Okay, we'll go ahead and get started here. Before we jump in, I just need to remind everyone that this event is not open to the press. Very pleased to welcome Quentin Blackford, President and CEO of iRhythm. As I've opened in all of these sessions, happy to take questions from the audience. Just please make sure to raise your hand, and we'll get a mic over to you in case there are folks listening in on the webcast as well. I thought we could, you know, I want to spend a little bit of time on market dynamics, and then also kind of jump into some of the drivers of your business and the momentum that you've seen the past couple of quarters. Maybe we just sort of start kind of higher level.
A big part of the story has been increased penetration of LTCM, and kind of where do you think we are in that evolution, and how do you think that progresses here as we march through 2025 and beyond?
I think, you know, the overall ACM market, probably six and a half million tests or so. I would say roughly 50% of that, maybe not quite 50%, probably 3 million of the six and a half is coming through long-term cardiac monitoring patches of some sort. We hold about 70% market share. I actually believe we probably took about two percentage points of market share in 2024 within the patch segment itself, so not accounting for any sort of mixed dynamics out of short-term monitoring into long-term cardiac monitoring. Within long-term itself, I think we regained some share position as we took share from competitors. I think that you look outside of the 3 million long-term cardiac patches that are taking place, there's probably 1.5 million short-term Holters that are still being prescribed. There's probably another 600,000 event monitors that are still being prescribed.
In my mind, that leaves about two million between those two that really ought to move towards long-term cardiac monitoring. There are some incredible studies that have been published here recently that would demonstrate more than 64% of all arrhythmias are found after 48 hours of monitoring. Why we are still monitoring in this short duration does not make a tremendous amount of sense. I think you are going to see long-term cardiac monitoring, ourselves by the virtue of that, shift out of short-term monitoring towards long-term, continue to grow and fuel the market overall. I do think the overall market is probably growing in that mid-single-digit range, although I view the market very differently, and I know we will get into this.
I think when you start to look at the undiagnosed, unaware population, who they're not being tested at all today, I think the market has the potential to be 27 million plus patients who likely have an arrhythmia are just completely unaware of it. We'll talk about what we're doing to open up that opportunity, but I think we're on the very front end of seeing some of that play out.
Why do not we continue down that path? Because I think that has been one of the things that is, I think, really characterized not just this year, but the past four or five years just on cardiovascular volumes in general. Whether it is, people make fun of me for suggesting that the Apple Watch might have something to do with this, or even Zio Patch or other monitoring technologies, but it is more consumer-based like AliveCor. The flow of patients into cardiology clinics continues to grow at a very, very healthy pace, for better or for worse. Maybe let us continue down the market growth path for a second here and how you see that. A, do you agree with that assessment, and B, where do you think that goes?
I would absolutely agree with it. I think the awareness around cardiac issues is growing, I think, for a couple of different reasons. I think wearables is a big part of that. I think the Apple Watch has been an incredible lead generator for folks like ourselves that bring patients in to see their cardiologist saying, "Look, I've got an alert, an alarm that's going off here." Ultimately, they have a patch that's placed onto them. I think you also have a younger population that's just becoming more aware of their health. They're wanting to do more to monitor their health. They care more for it. We also see a higher degree of prevalence around arrhythmias in a younger population. I think there's a lot here that's leading into that aspect of it. At the same time, I do think it creates a challenge.
I don't think there's enough cardiologists that are out there to see all of these patients, which is a big reason why we've made the push very aggressively. This started probably three and a half years ago. As soon as I got to the company, I believe that this device, being as easy as it is to apply, ought to be applied in the primary care physician's office. Whether that's the primary care physician prescribing it or sending the device directly to the patient's home and they're applying it in the home enrollment model, or the device is right there in the primary care physician's office, it's easy enough to use. It ought to be prescribed there. Some of what we run into is that the primary care physician will say, "Well, I'm not comfortable diagnosing," right?
I don't have enough experience with it, haven't been trained up on it." I think that's where we're able to meet sort of the current issues within the cardiology space of not wanting to give up the diagnosis to primary care through a tool like Zio Suite, where primary care can prescribe it, patient can wear it, the report gets posted right into Zio Suite, and the cardiologist will go right in there and look at it. They'll make the determination, "Do I want to see that patient or do I not?" Right? We start to think about it as a rule-in, rule-out capability. I think that's opened up cardiology, or sorry, primary care tremendously, sort of through cardiologist itself.
There's a lot of room to go there yet, but we've seen a lot of momentum in our own networks, leveraging our cardiologist, our EP relationships to have them push prescribing into primary care, given the capacity challenges.
I think that also, I think, brings up sort of one other dynamic, and we'll talk about the business in more detail, I'm sure. You go to any of these meetings, HRS, AF Symposium, ACC, and there's just like a bevy of patch companies out there. Then you look at your business and you look at the amount of capital you've had to invest to get to where you are today, plus the ecosystem around Zio Patch. How should we think about just the evolving competitive landscape, putting the two larger players maybe aside for a second? There's a lot of ankle-biters out there, but then at the same time, you've built this huge infrastructure.
Look, I think it takes an incredible amount of capital to build these businesses. I think iRhythm is a terrific example of that. It took us moving north of $500 million in revenue before we could even start to scratch on the ability to be profitable. We'll turn free cash flow positive in 2026, most likely. It takes a lot of capacity or capital, a lot of patience to sort of invest into that capability that I think just creates a very high barrier to entry. There are a tremendous amount of small players out there that are trying to creep into it, but I think the capital restrictions are going to be truly preventative. I mean, you've got some competitors in this space who have been at it for five, six, seven years. Maybe they're $67 million in revenue. They're not yet profitable.
They're on their sixth, seventh round of trying to raise capital. It's just a very tough go. I do think in many ways it creates a barrier to entry into the space that's going to allow us to win. I also think that the regulatory requirements have elevated tremendously. We find ourselves navigating through FDA sort of matters for the last 24 months that we hadn't necessarily anticipated. As we come out of that, I think we've rebuilt the quality management system. We've got a foundation in place that's going to allow us to be that much more successful into the future. One of the things we've learned here recently in some of the discussions with the FDA is that they've been very clear. This is not about iRhythm in particular.
This is about us trying to define a set of requirements on how we're going to regulate this entire industry in this MCT product category code. I don't think they've yet moved into our competitors just yet. It is going to be hard for these smaller players to meet those requirements, those objectives, find investors who are going to be willing to have the patience to let them work through that while they're putting their capital to work without a sufficient return. I think the barriers are high. I think that the large players who are here are going to continue to have success with it, but I think it's going to be harder and harder for these small players to get in.
I think when you issued the 2027 LRP, and a lot has changed since then, you did actually include in that market share loss in LTCM. I think as you introed, it's actually going the other direction. What's changed from when you issued that outlook to where we are today?
Yeah, the monitor business, the XT monitor business, right? Just the 14-day blinded product is actually, I mean, it's produced right in line with what we sort of expected it would, if not even a little bit ahead of what we thought it would. Where we've fallen short was on MCT, right, with the Zio AT product. In our long-range plan, when we put those expectations out, we actually expected to have the new MCT product in the market about two years ago. We're almost 24 months delayed from where we thought we were going to be. In that billion-dollar mark, we expected MCT would contribute roughly $200 million to us. Like I said, we're two years behind that MCT. We're probably a little bit behind delivering the billion-dollar mark in 2027. I would say probably six months behind that.
We have offset it in success and progress in other areas, but MCT has been the lone sort of reason that we were not able to get all the way there, or have not been able to get there.
Although if you look at the share gains in LTCM and the recent benefits you've seen from the dynamics of Philips and MCT, it actually looks like there's a path to getting a whole lot closer than maybe if we were having this conference six months ago.
I think that's right. I think there's a path into it. I don't think you're going to hear us talk about it that way at this point. I want to see the results continue to sort of stick in there. I think if you look at Q4, Q1, two consecutive quarters of 20% plus growth, there's a path into it. We see it. We've sort of reset that expectation that's probably six months behind where we thought, but there is a path into it. I think a lot of it will come down to continued success in AT and the new MCT product, which we will get on file in the third quarter of this year. We're excited to get that into the market, but also just the success in the undiagnosed, unaware population. There is tremendous interest in that space.
I think we're doing a lot to point these innovative channel partners towards where the patients that they cover, where that arrhythmia probably exists and where we ought to be monitoring. It's beginning to open it up. We're now into 12 innovative channel partner agreements that continue to ramp. We got a pipeline of about 40 that are in active discussions as we speak. There's probably somewhere around 100 in the U.S. alone that we ultimately want to get to. As those things come together, yeah, I think there's a clear path that could potentially be cratered into that billion-dollar mark in 2027, but that's probably not the way we're going to be talking about it or guiding into it.
Understood. On the past two quarters of 20% growth, I think there are a little bit different dynamics that influenced the performance in both quarters and probably some crossover. Maybe you help us unpack a little bit some of the underlying factors there that drove this sort of above recent trend performance.
I think you look back at Q4, we talked pretty openly about it. We had a single customer that came to us sort of with a population health approach that said, "Look, we want to put a patch on tens of thousands of patients in a very short duration of time." As a matter of fact, there were two patch providers, ourselves being one and a competitor being the other, sort of right there at the table. They were going to split the pilot, run both of us through that pilot. Within about a week and a half, we were demonstrating our ability to scale more successfully and produce the outcomes that they were looking for, that they eventually moved all of that over to us. There was a great outcome in the fourth quarter. It helped drive the north of 20% growth in the fourth quarter.
At the same time, we had Zio AT that was sort of performing very, very well, coming off the disruption that Philips had had in the third quarter. We were very happy with that, but we were a little bit uncertain on how much of that would stick. We felt like as Philips sort of got things back in order, much of that business might move back over to Philips, and therefore we were a little bit hesitant to sort of guide on that coming into the new year. Same with the big customer account, the big bolus that came in the fourth quarter. We did not know how that would stick into the new year, so we did not roll that into any of our guidance. Coming into the first quarter, obviously, we delivered north of 20% growth once again. A lot of that was Zio AT continuing to stick.
We probably saw 10-15% of that business go back to Philips over the course of the fourth quarter, early Q1. The rest has stuck in there really well. I think ultimately that ended up being a terrific door opener for us in AT into those accounts. I think what you have to realize is that with 70% market share on long-term cardiac monitoring, we're in the majority of these accounts. We tried to integrate EHRs into the majority of these accounts. When a competitor has a disruption like they did, it was very easy to bring AT in and let those customers try AT. I think they learned very quickly that AT was actually a pretty good product relative to the competition. The majority have stuck with it. Like I said, 10-15% went back, the majority have stuck.
We see new accounts coming on the board all the time with AT. It continues to perform very well. The innovative channels was a little bit lighter in the first quarter, although that's begun to ramp quite nicely. We signed up several new innovative channel partners in the first quarter that'll contribute into Q2, Q3, and Q4, the remainder of the year. We are a little bit more cautious, I would say, on how we guide to that aspect of the business, just because we do not know how lumpy it might be. We do not know what the patterns are going to look like. We want some experience before we start to roll those in. We have signed up some nice innovative channel partners, expect good contribution over the course of the year. We will let that play out, and then we will address it as it does.
On the Philips dynamic, you sort of referenced it around the EHR piece. Once an account or whatever the nature is, hospital, physician's office converts to a new player, in this case, Philips to you, there has got to be a really good reason to switch back, right? Switching is not like an on-the-shelf disposable where you just flip out one catheter for the other. They are also buying an infrastructure and a whole support process associated with that switch. I get that they are going to be loyalists for whatever reason, the 10-15%, but the remaining 85-90%, why would they switch?
I think if the disruption was the impetus for the integration of the account, they most likely would stick because they would have sunk that cost into it. Most of these are accounts we're already integrated with, right? They might be integrated with a Philips, just like they're integrated with Zio, right? Suite as well. It's easy to go back and forth across those integrations. What I think happened over the course of the fourth quarter, you've heard us talk about Zio AT not being sort of the competitive product we desire for it to be. The majority of that is tied to the fact that it's a 14-day product and not out to 30 days. What's really interesting is competitive MCT products, if you go look at the data, the average amount of analyzable time on a 30-day competitive MCT product is 12.8 days.
The average amount of analyzable time on a Zio AT product that's warranted for 14 days is 13.8 days of the 14. When these physicians had the opportunity to experience Zio AT and look at the data, they realized, "We actually got more analyzable time off of your AT product than we were getting off of our 30-day BioTel product," right? I think they started to realize, like, "Wow, maybe this AT product is better than what we thought." That's a bit of the word in the street, right, that's going around right now is AT is actually a pretty sufficient product. There are some folks who still want up to 30 days. There's some payers that still require up to 30 days. There's some practices that require that. I think we've demonstrated 14 days is pretty significant.
Yeah. I'll just repeat the question. There are folks on the webcast questions. Why is there that delta between 12.8 days of observable monitoring and the 30-day wear time?
It's a good question. With competitive MCT products, again, the code requires sort of up to 30 days. You're not required to get to 30 days. Because you say up to 30 days, most folks are looking to get out to 30 days, or at least they believe they need that. You look at competitive MCT products, it's generally multiple patches worn over a 30-day period. Most are five to seven-day patches. You wear it five days, you put the next patch on, you put the next patch on next until you get out to six patches, 30 days. Most physicians will see within that 12.8 days what they're looking for in the patch, and they'll just tell the patient, "Come back in," or they don't prescribe or don't have them put on patches three, four, five, and six. They've seen enough.
You start to find this in the data, and we can start to show this to these accounts. Here's your own data. Here's your average duration of monitoring with your prior product. Here it is with AT. Oh, by the way, the diagnostic yield with AT is far superior to any other competitive product that's out there. Data would tell you it's about 23% better than the next closest competitor. All of a sudden, the product starts to make a lot of sense in the hands of these physicians, so they stick with it. Now, we will, in our new MCT product, submit for 21-day wear, which our market intel, market research, we've done a ton of it, tells us we need to get beyond 20 days to truly address the entire market.
There's still some folks who just can't get over the idea of 14 days being enough, and so we'll go north of 20. If somebody wants to get to 30 days, we're going to provide a second patch. We're going to get you to 30 days. I think the market is realizing that the Zio product is just a far superior product, even in the MCT space. If we talk about opportunities, I mean, we probably have about 12% of that market share today. We hold 70% in long-term cardiac monitoring. Every 10 points that we can pick up in MCT is $80 million-$100 million of incremental revenue to us. I think what Q4 and Q1 has demonstrated is we're already in the vast majority of these accounts. Dropping an MCT competitive product like Zio MCT, I continue to be very bullish.
I think it's going to have great success in these accounts.
On your point about the innovative channel partners, is the question that you have still to resolve, like retention and reorder rates? What are some of the factors that influence the approach to guidance?
It's both, right? Let's take a Signify that we launched almost a year and a half ago now. They were pretty thoughtful, calculated in how they rolled that out. Sort of went three states, went to seven states, sort of 13, up to 25. By the end of this year, they're going to be across the entire nation. They have been very calculated in how they rolled that out. You take a CenterWell that we just signed in the first quarter, late first quarter, they're not waiting. They're going nationwide out of the gate. They're ready to roll, right? Every account is different. Then there's the question of, okay, once they get through their entire population, do they retest that population? How often do they retest that population?
There's been discussions where some plans are saying, "Look, we think we want to retest every two years, every three years." We still got to figure those sort of things out. I think what's encouraging is when you look at the 12 accounts that were right at the finish line with contracts or under contract with, most of them under contract with, that would cover, I believe, about almost 3 million folks who likely have arrhythmias of the 27 million that we need to get a patch on and find it. We've done some early work with defining and creating algorithms that can go into these innovative channel partners, be dropped across their medical data history at the patient level, and identify that patient likely has an arrhythmia that's never been diagnosed with an arrhythmia.
The first thousand patient pilot we dropped this into, which we tied it to a comorbid disease state of diabetes, type 2 diabetes, out of the thousand patients we put it on, 920 of them had an arrhythmia. We've launched into the second cohort, did our next thousand, of those 820 had an arrhythmia. Out of the first 2,000 we put this on, we found between 80-90% success in identifying arrhythmias. I just had an update late last week on the third pilot we just launched. The first 90 patients we put a patch on, every single one of those 90 patients had an arrhythmia.
I think we're becoming very good from an AI perspective to go into these innovative channel partners and say, "Look, we can find with a high degree of prevalence that there's an arrhythmia here, and when you put a patch on, you are in fact going to get that arrhythmia." Now, we have to make sure that the downstream cost of care is being reduced so that they understand the value of this. Most of these commercial payers understand the value of early identification of these disease states, and they understand their economics as well as anybody. It's resonating quite well, and I think that's how you open the market from 6 million tests a day to 27 million patients who likely have arrhythmias.
If I kind of put this together, you have a good market, strong market, improving market share, competitive share gain opportunity, incremental patients potentially coming off the sidelines. How do we put that against your guidance? You grew 20% in Q1. You're saying 17%-18% for the year, recognizing by Q4 you'll have another 20% comp, fine. You also are going into new market. Your OUS business should be bigger this year than last year, even if it's a small percentage of revenue. You put this all together. What assumptions did you make in the guidance that drove the balance of the year?
When we put that guidance together, again, our goal is not to get ahead of ourselves when we set the expectations. We want to be thoughtful around it, but we do not want to introduce unnecessary risk at this point in time. You're probably going to continue to hear us talk about the company as sort of being a 16-18% grower overall. If we can drive 20%, you should know internally the company is motivated and driven to deliver 20%. That's what we drive to. The way we set expectations is going to be in that sort of 16-18% range until we get more data, more experience in that undiagnosed patient segment that could completely transform sort of our way of thinking about that.
When we set the expectation coming out of Q1, we now had two quarters in a row where the Zio AT business was pretty sticky. Felt really good about it. We started to roll in sort of current performance over the remainder of the year. That was a good part of the guidance increase. Then we had some innovative channel partners that we had very clear daily prescribing trends that we had enough history. We could look at that and feel really good about their trajectory and just the continuation of that business. We rolled that in. What we did not roll in are new innovative channel partners that we have signed up this year that we just were still learning with them, right?
We don't know exactly what the behavior of prescribing patterns will look like, and so we want to give that some time, and we'll roll it in when the time makes sense. What I don't want to do is get out there, set an expectation. All of a sudden, the innovative channel partner starts a quarter later than what we thought, and I'm explaining why the quarter is short, but we're still bullish on the total picture. It didn't seem prudent. We want to be thoughtful, but I don't want to introduce risk unnecessarily, so.
Okay. Makes sense. I want to go over to the P&L, but we're remiss if we didn't have you just to ask about updates on FDA and GOJ. Maybe we just sort of tick through kind of the latest updates. I know you provided this on the call and in the queue, but maybe just for everyone's benefit.
Yeah. So I think on the FDA side, I would say good progress. I feel as good as I have with the FDA since the whole sort of ordeal of the 483s, the initial warning letter sort of came about. And this whole question of MCT and your clinical technicians, are they part of the product? Are they not? We aligned with them very clearly in the mid-part of last year, and I think from that point forward, we've done a tremendous job of addressing their concerns. We're 85% of the way through everything we've committed to the FDA. We will be complete by the mid-part of this year. So we're talking 30-45 days away from really being complete with everything we committed to the FDA to address their remediation and warning letter concerns. We had a call just as recently as about four weeks ago.
The tone, the tenor, the relationship is clearly very, very different than what it's ever been, and I couldn't feel better about where that's at. It doesn't mean that there's not challenges out there around the next corner we're not anticipating, but we're doing our very best to sort of bring them in, build a relationship, share very clearly where we want to take innovation on the platform. We've had multiple pre-sub meetings with them now where they're helping us to really think through what sort of testing data they're going to want to see, what they would expect the label to look like in these new products. That never happened historically. I mean, coming into the company, you couldn't get a single name of somebody at the FDA that we could pick up the phone and talk to. We just didn't have a relationship.
I couldn't feel better about the relationship that the team is building, and that feels great. Like I said, we'll be through our remediation activities by the mid-part of the year. Keep in mind, we agreed to go above and beyond what the FDA asked us to do, which we'll continue to work on that through the back part of the year. We are going to bring a third party in that we committed to the FDA as well to do a full-scale audit. We'll share those findings with the FDA, but we've committed to go above and beyond, and I feel good about where that's at. The DOJ, look, between the company and DOJ, there's not been any communication for probably a year now. We did have a recent ruling last week on the attorney-client privilege document matter.
The judge ruled in favor of the government, basically taking the position that we couldn't assert privilege. We'll most likely appeal that. I don't think it changes the case at all. I think they're very much aware of everything that's in those documents, but it is a matter of privilege being asserted and protected, and it has ramifications that go beyond just this case. I mean, it could go outside the case. We want to make sure that we assert privilege and that it's upheld where it needs to be. There's really not an update there. There hasn't been much back and forth with the DOJ at all in the last 12 months.
How do we tie or is there a link at all between the 483 remediation efforts and the filing of NextGen AT?
Not in the sense that the FDA is requiring any activity for us to complete before we can submit the MCT filing. However, we've made it very clear, and I've made it very clear internally to our team, our focus, and the FDA needs to understand our focus is addressing their concerns in the 483 before they start to deem us as trying to move on to the next product and just forget that, right? We have made it a priority to get the 483s completed. As soon as they're complete, get the MCT file submitted, right? That will be submitted in the third quarter. We're tracking well to that. I have no question it'll get submitted in the third quarter. Priority one was remediation. Priority two is MCT filing.
Okay. That's super helpful. Maybe we can just kind of go on. You made the comment earlier about needing to get to $500 million before you kind of bridge profitability. This year, you're starting to see another kind of inflection point in adjusted EBITDA margins. Maybe just kind of we could kind of start with gross margins and then walk through the opportunities that continue to support the uplift in profitability.
Yeah. On the gross margin side, I think the teams have done a terrific job of identifying different ways to drive more efficiencies within the gross margin profile. You think about our gross margin profile, there are really two pieces of it that are significant impacts within it. One is the product cost itself, and the other is the service cost. On the product cost, we have introduced automation that will drive another 200 basis points of improvement this year in the gross margin profile. There is the service side that we are making investments into to address the service model that will reduce that side of the house into the future, primarily through system enhancements and efficiencies, improving sort of scan time per report that is quite bored out.
You think about it in 2025, about 200 basis points of improvement in the product cost profile offset by tariffs, and there's about 50-75 basis points of tariffs. We're assuming about 100 basis points of pricing headwinds as well, and then a little bit of mix as AT is just growing faster than XT. On the gross margin side, think about that as being roughly flat year over year, although there's a lot going on underneath it to drive continued improvements that are just being offset with tariffs and a bit of mix.
Do we still have a tariff impact?
We still have 50-75 basis points modeled into it. I think that's the right way to think about it for the time being. I mean, let's see where it gets locked in. It's a little bit hard to predict, but we continue to build our models that way and plan sort of our expectations around profitability as if that's the range that it's going to land within. On the OpEx side, I think as you look down through our P&L, you're going to see a little bit of leverage coming out of R&D. There's been a tremendous amount of development work on MCT to get it ready for submission. Now that we get submitted, some of that cost comes down a little bit. Sales and marketing will lever a bit there.
We had some big Epic Aura investments that we made in the last year that we're starting the anniversary. That'll step down maybe a point. You're going to get about 300 basis points out of G&A that we continue to get really focused and turn the screws on in terms of where we think we can get that. All told, that's going to give you an EBITDA margin somewhere between 7.5-8.5% this year. When you think about that, G&A still sits in the low 40s. Not selling general and administrative, it's just pure G&A is about 42% of revenue in that model. We know most peers will operate with G&A sitting down in the low 20s. I don't think we can ever get our business model to the low 20s, to be honest with you.
I do believe we can get it in the low 30s. When we think about taking EBITDA margins from 15% that we've guided to at that billion-dollar mark, I truly believe this model can get into the mid-20s. G&A is going to be one of the biggest enablers to get there, and we're making a lot of investments in enabling that as we speak. That is where you're going to see the majority leverage continue to come from.
When you make the comment about the business model doesn't necessarily lend itself to that low 20s G&A, is that because of the IT investments you have to make from.
It's a little bit of IT. There's a little bit of the aspect that we bill a lot of payers. So the revenue cycle management piece is a higher component than what I'm used to seeing in other places where maybe you're billing hospitals or private practices. Here, we have a lot of payers. There's a lot of back and forth and aisles you got to kind of work through. You have the IDTF, right? Just the overhead required to manage the IDTF, which for us is 600-700 people, right? There's a good amount of management layer that's required in that that just weighs on the G&A profile. I think those sort of things probably create a model that doesn't let us get to low 20s, but there's no reason we can't get to low 30s in time.
Okay. Some of that depends, of course, on the level of revenue growth. I mean, the growth in G&A should be pretty fixed or is it more connected to revenue?
The RCM piece is a little bit connected to revenue because right now it's so much of a hand-to-hand battle, if you will, trying to navigate through that. So we have to throw a lot of people resources. I think in the next two years, you're actually going to see in this space a tremendous amount of AI that is likely going to drive tremendous efficiency. Investing in, we're already investing in, but until we see how that shows up, I think the RCM sort of scaling. That is just a piece of G&A. Overall, it should scale well.
Outside of profitability, I mean, obviously, you talk about turning free cash flow positive next year, although you do have a very strong balance sheet position that enables both reinvestment in the business as well as any of their other strategic paths you choose to go down. How are you thinking about M&A? Because the one thing that we hear sometimes is a multi-parameter monitor would have a huge amount of incremental differentiation. Now, no one else has one, but it would further just position the company in an advantageous way, both competitively and from a clinical value proposition standpoint. How are you thinking about M&A? I know you have the BioIntelliSense and Telesense partnership, but where does that fall in kind of your priority scheme?
I think the multi-parameter sensor, I absolutely agree with that. It was a big part of the premise behind why Telesense licensing agreements. Further, the more we move into primary care and get earlier in the care pathway, I think the more we have a right to look for more matters, right? Whether that's clearly, it's going to start with cardiac arrhythmia. Sleep is going to be one that's going to come very quickly behind it as we launch pilots later this year. Hypertension, blood pressure is another one that I think you can see a path to get into. Multivital sign monitoring, I think, is another one. There's a real place as we get further up the care pathway to look for more things, given how easy we've been able to make it for the physician to prescribe the product and then diagnose these things. It is critical.
I think from an M&A perspective, we're going to be thoughtful around it. We've got a strong balance sheet. Areas that we can really advance from a strategic perspective that fit well from a financial profile can help us drive leverage in the overall model and be accretive to the long-term financial goals are going to be very important to us. Things that can open up new adjacent markets that maybe we want to get into, but organically is going to take us a little bit longer so it can speed us to market. Those things get interesting to us. I will tell you, I think we have a pretty robust corporate development function where we understand the landscape incredibly well. We haven't rushed to any transaction. We're not going to rush into a transaction.
If we found one that made the right sense and fit for all the reasons I gave you, we wouldn't be shy on pulling the trigger to do that. It has to be strategically sort of a clear fit and accretive to what we're doing or accelerating what we're doing. I think that's very important.
Maybe in the last minute we have here, I'll turn it back to you. Any kind of closing or wrap-up comments you want to kind of leave folks in the audience or on the webcast with?
Yeah. We couldn't be more excited about where the company's at, to be honest with you. I think the momentum in the company is as strong as it's ever been. I think the market is very different than the way folks have thought about this market. I think it's very different than the way our competitors even think about the market, to be honest with you. I think if you were to sit down with a Philips, a Boston Scientific, a Baxter, a VitalConnect, smaller player, but certainly having some success, they would define the market very, very differently. The market's not 6.5 million ACM tests being performed each and every year. The market is further up the care pathway. It has to happen in primary care. You have to do this through population health programs, value-based care. That's right where we're going.
I think we have a product that plays there better than anybody else. All of our competitors I've listed, they start with MCT. The only way they offer a long-term cardiac monitor is when they downgrade into long-term cardiac monitoring. There's no way they're making a profit. I mean, if I took our AT product and downgraded into our long-term cardiac and still provided the gateway, all the electronic componentry that MCT has the benefits of, you wouldn't drive a profit. I understand why they're not pushing into this space. I love that fact. I think it leaves it for us to go get where the market is going to be. That's why I think the market's 27 million plus patients by the time we get it opened up. We're incredibly bullish about that and feel good about for the moment.
Excellent. I think with that, we're at time point. Thank you for making the trip this year to the conference and look forward to continuing to follow all the progress this year.
Terrific. Thanks for having us. We appreciate it.