iRhythm (IRTC) Q2 2025: Innovative Channels Drive 68% New Account Growth Surge
iRhythm delivered a quarter marked by record new account growth and expanding channel diversity, underpinned by operational discipline and a multi-pronged commercial strategy. Core long-term monitoring remained the anchor, while innovative partnerships and EHR integration accelerated new prescriber adoption. Management’s outlook signals confidence in sustainable scaling, but investors should monitor reimbursement, tariff, and regulatory execution as growth drivers shift beyond legacy strengths.
Summary
- Channel Expansion Momentum: Innovative partnerships and new account launches are reshaping iRhythm’s growth profile.
- Operational Leverage Realized: Margin improvement and process optimization are enabling higher reinvestment in technology and compliance.
- Guidance Confidence: Leadership signals visibility into sustainable growth, but execution on reimbursement and regulatory fronts remains pivotal.
Performance Analysis
iRhythm’s Q2 2025 performance was anchored by robust revenue growth and operational leverage, with record-setting new account additions driving 68% of year-over-year volume growth. The company’s long-term continuous monitoring segment, its foundational business that captures cardiac arrhythmia data over extended periods, delivered outsized growth through both existing and newly integrated accounts. Zio AT, iRhythm’s mobile cardiac telemetry (MCT) product, also set a new high, reflecting both competitive gains and increased workflow integration among health systems.
Gross margin improvement to 71.2% was fueled by volume leverage and efficiency gains that offset a higher mix of Zio AT, which carries a higher cost per unit. Adjusted EBITDA margin expanded by 500 basis points year-over-year, demonstrating the impact of disciplined cost management and automation initiatives. Notably, home enrollment for Zio services represented 23% of U.S. volume, reflecting the company’s push into more accessible monitoring pathways. The quarter’s profitability improvement was achieved despite ongoing investments in global expansion, FDA remediation, and innovation, with adjusted net loss narrowing materially from the prior year.
- New Account Onboarding: Accounts open less than 12 months contributed nearly 70% of volume growth, a direct result of channel partner strategy and commercial execution.
- Innovative Channel Contribution: Innovative partners, now 12 strong, accelerated prescriber growth and are expected to provide a recurring, scalable revenue stream.
- Operational Cost Discipline: Margin gains were achieved while absorbing FDA remediation and tariff headwinds, underscoring sustainable cost controls.
Overall, iRhythm is showing that its model can deliver both top-line acceleration and operating leverage, even as it invests in new geographies and regulatory compliance.
Executive Commentary
"We're excited to report strong second quarter results with $186.7 million in revenue, representing more than 26% year-over-year growth driven by acceleration within our core long-term continuous monitoring business, continued progress with innovative channel partners, and sustained strength in our ZOAT product lines."
Quinton Blackford, President and CEO
"Volume growth was robust across both product lines, driven by continued strength from our core business, strong ZOA team mix, and contributions from innovative channel accounts. New store growth, with new stores defined as accounts that have been open for less than 12 months, accounted for approximately 68% of our year-over-year volume growth."
Dan Wilson, Chief Financial Officer
Strategic Positioning
1. Innovative Channel Partnerships
iRhythm’s multi-year effort to build out “innovative channel partners”—large, often primary care-focused organizations like Signify Health and CenterWell—has begun to materially contribute to both volume and prescriber growth. These partners now account for a growing share of new patient funnel, with 12 partners under contract and a pipeline of 40 in active discussion. The model leverages repeat annual monitoring and addresses asymptomatic populations, expanding iRhythm’s reach beyond traditional specialist channels.
2. EHR Integration and Workflow Optimization
Epic Aura, iRhythm’s EHR (Electronic Health Record) integration solution, is demonstrating early operational impact, driving 20% to 40% increases in prescribing at integrated accounts. With over 40 health systems implementing or preparing integrations, this strategy is reducing onboarding friction, expanding access, and creating a single-vendor solution for large health systems. The integration is also enabling broader adoption of both Zio Monitor and Zio AT across departments, improving patient throughput and system efficiency.
3. Product Innovation and Pipeline
The upcoming next-generation Zio MCT (Mobile Cardiac Telemetry) filing is a strategic lever aimed at closing the gap in the underpenetrated MCT market. The new form factor, longer wear time, and improved analytics are designed to address competitive shortcomings and expand iRhythm’s addressable market. Additionally, the Lucem Health partnership brings AI-driven patient identification for earlier arrhythmia detection, supporting the shift to proactive, population-level health management.
4. Global Expansion
International momentum is building, with commercial launches in Japan and continued uptake in the U.K. and Europe. Early physician feedback and ongoing studies are positioning Zio for potential clinical superiority in new markets, while payer access wins have expanded in-network coverage by over 10 million patients domestically.
Key Considerations
iRhythm’s quarter underscores a transition from reliance on core cardiology channels to a diversified, multi-segment growth architecture. Investors should weigh the following:
Key Considerations:
- Channel Diversification: Innovative partners are reshaping the revenue mix, but scale-up cadence and repeat monitoring rates will determine long-term impact.
- Healthcare System Integration: EHR-driven workflow gains are unlocking new patient pools and driving deeper account penetration, but integration remains early-stage.
- Product Differentiation: The next-gen Zio MCT’s success will hinge on regulatory approval and market fit in a segment where iRhythm’s share lags its long-term monitoring dominance.
- Regulatory and Reimbursement Execution: FDA remediation, CMS fee schedules, and tariff mitigation remain material variables for margin and growth trajectory.
Risks
Execution risk remains high around scaling innovative channel partners and sustaining repeat monitoring volumes. Regulatory scrutiny, including ongoing FDA remediation and pending audits, could introduce operational or reputational headwinds. Tariff exposure and reimbursement shifts, particularly CMS rates and the evolving ambulatory specialty model, present ongoing margin and demand risks. Investors should also monitor competitive dynamics in the MCT segment and the pace of international adoption.
Forward Outlook
For Q3 2025, iRhythm guided to:
- Sequential revenue decline of approximately 1%, reflecting typical summer seasonality.
- Adjusted EBITDA margin of 9% to 9.5%, up from Q2 as cost leverage continues.
For full-year 2025, management raised guidance:
- Revenue of $720 to $730 million, with core business contributing two-thirds of the increase and innovative channels and Zio AT splitting the remainder.
- Adjusted EBITDA margin of 8% to 8.5% of revenue.
Management highlighted several factors that support guidance:
- Momentum in core long-term monitoring and Zio AT adoption.
- Measured optimism on innovative channel ramp, with further upside possible as repeat monitoring patterns stabilize.
Takeaways
iRhythm’s Q2 results validate its strategy to diversify growth engines and deliver operating leverage, but the transition to a more complex, multi-channel business raises both opportunity and execution risk.
- Growth Engine Shift: The company’s future will be defined by its ability to scale innovative partnerships and integrate with large health systems, moving beyond legacy cardiology channels.
- Margin Sustainability: Operational discipline has delivered margin gains even as investments in compliance and innovation accelerate, but reimbursement and tariff risks remain in play.
- Product Pipeline Execution: The next-gen Zio MCT and AI-driven partnerships are critical to expanding addressable market and maintaining leadership as competitive intensity rises.
Conclusion
iRhythm’s Q2 2025 showcases a business in strategic transition, with channel expansion, operational leverage, and pipeline innovation setting the stage for continued growth. Execution on regulatory, reimbursement, and product fronts will determine whether current momentum translates into durable leadership.
Industry Read-Through
iRhythm’s experience highlights the growing importance of multi-channel access, EHR integration, and AI-powered patient identification in medtech. The shift from specialist-driven models to broader primary care and population health management reflects a larger trend in digital health, where scalable, system-level solutions increasingly drive adoption. Competitors and peers should note the operational leverage achieved through automation and process optimization, as well as the necessity of robust regulatory compliance in sustaining growth. Tariff and reimbursement volatility remain sector-wide risks, demanding proactive mitigation strategies across the industry.