iRhythm Technologies Q3 2026 Earnings Call Transcript

iRhythm Technologies (NASDAQ:IRTC) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

iRhythm Technologies reported Q3 2026 revenue of $221.6 million, a 14.9% increase year-over-year, driven by strong performance in the Zio Monitor business.

The company achieved a record gross margin of 74.2% and an adjusted EBITDA margin of 23.1%, highlighting operational scalability and efficiency.

iRhythm completed the acquisition of VitalConnect, expanding its market opportunities with an FDA-cleared mobile cardiac telemetry offering and enhancing its monitoring capabilities.

Strategic focus is on integrating VitalConnect, expanding into the MCT market, and leveraging AI to improve operational efficiency and patient outcomes.

The company raised its full-year 2026 revenue guidance to $890-895 million and expects to achieve over $1 billion in organic revenue in 2027.

Management acknowledged delays in the Zio MCT program, with plans to submit to the FDA in 2027, while prioritizing the integration and commercialization of VitalConnect.

Full Transcript

OPERATOR

I will now hand the conference over to Francis Pruhell, Head of Strategic Finance and Investor Relations. Francis, please go ahead.

Francis Pruhell (Head of Strategic Finance and Investor Relations)

Thank you, operator, and thank you all for joining iRhythm Technologies’ third quarter 2026 earnings call. With me today are Quentin Blackford, iRhythm Technologies’ President and Chief Executive Officer, and Dan Wilson, our Chief Financial Officer. Before we begin, please note that management will make forward-looking statements within the meaning of federal securities laws under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our intentions, beliefs, and expectations about future events, strategy, competition, products, operating plans, and performance. Forward-looking statements on this call are based on current estimates and assumptions, involve risks and uncertainties, and actual results may differ materially.

These statements are made as of today, November 5, 2026, and are time-sensitive. We undertake no obligation to update or revise them except as required by law. Accordingly, you should not place undue reliance on these statements. For a discussion of risks and uncertainties, please refer to our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the SEC. Additionally, during the call we will discuss certain financial measures that have not been prepared in accordance with GAAP. Unless otherwise noted, all references to financial measures on this call are presented on a non-GAAP basis. These non-GAAP measures should not be considered in isolation or as a substitute for, or superior to, GAAP results. Reconciliations to the most directly comparable GAAP measures can be found in our earnings release and the slides accompanying today’s call.

And with that, I’ll turn the call over to Quentin.

Quentin Blackford (President and Chief Executive Officer)

Good afternoon everyone and thank you for joining us for our third quarter earnings call. We are pleased with iRhythm Technologies’ progress in the quarter and our results reflect the positive growth trajectory of our business across multiple channels as well as the meaningful operating leverage we continue to generate as we scale the Zio platform. I’ll begin with the key highlights from the quarter and provide updates on our strategic priorities before turning the call over to Dan for a more detailed review of our financial results and outlook.

Third quarter revenue was $221.6 million, up nearly 15% year over year against our toughest comparison of the year as we lapped more than 30% growth in the third quarter of 2025. Overall performance was consistent with our guidance, with our core Zio monitor business again outperforming our expectations. That monitor business continues to be driven by durable demand and sustained momentum across primary care, innovative channels, and international markets.

We continue to expand the cardiac diagnostics market both within traditional cardiology settings and across these underpenetrated opportunities. The strong performance in the core monitor business was offset by Zio AT, where revenue was roughly flat compared to the prior year. I also want to briefly highlight the record operating leverage we delivered during the quarter, reflected in gross margin of 74.2% and adjusted EBITDA margin of 23.1%. These results demonstrate the strength and scalability of our operating model as we continue to grow the business while investing in the strategic initiatives that we believe will support future growth.

This balanced approach supports both our long-term profitability and growth ambitions. Now I’m going to spend some time talking about the strategy we continue to execute to evolve from a leader in ambulatory cardiac monitoring into a broader cardiac and vitals monitoring and intelligence platform. First, I will walk through the opportunities that VitalConnect brings and then provide an update on the Zio MCT program. As a reminder, we closed the VitalConnect acquisition on October 5th, well ahead of our prior expectation of closing by year end.

This acquisition is an exciting milestone for iRhythm Technologies as it significantly expands our capabilities and market opportunity. It also immediately adds a complementary FDA-cleared mobile cardiac telemetry offering to our portfolio. VitalConnect’s platform can be used to monitor multiple physiological parameters including ECG, heart rate, respiratory rate, and body temperature, as well as fall detection and the ability to connect additional parameters such as blood pressure and pulse oximetry.

Its platform supports ambulatory, inpatient, remote patient monitoring, and hospital-to-home care, expanding our relevance across the patient journey and creating new opportunities within hospitals and health systems. VitalConnect will serve as our immediate MCT growth platform while also providing important multimodality capabilities. It supports MCT cardiac event monitoring, extended monitoring and Holter use cases with up to 30 days of monitoring service, live look-in functionality, and the flexibility to transition between monitoring pathways when clinically appropriate. These capabilities are particularly important because our planned next generation Zio MCT, as currently designed, would not address every customer requirement, including live look-in, 30-day reporting, and multimodality workflows.

We estimate these use cases represent approximately 25% of the MCT market and believe they are likely to grow over time. VitalConnect provides us immediate access to these opportunities and, together with our Zio platform, will position us to address essentially the full MCT market with complementary solutions. This expanded portfolio also creates opportunities to deepen existing health system relationships, reach new customers, and accelerate our participation in the broader MCT category.

Realizing the full potential of VitalConnect requires more than expanding our product portfolio. We are integrating the technology into our customer EHR systems, incorporating VitalConnect’s Vista Center data and live look-in functionality, and enabling multimodality workflows. These capabilities are essential to driving broader adoption, particularly among our existing large integrated health system customers. In parallel, we are preparing the business to scale across supply chain, clinical operations, customer support, technology, quality, and implementation capacity.

The earlier-than-expected transaction close allows us to accelerate commercial training into the first two weeks of November, enabling our teams to begin engaging customers while we continue building the integration and operating infrastructure required for broader adoption. Our focus is squarely on executing a disciplined integration, and our initial progress reinforces our confidence in the significant value and new growth opportunities this acquisition will unlock for iRhythm Technologies.

Having taken a significant step in broadening our MCT portfolio, we want to provide an updated view today of our go-forward path in this business. I’ll start by directly addressing our next generation Zio MCT program. In short, we have not delivered the way we want to here, and we recognize that this timeline has shifted multiple times. We share in the frustration this has caused not only for patients eagerly awaiting this program, but for our investors as well.

Our ongoing commitment to you is transparency and clarity. We’ve evaluated our MCT strategy in light of the newly combined portfolio and how we can grow our presence in the MCT market as soon as possible. With VitalConnect, we immediately have an additional FDA-cleared MCT offering, and integrating this technology will be our near-term priority. As a result, we no longer plan to submit Zio MCT to the FDA later this year. The addition of VitalConnect’s capabilities opens up what we believe will be a significant immediate growth opportunity, and this decision will allow us to focus on unlocking that value for patients and shareholders while being deliberate in our planning and preparation to, in turn, maximize the value of our planned next generation Zio MCT, our integrated MCT portfolio, and your investment.

That said, we’ve made tangible progress with Zio MCT that gives us greater visibility into the path ahead. We’ve begun producing and testing the actual Zio MCT system in the configuration we intend to submit to the FDA, and we are advancing the remaining verification, documentation, and regulatory work. We expect to submit our Zio MCT filing to the FDA in 2027. Zio MCT is an important part of our long-term portfolio as it is designed to build upon the simplicity patients and physicians value in Zio AT by providing an extended wear period and enhanced detection algorithms.

We believe that an MCT portfolio today of Zio and VitalConnect gives us an immediate best-in-class mobile cardiac telemetry portfolio that will further improve with the future introduction of Zio MCT, which we expect will eventually replace Zio AT. Turning next to Zio AT, we remain confident in its clinical value and the complementary set of solutions it creates with VitalConnect. In August, we published results from the CAMELOT study in the American Heart Journal evaluating nearly 450,000 Medicare beneficiaries across Zio AT, competing MCT platforms, and ambulatory event monitors. The study found that Zio AT delivered significantly higher diagnostic yield than both comparison groups, reinforcing the importance of platform capabilities and clinical workflows in driving diagnostic performance.

That said, Zio AT performance was below our expectations during the quarter, where revenue was flat compared to the prior year versus our expectations of growth generally in line with our overall business. Based on customer and commercial feedback, we believe this was in part driven by delayed purchasing decisions following the announcement of the VitalConnect acquisition, as they considered the combined portfolio and the potential availability of VitalConnect through the iRhythm Technologies sales channel.

We expect these dynamics to persist in the near term, and we will be training our commercial team over the next few months on engaging with customers to sell the full portfolio. This further reinforces the importance of moving quickly to integrate VitalConnect and establish a comprehensive MCT offering that addresses a broader range of customer needs. Our near-term priorities for MCT are clear: successfully integrate the VitalConnect team and business into iRhythm Technologies, actively commercialize VitalConnect in the MCT market, thoughtfully expand into adjacent multi-vital opportunities, and continue advancing Zio MCT through the regulatory process. We believe our VitalConnect and Zio AT portfolio provides a strong foundation to participate more broadly in the MCT market in the near term, with Zio MCT remaining an important addition to the portfolio over time.

Turning to innovative channels and primary care, we continue to see encouraging momentum as we expand cardiac monitoring beyond traditional cardiology settings. What is becoming clearer is that the market opportunity ahead of us is not simply about taking market share; it is about expanding our serviceable market in a meaningful way. More specifically, there is a measurable care gap for patients at risk of arrhythmias that can be addressed through better patient identification, better clinical workflow, and better access.

Our research and analysis continue to support that there are more than 27 million patients in a defined ambulatory cardiac monitoring eligible universe, creating a significant white space of opportunity. To more effectively prioritize and align our commercial approach, we are defining the addressable patient population through identifiable patient and provider categories. Symptomatic outpatients represent the largest portion of our undiagnosed opportunity, with many of these patients first seen in primary care.

The data is clear: patients presenting with the exact same symptoms in cardiology and electrophysiology settings are much more likely today to receive a cardiac monitor than patients presenting in other care settings such as traditional primary care. That insight is shaping how we execute in both primary care overall and also in our innovative channel strategy. Starting with innovative channels, which was our fastest growing business during the quarter once again, our partners increasingly view Zio as a way to identify and engage appropriate patients earlier rather than waiting for these patients to reach a specialist after repeated symptoms or acute care events. Importantly, our partners can make these determinations with confidence, as our early pilots have demonstrated greater than 85% accuracy in identifying patients with clinically relevant arrhythmias before they enter the diagnostic process.

Primary care more broadly is also an important part of our upstream strategy. Zio’s rule-in and rule-out capability can help primary care clinicians begin their diagnostic process earlier, enabling cardiologists to focus on patients who need higher-acuity care. We recently launched targeted initiatives through the PatientPoint Network, coordinating arrhythmia education for patients, physicians, and office staff. The objective is to improve recognition of symptoms and risk factors, help patients seek evaluation sooner, and make the connection between primary care and cardiology more efficient.

Key enablers of this strategy are continued EHR integration as well as AI, which is core to our business and embedded in our platform today with an advanced FDA-cleared AI algorithm that differentiates our monitoring service. We are continuing to bring forward new innovation on this front as we progress towards operationalizing our third generation algorithm, which we expect to generate more than $100 million in cumulative savings over the next five years.

We are excited to put this new capability into production in the early part of next year, and as AI advances we believe durable value will come from more than a standalone algorithm, which is why we are focused on the broader ecosystem around cardiac monitoring, not just the output of an individual device. We are encouraged by the opportunity to close this sizable identified care gap and by the early commercial signals. The next phase is to turn these programs into a repeatable playbook through provider education, patient activation, targeted primary care coverage, workflow and EHR enablement, and continued clinical and economic evidence generation.

If we execute that well, iRhythm Technologies can do more than take share in the monitoring market as it exists today. We can help expand the number of patients who are appropriately diagnosed and treated for arrhythmia, with a platform that can advance the same opportunity in other adjacencies like sleep. We also continue to make progress in other strategic areas of focus. In sleep diagnostics, we continue to see a substantial underpenetrated opportunity with meaningful overlap in cardiac patient populations. Our strategy is to simplify today’s fragmented home sleep testing process by leveraging our expertise in diagnostics and workflow integration. We have made meaningful progress in operational readiness, including IDTF capabilities, and are now advancing toward commercial readiness and scalability while maintaining a disciplined approach to investment.

We also submitted an application to the FDA for a pediatric indication for our Zio monitor, representing another potential meaningful opportunity to meet care needs for these patients and expand our core monitoring market. If cleared by the FDA, this would represent iRhythm Technologies’ first pediatric indication, and we are excited about the potential to serve this market segment. We are also excited about recent clinical developments. In October, we published results from our Excalibur study in Clinical Cardiology, extending the evidence generated through CAMELOT and Avalon into the Medicare Advantage population. The results once again demonstrated strong diagnostic performance with Zio long-term cardiac monitoring along with lower downstream healthcare utilization and cost across a large, diverse insured population.

Taken together, Excalibur, CAMELOT, and Avalon provide comparative evidence across more than 1 million patients, further strengthening the breadth of clinical and economic evidence supporting Zio long-term continuous monitoring. Finally, I’d like to provide a brief update on a few regulatory items starting with the DOJ. We continue to engage in ongoing dialogue with the agency, including a meeting yesterday on status and path forward. As part of that process, we remain focused on reaching an appropriate resolution. And with respect to the FDA warning letter, as previously noted, we have completed our remediation activities, updated the agency accordingly, and are expecting a follow-up inspection, although we don’t yet know when that will occur.

As we look ahead, I believe iRhythm Technologies is well positioned to execute our long-term strategy. Our core business continues to generate durable growth and meaningful operating leverage. We are expanding our reach across primary care and innovative channels, investing in new clinical applications, and strengthening our operating foundation. With VitalConnect, we have meaningfully expanded our addressable market, strengthened our immediate MCT offering, and created a platform to serve patients and providers across a broader continuum of care.

Our priorities remain focusing on disciplined execution and delivering sustained volume-led growth and continued profitability and free cash flow generation. With that, I’ll turn the call over to Dan.

Daniel Wilson (Chief Financial Officer)

Thank you, Quentin. Our third quarter results demonstrated solid top-line performance and exceptional operating leverage across the business. As we look ahead, we remain focused on balancing continued revenue growth Through targeted investments in our key strategic growth pillars while delivering robust profitability, expanding margins, and strong free cash flow. Generated revenue for the third quarter was $221.6 million, up 14.9% year over year, reflecting durable demand and continued progress in important growth verticals such as primary care and innovative channels. In the quarter, Zio Monitor was the primary driver of growth and performed ahead of our expectations.

Results in our core business benefited from strong volume growth, modest pricing gains, and continued strong collections, offset by Zio softness. As described earlier, demand remained broad-based across our existing customer base, reflecting the continued strength of the underlying business, while new accounts contributed approximately 51% of year-over-year volume growth. Moving down the P&L, third quarter gross margin was 74.2%, an increase of 310 basis points year over year. This result reflects continued progress in manufacturing automation, operational efficiencies, and disciplined execution. In addition, gross margin benefited from one-time tariff refunds of approximately $3 million, which contributed roughly 140 basis points during the quarter. Excluding this benefit, gross margin performance remained strong and consistent with our ongoing efforts to drive operating leverage.

Third quarter 2026 adjusted operating expenses were $138.6 million compared to $141.4 million in the prior-year period, representing a decrease of 2%. This reflects continued operating leverage across the business, including efficiencies associated with scale, moderating spend related to quality remediation efforts, and disciplined allocation of resources toward our highest-return growth opportunities. On the bottom line, GAAP net loss for the third quarter was $29.9 million, or net loss per diluted share of $0.90, compared to a GAAP net loss of $5.2 million, or net loss per diluted share of $0.16, in the third quarter of 2025. Adjusted net income for the third quarter was $27.8 million, or adjusted net income per diluted share of $0.82, compared to an adjusted net loss of $2 million, or adjusted net loss per diluted share of $0.06, in the third quarter of 2025.

As a reminder, our GAAP results in the period included a $50 million charge related to an IP litigation settlement previously announced. Adjusted EBITDA for the third quarter was $51.2 million, or 23.1% of revenue, an improvement of over 1,100 basis points compared to the prior year. Our adjusted EBITDA performance in the period showcases once again the significant scalability in our cost structure, and while we have now demonstrated record profitability on an adjusted EBITDA basis for the second quarter in a row, we will continue to balance profitability performance with targeted investments that support future growth.

Free cash flow in the third quarter was negative $11.5 million, which included the one-time $50 million payment related to the IP litigation settlement mentioned earlier. Excluding this payment, free cash flow would have been positive $38.5 million, representing another strong quarter of cash generation and reinforcing our commitment to delivering durable positive free cash flow. We ended the quarter with $560.7 million in unrestricted cash, cash equivalents, and marketable securities, providing a strong liquidity position and significant flexibility to support our strategic priorities.

In addition, on November 3rd we obtained a new $300 million revolving credit facility that provides additional liquidity and financial flexibility as we invest in future growth. Now turning to our updated financial outlook for Q4 and full year 2026, which includes the recently acquired Vital Connect business, we are raising full year 2026 revenue guidance to $890 million to $895 million, representing 19% to 20% year-over-year growth. This outlook assumes Zio Monitor year-over-year growth of mid-teens in Q4, approximately $16 million of Vital Connect revenue in Q4, consistent with our prior disclosure that the business was operating at a $65 million annual run rate, and Zio sequentially flat to Q3.

Given the purchasing delays we believe contributed to the product slowdown in Q3 and the uncertainty around how quickly demand patterns may normalize as we introduce Vital Connect and integrate the combined portfolio for the full year, we continue to expect a modest positive contribution from pricing relative to 2025 reflecting the benefit we have realized year to date. However, our primary growth driver remains volume expansion across Zio Monitor, innovative channels, and international.

Turning to gross margin, we expect to build on our strong performance in the fourth quarter, with gross margin for the organic iRhythm business remaining generally consistent with third quarter levels, excluding the one-time benefit associated with tariff refunds recognized during the period. Inclusive of Vital Connect, we expect to deliver total company gross margin above 70% in the fourth quarter. This outlook reflects the underlying strength of our business, continued operating discipline, and the early impacts of integrating the Vital Connect platform.

Based on our strong operating performance year to date and our expectations for continued execution in the fourth quarter, we are raising our full year adjusted EBITDA margin guidance to 15.5% to 16%. This increased margin outlook incorporates the addition of the recently acquired Vital Connect business, as well as the strength of our underlying business and continued operating leverage balanced against investments toward growth and innovation efforts.

Excluding certain one-time items such as litigation settlement payments and transaction costs, we continue to expect free cash flow to increase year over year in 2026, with positive free cash flow generation in the fourth quarter inclusive of the addition of Vital Connect. Before turning the call back to Quentin for closing remarks, I’d like to provide some initial perspectives on our outlook for 2027. With the addition of Vital Connect, we believe we now have a comprehensive portfolio of solutions to address the full spectrum of ambulatory cardiac monitoring, spanning both long-term continuous monitoring and mobile cardiac telemetry. This enhanced platform strengthens our competitive position and expands our ability to serve physicians and patients across a broader range of clinical needs.

Looking ahead to 2027, we remain confident in the growth trajectory of the business and continue to expect the organic iRhythm business to track toward approximately $1 billion in revenue. We expect the momentum in Zio Monitor to continue, with growth in the mid-teens supported by further expansion into primary care, continued strength across our innovative channels, and growth internationally. Within MCT, we are excited about bringing together Zio AT and Vital Connect to engage customers with a broader, more comprehensive portfolio.

Our teams are already preparing for this next phase, including commercial training and customer engagement across the combined offering. At the same time, we intend to remain measured in our expectations for Zio AT until we see growth re-accelerate as part of the combined portfolio. We are similarly enthusiastic about the growth opportunity for Vital Connect. Our integration planning is progressing well, aided by the transaction closing earlier than anticipated. Between now and our full commercial launch in the first quarter of 2027, our priorities include training our commercial teams, strengthening our supply chain, building inventory to meet capacity needs, and increasing systems and operational bandwidth to support the growth we believe is ahead.

Given these integration activities, we intend to be thoughtful in establishing our initial 2027 expectations for Vital Connect and allow the organization time to scale the platform successfully. With that in mind, we currently anticipate Vital Connect to grow slightly above organic iRhythm growth in 2027 relative to the $65 million run rate in 2026. Turning to profitability for the combined company, we continue to expect gross margin above 70% and remain committed to delivering an adjusted EBITDA margin of at least 15% in 2027. Importantly, our focus remains on profitable growth. We expect continued leverage down the income statement from operational excellence, implementation of our next-generation AI algorithm, disciplined spending, and moderating investment associated with our FDA remediation activities, while continuing to fund our highest-priority growth opportunities in primary care, innovative channels, home sleep testing, and integrating Vital Connect.

We see meaningful opportunities to drive additional leverage with Vital Connect through scale, operational efficiencies, and integration-related synergies. Our initial priority in 2027, however, will be ensuring the platform, supply chain, and systems are positioned to reliably support the growth we believe is possible. We expect to provide 2027 guidance and additional detail at the J.P. Morgan Healthcare Conference in early January. I will now turn the call back to Quentin for closing remarks.

Quentin Blackford (President and Chief Executive Officer)

Thank you, Dan. Our third quarter performance underscores that we are continuing to execute effectively against our strategy with record profitability. We are well positioned to reinvest in the business while continuing to drive long-term value creation. Finally, as we prepare to celebrate our 20th anniversary as a company and our 10th anniversary as a public company with ringing the NASDAQ opening bell next week, I could not be more excited about the future ahead. It is a privilege to be part of this journey, and I remain confident in the significant value we can deliver to patients, providers, and shareholders. With that, we’re now happy to take your questions.

OPERATOR

We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of John Young with Canaccord.

Your line is open. Please go ahead.

John Young (Analyst)

Hi guys, thank you for taking the question tonight. I want to ask a question just on the guidance changes here. You know, looking at the organic guidance excluding the $16 million, if my math is right, it looks like Q4 organic growth is implied 10% to 12% versus the 14.9% or so this quarter. Is that all just AT headwinds, and was that headwind consistent through this quarter, and what are you seeing now? Thanks.

Daniel Wilson (Chief Financial Officer)

Hey John, thanks for that question. Yes, what you’re seeing in the fourth quarter is really the impact of the AT business slowing down, and I think we put in our prepared remarks that the Monitor business will continue to grow in that mid-teens range. So if you think about it, you know, how we’re thinking about Q4 is that the volume growth in the AT business will continue to be consistent with what we saw in Q3—essentially flat year over year. We do have a bit of a headwind from a revenue dollar perspective in the AT business with a benefit that was in the fourth quarter of last year that’s not going to repeat itself.

So that AT business in the fourth quarter, on a dollar basis, is going to be down about 10%; on a volume basis, it will be flat year over year. When you normalize for that, you’re going to get the Monitor growth right in that mid-teens range, which is very consistent with what we just saw in Q3. So you’re thinking about it the right way in terms of how you’re parsing it apart. On top of that, then you add in the Vital Connect contribution, and that’s what gets into the guide.

OPERATOR

Your next question comes from the line of Brandon Vasquez with William Blair. Your line is open. Please go ahead.

Brandon Vasquez (Analyst)

Yes, thanks for taking the question. Can, Quentin, maybe can you just spend a little bit of time on these delays and what’s impacting it? I mean, I don’t think it’s every day that you have an organization. It kind of sounds like you’re saying that there’s a bunch of physicians or a lot of physicians that are holding back because they know that they might be able to get VitalConnect later. It’s an interesting comment given VitalConnect was relatively small.

And so just help us understand, like, what are you actually seeing? What’s going on in the accounts? Why are things getting delayed out and is it VitalConnect that they’re waiting for? That part wasn’t entirely clear. Thanks.

Quentin Blackford (President and Chief Executive Officer)

Yeah, sure. Thanks, Brendan. So what we’re seeing in the AT business is actually, you know, sustainable, durable performance in the core accounts that we perform in with AT today. Where we’ve seen a slowdown is the new accounts onboarding and, essentially, you know, as they understand VitalConnect or the VitalPatch is a product that’s going to become available in our platform, what they don’t want to do is move forward with integrating with the iRhythm platform today that only has Zio AT on it, train up their existing teams on Zio AT, only to have to come back, you know, a few months here and train up on VitalConnect and go through another integration of the VitalConnect platform.

What we’re working on immediately as an organization here at iRhythm is to bring the VitalConnect, the VitalPatch, the VistaCenter, into our integrated platform so that in the future it’s a single integration with our customers, which makes it very seamless, streamlined for them to have access to what we think is a best-in-class MCT portfolio with both Zio AT and what will then be the VitalPatch MWT product that VitalConnect brings. But here in the near term, what we’re running into a bit of is excitement around the potential of the portfolio that we have, excitement around the VitalConnect product itself, but not wanting to go through full-scale integrations of both systems. And, you know, that makes sense. It does take resources, it takes time on the behalf of our customer accounts, and they don’t want to go through two of those instances, if you will. So they’re deferring those decisions to onboard until the platform is combined, which is our focus of our team here at iRhythm and the core focus out of the gate.

OPERATOR

Your next question comes from the line of Joanne Wunsch with Citibank. Your line is open. Please go ahead.

Joanne Wunsch (Analyst)

Good evening and thank you so much for taking the questions. I have two short ones. Did I hear you right? You’re putting off filing MCT this fall, but that you’re still going to be filing it in 2027? But I wasn’t sure I heard that correctly and I wasn’t sure if you gave a timeline in 2027. And then my second question has to do with adjusted EBITDA. Thank you for the 2027 commentary on revenue. But any way to think about, you know, improving profitability?

Quentin Blackford (President and Chief Executive Officer)

Sure. So let me talk to the MCT timeline and then I’ll let Dan hit on adjusted EBITDA. If you think about MCT, it continues to be a very important product for us. It’s going to be an important part of the portfolio. But when we think about MCT today as an opportunity, it’s a very strategic market. We have an immediate opportunity with the VitalConnect product to address an immediate growth opportunity in a market that’s very strategic and we think has tremendous runway for us to take market share.

So our initial focus is getting that VitalConnect and the VitalPatch integrated into our system. We are working in parallel with Zio MCT as well to get that ready for filing. And I shared in my prepared remarks, we’re actually producing units off of the production floor for testing as we speak. So work continues to go there, we continue to make good progress. But our initial focus is getting the integration of VitalConnect put in place, make that a seamless opportunity for our customers to experience the full breadth of our new portfolio and then lean back into the Zio MCT filing.

Dan, I’ll let you hit on the adjusted EBITDA.

Daniel Wilson (Chief Financial Officer)

Yep. So, Joanne, for 2027 we reiterated kind of our prior guidance of at least 15% adjusted EBITDA margin in 2027. Importantly, that is balancing kind of continued operating leverage across the business while also making, you know, the targeted investments that we mentioned to drive future growth, which includes both investments in the core business as well as integrating VitalConnect. So, obviously, you’ve seen the operating leverage we’ve been driving over the last couple of quarters.

There’s some timing-related aspects there in terms of when these investments will show up, but [we are] committed to delivering at least 15% adjusted EBITDA margin in 2027. And again, we’ll provide formal guidance in the early part of the year.

OPERATOR

Your next question comes from the line of Stephanie Al Ghazi with Bank of America. Your line is open. Please go ahead.

Stephanie Al Ghazi (Analyst)

Hi, thanks for taking the question. I wanted to ask on when do you expect VitalConnect to be fully integrated and broadly available? I guess just trying to understand if this pausing dynamic in MCT that you’re seeing will persist in 2027 and for how long, and if the delay that you’re currently seeing will be recaptured then.

Quentin Blackford (President and Chief Executive Officer)

Yeah, thanks, Stephanie. Look, I would expect that we have the integrated capabilities under the single platform beginning to be available in the mid part of the first quarter of next year. So we’re working through that through the back part of this year, through the end of the year and then into the very early part of next year. I do suspect you’re going to see sort of what we’re experiencing in AT hang around for a quarter or two as we navigate through that, and you’re going to see it start to reaccelerate then once we have the platforms combined in a single solution for the iRhythm commercial team.

You know, we couldn’t be more excited to drop that platform onto a commercial force of, call it, 200 folks versus the 30 folks that it’s been coming from on the VitalConnect side. So we’re excited with that, but we need to get to that integrated single platform.

OPERATOR

Your next question comes from the line of Alan Gong with JP Morgan. Your line is open. Please go ahead.

Alan Gong (Analyst)

Hi, thanks for the question. Just wanted to kind of touch on, you know, the progress you’re making on, you know, Zio Monitor. Right. So it’s clearly the momentum there has continued to be really strong. I guess when I think about, you know, the ability to kind of continue to pull forward AT in the accounts where you have Zio Monitor, is that something that’s still progressing well? And how should I think about the assumption for innovative channel growth in fourth quarter, that mid-teens you’ve talked about, kind of only accounting for the contracts that you have in place, not really accounting for any new ones.

So just curious what’s baked into that mid-teens growth for fourth quarter. Thank you.

Quentin Blackford (President and Chief Executive Officer)

Yeah, I’ll hit the first part of that and then Dan can hit on the second part of that. So, in the existing iRhythm accounts where we have Zio Monitor being prescribed with an opportunity to introduce our MCT solution, you know, we’ve had that opportunity for some time with AT, and I think we’ve realized, you know, a great deal of the potential that’s there in terms of who’s willing to utilize the AT product. What we know is that we’ve got a tremendous amount of our top accounts who are prescribing competitive MCT solutions alongside our Zio Monitor product.

They’re incredibly excited to learn about the new VitalConnect VitalPatch and that solution, but it’s not yet on the integrated system that we can make it a simple part of their workflow. So that is where our focus is at as we speak — to get that into that simple workflow, the same integrated instance that they have, and make that VitalPatch available to them. And I do think we’re going to have great success capturing the MCT opportunity in these accounts that we already have a good deal of business through Zio Monitor. I think that’s going to be a very nice revenue synergy for us. But until that product is available in the integrated solution, you know, we’re going to see folks continue to defer utilizing that product. So once the integration is complete, then I expect to see some nice benefits there.

But until then, I think you’re going to continue to see sort of performance as is. Dan.

Daniel Wilson (Chief Financial Officer)

Yeah. And then, Alan, on your second question there, in terms of assumptions on innovative channel in Q4, I would say no change in overall philosophy for us. We like what we’re seeing there. That remains, you know, the fastest growing channel in the business, as we commented on, and that’s our expectation going forward. At the same time, that is a business that’s still, you know, a bit early for us. It is concentrated in, you know, a smaller number of accounts versus our core business, and we still see a bit of lumpiness in that business.

So for that reason we always want to make sure we’re not getting ahead of ourselves. But again, no change to overall focus or philosophy as we’re setting guidance for Q4.

OPERATOR

Your next question comes from the line of Richard Neueder with Truist. Your line is open. Please go ahead.

Richard Neueder (Analyst)

Hi. Thanks for taking the questions. Maybe just two quick ones. I guess the first, I just want to make sure I heard you right. Did you say that you should be on track to hit a billion dollars in organic ex-VitalConnect revenue for ’27, or that you said you’re going to grow in line with a little bit above the organic rate? What is that? Is that a 14, 15% rate? And then the second question, I guess, Quentin, you know, it seems like the AT issue here, you know, as a result of having VitalConnect on the platform, these are things I would imagine you would have diligence with your customers or thought about.

I guess, how did this not get thought about in the diligence process or at least to prepare investors for it? Thank you.

Daniel Wilson (Chief Financial Officer)

Yeah, hi, Rich, I can take the first part of your question there on 2027. So you’re right. We did say the organic core business on track to hit approximately a billion dollars next year. Embedded in that is Zio Monitor growth kind of continuing at that mid to — and then really assuming Zio AT is flat versus 2026 as we wait to see that growth potentially reaccelerate as we reengage customers with the combined portfolio. And then we did comment that we expect VitalConnect growth off of the $65 million base run rate in 2026 to grow slightly above that organic growth rate.

So call that mid to high teens is how we’re thinking about it.

Quentin Blackford (President and Chief Executive Officer)

Yeah, Richard, on the second part of that, we certainly had contemplated that the AT business would continue to slow down in the guidance that we put out there off of the last call. So we did anticipate that. It slowed a bit further than what we expected, so we didn’t see it, you know, to the degree that it did slow down. I think, in part, closing the deal sooner than what we anticipated certainly forced some of these folks to say, look, this is probably nearer term than what we had anticipated.

We’re looking at this with a more critical eye. If you’re a few months away, then we’re going to wait with the onboarding versus what we had anticipated originally, which could have been all the way up to the end of the year before we got to the point of a close. So we did close much sooner and we saw some of these decisions being taken a little bit earlier than what we would have expected.

OPERATOR

Your next question comes from the line of Nathan Trabec with Wells Fargo. Your line is open. Please go ahead.

Quentin Blackford (President and Chief Executive Officer)

Thanks. Well, let me hit on the capacity for a second. We’re making investments as we speak to more than double the capacity of that Vital Connect business from an inventory perspective, from an operational capacity perspective. And that will only continue to grow into the future as we continue to invest onto that platform. But our immediate investments have been to double the size of that platform and to double the size of the capability or the capacity that’s in there.

So we do expect great performance coming out of it. We’re simply not going to get ahead of ourselves from a guidance perspective as we think about the combined MCT portfolio. I do think as we go into 2027, you’re going to hear us talk more and more about the combined MCT portfolio versus Vital Connect versus AT. But what I do expect is that the AT product and the Vital Patch, they’re going to continue to serve very distinct needs in the MCT category. When we talk to our physicians, we understand that there is a segment of that market we haven’t been able to serve historically that values things like live look-in capabilities, values the 30 days of monitoring, values the 4-in-1 multimodality capabilities.

Those are things that we haven’t been able to offer historically. But there’s also a segment of that market who is very keen on the simplicity of the Zio product. You’ll hear stories a lot from physicians who will say, look, I have a patient that I’m not confident is going to consistently replace their patch every 4, 5, 6 days to get out to 30 days, where I’d rather have a single stick-it-and-forget-it experience with that patient and capture the data for 14 days, or ultimately 21 days when we get to the new Zio MCT solution.

So I think both of those products are going to be very important for us as we offer what I think will be a best-in-class MCT portfolio. But to talk about the mix between the two products, I think that’s something that we’ll get experience with as we go, but they’re both going to serve a real need in the marketplace.

OPERATOR

Your next question comes from the line of Vijay Kumar with Evercore ISI. Your line is open. Please go ahead.

Vijay Kumar (Analyst)

Hi. Hi, guys. Thanks for taking my question. It’s Vijay. I had a question on your MCT assumptions here for ’27. So, you know, I heard you say MCT is going to be — AT is going to be flat-ish, and Vital Connect should grow in the mid to high teens. But your Vital Connect revenue base is smaller, right? I think that’s 65 million in fiscal ’26 as a run rate. I’m still not sure what the actual dollar number is in ’26. So what are we basing that mid to high teens growth on?

And my sense is Vital Connect is smaller than AT. So is this going to be growth-dilutive? And does it mean you’re losing share in this category — right, in the cardiac telemetry category? Like when does it resolve? Thank you.

Quentin Blackford (President and Chief Executive Officer)

Yes, I think the way to think about Vital Connect’s ’26 revenue — think about that as, you know, in the 65 million run rate that we’ve put out there. I think that’s going to get you materially correct in terms of the size of that business and how to think about it. And to Dan’s comments on the guidance, we’re expecting that Vital Connect business next year to grow a bit above the overall corporate organic iRhythm growth rate, meaning it continues to be accretive to the total company growth rate.

I think that’s the right way to think about it for the time being. We’re four weeks into having acquired the company. We’re still learning quite a bit — incredibly bullish about the opportunity. I’m very excited about the MCT portfolio that we’re going to have, but we’re not going to get ahead of ourselves in terms of setting those expectations either. I think there’s a lot of very interesting and exciting potential with the broader commercial force, with some of the commercial synergies that are out there, the ability to bring this into some of our core accounts that historically have prescribed competitive MCT solutions.

These are all things that excite us, but not a reason to get ahead of ourselves here either. So I do expect it to be accretive to the overall growth profile of the company, but I think the right way to think about that business right now is it’s growing a bit above the overall organic or core iRhythm growth rate.

OPERATOR

Your next question comes from the line of David Restcott with Baird. Your line is open. Please go ahead.

David Restcott (Analyst at Baird)

Thanks for taking the questions here. I wanted to ask, you know, as you get through or move to kind of the integration pieces or rollouts between the Vital Patch and the existing MCT, you know, kind of how we think about both that, like, Zio suite offering versus that live look-in, or back-end suite offering that Vital Connect has. Just trying to get a sense for how, or the way in which, I guess, you go to accounts and have both of those platforms out there integrated with an Epic and then, more broadly, as well as integrating with Epic, and then how you kind of, you know, I guess drive adoption across maybe what might be two separate kind of back-end software systems at this point. Thank you.

Quentin Blackford (President and Chief Executive Officer)

Well, David, the point is to make it seamless for our customers. And that’s exactly what we’re working through right now as we integrate Vital Connect onto our platform. When we go into an account and we integrate through Epic or Cerner or Athena, or any other EMR for that matter, we want it to be a seamless experience for our customers where they can have access to either one of those products without having to jump through different instances or iterations of an integration.

We want it to be a single integration where it’s very seamless and smooth in terms of the workflow for them. So we don’t want them moving between platforms, if you will, or on the back end having to jump and toggle between two solutions. We want it to be available to them in a single solution. That’s what the focus is of the teams today as we’re working to integrate the Vital Connect capabilities onto the iRhythm platform, if you will. So in the future that’ll show up as, you know, a single platform of iRhythm solutions and they’ll have access to Zio — eventually, in the future, Zio MCT — or Vital Connect’s products as well.

OPERATOR

Your next question comes from the line of Michael Polark with Wolfe Research. Your line is open. Please go ahead.

Michael Polark (Analyst)

Hey, good afternoon. Thank you. Two-parter: Is there a risk Zio Monitor sees some disruption from all this MCT integration activity? That’s question one. And question two is for Vital Connect — my understanding is they were operating in, say, 15 or 20 states. What is the action-item list to get more payer coverage for them for the rest of the states? Is that a big lift, or is that an easy plug-and-play? Thank you.

Quentin Blackford (President and Chief Executive Officer)

Yeah, it’s a great question. I can tell you on the Monitor side, the Monitor business continues to be very strong, performing very well. We commented in the third quarter it continued to be ahead of expectations. As a matter of fact, had it performed in line with our expectations, you would have seen us deliver a nice beat on the quarter, really on the back of that Monitor business. So the momentum there continues to be very good. The innovative channel business continues to be very good.

We added a handful of new accounts once again in the third quarter that we feel very good about, and the pipeline continues to be very strong. So I feel good about that. In terms of the market access on the Vital Connect side, the teams have been hard at work at increasing access on a national basis to get access to their product on a payer-by-payer basis. So we’re making great progress there. There continues to be work to be done, no doubt. But I feel good about the momentum that’s building there and the ability to get Vital Connect onto our contracts, or in some cases get Zio onto the Vital Connect contracts as well.

So it goes both ways there, but making good progress there.

OPERATOR

Your next question comes from the line of Mary Thibault with BTIG. Your line is open. Please go ahead.

Mary Thibault (Analyst)

Good evening. Yeah, I just wanted to ask another follow-up here on Vital Connect and Zio. How do you view which customer is ideal for which product? And can you tell us a little bit more about kind of the primary drivers behind that growth assumption that you gave us for Vital Connect? What needs to go right, and what’s kind of assumed in that above corporate-average growth?

Quentin Blackford (President and Chief Executive Officer)

Sure. So I think on the Vital Connect side, the primary drivers of growth is sort of seeing what we’re seeing in that existing business over the last several months now. I think just seeing that continue on gives us confidence in the guidance that we’ve put out there. So it’s something that we’ve been realizing and it’s been demonstrated here for a few months. The first part of that question — what was the first part? Targeting of customers — a great question. So really when you get down to the customers and their preference, it comes down to what are the features and the functions that they’re looking for in the product. And I described this a little bit earlier. There are several physicians out there, depending on the patient that they’re serving, who prefer the simplicity of a stick-it-and-forget-it experience. They want a single patch that can be worn for today 14 days with Zio, ultimately out to 21 days with MCT, but it takes out of question sort of the patient compliance around it.

Once the patch is on, they’re going to get that feedback that they want from monitoring that patient. Zio and Zio MCT are going to continue to be perfect products for those folks. And then we continue to invest in the research around it that demonstrates the clinical superiority of AT relative to some of the other competitive products that are in the market. The Camelot Alert study that I referred to demonstrated pretty clearly that our Zio product is superior on a head-to-head basis with other competitive offerings.

So where those things are important to the physician customers, they’re going to lean in and they’re going to continue to use Zio and ultimately what I think will be Zio MCT. For those customers who are really mindful of the live look-in capability — they want to see things sort of right there at their fingertips, they want to see that through the mobile device, they want 30 days of monitoring, they appreciate the multimodality capabilities, if they want to move from MCT down to, you know, event recorder or event monitor — that Vital Connect product gives them the flexibility to do that. They’re going to value that product.

So I think there are just very different needs within the MCT marketplace that our combined portfolio is going to be able to address, regardless of what that need might be.

OPERATOR

Your next question comes from the line of Siraj Kalea with Oppenheimer. Your line is open. Please go ahead.

Siraj Kalea (Analyst)

Quentin, can you hear me? All right,

Quentin Blackford (President and Chief Executive Officer)

We got you.

Siraj Kalea (Analyst)

Perfect. Gentlemen, thank you for taking my question. Dan, Forgive me, many calls going on. So if this has already been answered, I apologize for being redundant for all the issues of Zio AT. Right. And if I heard you correctly for FY27, I heard you say about a billion dollars in revenues. And I guess what I’m landing up is if I remove VitalConnect from the equation, I’m landing at organic growth like around 10-ish percent. 9-ish. 10-ish? Is my math wrong or what am I missing in this picture? If you could just put some finer points to that, would be greatly appreciated.

Gentlemen, thank you for taking my question.

Daniel Wilson (Chief Financial Officer)

Yeah, thanks, Siraj. So to be clear, the billion in revenue is our organic business, and then VitalConnect would be on top of that billion dollars. Hopefully that was clear. Embedded in that billion dollars, I did mention Zio monitor continuing to grow in that mid-teens rate, and then assumed in that is Zio AT essentially flat. We believe that’s the right way to set up the year. As we get experience, as we reengage with customers with the combined portfolio, we’ll, you know, we’ll reassess where we’re at at that point.

But to set up the year, we believe that’s the right way to think about it: mid-teens growth for Zio monitor at flat, and then VitalConnect a bit above the organic iRhythm business, which, Siraj, I’m not sure your math on the organic growth of 9% to 10%, but that would put, you know, overall organic growth right in that mid-teens range. So I’m not following your 9% to 10%.

OPERATOR

Your next question comes from the line of Mason Carico with Stephens. Your line is open. Please go ahead.

Harrison (Analyst)

Hey, this is Harrison on for Mason. Is there an ASP opportunity with Vital Patch MCT from a hospital contracting and reimbursement perspec