5 Interesting Tidbits In iRhythm??? $86M IPO Registration

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iRhythm Zio XT patch

Medical device company iRhythm Technologies last week filed for an $86 million initial public offering. The San Francisco-based maker of a wearable heart monitor called the Zio expects to use the cash to expand the device’s clinical reach.

The FDA-cleared device is worn as a patch and continuously logs heartbeat data for 14 days to look for irregular heart rhythm. Combined with a cloud-based data platform, the device makes up one-half of an overall Zio service that enables physicians to monitor patients and diagnose arrhythmias.

It is meant to be a less cumbersome alternative to the Holter monitor that doctors prescribe to patients they suspect may have atrial fibrillation for a total of 24-48 hours. For instance, you can shower wearing the Zio patch. Not so with the traditional Holter monitor.

With more than 125 million hours of heartbeats logged from 500,000 patients, iRhythm claims it’s assembled the largest repository of ambulatory echocardiogram data in the world.

Here are five interesting tidbits we found in iRhythm’s S-1 registration statement, filed with the U.S. Securities and Exchange Commission:

  1. The company’s got some brand new digs. On Aug. 9, iRhythm signed a commercial lease at $320,000 per month for a little more than 60,000 square feet of office space in San Francisco, its headquarters. (The Zio device is produced in Cypress, California, and the company also has facilities in Illinois and Texas.) And it looks like the iRhythm expects to be in the Bay Area for a while, since the lease itself goes through February 2020.
  2. Its potential market size is $1.4 billion. iRhythm seems confident it can bite off a huge chunk of the U.S. market for ambulatory cardiac monitoring, saying the device and the cloud-based platform are “well-positioned to disrupt an already-established $1.4 billion U.S. ambulatory cardiac monitoring market,” Approximately 4.6 million diagnostic tests are performed every year in the U.S. alone, the filing said.
  3. iRhythm hasn’t tapped the international market yet. “Substantially all of our revenue is currently derived from sales of our Zio service in the United States,” the company said. How big of a worldwide market there might be for iRhythm is still an unknown it acknowledges directly in its S-1. “While reliable third-party data is not available for markets outside the United States,” it says, “we believe there is a substantial additional market opportunity for our Zio Service in the rest of the world.”
  4. Government programs pay a lot of the bills. Roughly 41 percent of revenue comes from “federal government agencies under established reimbursement codes,” while hospitals and clinics make up 38 percent of the company’s total revenue. The rest of the revenue comes from commercial payers, private physician practices and patients using the Zio service.
  5. The 10-year-old iRhythm is losing money. Its accumulated deficit as of June 30 was $116.8 million, and iRhythm believes additional losses are forthcoming. From the S-1: “The company has incurred significant operating losses since its inception and believes that it will continue to incur additional losses and negative cash flows from operations in the future.” Last year, annual sales increased by 66.4 percent to $36.1 million, but iRhythm incurred net losses of $22.8 million.

Photo: Wikimedia Commons

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