Ladies and gentlemen, thank you for standing by, and welcome to the iRhythm Technologies, Inc third quarter 2020 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ms. Leigh Salvo. Thank you. Please go ahead, ma'am.
Thank you, Zen, and thank you all for participating in today's call. Joining me are Kevin King, CEO, Doug Devine, CFO, and Dan Wilson, EVP of Strategy, Corporate Development, and Investor Relations. Earlier today, iRhythm released financial results for the third quarter ended September 30, 2020. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements.
Our forward-looking statements, including without limitation, those statements related to the impact of COVID-19 on our business, expectations for economic recovery, market expansion and penetration, productivity improvement, reimbursement, release of clinical data, operating trends, and our future financial expectations, including revenue, growth margins, profitability, and operating expenses, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. In addition, we will refer to adjusted EBITDA, which is a non-GAAP measure that is used to help investors understand iRhythm's ongoing business performance.
For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent annual and quarterly reports on Form 10-K and Form 10-Q, respectively, with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 5th, 2020. iRhythm disclaims any intention or obligation, except as required by law, to update or revise any financial projections of forward-looking statements, whether because of new information, future events, or otherwise. With that, I'll now turn the call over to Kevin.
Thanks, Leigh. Good afternoon, and thank you for joining us. In my prepared remarks today, I'll discuss the key highlights and accomplishments of our third quarter and provide our current view of the market environment as we close out the year. Doug will go into more financial details before we open the call up for your questions. The iRhythm team continues to rise to the challenges presented by the current environment, and we not only continue to deliver high-quality patient care each and every day, we are also building a stronger company for the future. The strength of the company starts with our employees, and I am thankful for their resilience, commitment, and passion they bring every day. Our future and our ability to make a positive impact on the lives of patients has never been brighter.
Overall, the positive recovery trends we experienced in Q2 continued throughout the third quarter and helped lead to significant growth. Total revenue in the third quarter was $71.9 million, reflecting year-over-year growth of 31.6% and sequential growth of 41.4% over the second quarter. This quarter's results were driven by further penetration of Zio XT in both existing and new accounts, continued ramp of Zio AT, and continued utilization of our home enrollment service in telemedicine settings. We're very pleased with these results given the challenges that remain in the market and believe that the results signify the strength of our platform and our capabilities. In addition to our top-line results, gross margins were also strong at 74.7%. Importantly, third quarter operating results include positive cash generation for the quarter, demonstrating our path to profitability while maintaining platform and future growth investments.
Turning back to our top-line results and the market backdrop, we saw steady improvement in the overall market conditions during the third quarter, but also continue to see a number of challenges. On the positive side, a significant number of our accounts are prescribing Zio at volumes well above levels at the start of the year. These accounts contributed to our strong growth. However, were partially offset by roughly equal number of accounts that remain below pre-COVID levels. The primary reasons for these constraints remain essentially unchanged from our prior discussions. Lower patient throughput due to stringent safety protocols, resource constraints due to furloughed or reduced staff, or continued hesitancy by patients to visit their health system. We did successfully open a significant number of new accounts compared to the second quarter's rate. This rate, however, is slightly below pre-COVID levels.
The largest hurdle we face in opening up new accounts continues to be account limitations to in-person selling, particularly in regions that have been slow to open up or have had recent resurgence. Overall, we're pleased with the trend towards improved market conditions, yet continue to remain cautious on the overall outlook. Importantly, we have high confidence in our platform, our near and midterm strategic priorities, and our ability to continue to grow our share of the market. To that end, we remain focused on our three-pronged strategy to drive sustainable high revenue growth and to deliver operational efficiencies as we scale. We made important progress against each of these initiatives during the quarter. As a reminder, our strategy consists of increased market penetration with Zio platform, increased operating leverage through continued productivity and automation improvements, and expanding our addressable market into new indications and geographies.
Starting with increased market penetration with our Zio platform. While the pandemic undoubtedly has created unprecedented challenges, it has also served to escalate awareness of the benefits of the digital platform compared to alternatives. For example, Zio has demonstrated unique advantages relative to traditional Holter monitors, including being more patient-friendly and the ability to maintain patient care in telemedicine environments. To that end, our home enrollment capability remains an important component of our service delivery. While we saw a spike in the early part of the COVID outbreak, we have seen this stabilize to around 25% of our registration volumes. We believe there will always be a need for physicians to see patients in person, particularly new patients or those with an emergent situation.
Virtual care pathways are becoming increasingly accepted and critical to ensuring continuity of patient care as well as providing for greater staff and patient safety. We expect this to be another critical differentiator and competitive advantage of our platform going forward. Turning to Zio AT, we had another quarter of strong market traction and growth for Zio AT. Our single platform strategy that leverages our entire innovation stack distinguishes Zio AT from traditional MCT technologies. The experience and trust that our customers have with Zio XT has benefited Zio AT, and further enabling our customers to standardize to a single ambulatory cardiac monitoring platform allows them to streamline their workflows, which has never been more important.
A full year into market launch of Zio AT, we are very pleased with the pace of adoption, which has exceeded our initial expectations, and we're increasingly more confident that Zio AT can be the market leader within MCT. Turning to our second strategic priority, increased operating leverage through continued productivity and automation improvements. We were very pleased with the operating results during the quarter, which led to strong cash flow generation. Longer term, our focus remains on building the infrastructure to scale the business efficiently for the next five-plus years. Despite the challenges in the market environment, we saw a return to high sales force productivity in the third quarter. As evidence of this points to year-over-year revenue growth in the quarter far outpaced the growth in the number of reps, suggesting continued improvement in sales force productivity.
As mentioned previously, we were successful during the quarter in opening up new accounts. In certain regions, however, the resurgence of the pandemic continues to constrain account access by our sales team. While our ability to interact with existing customers is not difficult, we're finding that getting in front of new customers is a bit more challenging. We saw this challenge emerging early in the pandemic and put in place investments to build virtual selling skills and marketing presence. For example, in the form of a new media campaign to promote the benefits of Zio brand and peer-to-peer education and webinars to help our team reach our customers in new ways. Over the past several months, these investments have helped evolve our commercial team's competency to sell in this rapidly evolving market. Finally, our third strategic priority is around expanding our addressable market into new geographies and indications.
We made good progress against this priority during the quarter and see a number of important catalysts in the near future. As it relates to expansion into new geographies, we achieved an important funding award in the U.K. that will not only drive increased utilization of Zio in the near term, but also lays the groundwork for wider adoption, iRhythm was selected from over 500 applicants as a winner of the Artificial Intelligence in Health and Care Award by the U.K.'s National Health Service, a first-of-its-kind digital health technologies pilot. The award funds Zio trials in selected sites across the U.K. over a three-year period. Clinical pathway and economic outcomes will be monitored and evaluated in order to inform any future commissioning decisions around the adoption of Zio within the NHS program.
We're focused on building out our infrastructure and capabilities within the U.K. in order to meet the requirements of the program and to lay the foundation for future scale. Related to new indication expansion, we're coming into a number of important market development milestones related to the asymptomatic AF opportunity. As a quick reminder, we estimate that there are more than 10 million individuals in the U.S. that are at high risk of atrial fibrillation due to age and other risk factors. It's estimated that one-third of these individuals with AF are not aware that they have it, and if left undiagnosed and treated, have a five-fold increased risk of stroke.
We believe this large unmet need can be addressed through targeted long-term continuous monitoring. Once diagnosed, initiation of anticoagulation therapy or other therapeutic interventions can be put in place that have already been shown to improve clinical outcomes such as stroke. Lastly, a virtual care pathway that diagnoses AF earlier in the disease progression has the opportunity to reduce unnecessary healthcare utilization and reduce the cost of care. The mSToPS trial was designed to prove out this model. The trial, which began in 2015, is a collaboration between the Scripps Research Translational Institute, Aetna's Healthagen Outcomes Unit, and Janssen Pharmaceuticals, and utilizes our Zio service. Initial data from the trial demonstrated significantly improved AF detection rates at year one in an active monitoring group with Zio versus an observational group.
In addition, one-year health resource utilization data showed a decrease in emergency department visits and hospitalizations for the actively monitored group. We are now just a couple of weeks away from the three-year outcomes data that is scheduled to be presented at the American Heart Association meeting in mid-November. In addition to mSToPS, we are expecting the results from the SCREEN-AF trial to be presented at the European Stroke Organisation and the World Stroke Organization 2020 virtual conference this Saturday, November 7th. This trial is a randomized trial evaluating AF screening of primary care patients using Zio. Patients over the age of 75 with hypertension and without known AF were randomized into either a standard group of care or an interventional group receiving AF screening, including Zio.
The aim of the trial is to demonstrate that continuous ECG monitoring with Zio is superior to standard of care for AF detection in a high-risk, asymptomatic population, and ultimately, to build evidence supporting practical and cost-effective screening strategies. We anticipate these trial results will be very important milestones and catalysts for our market development efforts, and we're looking forward to the results and reviewing the data with you when it is presented. In summary, we remain highly confident in our long-term strategy for the company and are pleased with the recent progress we made with several important milestones to come. Before closing, I want to discuss our outlook for the remainder of the year. Barring any unforeseen change in the market environment, we are confident that we can continue to grow the business at a similar level to the third quarter.
While we remain cautious on the overall market environment, we have high confidence in our platform, our strategy, and our capabilities. We're resolute in our focus on changing the standard of care and know that we can continue to have an even greater impact on individuals' lives. I'm extremely proud of the entire iRhythm team and the energy and effort they bring to it every day to deliver our service to the millions of patients that can benefit from it. With that, I'll turn the call over to Doug.
Thanks, Kevin. The third quarter of 2020 showed steady growth and gradual recovery of the business environment. The third quarter achieved some significant milestones. The company executed a $220 million capital raise to provide balance sheet security and fund future growth and achieved positive adjusted EBITDA for the first time. More on that later. First, let's look at financial highlights for the third quarter of 2020. Revenue increased 31.6% year-over-year and was up sequentially 41.4% quarter-over-quarter. Gross margins were 74.7%, roughly flat year-over-year, and up 510 basis points quarter-over-quarter. We experienced strong recovery on Zio XT and continued expansion of Zio AT, and cash and short-term investments were at $327 million at quarter end. Taking a more detailed look at the third quarter financial results, revenue grew incrementally through the quarter, exiting the quarter slightly higher than our pre-COVID run rate.
We saw that trend continue into October. As we think about individual drivers within revenue, Zio XT drove the majority of quarter-over-quarter revenue growth, with Zio AT continuing to steadily grow in the quarter. On an account and regional level, third quarter volume showed progress returning to pre-COVID baselines. The pace of recovery remains uneven across regions and accounts. 42% of our accounts remained more than 10% off their Q1 run rates, offset by continued onboarding of new accounts and the growth of over 10% over Q1 run rates in 31% of existing accounts. New account onboarding improved 50% from Q2, though still slightly below pre-COVID levels. Looking at new store/same store mix, new store accounted for 45% of year-over-year growth. Home enrollment was steady at approximately 25% through the quarter.
Turning our attention to the rest of the P&L, gross margin for the third quarter of 2020 was 74.7%, a 5.1% increase compared to the gross margin of 69.6% in Q2 of 2020. Compared to Q3 2020 gross margin, comparing Q3 2020 gross margin to Q1 '20 gross margin of 74.7%, gross margin is flat. Although within there, you have up on volume offset by the cost of home enrollment and the continued ramp of Zio AT. Operating expenses for the third quarter of 2020 were $58.5 million, down slightly from Q3 2019 OpEx of $59.1 million and up 5.2% compared to Q2 2020 OpEx. OpEx increased versus Q2 2020 due to the partial restoration of compensation reductions. Variable costs included in OpEx were a half a million dollars in Q3 2020 compared to $5 million in Q3 of 2019 and $3.4 million in Q2 of 2020.
Variable expenses were higher in Q3 2019 and Q2 2020 due to milestone payments. The company expects the next variable milestone payment to occur in Q4 2020. Looking at adjusted OpEx, defined as OpEx minus variable expenses and non-cash expenses, Q3 2020 was $40 million flat compared to Q3 2019 of $46.5 million and Q2 2020 of $41.8 million, showing continued reduction of cash operating expenses. Of note, we fully reinstated stock compensation in Q3 2020 following the partial restoration in Q2 2020, resulting in non-cash OpEx increasing $7.6 million quarter on quarter. Quarterly adjusted EBITDA, defined as EBITDA less stock compensation, was positive for the first time in Q3 2020 at $14.8 million. Expense reductions due to COVID were approximately eight million in Q3 2020. Thus, EBITDA would still have been positive at $6.8 million with the full restoration of COVID related cash expenses.
The net loss for the third quarter of 2020 was $4.7 million or $0.17 per share, compared with the net loss of $18.3 million or $0.72 per share in the same period of the prior year. Turning our expectations to the remainder of 2020. As Kevin mentioned, despite the challenging environment, we are confident that we can continue to grow at levels similar to the third quarter. Assuming no material change in the operating environment, we expect fourth quarter revenues to grow mid-single digits sequentially as compared to the third quarter. CMS Category One update. Before closing, I wanted to provide an update on where we are in the transition to a Category One code. As you know, CMS published the proposed Medicare physician fee schedule proposed rule for 2021 in early August, which we summarized in our last earnings call.
A public comment period followed by the publication of the proposed rule, with the public comment period closing in early October. We continue to expect CMS's final rule on or around December 1st, 2020, for implementation on January 1, 2021. In tandem with the remaining CPT process timeline, we have been actively transitioning the hundreds of existing commercial contracts and pricing to the new CPT Category I codes. This process is going according to our expectations, and we continue to expect the majority of these contracts to crosswalk to existing rates. We expect the majority of these contracts, along with the required information and system changes to support claims processing of the new codes, to be complete at the end of this year or early next year. Kevin, Dan, and I would now like to open the call to questions. Operator?
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Again, to ask a question, you may press star one on your telephone keypad.
Operator, this is Leigh. I want to let the audience know that we might be having some technical difficulty as we're not seeing anyone queuing up for questions. Operator, can you please re-queue?
Yes. Okay. Again, if you have any questions, please press star then the number one on your telephone keypad. All right. We have a question from David Lewis, from Morgan Stanley. Your line is open.
Good afternoon. Kevin, maybe just two questions for both of you, I guess. The first would just be any update on the reimbursement process, Kevin, other than the commentary you've already provided in the public domain, would be question number one. Question number two for me would just be as you think about, it's early, but as you think about 2021, I know there's a lot of dynamics moving around from reimbursement from a revenue perspective. If you think about the underlying volume of the business, I'm just trying to think about how we should think about '21 over a baseline 2019, and is 25% volume growth for this business the right structural growth rate that you're seeing? Thanks so much.
Yeah, you bet, Dave. Hi, it's Kevin. Really don't have any other updates on reimbursement than what we said here in the prepared remarks and the comments that we've had since the open period closed. We remain extremely confident in where we sit. We've provided all of the necessary information and feedback, and we're looking very forward to December 1st when the final ruling takes place. Regarding 2021 reimbursement and volume, I think on the reimbursement or pricing side, if you will, the data that we gave at the time of the initial ruling, I guess the RVU, and we did the backwards walk to 2019 and those same mix and so forth was I think high single digits delta on price. I think that still continues to make sense.
The progress that we're making with our commercial contract conversions, be they indexed or non-indexed, is very much in line with where we were with what we had stated before. I feel comfortable with that number. As far as the volume growth, a lot of this is still so dependent on COVID recovery and resurgence. David, as you know, yesterday we hit 100,000 new cases, and this is kind of rattling the bones of the healthcare system right now. If it weren't for COVID, I think that's probably a reasonable range in that mid-20 category, maybe a little bit higher than that. We'll have to see where the roll-ups are, but definitely a forward-looking positive growth trend from our side. There doesn't seem to be anything in front of us but open field.
Your next question comes from the line of Robbie Marcus of JP Morgan.
Thanks for taking the question and congrats on a really nice quarter here.
Thank you, Robbie.
Kevin, I was hoping you could talk about sort of where you are in terms of account penetration. Are you seeing the growth from adding more centers? Is it adding more docs within those centers? Is it having doctors who are already prescribers prescribe more? Is it all of the above? Just trying to get a sense of, is the low-hanging fruit all picked already, or is there still more to go here? Because the growth is pretty impressive.
Yeah, I would say what Doug said in his prepared remarks. For this particular quarter, new store growth accounted for 45% of the growth in the quarter, 55% being same-store sales. We count same stores as kind of brick and mortar addresses, not necessarily multiple sites. Sites that have multiple locations would be multiple stores, if you will. We've referenced in the past, for example, Stanford has 10 locations. Stanford would be 10 same-store locations. It wouldn't necessarily just be the one. I think we're still under-penetrated in the market. It's probably less than 20% overall penetrating in terms of volume. Maybe slightly higher than that in terms of accounts. I don't see anything in our regular sales operations calls that would lead me to believe that the funnel of opportunities for new account growth is diminishing in any way, shape, or form.
I think we still have a long runway there. Of course, Zio AT is helping us there as well because now we're able to go after accounts that were previously unaddressable because they had a demand for more of a full line. When we can address the market with long-term continuous monitoring plus the mobile cardiac telemetry capabilities, that adds to the pie here.
Great. Maybe a quick follow-up for Doug. It was great to see first quarter with adjusted EBITDA profitability. Probably would have still hit that even ex some of the holdback on spend due to COVID. How should we think about profitability here? Should it teeter back and forth depending on the quarter, or do you think this is adjusted EBITDA profitability is here to stay? How should we think about the expense ramp going forward? Thanks.
Yeah. Well, I think you did see obviously a pretty significant swing in the EBITDA in Q3 as we saw a substantial recovery in revenue, and you did not see any meaningful, and as I shared in my prepared remarks on the cash OpEx expenses, we were actually down a bit.
Down slightly quarter on quarter. You should expect that, and I also highlighted in there that we had about $8 million of reductions that are COVID related in the quarter, but that still leaves you nicely positive. You should expect that we are going to start ramping up OpEx, the cash OpEx spending over time. Given where we are in the positivity, I wouldn't expect big quarter to quarter fluctuations. We're of course, going to be managing our expenses along with the pace of the development of the business.
Great. Appreciate it. Thank you.
Your next question comes from the line of Margaret Kaczor of William Blair. Your line is open.
Hey, good afternoon, guys. Thanks for taking the question. Maybe first off, I wanted to touch on the asymptomatic population. You guys have the mSToPS data, obviously SCREEN-AF, GUARD-AF, and the rest are ongoing. Is mSToPS for the next few weeks enough to at least start to move down the pathway of changing clinical society guidelines or payer approvals? Really to think about it, what timeframe should we think about asymptomatic becoming more material as a growth driver?
Yeah. Hi, Margaret. Thanks for the question. It's Dan. I would say we have two very important trials within the next couple of weeks, mSToPS and SCREEN-AF. Add to that GUARD-AF a little more longer term, and we think the clinical evidence supporting what we believe is a very compelling value proposition is really going to start coming together. It will take a lot to impact clinical society guidelines, and I think that's potentially a longer-term aim for us. Certainly initially, with mSToPS, SCREEN-AF, and other trials, we will look to go to market with that evidence, and try to bring mSToPS-like models to the real world in really targeting payers. We're excited about what's on deck, but recognize that this is not a market that exists today.
There's certainly some market development work that will need to go into it, but we believe everything is lining up really well to have this be a meaningful opportunity over time.
Okay. Just to follow up a little bit on the fourth quarter and maybe 2021, similar to David's comments. You mentioned some sequential improvements in revenues going into Q4. In the meantime, we're seeing these COVID waves. Equally importantly, you guys actually had really, really strong numbers in the third quarter. I guess walk us through what happened in Q3 that drove that upside. Is it those existing accounts doing better or new accounts maybe coming in better? Why can or can't that happen in Q4? What's being assumed in that number? Thanks.
Yeah, Margaret, I think I'll go back with, Doug and I can address this here. Compared to the second quarter, the third quarter had a higher recovery of new account additions that we didn't see in the second quarter. The second quarter was closer to a complete lockdown, if you will, and I think we described that previously. That certainly helped. We saw volume recovery in the third quarter of our existing accounts as rates of new infections began to fall in the June timeframe and tick their way down until we got to about late August, early September, and things started to sort of peak back up again. Prescribing volumes, patients' willingness to see their doctors virtually, et cetera, those things helped quite a bit. I think it's a combination of those two things that took place in the third quarter.
Going into the fourth quarter here, we're having to rethink the COVID resurgence that we're seeing right now with, yesterday, as I said, over 100,000 cases, but we're peaking back up into a third wave. From everything we can see, the third wave looks more significant than the first two. Now, that's on the downside. On the plus side, I think hospitals are better prepared. I think they've got better safety protocols in place. We've got the advantage of home enrollment well established. Our sales teams are getting better and better at virtual engagements with accounts, whether they are existing accounts or new accounts. Then all of the media and peer-to-peer educational things that we have are also helping us to get in front of customers.
The best crystal ball we have right now looking into the fourth quarter is it'll probably be about the same level of growth that we had in the third quarter. It's really hard to tell whether or not it would be significantly much better than that. Depending upon how the resurgence hits regions of the country, it could possibly be worse. For that reason, we're not being so specific on guidance and sort of giving a more of a broad paintbrush view of where we see things right now. Doug, do you want to add anything into those comments?
Yeah, I think as we mentioned, we're giving the guidance here of mid-single digits. From Q3 2019 into Q4 of 2019, the company grew 8%. As we've already highlighted, the sales productivity, the selling process has improved in Q3 2019 significantly over Q2 2020, but is still not back to a full pre-COVID productivity level. I'd already be probably backing off that 8% a little bit. As just Kevin was highlighting, depending on the size of this third wave and how it impacts the healthcare system, you might have to back off a little bit more.
Okay. Fair to say that you guys are kind of assuming a slightly bearish scenario, and then also offsetting it a bit with some of the DTC efforts and kind of continued ramp of the new accounts, but not assuming too much.
Yeah. it's not anything competitive. This is all in our view, how contracted will the market be going forward? To the extent that it's not contracted, then we'll do remarkably well. I'd rather err on the side of caution knowing what we're seeing right now is a more negative trend towards a greater number of daily cases. over the last nine months, that's given us cause for concern, because over the last four to five months, we've been seeing declining rates and improving volumes. now it's going to be a crossover and go the other way. Possibly go the other way. Does that make sense to you, Margaret? Yeah?
Yeah. That's very clear.
Yeah.
Appreciate it, guys.
Okay. Yeah, you bet.
Your next question comes from the line of Kaila Krum of Truist Securities. Your line is open.
Hi. Thanks for taking our questions. First, just to follow up on the last question. Is there a way to just put sort of a finer point on how October has tracked thus far, and what you're considering as you look at the remaining two months of the year? I think you guys gave some good detail around these accounts that you mentioned that have remained below prior trends. Do you simply expect that they will remain stable through the end of this year? Do they have to improve? Just would love a little bit more detail, I guess, on that front.
Well, it's a great question, Kaila. I don't have the October specific information right in front of me. Maybe in the after call, we could try to pull some of that up for you, unless, Dan, you feel comfortable or Doug, you've got it handy. October tends to be a stronger month because it has more days in it than November, December. That's a little bit of a hard thing to extrapolate out, right? We've got the Thanksgiving two days, and then we've got the whole Christmas week when things are less. Kaila, maybe we can get you that information or Doug, if you want to-
Yeah, sure
add some commentary.
Yeah. I'll add a couple of quick comments right now. First, when you look at Q3, it was definitely an upward trend that July was better than June, and then August sequentially better, and then September sequentially better. Definitely, I'm talking about on a per day rate, given the different number of work days. October continued the pattern of what we were seeing in September. As Kevin was highlighting, we've got holidays in both November and December. We're expecting our daily rates to remain strong, but all of that is fully taken into consideration in our guidance of mid-single digits there.
Great.
We've looked at all the month-to-month variations to arrive at that conclusion.
That makes sense. Thank you. I guess just one on reimbursement. I know you guys touched on it. I think we all thought that we would be done talking about it by now, but I have to ask because we get the question. Just any updated view on the conversion factor and, again, I say that because it seems like there are some moving parts, and I realize that there's a lot of factors that will go into this, but just would love to get your updated view there. Thank you.
Sure. Kaila, I don't have any updates on conversion factors. We've been focused on our own work with CMS and the RVUs, in our own recontracting effort with commercial carriers. I think the comments that we mentioned before are the same. I don't have any new information about whether or not that conversion factor will revert back up. Dan, do you have any?
Great.
Have you heard anything from anyone? No.
No. Your comments are right.
Thank you, guys. I appreciate it.
You bet. Take care.
Thanks, Kaila.
Your next question comes from the line of Suraj Kalia of Oppenheimer.
Thank you for taking my questions. Kevin, can you hear me all right?
Hi, Suraj. How are you?
Good. Perfect. Kevin, many calls happening at the same time, so please forgive me if you've already answered this. There was a comment made about billing of Zio AT causing a pull-through effect, and also doing good on a standalone basis. As we stand today, Kevin, Zio AT, is it still using 0297T, and are one or two monitors being used per case?
Zio AT uses the MCT code. I think it's 93224, if I'm not mistaken. But it's not the temporary code. Zio AT's in the MCT category.
No, I-
Go ahead.
No, go ahead, please.
No, go ahead. Did that answer your question on the coding?
Yeah. I guess the question, what I was really trying to get at, are you using one monitor or two monitors in the standard MCT code? That really was the gist of the question. Copy.
The vast majority of prescriptions that are written for Zio AT by physicians are for 14 days of monitoring. In some cases, 28 days of monitoring are used, and two monitors are applied sequentially to one another. It's a physician decision, and based upon the confidence of the diagnostic yield that we have with 14 days, which we previously reported to be about 84% higher than the traditional MCT for the life-critical arrhythmias of ventricular tachycardia, complete heart block, things of that nature. Even first AF detection is like five days sooner than the literature for MCT.
Fair enough. Kevin, last question from my side. mSToPS. Just taking a step back, Kevin, thinking like an engineer, the mSToPS is basically on the Zio platform. Your partnership with Verily. Let's say in the future, you develop a wearable. Can the mSToPS algorithm, everything, be adapted for that? How easily would it be transferable to a potential wearable for asymptomatic patients? Is it even possible?
Well, that is the work that's being done in our collaboration with Verily, is to ensure that there's a high degree of physician confidence and a high degree of correlation between ECG measurements and other types of tools that could be used. If you think about the use of today's photoplethysmograph measurements on things like Apple Watches or Samsung Watches, those measurements are fairly inaccurate, largely because they lack the artificial intelligence tools and the size of a data repository needed to develop an algorithm. We would not bring anything to market if it wasn't equal to or better than what we could do with Zio XT.
Got it. Thanks, Kevin.
A way to make it better for the platform. Yeah, sure.
Fair enough. Thanks, Kevin.
Okay.
Again if you have any question please press star one on your telephone keypad. I am showing no further questions at this time. I would now like to turn the conference back to our CEO, Mr. Kevin King, for closing remarks.
Thank you, operator. Thank you everyone for joining our third quarter 2020 earnings call. We appreciate you taking the time to listen to our messages and also to help answer some of your questions. My guess is, from the subdued nature of the call, everybody has election fatigue. I wish you all well, and I hope you all stay safe out there during this period of time. We're always available to speak with you in other venues, and I look forward to reporting out our full year complete earnings early next year. Take care and have a great holiday season. Bye-bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.