Medical technology company iRhythm Technologies (NASDAQ:IRTC) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 30.7% year on year to $192.9 million. The company’s full-year revenue guidance of $737.5 million at the midpoint came in 1.5% above analysts’ estimates. Its non-GAAP loss of $0.06 per share was 78.9% above analysts’ consensus estimates.
Is now the time to buy IRTC? Find out in our full research report (it’s free for active Edge members).
iRhythm (IRTC) Q3 CY2025 Highlights:
- Revenue: $192.9 million vs analyst estimates of $184.4 million (30.7% year-on-year growth, 4.6% beat)
- Adjusted EPS: -$0.06 vs analyst estimates of -$0.28 (78.9% beat)
- Adjusted EBITDA: $21.56 million vs analyst estimates of $17.32 million (11.2% margin, 24.5% beat)
- The company lifted its revenue guidance for the full year to $737.5 million at the midpoint from $725 million, a 1.7% increase
- Operating Margin: -4.4%, up from -34.1% in the same quarter last year
- Market Capitalization: $5.92 billion
StockStory’s Take
iRhythm’s third quarter results were driven by strong commercial momentum across both core Zio Monitor and Zio AT products, with management citing a record number of new account openings and expanded adoption among large healthcare networks. CEO Quentin Blackford pointed to the company's ability to onboard entire customer networks from the outset and growing integration with electronic health records (EHR) systems as key drivers of the volume growth. Management highlighted that 76 of the top 100 customers are now EHR-integrated, which has led to a meaningful increase in monitoring volumes and workflow efficiency for clinicians.
Looking forward, iRhythm’s raised guidance reflects management’s confidence in continued adoption of its cardiac monitoring solutions, underpinned by EHR integration, partnerships in innovative health channels, and the upcoming Zio MCT device. CFO Daniel Wilson emphasized that ongoing investments in artificial intelligence (AI)-driven analytics, operational automation, and adjacent market expansion—particularly in sleep diagnostics—are intended to support long-term growth and margin improvement. Management noted, however, that contributions from new products like Zio MCT will only be factored into expectations once regulatory timelines become clearer.
Key Insights from Management’s Remarks
Management attributed Q3’s outperformance to new account wins, deeper EHR integration, and early results from innovative channel partnerships that target undiagnosed patient populations.
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New account onboarding surge: The company reported a record pace of new customer network conversions, with many bringing both Zio Monitor and Zio AT products online from day one. Management noted that these larger, system-wide conversions are now possible due to improved onboarding capabilities, allowing iRhythm to capture both market share and expand overall market usage simultaneously.
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EHR integration impact: iRhythm’s push to integrate with major electronic health record systems, especially Epic, has resulted in 76 of the top 100 customers now being integrated. These accounts saw an average 25% increase in monitoring volume within six months post-integration, driven by streamlined digital workflows and easier device ordering for clinicians.
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Innovative partner channel growth: The innovative partner channel—targeting large, often asymptomatic, undiagnosed patient cohorts—expanded to 18 active accounts from 12 last quarter. Management described wide variability in sales cycles but emphasized the durability and incremental revenue potential due to the focus on comorbid populations such as type 2 diabetes and chronic kidney disease.
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Clinical evidence drives adoption: New real-world studies reinforced the benefits of proactive, long-term monitoring, showing that earlier arrhythmia detection reduces emergency visits, shortens hospital stays, and lowers total healthcare costs. This clinical data is supporting further adoption among both existing and new healthcare providers.
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Operational efficiency and profitability: Gross margin improvement was credited to increased volume leverage and operational efficiencies, offsetting higher per-unit costs linked to the Zio AT product mix. The company achieved positive free cash flow earlier than expected, with further gains expected from automation and scale as new products launch.
Drivers of Future Performance
Looking ahead, iRhythm’s outlook is anchored by growth in EHR-integrated accounts, innovative partnerships, and new product launches, while managing regulatory and operational headwinds.
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Expanded EHR integration and primary care adoption: Management expects further growth from additional health system integrations and adoption in primary care settings. These factors are projected to drive increased monitoring volumes and broaden the addressable market as clinicians leverage streamlined workflows for earlier detection.
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Innovative channels and AI partnerships: The company is prioritizing expansion through innovative channels that target undiagnosed populations, supported by AI-driven risk stratification tools developed with partners like Lucem Health. While sales cycles vary, management believes these partnerships have the potential to generate durable, incremental revenue as evidence mounts for clinical and cost benefits.
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New product launches and adjacent markets: The anticipated launch of the Zio MCT device and ongoing development in sleep diagnostics represent new growth vectors. Management cautioned that financial contributions from Zio MCT depend on regulatory approval timelines, while early pilots in sleep diagnostics are expected to inform future adjacent market opportunities.
Catalysts in Upcoming Quarters
Going forward, StockStory analysts will monitor (1) the pace of EHR integration and associated volume growth, (2) conversion and scaling of innovative partner channels targeting undiagnosed populations, and (3) progress toward regulatory approval and launch of the Zio MCT device. Developments in adjacent markets such as sleep diagnostics and continued gross margin expansion through automation will also be key indicators of execution.
iRhythm currently trades at $204.99, up from $184.42 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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