iRhythm Holdings Q2 FY26 earnings call IRTC

iRhythm announced the acquisition of Vital Connect, a move expected to significantly expand its cardiac monitoring capabilities. Vital Connect brings a complementary platform supporting four cardiac monitoring modalities, including mobile cardiac telemetry (MCT), event monitoring, long-term continuous monitoring, and short-term Holter. The technology is also FDA-cleared for continuous patient monitoring in hospitals, expanding iRhythm's reach beyond ambulatory care. This acquisition is anticipated to strengthen iRhythm's long-term growth profile, with Vital Connect currently at an approximately $65 million annual revenue run rate, and contribute positively to revenue growth starting in 2027.

The acquisition of Vital Connect is central to iRhythm's multi-product strategy for the MCT market, which is estimated to be a $1 billion market. Vital Connect's platform addresses the remaining 50% of the MCT market that Zio AT could not serve, offering features like 30-day monitoring, live-looking capabilities, and 4-in-1 device functionality. While the company remains committed to Zio MCT and aims for its clearance in H1 2027, the immediate focus post-acquisition will be on integrating Vital Connect's products into iRhythm's commercial force to capitalize on its broader market access and advanced features.

iRhythm is actively pursuing an upstream strategy to reach patients earlier in their care journey, particularly the 27 million people at risk for arrhythmias in the U.S. who often first engage with primary care. This includes commercial agreements with Luum for predictive identification workflows and a partnership with Desert Oasis Healthcare using AI-driven analytics. The company launched direct-to-patient initiatives through the patient point network to increase awareness and streamline connections between primary care and cardiology, with early pilot programs showing over 85% accuracy in identifying clinically relevant arrhythmias.

Technology integration is a key enabler of iRhythm's growth, with approximately 60% of volume from EHR-integrated accounts and nearly 80 of the top 100 customers integrated. This reduces friction and improves efficiency in provider workflows. Internationally, iRhythm is building momentum in the U.K. with the NHS, deepening relationships in the Netherlands, and benefiting from a higher reimbursement rate in Japan effective June 1. These efforts are supported by clinical evidence generation and disciplined commercialization.

iRhythm achieved FDA clearance for its third-generation algorithm, which is expected to launch in H1 2027 and significantly improve efficiency and reduce costs. The company continues to work with the FDA on its warning letter, having updated the agency on remediation activities and a third-party audit. Additionally, iRhythm settled outstanding litigation with Baxter and its subsidiaries for a payment of $50 million, resolving the matter and allowing for greater focus on strategic initiatives.

A cybersecurity incident identified on June 8 was contained, with the root cause identified and no material impact to products, patient care, business operations, or financial results. The company also continues to explore the sleep apnea market, which represents a large and underpenetrated opportunity with approximately 40 million U.S. patients. Pilot programs are underway to refine strategy and streamline fragmented workflows, with encouraging potential for future growth.