iRhythm Technologies, Inc. (NASDAQ: IRTC) Q4 2020 Earnings Call Highlights
CEO Mike Coyle
“…Appropriate diagnosis is paramount to getting the right patients to the right treatment at the right time. iRhythm is a leader in bringing to market a differentiated platform for arrhythmia detection and patient management. We have been a pioneer in the category of long-term continuous ECG monitoring and I truly believe that we are just getting started on the journey to change the way cardiac arrhythmias are diagnosed and managed.
I see the opportunity for significant growth in our core symptomatic arrhythmia detection market, which we estimate to be a $1.8 billion opportunity and less than 20% penetrated. With this much of the market underpenetrated, we believe there is a very long runway for growth ahead.
I’m equally excited about a number of other growth vectors that are rapidly emerging for our technology, including international expansion of our ZIO platform and the development of the asymptomatic atrial fibrillation market. Both of these opportunities have a number of recent positive developments that are encouraging and give me confidence that this can be a material growth driver for the mid and long-term growth.
In my prepared remarks today, I will cover recent highlights and accomplishments, developments related to our strategic initiatives, provide our current view of the market environment as we enter Q1, and provide an update on our reimbursement progress given the recent unexpected dynamics that have risen in the Medicare segment of our business. Doug will go into more details on our financials and then we will open the call for your questions.
Starting with our fourth quarter performance. Once again the iRhythm team continued to rise to the challenges presented by the current environment and maintain high-quality patient care each day, while building a stronger company for the future.
In the short time that I’ve been on board, I’ve been very impressed by the ability of the team to innovate and adapt to ongoing uncertainties. And most importantly, the ability to deliver on the priorities established a year ago for increased market penetration of our ZIO platform, increased operating leverage through continued productivity and automation improvements, and expanding the addressable market into new indications and new geographies.
While the COVID situation generally worsened through the quarter, we saw a positive recovery trends at our accounts and the resiliency of our digital platform led to another quarter of significant growth both sequentially and year-over-year.
In summary, total revenue in the fourth quarter was $78.8 million, reflecting year-over-year growth of 33.3% and sequential growth of 9.5% over the third quarter. As we saw in the third quarter, fourth quarter results were driven by further penetration of ZIO XT in both existing and new accounts, continued ramp of ZIO AT and continued utilization of our home enrollment service in telemedicine settings.
We are very pleased with these results, given the challenges that we made in the market and believe that the results signify the strength of our platform and our capabilities. The start of Q4 we saw a continuation of the strong trends, we saw in the prior quarter.
And while parts of the United States saw a widespread surge of COVID cases in the latter half of the quarter this had a much less significant impact on our business, as our customers, our team, and our business operations demonstrated resiliency and the ability to continue to provide high-quality patient care.
Once again, home enrollment for our ZIO service allowed physicians to deliver care in a flexible manner and partially insulated our business from negative impacts of COVID. And through the first two months of 2021, we are pleased with the overall market environment and the continued demand for the ZIO platform.
Importantly, we are confident in our platform, our near-term — near and midterm strategic priorities, and our ability to continue to grow our share of the market. As we enter 2021, our strategic goals remain driving increased penetration of our ZIO platform, increasing operating leverage while building the infrastructure to support our future growth, and expanding our addressable market into new indications and geographies.
Starting with market penetration with our ZIO platform, we saw significant adoption in 2020 and a continued appreciation by our customers of the meaningful clinical and economic benefits of long-term ECG monitoring and ZIO’s ability to change the standard of care.
The events over the past year brought to the forefront, the unique advantages of our platform relative to traditional Holter monitors. This includes being a single use, patient-friendly device, leading to high compliance rates and of increasing importance, the ability to monitor and administer patient care remotely.
Further, our 40-plus, peer-reviewed publication, demonstrates ZIO’s superior clinical accuracy and higher diagnostic yield. As well as the ability to diagnose patients earlier and more accurately leading to reduced health care resource utilization.
This body of evidence which we continue to build on has driven the adoption of our ZIO platform across the health care ecosystem. And the flexibility of our digital platform allows for continuity of patient care, independent of patient and physician location which has become even more important and valued by our customers throughout COVID.
Turning to ZIO AT, we had another quarter of strong market traction and growth which continues to exceed our expectations. Our single platform solution resonates with our customers and has shown important operational benefits and streamlined workflows, leading to increased patient throughput for usage of both ZIO XT and ZIO AT.
We are focused on generating important clinical evidence to demonstrate the advantage of ZIO AT, relative to traditional MCT technologies. And anticipate releasing data this year to help demonstrate ZIO’s AT clinical differentiation. In 2021, we continue to expect ZIO AT growth will outpace the growth of our overall business.
An important element of the market penetration is the continued innovation of our technology platform. Through these investments, we have continued to not only expand our competitive differentiation, but more importantly, to increase the value of the service we deliver to our customers.
In 2020, we had a significant upgrade and rollout of our information system ZioSuite, and are now live with that offering and 100% of our accounts. Looking forward, we continue to make significant investments across our technology stack and expect to see meaningful updates within 2021.
Our technology stack includes our patient database, with over 750 million hours of curated ECG data. Our FDA-cleared deep learned algorithm and artificial intelligence tools, our patented wearables, and our clinical backend all of which work together seamlessly to deliver a clinically superior and complete service to our customers.
These elements also meaningfully differentiate our platform, enabling us to maintain a strong competitive position. Through continued technology innovation, clinical evidence generation and delivering a high-quality service to our customers, we are well positioned to drive meaningful market share gains, and to establish the new standard of care within ambulatory cardiac monitoring.