 2024, we entered into a Technology License Agreement (as amended, the “License Agreement”) with BioIS, pursuant to which (i) we will receive a perpetual fully paid up license to certain of BioIS’ intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including (x) an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services, and (y) a limited, non-exclusive license to develop and commercialize products and services for use in unattended, home-based diagnostic testing and assessment of central and obstructive sleep apnea, and (ii) iRhythm and BioIS agreed to negotiate in good faith a supply agreement for pulse oximetry hardware.
Under the terms of the License Agreement, during the third quarter of 2024 we paid BioIS an upfront fee of $15.0 million in cash consideration. In connection with the License Agreement, we also purchased an aggregate of $40.0 million of convertible promissory notes from BioIS of which $20.0 million of the convertible promissory notes (“Milestone Notes”) were designated for satisfaction of our regulatory milestone payment obligations. The Milestone Notes, plus accrued and unpaid interest, if any, will be cancelled, if outstanding, upon the achievement of the regulatory milestones up through December 31, 2026. In June 2025, BioIS achieved the first of two regulatory milestones. As of June 30, 2026, we are in the process of completing all required contractual conditions in order to cancel $10.0 million in Milestone Notes plus accrued and unpaid interest.
On June 3, 2026, we entered into a binding Stipulation and Agreement of Settlement (the “Securities Settlement Agreement”) to fully resolve the putative class action securities litigation. The Securities Settlement Agreement provides for a settlement payment of $45.0 million, inclusive of lead plaintiff’s attorneys' fees and litigation expenses in exchange for the complete dismissal with prejudice of the action and a release of all claims against the named defendants in connection with the action, without any admission of fault, liability, wrongdoing or damages by the defendants. During the three and six months ended June 30, 2026, we recorded a litigation settlement liability of $45.0 million within accrued liabilities on our unaudited condensed consolidated balance sheet. We are entitled to recover approximately $40.0 million related to litigation legal fee defense costs as well as the settlement liability under applicable insurance policies, which has been recorded within prepaid expenses and other current assets on our unaudited condensed consolidated balance sheet. As of June 30, 2026, we incurred approximately $9.0 million in litigation legal fee defense costs expected to be recovered through insurance, with a remaining amount of approximately $31.0 million in settlement costs expected to be recovered through insurance, of which we have received $4.1 million in insurance recoveries. As a result, during the three and six months ended June 30, 2026, we recorded litigation settlement expense, net of expected insurance recoveries, of approximately $14.0 million in the accompanying unaudited condensed consolidated statement of operations.
On July 31, 2026, we entered into a settlement and license agreement (the “Baxter Settlement Agreement”) with Baxter, Welch Allyn, Inc. and BardyDx (collectively, the "Baxter Parties") to resolve all outstanding patent litigation among the parties. Under the Baxter Settlement Agreement, we paid the Baxter Parties $50.0 million on July 31, 2026. The Baxter Settlement Agreement also provides each party and its affiliates with a worldwide, royalty-free, non-exclusive, fully paid-up license under the patents asserted in the litigation and other related patents and patent applications, in each case, to exploit products and services comprising or involving certain sensors used for cardiac monitoring. Except for the $50.0 million settlement payment, the Baxter Settlement Agreement does not require either party to pay royalties or other compensation. The Baxter Settlement Agreement also includes mutual covenants not to sue for six years from the effective date of the Baxter Settlement Agreement with respect to the exploitation of licensed products and services and mutual agreements not to challenge the licensed patents and patent applications, unless such licensed patents are enforced against the applicable party or its affiliates.
On August 5, 2026, we entered into a definitive agreement to acquire Vital Connect, Inc. ("VitalConnect"), a wearable biosensor technology and ambulatory cardiac monitoring company. Consideration for the acquisition totals $287.5 million, consisting of $237.5 million in cash and $50.0 million in our common stock, subject to customary adjustments. The definitive agreement also provides customary termination rights to each of the parties and provides that we will pay a reverse termination fee of $9.0 million to VitalConnect if the definitive agreement is terminated under specified circumstances related to the failure to obtain required antitrust approvals. In addition, we will provide VitalConnect with interim financing to fund its normal course of operations and certain specified expenses as the parties work towards closing, with an initial funding of $10.0 million and additional increments thereafter, up to an aggregate maximum amount of $30.0 million. The transaction is subject to regulatory approval and is expected to close by the end of 2026. Because the acquisition had not closed as of the issuance date of the accompanying condensed consolidated financial statements, no amounts have been recognized related to the transaction.
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| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Net cash provided by operating activities | $ | 24,907 | $ | 19,768 | |||||||
Net cash used in investing activities | (18,423) | (139,054) | |||||||||
Net cash provided by financing activities | 4,229 | 8,823 | |||||||||
Operating Activities
During the six months ended June 30, 2026, cash provided by operating activities was $24.9 million, as compared to cash provided by operating activities of $19.8 million during the six months ended June 30, 2025. Cash provided by operating activities increased by $5.1 million, primarily attributable to reductions in our net loss driven by our revenue growth and timing of payments associated with our accounts payable and accrued liabilities, Offsetting these increases in cash provided from operating activities were increases in our prepaid and other current assets, as well as other long-term assets.
Investing Activities
During the six months ended June 30, 2026, cash used in investing activities was $18.4 million, a decrease of $120.6 million, as compared to cash used in investing activities of $139.1 million during the six months ended June 30, 2025. The decrease in cash used in investing activities was primarily attributable to a net change in marketable securities activity of $123.3 million, consisting of an increase in the maturities of marketable securities of $208.3 million partially offset by an increase in purchases of marketable securities of $85.0 million. This decrease was partially offset by increases in purchases of strategic investments and of property and equipment of $2.0 million and $0.7 million, respectively, during the six months ended June 30, 2026.
Financing Activities
During the six months ended June 30, 2026, cash provided by financing activities was $4.2 million, a decrease of $4.6 million as compared to $8.8 million during the six months ended June 30, 2025. The decrease was related to lower proceeds from the issuance of common stock primarily from stock option exercises in connection with our employee equity incentive plan.
1.50% Senior Convertible Notes due 2029
On March 7, 2024, we completed an offering of $661.3 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 1.50% and a maturity date of September 1, 2029 (the “2029 Notes”). The proceeds include the full exercise of the option granted by us to the initial purchasers of the 2029 Notes to purchase up to an additional $86.3 million aggregate principal amount of notes. Interest on the 2029 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024. The net proceeds from the offering, after deducting initial purchasers’ discounts and estimated costs directly related to the offering, were $643.8 million. The initial conversion rate of the 2029 Notes is 6.7927 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $147.22 per share, subject to adjustments. The 2029 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion.
We used approximately $72.4 million of the net proceeds from the offering to pay the cost of the 2029 Capped Calls, as described below. In addition, we used approximately $80.2 million of the net proceeds from the offering for the repayment in full of the indebtedness outstanding from the Initial Tranche of the Braidwell Term Loan Facility (as each such term is defined below). We also used approximately $25.0 million of the net proceeds from the offering to repurchase 229,252 shares of our common stock at a purchase price of $109.05 per share in privately negotiated transactions effected through one of the initial purchasers or its affiliate. These repurchases could increase (or reduce the size of any decrease in) the market price of our common stock, and could result in a higher effective conversion price for the 2029 Notes. We intend to use the remainder of the net proceeds from the offering for general corporate purposes.
No principal payments are due on the 2029 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2029 Notes includes customary terms and covenants, including certain events of default after which the 2029 Notes may be due and payable immediately.
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On January 12, 2026, we implemented the Holding Company Transaction. The Holding Company Transaction constituted a Merger Event as defined under the Indenture. The Holding Company Transaction did not constitute a Fundamental Change or a Make-Whole Fundamental Change as defined under the Indenture. As a result of the Holding Company Transaction, holders of the 2029 Notes had the right to exchange their 2029 Notes at any time up through March 4, 2026, the 35th trading day following the effective date of the Holding Company Transaction. During the three and six months ended June 30, 2026, holders exchanged $3,000 principal amount of their 2029 Notes, which was settled in cash at our discretion.
On January 12, 2026, in connection with the Holding Company Transaction, we entered into a supplemental indenture to the Indenture (the “First Supplemental Indenture”) in order to (a) provide that (i) the right to convert each $1,000 principal amount of 2029 Notes into shares of iRhythm Technologies common stock was changed to a right to convert such principal amount of 2029 Notes into shares of our common stock; (ii) iRhythm Technologies shall continue to have the right to determine the form of consideration to be paid or delivered, as the case may be, upon conversion of the 2029 Notes; (iii) any amount payable in cash upon conversion of the 2029 Notes in accordance with the Indenture shall continue to be payable in cash; (iv) any shares of common stock of iRhythm Technologies that iRhythm Technologies would have been required to deliver upon conversion shall instead be deliverable in shares of our common stock; and (v) the Daily VWAP (as defined in the Indenture) shall be calculated based on the value of a share of our common stock; and (b) provide for the full and unconditional guarantee by us of the obligations of iRhythm Technologies under the 2029 Notes and the Indenture.
In connection with the offering of the 2029 Notes, we entered into the privately negotiated capped call transactions (the “2029 Capped Calls”) with certain financial institutions. The 2029 Capped Calls will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes, the number of shares of our common stock that will initially underlie the 2029 Notes. The 2029 Capped Calls are expected generally to reduce potential dilution to our common stock upon conversion of the 2029 Notes and/or offset any cash payments that we could be required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap. The 2029 Capped Calls have an initial cap price of $218.10 per share, subject to adjustments, which represents a premium of 100% over the closing price of our common stock of $109.05 per share on The Nasdaq Global Select Market on March 4, 2024. We completed the purchase of the 2029 Capped Calls on March 7, 2024, for the amount of $72.4 million.
Contractual Obligations
Our contractual obligations as of December 31, 2025, are presented in our Annual Report on Form 10-K filed with the SEC on February 19, 2026 (the "Annual Report"). There were no significant changes to our lease obligations during the six months ended June 30, 2026. As of June 30, 2026, our purchase commitments totaled $106.1 million, primarily related to inventory and revenue cycle service fees and expected to be due within a year. See Note 8, Debt, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for changes in our debt obligations during the six months ended June 30, 2026.
Guarantor Information
In connection with the Holding Company Transaction, on January 12, 2026, we, as guarantor, iRhythm Technologies, and U.S. Bank Trust Company, National Association, entered into the First Supplemental Indenture. As of June 30, 2026, there was $661.2 million in aggregate principal amount of issued and outstanding 1.50% Convertible Senior Notes due 2029 of iRhythm Technologies, our wholly owned subsidiary, that are fully and unconditionally guaranteed by us. Accordingly, pursuant to Rule 3-10 of Regulation S-X, separate consolidated financial statements of iRhythm Technologies, Inc. have not been presented. As permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded summarized financial information for iRhythm Technologies because the assets, liabilities and results of operations of iRhythm Technologies are not materially different than the corresponding amounts in our consolidated financial statements.
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Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Annual Report. Updates to our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The critical accounting estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Annual Report. There were no material changes to our critical accounting estimates during the six months ended June 30, 2026.
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Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-08-10 | Blackford Quentin S. | President and CEO | Sell | -26,859 | $124.65 | -$3,348,012 |
| 2026-08-10 | Turakhia Minang | CHIEF MED/SCI OFCR EVP ADVTECH | Sell | -7,093 | $124.65 | -$884,151 |
| 2026-08-10 | Shrishrimal Sumi | EVP, Chief Risk Officer | Sell | -5,372 | $124.65 | -$669,641 |
| 2026-08-10 | Patterson Chad | CHIEF COMM & PRODUCT OFFICER | Sell | -7,093 | $124.65 | -$884,170 |
| 2026-08-10 | Murphy Patrick Michael | CBO and CLO | Sell | -7,093 | $124.65 | -$884,156 |
| 2026-08-03 | Patterson Chad | CHIEF COMM & PRODUCT OFFICER | Sell | -2,712 | $122.12 | -$331,192 |
| 2026-08-03 | Rodda Julianne | EVP, CHIEF PEOPLE OFFICER | Sell | -2,112 | $122.12 | -$257,919 |
| 2026-08-03 | Smith Mervin | EVP Strategic Business Ops | Sell | -617 | $122.12 | -$75,349 |
| 2026-07-02 | Freeman Sean Clinton | EVP, Strategy & Corp Devt | Sell | -918 | $124.71 | -$114,484 |
| 2026-07-02 | Turakhia Minang | CHIEF MED/SCI OFCR EVP ADVTECH | Sell | -1,423 | $124.71 | -$177,462 |
| 2026-06-02 | Rosenbaum Marc Wade | Chief Accounting Officer | Sell | -729 | $108.19 | -$78,870 |
| 2026-06-02 | Shrishrimal Sumi | EVP, Chief Risk Officer | Sell | -1,716 | $108.19 | -$185,652 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-29 10-Q expected by 2026-11-06 (in 74 days)
- ~2027-02-18 10-K expected by 2027-02-20 (in 186 days)
- ~2027-04-29 10-Q expected by 2027-05-07 (in 256 days)
- ~2027-08-05 10-Q expected by 2027-08-13 (in 354 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-13 8-K Officer/Director Change
- 2026-08-06 8-K Material Agreement Entered; Unregistered Equity Sale; Financial Statements and Exhibits
- 2026-08-06 8-K Material Agreement Entered; Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-08-06 10-Q Quarterly Report
- 2026-06-15 8-K Cybersecurity Incident
- 2026-05-28 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2026-05-27 S-8 Employee Benefit Plan Registration
- 2026-04-30 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-30 10-Q Quarterly Report
- 2026-04-17 DEF 14A Proxy Statement
- 2026-04-06 PRE 14A Preliminary Proxy Statement
- 2026-04-01 8-K Changes in Auditor; Financial Statements and Exhibits
- 2026-03-12 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-19 10-K Annual Report
- 2026-02-19 8-K Earnings Release; Financial Statements and Exhibits