iRhythm (IRTC) Q3 2025: EHR-Integrated Accounts Surge 25%, Accelerating Volume and Margin Expansion

October 30, 2025 | By EarningsIQ Research

iRhythm’s record Q3 growth was powered by enterprise-wide EHR integration, new account conversions, and expanding innovative channels. Operational leverage and clinical evidence are driving both rapid adoption and a step-change in profitability, while investments in AI, adjacencies like sleep, and new product launches set the stage for continued outperformance into 2026.

Summary

• EHR-Integrated Accounts Unlock Utilization: Seamless digital workflows drove a 25% volume increase at top clients.
• Innovative Channels Expand Asymptomatic Monitoring: Partnerships are capturing undiagnosed, high-cost patient cohorts.
• Margin Expansion and Cash Generation: Operating efficiency and scale are delivering sustainable profitability ahead of plan.

Performance Analysis

iRhythm delivered a standout third quarter, with revenue up 31% year-over-year to $192.9 million, reflecting record performance in both Zio Monitor and Zio AT product lines. Enterprise account conversions and EHR (Electronic Health Record) integration, especially with Epic Aura, were central to the surge, as 76 of the top 100 customers are now integrated, resulting in a 25% average increase in monitoring volume within six months of go-live. New account growth was robust, with 60% of year-over-year volume growth coming from accounts less than 12 months old, and a growing share of these new customers onboarding both Monitor and AT solutions simultaneously.

Gross margin improved to 71.1%, up 230 basis points, driven by volume leverage and operational efficiencies that more than offset cost pressure from a higher mix of Zio AT and tariffs. Adjusted EBITDA margin swung to 11.2%, a dramatic year-over-year improvement from negative double digits, and the company reported its third consecutive quarter of positive free cash flow, now guiding to full-year free cash flow positivity for the first time. Innovative channel partnerships also stepped up, with 18 active accounts targeting large, undiagnosed populations, and international markets showed early traction, especially in Japan and Europe.

• Volume Growth Fueled by EHR Integration: Digital workflow improvements are accelerating both adoption and physician efficiency.
• Operational Leverage Drives Margin Upside: Scale and cost discipline yielded a 300 bps margin improvement, even as product mix shifted.
• Innovative Channel Contribution Steps Up: Asymptomatic and comorbid patient monitoring is expanding the addressable market.

With strong top-line acceleration, operating leverage, and cash generation, iRhythm is demonstrating a scalable, defensible growth model that is resonating with both providers and payors.

Executive Commentary

Strategic Positioning

1. EHR Integration Accelerates Enterprise Adoption

iRhythm’s EHR integration, especially with Epic Aura, is now a core competitive differentiator. By embedding Zio ordering and reporting directly into provider workflows, the company is seeing not just faster adoption but more durable account conversions, with few if any integrated clients leaving the platform. This seamless connectivity is enabling system-wide conversions and pushing adoption upstream into primary care, further expanding the market.

2. Innovative Channels Target Undiagnosed Populations

Innovative channel partnerships are now a meaningful growth lever, with 18 active accounts and a pipeline of over 100 potential partners. These programs focus on large, undiagnosed, often asymptomatic patient populations with comorbidities such as diabetes, COPD, and chronic kidney disease. Early data shows high diagnostic yields and significant cost avoidance, reinforcing the durability and economic value of this channel.

3. Clinical Evidence and AI-Driven Differentiation

Robust real-world evidence underpins iRhythm’s platform, with studies like Avalon and Camelot demonstrating superior diagnostic yield and cost savings versus alternatives. The partnership with Lucem Health is advancing AI-based risk stratification, enabling proactive identification of high-risk patients across large health systems. This positions iRhythm as more than a device company—moving toward a comprehensive digital health platform.

4. Margin Expansion and Cash Flow Inflection

Operational scale and cost control are translating into rapid margin expansion and sustainable cash generation. The company is on track for full-year free cash flow positivity, enabling continued investment in innovation, infrastructure, and adjacent markets like sleep diagnostics, while maintaining a strong balance sheet.

5. Pipeline and Adjacencies Drive Optionality

Product pipeline momentum is high, with the 510(k) submission of Zio MCT (Mobile Cardiac Telemetry) and early-stage development in sleep diagnostics leveraging the existing patch platform. These adjacencies could expand the addressable market and deepen integration with provider workflows, supporting long-term growth and margin targets.

Key Considerations

iRhythm’s Q3 results reflect a business firing on all cylinders, but investors should focus on the durability of these growth vectors and the company’s ability to sustain operating leverage as it scales.

Key Considerations:

• Enterprise EHR Penetration: Integration with Epic and other EHRs is driving record volume and stickiness, but further penetration and competitive responses warrant monitoring.
• Innovative Channel Ramp: While the pipeline is large, the sales cycle remains variable and contribution is not yet fully predictable or included in guidance.
• Regulatory Progress and Product Launches: FDA timelines for Zio MCT and ongoing remediation efforts are gating factors for incremental growth in 2026.
• Adjacency Execution in Sleep Diagnostics: Early pilots are promising, but the path to commercial scale and economic impact remains multi-year.
• Margin and Cash Flow Trajectory: Continued scale benefits and automation are key to hitting 2027 margin targets, especially as product mix evolves.

Risks

Regulatory uncertainty remains a material risk, with FDA review timelines and remediation efforts subject to external factors. Innovative channel ramp is not fully in guidance, and sales cycles vary widely. Competitive responses in EHR integration or digital health could pressure share gains, and tariffs continue to impact gross margin by approximately 50 basis points for the year.

Forward Outlook

For Q4 2025, iRhythm guided to:

• Continued strong volume growth, with a slight deceleration versus Q3 due to prior year comp strength
• Gross margin to slightly exceed 2024 levels despite ongoing tariff headwinds

For full-year 2025, management raised guidance:

• Revenue of $735 to $740 million, up 24-25% year-over-year
• Adjusted EBITDA margin of 8.25% to 8.75%

Management emphasized:

• Prudent, calibrated guidance for 2026, with upside from MCT and innovative channels left out until visibility improves
• Ongoing investment in innovation, AI, and operational scale, supported by a strong cash position

Takeaways

iRhythm is demonstrating a rare combination of rapid top-line growth, margin expansion, and strategic optionality.

• EHR integration and enterprise conversions are driving both volume and stickiness, with workflow improvements accelerating adoption across provider types.
• Innovative channels and AI partnerships are unlocking new patient pools, expanding the addressable market and supporting the move toward a digital health platform.
• Investors should watch for FDA progress on Zio MCT, ramp in sleep diagnostics, and continued leverage of operational scale to sustain profitability and margin expansion into 2026 and beyond.

Conclusion

iRhythm’s Q3 results confirm the company’s transition from a device-enabled service to a data-driven digital health platform, with strong execution across commercial, operational, and financial vectors. With a robust pipeline, expanding adjacencies, and accelerating cash generation, the company is well positioned for durable, profitable growth.

Industry Read-Through

iRhythm’s success with EHR integration and enterprise-wide digital workflow adoption signals a broader industry shift toward interoperability as a growth and retention lever in medtech. Proactive monitoring and AI-driven risk stratification are gaining traction with payors and providers, highlighting the need for actionable data and seamless integration in chronic disease management. Competitors and adjacent digital health players should take note: the bar for clinical evidence, workflow integration, and scale is rising, and those who deliver on these vectors will be best positioned to capture share as value-based care accelerates.

IRTC Healthcare Medical Devices Digital Health EHR Integration AI Cardiac Monitoring Profitability