Thank you. Okay. We're going to start the next—this one?
We're going to start the next, thank you. Next fireside here with iRhythm. And we have Dan Wilson, CFO, and Stephanie Zhadkevich. Sorry, Stephanie, I always fumble over that. But thanks for joining us, both of you. Looking forward to a good discussion here. If anyone has questions throughout the course of our fireside, please raise your hand, and we'll try to get you a mic. Dan, you guys are coming off—not really coming off anymore. We're almost done with 2Q. The last major public update from you guys was your 1Q. Very strong quarter. Growth accelerated. Would love to just get a high-level view to kick us off on the market, kind of the LTCM market, and kind of where we are in terms of runway. I know you have 70% share there. Kind of what's the runway?
What drove some of those—what seemed like a strengthening trend in the first quarter? And then we can dive in deeper.
Yep. Sounds great. Thank you, Rich, and thanks for having us. Excited to be here. You're right. We are seeing really good momentum in the business and actually an acceleration. Really saw that through most of 2024. As we were executing through 2024, saw growth kind of stepping up each quarter, which speaks to the momentum in the business. Exiting 2024 and into Q1 this year, growing in excess of 20%. Really excited about the momentum in the business, what we're seeing. From a market opportunity standpoint, for a long time we've pointed to our core market of 6.5 million tests. That is still our core market. We have—call it—30% share of that market. The fastest growing segment within that market is long-term continuous monitoring, where we have over 70% share.
Naturally, as we see more and more share shift into long-term continuous monitoring, we're in a great position to capture that. We're really driving that transition in the market. Despite all of our success over the last 10-plus years being commercial, there's still 1.5 million tests per year that are short-term Holter monitors. Legacy, traditional technology, where the clinical evidence is very clear, that is an inferior technology relative to long-term continuous monitoring with Zio. Big opportunity to continue to drive share shift into long-term continuous monitoring and grow our share in that market. Of course, there's the MCT segment, also a growing segment within that 6.5 million tests overall.
There we have, call it, low teens, mid-teens market share and a real opportunity for us to grow the market share there more in line with the 70% that we have in long-term continuous monitoring. A lot of opportunity still in our core market. We see growth opportunities beyond our core market. I imagine we'll get into that as we get into the Q&A.
Got it. Just maybe sticking with the LTCM, long-term continuous monitoring, 70% share, what are the biggest hurdles you think to growing in that segment? Where can that 70% get to? Can we just think of you kind of holding that type of share, maybe even losing a little, and that portion of the market is just sustaining? What's the growth curve for you if that happens?
Yeah. Maybe two parts to that. In terms of continuing to shift away from traditional Holter monitors to long-term continuous monitoring. More of the market shift. I'll talk about our positioning within that segment. A million and a half short-term Holter is still being done. Inertia and kind of changing behaviors in healthcare is always the barrier to bringing in new technologies. That remains true in our case. Really, it's generally an education, right? We're moving more and more into primary care, as I'm sure we'll talk about, educating those physicians on ambulatory cardiac monitoring and the benefits of long-term continuous monitoring. That's where the opportunity is. We've been generating a lot of clinical evidence to support that. We will continue to do that. Actually, we're seeing a lot of our cardiology customers, electrophysiology customers helping drive upstream into primary care as well.
They're aiding us in terms of the education of primary care physicians as well. That is in terms of the share shift. In terms of our positioning within long-term continuous monitoring, I mentioned 70%. We've actually seen that step up a point or two over the last couple of years. Maintaining, if not growing, our share of that market. I really like our position there. We'll probably talk about some of the clinical evidence, but CAMELOT and AVALON clinical data that we've put out there over the last couple of years. Our new form factor, Zio Monitor, which has been in the market, call it two years, has been pretty foundational to our success and growing our share in the market. We're going to continue to innovate and win as much share of the market as we can.
Maybe on CAMELOT and AVALON, how are you leveraging those studies, both in the marketplace for share and market extension, but also with the payers?
Yeah, good question. In our history, we've always generated clinical evidence to demonstrate the superiority of long-term continuous monitoring relative to traditional Holters, as we were talking about. It wasn't really until CAMELOT and AVALON that we started to distinguish Zio from other long-term continuous monitoring technologies. I think our competitors actually did a reasonably good job up until a couple of years ago to kind of draft on our success and point to our clinical evidence as if it was their own clinical evidence. CAMELOT and AVALON start to break that down. Between the two, across Medicare and commercial populations, over 700,000 patients in those two study sets, and clearly showing Zio having the highest diagnostic yield, lowest retest rate, lowest healthcare resource utilization, and actually the best patient outcomes as well. Pretty powerful clinical evidence.
It has been a great tool in the bag of our commercial team. The evidence kind of speaks for itself. Certainly with clinicians, it's a powerful tool, absolutely with payers as well. We've gotten some good market access wins on the basis of CAMELOT as well. Very important clinical data sets. We'll continue to add to that. That's always been part of our DNA.
Just when you say a market access win, can you elaborate on that? What exactly is that opening up? Can you describe that?
Yeah. One good example, it was a legacy national payer, kind of the last one to fall. They still had a requirement where for a patient to go on to long-term continuous monitoring, they had to start with a short-term Holter. They had to do a one to two-day monitor first. If that came back empty or unclear, then they can move on to a long-term continuous monitoring. On the basis of presenting the CAMELOT data, they took out that requirement. Now those patients, which I think were that payer specifically was 10 million covered lives, those patients can go directly to long-term continuous monitoring first line.
Got it. Okay. That makes sense. Just jumping to MCT for a minute, forgetting about the timing and everything, just what does that do for you competitively as you kind of sell your portfolio? Can you just describe kind of how and where you're potentially kind of at a disadvantage today and leaving money on the table, if you will, and where this will kind of hopefully allow you to get up to that LTCM type share?
Yeah. Yeah, good question. I mentioned the overall market. The two segments that are really growing are long-term continuous monitoring and MCT. Having the two products in the growing segments of the market, I think we're well positioned from a portfolio standpoint. With AT, our current product in that MCT category, it is a good product. We're seeing very good success, and specifically in the last couple of quarters with Zio AT. It does have competitive advantages that our teams are doing a really good job effectively selling against and really good momentum there. Zio MCT, our next generation product, is absolutely the better product. There's a couple of factors there. Extending the wear time out from 14 days to 21 days, that's important for a couple of different reasons. Clinicians have a view that MCT does need to be closer to that 30 days.
Twenty-one days moves us meaningfully in that direction versus 14 days for AT as well. It will be on the new form factor as well, which Zio Monitor is on. I pointed to that as a recent driver of the success we are having in long-term continuous. Having both of those products on that same hardware platform.
Can I just ask one thing on that? Is 21 close enough to 30 that they're synonymous? Or is there still a—is there still a perceived disadvantage of being 10 days shorter wear?
Yeah. I think 21 days absolutely gets us a good chunk of the market that may not be accessible to us today. We can serve the folks that believe firmly that it needs to be 30 days. We can essentially offer back-to-back monitors: 21 days and then another 9 days to get to 30 days. There are other ways to serve that market. 21 days is sufficient for the vast majority of the market. The ironic thing is here, if you look at competitive devices that are prescribed for up to 30 days, to get to 30 days, a patient has to swap out the device, the adhesive, recharge, the gateway, a lot of what we call patient manipulations that introduces friction. That means the patient is not going to get out to 30 days. They are going to find it too cumbersome.
They're not going to put it on the third or fourth time they need to. Versus our product with AT and MCT, patient puts it on, that's all they have to do, and they can wear it continuously for 14 days with AT and eventually 21 days with MCT.
Okay. Now I'm going to ask you on timing and how any updates that you can provide on Zio MCT. Do you remain on track still to submit that to the FDA by Q 2025? What are the biggest risks to that timing and then eventually approval in your view?
Yep. Yeah. Still tracking towards that Q3 submission. That's a top priority for the company. FDA remediation remains the highest priority and Zio MCT right behind it. Tracking to the Q3 submission, feel good about getting there. Still some blocking and tackling to be done, but nothing that we see that's going to prevent us from submitting in Q3. In terms of kind of after submission clearance, we're not going to guide to that. We'll certainly try to provide more visibility once we're submitted and with the FDA. Ultimately, what we control is submitting it to the FDA. We're comfortable guiding to that. I'd say fortunately with AT and the strength that we're seeing with that product, when we launch Zio MCT, we're going to be launching it from a position of strength. Really excited about getting that product out to market.
I think that the overall opportunity doesn't change even with the AT strength that we're seeing. As I mentioned, low, mid-teens percent share of that MCT market. There's a tremendous opportunity to grow our share more meaningfully there. We believe Zio MCT is going to be an important driver of that.
Just within primary care, the penetration there is a priority. You've talked about kind of that being a key growth driver for you currently and into the future. It feels like it's under-penetrated, so there should be some runway there. Can you put some quantification around that for us from a market opportunity size for you, kind of where you are? I think you said a third of your volumes run through that channel. Where can that go? The pace of adoption there, is it just steady, or is there anything that's potentially deflecting?
Yeah. Yeah, good question. A bunch of different things to answer that question. You mentioned a third of volume. That was in our most recent quarter, a third of volume being prescribed out of primary care. We last gave that metric for full year 2023, which was 21%. That gives a sense of how that's grown over the last 12+ months. We see that continuing to grow. In terms of increasing.
Your percentage is increasing.
We do. It's a big push. We're coming at it in two different approaches, which I'll touch on in a minute. When you look at claims data, there's 15.5 million patients showing up in primary care every year with cardiac palpitations noted in their medical record. All of those are candidates for long-term continuous monitoring. Yet only 6.5 million tests across all modalities, all care settings are taking place. We do believe as we're pushing into primary care, we're going to be well positioned to capture more of those patients upstream and earlier.
That was 15.5 ?
Fifteen and a half million. And those are symptomatic patients. I'm sure we'll start to talk about asymptomatic and undiagnosed monitoring as well. That's an incremental opportunity beyond the 15.5. We believe it's an important growth driver for our business and opening up, expanding the market, and really getting patients and their clinicians answers sooner to avoid downstream impact as well.
Got it. What are the efforts that are underway to drive that faster?
Yeah. Yeah, good question. I mentioned a two-pronged strategy. We've always had a land and expand kind of part of our business model where we would open an account typically through cardiology or electrophysiology as the clinical champion. We would look for opportunities to expand within that network. It could be emergency room, neurology, nephrology, other departments. Primary care is a big one as well. We've always had that model. We've gotten more kind of organized and strategic in terms of how we execute on that strategy. We have structured our sales force to really deliver that land and expand model. We have territory managers that are responsible for opening up new accounts. We have a group, key account managers and other kind of support functions that are responsible for expanding penetration within those accounts.
There's a number of different things we could do to drive expansion there. EHR integration is a big one. That's always been part of our strategy. Integrating an account into EHR just makes Zio even more seamless in terms of integrated into workflows, easier to adopt, provides access to all prescribers in that account.
When you talk about innovative channel partners, is that what you're referring to?
That was the second part of the two-pronged strategy. I'll jump there. Innovative channel is now kind of a more recent development. I would say this was always viewed as a when, not if part of our business. Really have started to see this show up starting 12-18 months ago and seeing really positive early signs. These are groups, kind of value-based care entities. The common denominator is they own the risk of the patient and make the clinical decisions for those patients in an integrated payer and provider type of organization. Certainly, they can adopt Zio for symptomatic patients. They're seeing symptomatic patients and they're generally primary care physicians. What we're seeing more and more of is now taking the step to proactively monitor asymptomatic or undiagnosed patients. There's a lot of clinical evidence that has been generated.
We'll continue to generate clinical evidence to show you monitor these patients, you are going to find undiagnosed arrhythmias. Importantly, you could either choose to proactively monitor these patients and diagnose them with Zio upstream before a clinical event, or you can do nothing and these patients are likely going to show up in the emergency room and get diagnosed there. That'll cost you $15,000. Right? Moving this upstream, finding the undiagnosed arrhythmias earlier to prevent these clinical events and reduce hospital utilization has been a meaningful driver behind this. Again, we believe we're early, but see the opportunity.
Is that the Signify?
That's one of them, yeah.
Just remind me some of the others that we should be focused on or anything.
Yeah. Yeah, some context I can give there. So there's kind of five accounts that we've named publicly, Signify being one of them. I'd say probably a dozen that we have that we're actively either in programs with or contracting with. That's kind of the near-term group that is contributing to growth this year. There's another group, call it 40, that is kind of our near-term pipeline, the group that we're actively engaging with and looking to sell these programs into. And then a full population identified, call it 100 accounts. I believe we're just getting started. What is unique about these groups is they're managing a large number of patient lives. It is a one-to-many selling model for us where we're selling into the top of these groups.
They're making the determination to monitor a certain portion of their population and driving that education and utilization from the top down. A really powerful model for us. I'd say we're uniquely positioned there given our scale and our ability to meet some of these volumes that these accounts are looking for. I would say that's a differentiator for us relative to our competitors that is true today that maybe wasn't true, call it two or three years ago.
As I think of some of the opportunities outside of asymptomatic and then even thinking through sleep apnea, can you talk a little bit about which are the closest at hand and what it's going to take to unlock those? Who should realistically start to be thinking about those?
Yeah. Yeah, good question. That is the other great thing about moving into primary care. I mean, that is a strategically important initiative to open up additional patients to us, right? Unlike cardiology, primary care physicians are seeing kind of all patient types. As we're successful there and continue to be successful there, there's going to be other adjacent market opportunities opening up for us. I'd say sleep is probably the nearest term one. We've been talking about that. We'll have pilots launching there later this year. I'd point to multivital sign monitoring and think about that as our next generation beyond Zio MCT.
This is where we'll start to bring other vital sign, other monitoring parameters onto the platform, onto the device where we can be monitoring for SpO2, blood pressure, potentially respiratory rate, other parameters, other signals that allow us to give deeper insights and broader insights. That will be the platform that helps open up these adjacent markets from a channel standpoint. Think about primary care as the channel to open up those opportunities.
Do we think of all of those additional parameter offerings as internally developed? Or these are things you need to go and supplement with external DD?
We did do a licensing transaction last year with a company called BioIntelliSense. We licensed technology to some of those parameters. I believe that's going to move us down the path and have internal teams working on the development there. FDA remediation and Zio MCT are higher priority. We do have teams actively working on this. If we see something external from iRhythm that is going to move us faster down the path, we'll certainly consider that. Maybe a little bit like how we saw the opportunity with BioIntelliSense last year. I believe we have enough to move this forward internally. Certainly, we're going to look externally and won't be shy if there's an opportunity that moves us down the path meaningfully.
Just going back to the 1Q and 4Q to 1Q, what feels like a step up in growth? It is kind of consistent now. It is two quarters in a row. You have accelerated. I guess, one, investors have asked me, "Hey, how much of that is due to some competitor issues that just might be spilling over from Philips? And where are we on that?" Two, not that this is a bad thing or that it is transient. There is PFA kind of going on in the backdrop. That is an extremely fast growth category. I would imagine that as you have more EP procedures, because there is some incremental procedure contribution from that new product category, that might be spilling over to more monitoring, right?
Can you just help us think through those more secular tailwinds and the degree to which those are benefiting you and how durable or sustainable they might be?
Yeah. Yeah, I'll come back to the PFA one. As we set up the year, we saw, to your point, a competitive disruption in the Q3, Q4 timeframe, really centered in the Q4 timeframe. We won a good amount of business during that disruption and did a lot to retain that business. As we set up the year and set initial guidance for the year, we were only a couple of months into that and wanted to be careful not to get ahead of ourselves. We wanted to make sure we were able to retain that business before really baking it in. Through Q1, we estimate we retained, call it 85% of the business that we won during that disruption. I feel really good about that sustaining through the remainder of the year. We did factor that into guidance when we updated guidance in May.
I would also say, even independent of that competitor disruption, we are winning good business with AT kind of independent of that disruption. I feel really good about the momentum in AT and that sustaining through the year, which is why we updated guidance the way we did. In terms of PFA as a driver of the business, absolutely, it is a tailwind. The volume numbers or procedure volumes, it is on the lower side when you think about our total market size of 6.5 million tests. I would stop short of pointing that to as the number one driver of our overall market and growth. It is absolutely a tailwind. There is energy and excitement in electrophysiology that has not been there for some time. There is motivation to find patients that are candidates for PFA. Absolutely a tailwind.
I wouldn't point that out as kind of the number one driver of our business, but certainly helpful.
Dan, aren't you glad that 90% of the conversation so far has not been about remediation compared to this time last year, right?
Happy to go there, but yeah.
Okay. I'm going to put the last few minutes on that because it's very important. Maybe just update us on where you guys are on the remediation efforts. What milestones, if any, we should be thinking about or on the lookout for as the FDA comes back and reinspects and things of that sort? How do we think about any of those potentially impacting MCT?
Yeah. Yep, good question. Happy to spend time here. It is our number one corporate priority, as I mentioned. When the 483 observations came in that July-August timeframe last year, we took the position this needs to be number one corporate priority. We can continue to innovate, but none of that's going to matter unless we have the foundation as strong as it needs to be. I have really made that a priority over the last 10, 12 months. We brought in a new head of quality and regulatory that has been an incredible value add to the business and making sure we're meeting our timelines and commitments that we've laid out to the FDA. In response to the 483 observations back in August last year, we did submit a 12-month remediation plan to the FDA.
We've continued to execute and hit every timeline and commitment that we laid out to the FDA at that time. We're over 80% completed with those activities and should have that wrapped up in the Q3 timeframe. We are going above and beyond that. There will be kind of more remediation work or really, think about it, really transforming our quality management system holistically and working with an independent outside firm, highly reputable, that will help us do that last bit, which, by the way, was all voluntary. This was not part of what the FDA asked for, but we wanted to show our commitment and really build that foundation, as I was mentioning. Those activities will take us through the remainder of the year and feel good about continuing to hit all those timelines.
I'm just curious on that last piece. Is it possible the FDA comes in before you've begun to implement those above and beyond steps that I would presume were anticipatory of where the FDA could go down the road? Why be reactive? Let's be proactive. Is there a chance that the FDA comes in, looks at what you're doing, says, "Fine," and still issues observations pertaining to those things that you haven't yet been able to implement? Or is it more of a dialogue? The FDA knows what you're doing. They can see that. That probably is less likely.
You started to ask the question, "Is it possible?" Yes, everything's possible, certainly. I do think we are highly communicative with the FDA. We've had good meetings, recent meetings with the FDA. We are keeping them updated in terms of our plans and intentions. I'd say the tone there is very positive. I think they see our commitment, understand that we're going above and beyond. I feel good about really what's in our control, which is executing against that plan. Until they tell us something different, that will remain our plan.
Just relating all this to MCT.
Yeah.
How would MCT be delayed, if at all, from these remediation efforts and/or setback? Are they somewhat separated?
Yes, somewhat separated. Keep in mind, we did push out Zio MCT timing from what we were originally thinking because of the remediation activities and what we kind of heard from the FDA. We took additional steps, again, voluntarily to work in some additional testing, make the submission more robust, and make it in line with how we believe the FDA is viewing things. Continue to feel good about that Q3 submission. We will get feedback from the FDA following this submission.
Great. We're brushing up against time here. Not really enough for another question. Thank you, Stephanie, Dan. Really appreciate you being here.
Thank you.