Okay, afternoon, everyone. Thanks for being here. My name's Alan Gong. I'm on the Medical Supplies and Devices team with Robbie Marcus. It's my pleasure to introduce the management team of iRhythm here today. We've got CEO, Quentin Blackford, CFO, Brice Bobzien, and also Head... Strategy?
That works.
Dan Wilson. After pre-remarks, we'll be running some Q&A. I'll leave it to you guys.
Sure. Well, thanks, Alan, and good afternoon, everybody. Thanks for having us. We appreciate the opportunity to be here with you guys today. Just a quick reminder as I get started, I will be using forward-looking statements during the course of the presentation. So if you're looking for any further information in and around that, I'd refer you to our annual filings or our quarterly reports for any information that you might be looking for there. Just to share a little bit about who we are at iRhythm. We're a digital healthcare company who's really leveraging the power of artificial intelligence to better predict, detect, and ultimately prevent disease. That is what our goal and our objective is as an organization.
When you think about the company in terms of size, in terms of where we're at today, roughly, you know, approaching nearly $500 million in overall annual revenue. We guided for the year at $487.5 million-$490 million. It's a little bit early at this point to comment on exactly where we finished 2023, but we did wanna put a data point out there. Our unit volumes were very strong in the fourth quarter, coming in just north of 22%, a bit ahead of our own expectations in that guidance range. So feel good about the momentum in the business and the performance in the fourth quarter, and look forward to updating you guys on the full year finish as we get out in the latter part of February.
Today, we hold about 25%-30% of the overall ambulatory cardiac monitoring market. There's about 6.4 million procedures in the U.S. alone. The predominant amount of those are still being done through a traditional Holter monitor. We're trying to disrupt that Holter monitor space with the utilization of a patch-based technology. And like I said, we've got about 25%-30% of the overall market now using a Zio patch in their practices. Interestingly, we're just very early in the very early stages of the international market, where roughly 5 million procedures, ambulatory cardiac monitoring procedures, are taking place on an annual basis. And again, those are predominantly Holter monitor technologies that are decades old and we believe ripe for disruption into the future. We've got a tremendous amount of data and science that stands behind our product.
More than 100 scientific journals and reports have been put out, really standing behind the value of our artificial intelligence, which are powered by meaningful data sets. Over 1.8 billion hours of curated ECG data powers the AI in our platform. That gives us a differentiated advantage relative to our competition. There's nearly 40 peer-reviewed... independent peer-reviewed publications that are out there that stand behind our artificial intelligence and, and the product that we offer. What's interesting is 99% of the time, a physician is gonna agree with the artificial intelligence and the clinical technician oversight that shows up in the report that we hand back to that physician. So incredibly accurate in terms of what we're able to deliver into the marketplace. I think one of the things that's really unique about iRhythm is that we are more than a product.
We view ourselves as truly a platform technology. Yes, we have a wearable biosensor that we just launched the newest version of that, which our Zio Monitor went into the market in September 2023, 72% smaller than the prior product that was in the market, and we're having tremendous success with the early launch of that. I'll talk a little bit about that in a future slide. But what really makes us unique and what really differentiates the company is the artificial intelligence that stands behind the product. Again, powered by more than 1.8 billion hours of curated ECG data, we're on our second generation of an FDA-approved algorithm, and it's a thirty-four-layer deep neural network that works to generate those results that differentiates us.
Again, 99% of the time, a physician's gonna agree with the recommendation that we provide in that report to himself or herself in terms of diagnosing that patient. And then we bring it all together in a very actionable, scalable digital platform. It's very important to us that we make it very easy for our physicians to manage their patients, to understand what's going on with their patients across their entire practice. Same with the patients being able to understand what's going on within their data as well, and we make that available to them. One of the things that's important also is our focus on integrating within our accounts. EHR integration is critical to our success in the long-term future. We're pushing to get as much integration into these accounts as we can possibly find.
We know that when we get integrated, the stickiness with the account increases dramatically, and the growth profile takes off in a meaningful way once we're integrated. So we spend a lot of time focused on integration of accounts. I talk about data, and I talk about the fact that Zio or iRhythm is truly unique and differentiated. We are not just another patch-based technology, and this was validated through the CAMELOT study that was published earlier in 2023. And what the study did was it took a retrospective look at the CMS dataset, nearly 300,000 patients, and looked at that dataset and looked at patients from the first time that they began to be monitored. So had no idea that an arrhythmia was present, was monitored for the first time, and then followed them through.
What they found was they compared long-term cardiac patching, so 14 days worth of monitoring, to event recorders, to extended Holters and to MCT devices. They also looked at it across competitive dynamics, so looking at each of our competitors in and around all of those modalities, and they found that Zio truly was unique in a significant way, meaning we generated the highest diagnostic yield of any competitive product in the marketplace across any modality. We also had the lowest retest rate in terms of the likelihood of the need to retest, and we also generated the lowest healthcare utilization in terms of resources required to manage those patients after the arrhythmia was detected, which is a meaningful differentiator for us in the marketplace.
This is something we've been able to use with payers ever since it's been published, to start to generate some really interesting discussions. And we've seen, in many cases, prior authorizations removed for Zio in particular, before stepping through to say, MCT as an example... The market we serve is significant. Nearly 11 million diagnosed arrhythmias in the U.S. We believe that the presence of this in the international markets is somewhat similar to what we see in the States here, but we know that this is a growing market as well. With the aging population continue to increase and that population getting larger by the day, over the age of 55, you have a 40% chance of experiencing AFib in your lifetime. And we know that with AFib, your likelihood of experiencing a stroke is nearly five times higher.
It's important that we find these dangerous arrhythmias and AFib in particular, as early in the care pathway as we possibly can. And there's a lot that we're doing to move this technology earlier into the care pathway. I'll talk about this, but moving it beyond the cardiologist in the EP, but up into the primary care space, which is having some great success here over the course of 2023. But frankly, we, we see the market a little bit differently than just going after those 11 million diagnosed arrhythmia patients as well. To find those 11 million today, there's about 0.4 million ACM tests being prescribed in the U.S. marketplace. These are predominantly prescribed by cardiologists and EPs today.
But if you look at the primary care space, in primary care alone, there's 15 million patients who are showing up in their medical records with cardiac palpitations already identified when they see that primary care physician or coming out of that primary care physician's visit. We believe there's the opportunity as we push into primary care, to see more and more of those 15 million patients begin to get monitored. And I'll talk about this, but 21% of our registrations in the year 2023 actually were prescribed by primary care physicians. So we believe there's a real opportunity to open up that 15 million market opportunity into the future. And then interestingly, there's also about 12 million folks in the U.S. that we estimate, who have no idea that they have a dangerous arrhythmia that's even present.
There was an mSTOPS trial that was published probably 18 months ago, that took a targeted approach to a population and proactively began to screen that population. What they looked at was females over the age of 75, males over the age of 65, or male and female over the age of 55, that had a comorbid condition. Either there was type two diabetes present, there was obesity present, diagnosed hypertension was present, and they found that in that population, there was dangerous arrhythmias identified in nearly 25% of those patients.
When you look at just the covered lives from a CMS perspective and Medicare Advantage perspective, and you assume roughly that 25% ability to find or diagnose these asymptomatic arrhythmias, that would indicate there's roughly 12 million folks out there that have no idea that there's a dangerous arrhythmia present that we believe we ought to be monitoring for, and we look forward to the opportunity to find those into the future. We actually have clients today who are proactively utilizing the mSTOPS criteria to proactively screen and monitor broader populations of folks attempting to find these things earlier in the care pathway. And then, of course, we believe the same opportunity exists in the international space.
With the platform that we have, we think there's a real opportunity to move into sleep and disrupt that space, both from a, an ability to identify when sleep disease is present, but also from a service perspective with the IDTF capabilities that we have in cardiac arrhythmias. We think we can do some interesting things with respect to sleep and sleep diagnosis, heart failure, hypertension as well. I mentioned the importance of primary care. We're coming after the primary care space really in two distinct ways out of the gate. One, in these large IDNs that we work within today, the cardiologist and the EP, they're challenged to see patients on a timely basis. It's not uncommon to hear of 3-4-month delays before a cardiologist or an EP can see a patient.
In many of these networks, we're actually seeing the cardiologists and the EPs bring the primary care physician to the discussions that we're having, recommending that they begin prescribing the product earlier in the care pathway. In some cases, they're completely comfortable with the primary care physician prescribing and diagnosing off of the report that we generate. Again, 99% alignment to the recommendation we make. But in those cases where they're not comfortable with the primary care physician diagnosing, we simply publish a report in Zio Suite, and the cardiologist and the EP will look into Zio Suite, review that report before they ever see a patient, and make a determination on yes or no, I need to have that patient referred on to me and ultimately see them in my practice.
That's been a big part of the success early out of the gate with respect to how we've delivered 21% of the prescriptions coming through the primary care channel. The other approach is going right at it from a national level, at the highest level, from a top-down approach. So approaching those like the One Medicals, if you will, and other national primary care players, where we contract at the highest level and they take us down into their network. And that's just getting started, but we believe has a real opportunity to, to open up that channel. We've got a couple pilots that are going on as we speak, with these large national primary care players, where they're applying the mSTOPS criteria proactively across the population, searching for these asymptomatic patients with the belief that it manages or, or reduces the downstream cost of care for these patients.
And there's a lot of data that stands behind that. The mSTOPS study alone, the economic data that came out of that, the incremental cost per quality-adjusted life year gained ended up coming out right in the $30,000 range, which demonstrates real value, in terms of how payers think about paying for these type of proactive services. Another market opportunity for us, one that gets us very excited about our future, and you're starting to hear us talk more and more about it, is the MCT space, mobile cardiac telemetry space. We have not played in this space historically in a large way. It's about 7% market share for us today. It's about 10.5% of our overall business.
To be honest with you, we don't have the right product to truly compete in this space to gain this sort of representative market share that we have in the long-term patch market. If you look on the left of this slide, we hold about 70% share in long-term cardiac monitoring patch-based technologies. Yet in MCT space, we only have about 7% of that share. The most significant product in our pipeline today is our Zio MCT product that we look to get on file with the agency in the back part of 2024.
That when it comes to market, that'll be in the back part of 2025, we believe will allow us to compete very aggressively in the MCT space, which every 10 points of share gain in that space represents roughly $80 million-$100 million of incremental revenue to iRhythm. And, and again, you can see 7% compared to the 70% that we have in the long-term cardiac monitoring market today. We believe there's a real opportunity for MCT to be a significant growth driver for us into the future as we get that more competitive product into the market. International is another significant opportunity for us. We're in the very early stages of our international business. We're in the UK today.
It represents about 1.5% of our total revenue stream, working to get onto national policy, coverage there within the UK, and then taking it into the EU as well. We'll be in Netherlands, Spain, Italy, Switzerland, as we think about the early stages of 2024, beginning to sell into those markets. We're on file as we speak in Japan right now, working through that regulatory pathway in what is the second-largest market in the world, 1.5 million ACM tests being prescribed each and every year. One of the things that I think is very important here is we work directly with the regulators there to get a designation around Zio specifically, which is a High Medical Needs Designation in that market.
I think it's important to note that High Medical Needs Designation is not specific to long-term patching. It's specific to Zio and the brand Zio, that I think gives us a competitive advantage as we ultimately enter that market in the back part of 2024 and early part of 2025. Innovation. Innovation is a meaningful part of how we continue to differentiate ourselves, and it's something that we take a lot of pride in. We wanna be the most innovative company in this cardiac rhythm management and monitoring space, and it's something that we put a lot of resources into. We spend about 12% of revenue on R&D efforts each and every year, and we just launched the Zio Monitor in September of 2023.
Importantly, the largest launch in the history of our company, 72% smaller than the previous patch that we had utilized. Importantly, as well, we just received EU MDR approval, which is gonna be an enabler for us to take this product into those EU markets that we just talked about in terms of the market opportunity. We also launched a new myZio app with the monitor, and the app is very important because it is what encourages and engages the patient in a more meaningful way. We know that when patients engage with us, the likelihood of them wearing the patch through the full duration, us getting that patch back and providing the report, which is important to revenue recognition, increases significantly.
So we've seen a dramatic increase in the app utilization upon the launch of monitor, which is exciting for us to see as well. I mentioned Zio MCT. It will replace our Zio AT product. You can see in the middle of the screen, today, that is our Zio AT product, and again, it's not the most competitive product in this space. I think there's two features that are most important to our MCT product that will come in the back part of 2025. That is extending the duration of wear. Today, we go after the MCT space with our AT product, which is a 14-day wear product.
Our customers, the physicians, are demanding a longer duration wear period, so we'll have a product that will get out closer to certainly beyond 21 days, but get them all the way to 30 days, if that is what the customer wants, we'll deliver it. But also having a downgradable capability. I think one of the important things with MCT is that nearly 70% of all MCT procedures have to go through a prior authorization. The challenge with using a Zio AT product today is, frankly, that the patient gets the Zio AT product applied, and they learn a day or two later whether they're gonna be covered or not from a payer perspective. Our competitors, through software, can downgrade into an event monitor if their MCT device is denied.
Us, we don't have that capability today, so what happens is they have to remove our patch, and a competitive patch gets put on. It's one of the greatest points of pushback from our customers today that we'll address in the new Zio MCT product. I think an interesting data point is the majority of folks who are prescribing Zio... Or sorry, not Zio, but MCT products, are the same exact physicians, cardiologists, and EPs, who are prescribing our Zio long-term cardiac monitor patch today. So we think there's a real opportunity to win with that existing customer base when we have the right product in the market, which will be late 2025. Artificial intelligence is another area. We're truly unique and differentiated with respect to the AI that we deploy within our products, utilizing deep neural networks, 34 layers deep.
We continue to invest in this particular area. While we're focused on diagnosing arrhythmias, what we're finding in our data sets is that we have the ability that maybe we don't find the arrhythmia, or AFib on a patient today, but we can see in the markers coming off that strip that there's a likelihood that AFib is gonna develop over the next 6-12 months, and that physician needs to see that patient again to be monitoring into the future. We can begin to do that with the algorithms that, our teams are building and developing, and that encourages or gives us a lot of encouragement for future growth. Similarly, getting into adjacent spaces, we think there's a lot that we can do within sleep. The overlap of sleep disease with AFib, in particular, is significant.
Nearly 80% of folks who have AFib also experience sleep apnea. There's nearly 40 million folks who are diagnosed with sleep apnea. We believe there's some reverse correlation there as well that gives us the opportunity to hunt in that space as we develop sleep capabilities and open up some of these other adjacent business markets, if you will. Speaking of the adjacent markets, I mentioned the sleep apnea, 40 million folks diagnosed with sleep apnea. We think there's a large overlap with cardiac arrhythmias that we're pursuing. We also think that there's ways to leverage our IDTF capabilities. So, you know, we've developed a pretty unique capability in terms of utilizing or leveraging our IDTF in the cardiac rhythm management space.
We think there are things that we can do with a sleep IDTF as well, that can really start to disrupt the whole service flow of the sleep space. One of the largest prescribers of sleep devices, whether that's a home sleep test, or a prescription to move on to a sleep lab or a sleep specialist, is from the cardiologist or the EPs that we do business with today. So we think there's a terrific opportunity to leverage that in a future iteration of our product offering, and then leverage the IDTF capabilities to provide a service back in that sleep space that we think can be a nice contributor to our overall growth long term. Same with heart failure, hypertension, opportunities to disrupt those spaces that the teams internally are focused on today....
You know, 2023 was a significant year for us. A lot was accomplished over the course of the year. One of the things that we were most encouraged by, we saw momentum pick up nicely. Our unit volumes increased in 2023 versus 2022, as we got more dedicated to our focus in driving deeper within the existing accounts that we're in. Today, nearly 70% of our growth will come from our existing accounts, where we're just focused on going deeper. We have about 30% market share in the existing accounts that we're in, so there's a big greenfield opportunity there to go deeper. But at the same time, we're opening record numbers of new accounts each and every year. 2023 was a banner year for us for new accounts being onboarded.
Q4 was another strong quarter for us as well, and we're excited about what we're seeing in the momentum of the business continuing to pick up. I mentioned, registration growth growing north of 22% in the fourth quarter, which was a significant accomplishment for us, as coming out of the year. Bringing innovative products to market, Zio Monitor , again, the largest launch in the history of the company. Zio MCT in the pipeline, we believe, has the opportunity to move the needle in a significant way. Focusing on, on the data, the science that's behind this. Nobody invest in the research like we do in this space. There's nobody who can put the number of publications out there to stand behind their product like iRhythm can. CAMELOT was a big deal in 2023.
You're gonna see CAMELOT 2.0 get released and published in 2024, which is essentially taking that same approach with the CMS data set and partnering with a very large commercial payer in the States to replicate that look into their data set, and we'll see what it has to produce. But I'm excited by where I think that ultimately goes. Market access. As we move into the primary care space, it's very important that if the market's gonna expand, you wanna make sure patients have access to that product when it's prescribed. 93% of all covered lives in the U.S. now have access to our Zio XT/Zio Monitor product without any prior authorization required.
That, that is very important, making it as seamless as possible for folks to get onto our technology, and then certainly continuing to focus on the profit profile of our company. We put out there a long-range goal as we approach $1 billion in revenue to get to roughly 15% adjusted EBITDA margins. Keep in mind, we started from nearly negative 1,100, 1,300 basis points, or 11... negative 11, negative 13%. We'll, we'll get very close to break even as we approach the end of 2023, so we're about halfway to that data point of 15%. We have clear line of sight of how we get on to 15% and, and frankly, on into the mid-20s over time.
From a revenue perspective, just looking at 2024, we put out guidance this morning of $575 million-$585 million for the year, which represents about 18%-20% growth off of the midpoint of the guidance that we have out there for 2023 at this point. When we think about some of the tailwinds in the business that have us excited, I think further expansion into that PCP channel, that's something that we're going to wait, see, play out with these large national primary care players, but we, we believe there's some real potential there that could create a nice tailwind for us. I think the whole pulsed field ablation discussion that's going on, you see a lot of companies who have products coming into this space, very excited about that opportunity.
Of course, if it reduces the amount of time to do that procedure, and more procedures are able to be done, you're going to have to monitor more and more of those procedures. I think that's a nice tailwind that we could see show up in the business. Again, we haven't contemplated anything like that in our forward-looking estimates at this point in time, but we're excited by what we see there. And then a bit further out, the MCT opportunity, getting into Japan, second largest market in the world, with that High Medical Needs Designation, we think can do some really interesting things for us. And then seeing the asymptomatic targeting of the populations, which we call Know Your Rhythm, beginning to get some traction, is something we think can drive some nice tailwinds to that revenue expectation.
Then from a profitability perspective, we're just as focused there. So again, driving to 15% adjusted EBITDA margins, you're going to see that continue to show up in our gross margin. There's a couple hundred basis points of further improvement for us to deliver there, which will come through automation of our production lines. Today, it's primarily manual assembly, but that'll move to the automation in 2024. Leveraging AI in the back office with our clinical technicians and the workflow associated with reviewing those reports is a real opportunity. I feel pretty good about where we spend with respect to R&D spend today is about 12% of revenue. I think that's a pretty healthy rate for a company of our size and the innovation pipeline that we have and the roadmap that we've put in front of us.
Similar to the sales and marketing, we're about 21%-23% on any given year with respect to spend as a percent of revenue. We feel pretty good with that. We are turning the dials with respect to where we spend those resources, really amping up the focus on getting integrated with our accounts and elevating the marketing aspect to create awareness around the technology and the ease of use with it. But overall, the spend levels are pretty good there. Where you're gonna see the majority of our leverage is gonna be in the G&A side. You know, when we started this endeavor to improve our profitability profile, G&A alone was north of 50% of revenue. Today, it sits in the low 40s.
We see a clear path that gets that into the low 30s, which frankly, will close the majority of the gap to get to 15% adjusted EBITDA margins. But we also know that when you look at our peers, most peers are spending in the low 20s or high teens on pure G&A alone, which gives us another, call it, 1,000 basis points to get after that ultimately gets us into the mid-20s over time. So we're excited by what we're seeing there. One of the big enablers there is the Global Business Services Center that we just opened up in Manila, Philippines, in late 2023, will start to provide some nice leverage for us into the future.
Then finally, just in wrapping up before we head to Q&A, you know, I think that the company is really well positioned when we think about where the future focus of healthcare is moving. Earlier diagnosis, earlier in the care pathway, the leverage of AI, and what we can do to reduce the downstream cost of care for our patients in the healthcare system. We fit really uniquely and perfectly into that opportunity. Expanding existing markets, we believe we can expand that existing ACM market from the 6 million tests prescribed today and performed today.
to something closer to that 15 and 12, that sits out there with respect to folks in the primary care channel, seeing their physician with cardiac palpitations already identified or the asymptomatic population, which puts us in a position, we believe, to deliver outpaced revenue growth with also a very, significant improvement in the profitability profile. So all told, we're excited about the future. Appreciate the time here, and Alan, I'll invite you back up, and maybe we jump into Q&A.
Thanks, Quentin. So, you know, I think there's clearly a lot to really get excited about in the iRhythm story. So, let's start with the quarter and guide, the most exciting part for some of us here. You know, we didn't exactly get the specifics of the quarter, but you pointed to 22% patient registration growth in the quarter, and I just wanna kind of clarify that for the investor base, right? How should we think about that in terms of, you know, a translation into volumes, if it is, you know, that kind of straightforward, and how should we think about the kind of expected pricing headwind that you'd expect in the quarter to maybe sort of bridge the gap to revenues?
Yeah. So, you know, we think that registration's a pretty good leading indicator as to what you can assume for volumes. A couple of things to just think about is, remember, there is a return device rate. Effectively, everyone's patched, and it's registered. In some situations, that device doesn't come back for one reason or another. So there's a little bit of a gap there in any given situation, but then also, once a product is registered, there's also, call it 30-45 days before it comes back to us, and ultimately, a report is issued, and then revenue is generated. So a lot of times that 22% is a pretty good proxy, as long as there's no material changes. But it can be... Sorry. It can be slightly lower than that, but not material.
The thing to think about this, and this is unique to Q4, is that ASPs. It is about 500 basis points-600 basis points of pressure year-over-year in Q4 2023 versus Q4 of 2022, and that's because of the MACs that we're utilizing in 2022. It's a one-time thing. It's not gonna happen, but it will translate into that, you know, call it mid-teens or so from a revenue perspective. So all of those things kind of line up to that data point we put out there. We're not quite finished with the accounting entry, so we can't say exactly where we're gonna land, but it's a pretty good leading indicator.
Got it. Then when I think about the 18%-20% growth, kind of in the lens of, you know, that patient registration number, you know, it seems like you have pretty good momentum heading into next year on the volume side of things. But when we think about that 18%-20%, you know, my impression is that price is probably set to be another modest headwind next year, which implies that, you know, to get to 18%-20%, you need basically volume growth similar to what you had in fourth quarter, around, you know, 20% ± a bit from price. Is that the right way to think about it? And if it is, what gives you confidence that you can, you know, off of a larger revenue base, off of larger volume base, grow at the same rate?
Sure. So you know, what I would say is ASP, there is some modest headwinds, but there's also some tailwinds as well, and the tailwinds are really coming from us leveraging our IDTF footprint and then ultimately leveraging the center of excellence that we have in San Francisco. So, so some puts and takes, but ASP is relatively flat year-over-year, which, you know, call it a point versus those couple points that you were talking about. So effectively, volume is relatively in line with the guidance we set. Again, it is coming off a bigger base, but we do have great, in my mind, tailwinds heading into 2024, when you think about the monitor launch, you think about the PCP penetration, the number we put out there for the first time today, but, you know, international becoming a bigger part of our business.
Those are all things that will contribute to that growth profile that we put out for 2024.
Breaking it down a little bit by the kind of two sides of your business, when I think about Zio Monitor , on the third quarter call, you had talked about the fact that, you know, the demand outstripped your expectations, and, I guess you could call it a little bit of distraction, if you will, of the sales force, as they were really focused on serving your existing customer population, and they weren't able to kind of go out and get new customers as aggressively, and that was a dynamic that I think you had expected to continue into fourth quarter. So is that something that you've managed to resolve? And if you have, should we think of there maybe being a little bit of pent-up demand of new customers who also, you know, were excited for Zio Monitor and have been waiting to get on board?
Yeah. Okay, great. Look, we couldn't be more happy with the monitor launch. I think you're exactly right. As we looked early on, converting the existing accounts probably went a little bit faster than what we expected it was gonna go. And frankly, we would have preferred for that to go a little bit slower because it would have let us work through some of the XT product inventory that we had there, right?
So as they converted to monitor more quickly, it has created a little bit of a challenge on the XT side of the business, where we haven't been able to sell through that inventory as much, which creates a little bit of non-cash inventory reserves that we've had to work through, and we noted that on the Q3 call, if you recall, right, with some of those reserves. Q4, while it won't be a record quarter in terms of new account openings, it's gonna be the second highest in our history. And a lot of that is addressing the pent-up demand of the new accounts that were ready to come on board with us, but weren't gonna come on with Zio XT. They were gonna wait till Zio Monitor was delivered.
One of the things that is interesting, and I think speaks to your question of, you know, does volume demand have to stay sort of where it's at in the fourth quarter into next year? Actually, as we worked through that transition, October was a pretty slow month for us, to be honest with you. November, December were extremely strong months for us from a volume perspective. So we couldn't be more encouraged with sort of the pent-up demand that is in the business and that we're seeing begin to play through, but I think that's a nice tailwind for us also, as we think about 2024.
The other point that that you could look at as well, and we're gonna wait for this to play through the results, is monitor, in the market evaluations we did, had a much better return device rate with it than the old XT product did. And I think a lot of that is the engagement with the app. A lot of it is the better patient experience and patient compliance, but if that plays through, then that becomes another nice tailwind for us in the year of 2024 as well. So to Brice's point, you know, we like the setup for 2024, the 18%-20% growth.
I think there's a lot of nice tailwinds that potentially sit there and can really benefit us over the course of the year, but at the same time, we're not gonna get out ahead of ourselves either, and we're gonna wait and see some of those things play through. But we should be fully converted from XT onto Monitor in that second quarter of 2024. So we're still working through some of those existing accounts, converting over... again, we're trying to manage that as well as we can because we wanna sell through the XT inventory versus have to write that off. But frankly, when you get some accounts out there who look at the account down the street and say, "They have Monitor, and I don't have it, why not?" It's hard to hold it back, right?
It is something that folks are clamoring for, and we're doing our best to manage that transition, but it's a good problem to have. Ultimately, monitor's got a much better margin profile with it, but we wanna work through the transition as well as we can.
On the flip side of your business, AT has had a little bit of difficulty over, you know, the last year. You had the warning letter that came through that kind of disrupted your ability to sell for a while, and now, you know, it seems like you've hopefully established a path with the FDA to continue selling while also, you know, resolving some of the concerns they had with the device. And I believe the strategy was to file, you know, two catch-up 510(k)s to address some of the deficiencies that the FDA found. You had planned to file the first one, I believe, before the end of the year, with the second one hopefully following soon after. So I was just wondering if there were any updates on the timelines that you could provide there.
Sure. So we did get the first one filed, although we got that filed last week, and that was really at the recommendation of the FDA. Both of them are ready to get filed as we speak. And the two filings are: one is the catch-up 510(k) of the Letter to File matters that we had taken the position with historically. Ultimately, we agreed with the FDA. We'll just put them into a catch-up 510(k) and clear it up that way. And the other is related to the design enhancements with the light on the product itself, some enhancements with respect to how we think about the MACs trigger limit and notification in Zio Suite. The FDA has asked us to stagger those.
We should be on file with the second one next week, so long as they're ready to accept it, but they asked for us to put two weeks in between those. We were ready to go in December. They asked us to push till after the holidays, as they had folks who were out. We've submitted the first one, second one, whenever they're ready, they'll, they'll have it.
It's always hard to know with the FDA, especially with warning letters, but, you know, my sense was that this was kind of, you know, a major step towards hopefully getting the warning letter formally lifted. So once you have the filed 510(k)s in and approved, is there any sense of kind of like a timeline that you could provide? Like, is... Are there any other steps that the FDA has to take to resolve the warning letter, or is it just a waiting game once you get those approved?
Yeah, I think while there's not a set date, our expectation is somewhere within 12 months of receiving the approval, the FDA will come back and inspect, right? Now, importantly, their issues have been identified in the warning letter, and we put together action plans specific to every one of those issues, and we provide an update to the FDA, really, every couple of weeks to every month, depending on what the matter is, and we're on track to hit all of those dates that we've outlined with the FDA in terms of the remediation or the areas of focus that they have. So I feel very good with the progress we're making with the agency.
But to be clear, and to your point, once we get approval, our best guess is within a 12-month window, they're likely gonna be back and want to inspect and we'll be ready for that. But we provide routine updates to them, you know, as we go with respect to the progress we're making, so I don't expect any surprises there.
Just to make it really clear, in the meantime, you're still able to sell Zio-
No question.
Zio AT, totally fine. It won't affect, you know, once you get those filed 510(k)s , it won't affect your ability to, you know, once you're ready, file for Zio MCT?
That's right. Well, once we get approval of AT, then we'll get on file with MCT.
Yeah. Yes.
But there is zero, zero indication from the agency at all that they would want us to halt the product. Frankly, if there was a concern at all, they would have done this much earlier. It would've been around a safety concern. They haven't done that. They haven't requested it in any way. They've been clear to us that they haven't requested it, right? So I don't have any concerns with respect to halting the product. And importantly, we also have from them that they are very comfortable with us continuing to market the product as an MCT device, which I think is important also. So I don't see any market disruption concern with AT.
I think at this point, it's sort of checking the boxes on getting the Letter to File caught up in the 510(k), getting the design enhancements through that 510(k) process, and then closing this thing out. But I don't have any concerns with respect to halting a product or holding a product or not being able to sell that product in the market.
So, we definitely don't have enough time to kind of talk through all of the opportunities in the pipeline, but I guess I'll cover one that's probably, you know, top of mind for the investor base, which would be PFA, right? And I think, you know, I've definitely been getting questions from investors of like, "Oh, could this be a major opportunity for, you know, XT or MCT if we start seeing more of those procedures coming through?" So I guess, just as a baseline, how often are you being used, you know, pre or post, AF ablation today? And is there, like, a particular reason why PFA, apart from having higher volume, would maybe be more conducive to these kinds of tests?
You know, it's hard for us to see in the data when the device is being prescribed following a procedure, if you will, an ablation procedure, or even pre, if you will. I think there are ways that we're getting access into claims data that will make it more easy for us to start to see some of this, but those are things we're working on. We don't quite have that information in front of us today. However, if the reality is that this PFA procedure reduces the amount of time to ablate a patient significantly, like the claims are being made, and you hear the excitement from these companies who are bringing these products to market, there's really no question at all that the overall procedural volumes are going to increase.
As those volumes increase, you need to monitor more patients, more procedures, right? It's not, in my mind, really a difference of needing to monitor a PFA procedure versus a traditional ablation any differently. To me, it's... The way I think about it is more the overall improvement or increase in unit volumes or procedural volumes that's gonna drive the need for more monitoring. That's how we think about it. Again, we've put nothing in our forward-looking estimates related to it, but I think it's another nice tailwind in our business that we're certainly aware of and, and having discussions with physicians around.
... In the few minutes we have left, I want to kind of shift back to the profitability side of things. So, you know, you didn't exactly preannounce the EBITDA for the year, but it sounds like you did hit your target of, you know, profitability, correct me if I'm wrong there. And you've, you know, kind of held to your long-term target of 15% with the caveat that you can, you know, it's not going to stop there. So when I think about your ability to drive profitability, you know, in 2024 and 2025, as you're moving on to this, you know, lower cost, unified platform, you're going to be bringing MCT onto that as well. Should we think that, like, you know, that 15% should be the, you know, pretty readily achievable target with path to upside?
Or, you know, when we think about investing into all of these other opportunities, into building out international, into building out sleep apnea and PFA and heart failure, that you're kind of leaving yourself some wiggle room to invest into those?
Yeah. So the way I think about it is, first of all, in 2023, we're still working through where we land and how it goes. And as Quentin mentioned, as we move to more and more monitor, there's a bit of a shift between XT and what the cost profile is. So we're waiting to see where we land, and we want to make sure that that's clear. But as we move forward, you know, I... The way we think about it is, we've set up nice leverage as we head into 2024. We've got plans for 2025 and 2027. We absolutely think that 15%, with upside, is available to us.
To Quentin's point also, as we go beyond $1 billion, we could be thoughtful about how this works, but there's no reason we don't have a path to 20%-25%, even upwards of 30%. And that's primarily going to come through that SG&A profile, which we've already started to set the stage for with the GBS. But it's going to come through gross margin, it's going to come through and, you know, it's going to come through SG&A, but there's opportunities for us to be thoughtful with how we're investing dollars with R&D and sales and marketing. And frankly, we feel comfortable with those levels, but that doesn't mean we're not addressing profitability within them. We're evaluating the product portfolio, and then ultimately allowing us to invest more into these adjacent market opportunities.
We talked at Investor Day that 2.5% of our revenue would be invested in just driving those market opportunities beyond $1 billion, and we still plan to do that, so.
The other thing I would mention, Alan, is, you know, we spend nearly 150 basis points right now in 2023, and we expect to do so in 2024 on this FDA and DOJ related matter, right? Once we clear that, that cost comes out of the P&L, right? So from the point that we started talking about profitability, we're nearly 1,100 basis points improved beyond where we were at. Nearly 1,300 basis points, if you exclude sort of the unforeseen cost of FDA and DOJ, which will go away. When is the question. We think it's probably here in 2024 and then goes away. But to Brice's point, I think there's a clear line of sight. There's no reason why this company needs to spend 30% of revenue dollars on G&A alone.
We know we can get below that, but frankly, getting to 30% is all we need to do to deliver the 15, right? So, I think there's clear line of sight of where we go and how we go.
Got it. Okay. Thank you, team. Thanks, everyone, for being here.
Thanks, guys.
Awesome. Thank you.