Hello, everyone, and welcome to iRhythm’s Third Quarter 2024 Earnings Call. My name’s Lydia, and I'll be your operator today. After the prepared remarks, you'll have the opportunity to participate in the Q&A with the management team. I'll now hand you over to Stephanie Zhadkevich, Director of Investor Relations at iRhythm to begin. Please go ahead, Stephanie.

Thank you all for participating in today's call. Earlier today, iRhythm released financial results for the third quarter ended September 30, 2024. 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 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 facts should be deemed to be forward-looking statements. These are based upon our current estimates and various assumptions and reflect management's intentions, beliefs, and expectations about future events, strategies, competition, products, operating plans, and performance. These statements involve 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. 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, filed with the Securities and Exchange Commission. Also, during the call, we will discuss certain financial measures that have not been prepared in accordance with US GAAP with respect to our non-GAAP and cash-based results, including adjusted EBITDA, adjusted operating expenses, and adjusted net loss. Unless otherwise noted, all references to financial metrics are presented on a non-GAAP basis. The presentation of additional information should not be considered in isolation of, as a substitute for, or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and 10-Q for a reconciliation of these measures to their most directly comparable GAAP financial measures. Unless otherwise indicated, all references to financial measures in this call, other than revenue, refer to non-GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, October 30, 2024. iRhythm disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I'll turn the call over to Quentin Blackford, iRhythm's President and CEO.

Thank you, Stephanie. Good afternoon, and thank you all for joining us. Dan Wilson, our Chief Financial Officer, is joining me on today's call. My prepared remarks today cover business updates during Q3 of 2024 as well as our annual outlook. I'll then turn the call over to Dan to provide a detailed review of our Q3 financial results and updated 2024 guidance. Before diving into the specifics of Q3, I'd like to address what I know is top of investors' minds regarding headwinds on our share price, especially regarding the status of iRhythm's remediation efforts in response to a 2023 warning letter from the FDA and their more recent 483 observations. As many of you know, iRhythm is in the midst of a company transformation, maturing our US-focused business beyond a single product, single-market company into a profitable, scalable, global growth company with a multi-sensing platform addressing multiple large end markets. Our accomplishments of the past 24 months are reflective of these ongoing transformational changes within our organization to foster a commitment to excellence, and we have made significant strides towards our stated long-range goals to create value for multiple stakeholders and continue to foster innovation for the benefit of patient outcomes. I'll provide some specific examples of recent accomplishments a bit later on in my remarks. While we have made significant progress, we acknowledge that addressing ongoing and legacy quality and regulatory issues remain a significant challenge for our organization. First and foremost, iRhythm is committed to a culture of quality and sustainability from the top down, and remediation of these quality and regulatory matters have been and will continue to be iRhythm's top corporate priority from the board and executive level into every layer of our organization. Our current remediation efforts extend beyond addressing the focus of the warning letter from last year and the 483 observations from July of this year. We are rebuilding our entire quality management system, touching every aspect of it, including areas that have not been part of the FDA's recent inspections with the intent of making our quality system truly best in class. iRhythm is committed to going above and beyond with our efforts intended to exceed the expectations of the FDA as we seek to rapidly accelerate the maturation of the quality organization and the broader culture of quality within our company. As one example, we have made significant resource investments in our regulatory and quality organizations from roughly 20 people 2 years ago to more than 100 individuals today. Further, within the past month, we have hired a new leader of our quality function, who is now reporting directly to me and brings significant experience of having led companies through warning letter and 483 remediation efforts. Additionally, beyond the expert consultants already in place, we have engaged a highly reputable industry-recognized consulting firm that is known as a leader in navigating regulatory compliance matters to conduct periodic internal audits for progress against remediation efforts. They will also be performing a full audit at the conclusion of our planned efforts around our entire quality management system, the scope of which will go beyond what the FDA commented on in last year's warning letter and the most recent 483 observations. As we hope is abundantly clear, we are taking these regulatory and quality matters very seriously, and we'll allocate the necessary resources to ensure that we are best in class from a quality perspective and that the FDA's observations are remedied to their complete satisfaction. As a clear indication of progress in addressing the concerns expressed in the FDA warning letter, we have recently received FDA clearance for the first of two 510(k)s related to our Zio AT system. The first clearance is a catch-up for changes previously made to the Zio AT system as a letter to file. Regarding the second 510(k), the agency specifically requested that the first 510(k) clearance be obtained before they perform final review of our second 510(k) submission, which contains design modifications to our Zio AT system. We are unaware of any further technical questions from the agency at this time. At this time, we have submitted the recently received 510(k) clearance letter to the FDA and are awaiting a response from the agency regarding the clearance of our second 510(k) submission. We look forward to updating the investment community as soon as this milestone is reached. Considering the substantial efforts to accelerate the transformation of the quality organization, while undertaking the remediation efforts and redefining the standards with which we engage the FDA, we will be voluntarily delaying our regulatory submissions for the Zio MCT system, which were intended to support the company's next generation of our mobile cardiac telemetry product. Following the company's receipt of the recent 483 observations and our acceptance of the FDA's position regarding the inclusion of certain activities performed by the company's technicians as part of our system, we will take the time to ensure that our next generation MCT 510(k) filing encompasses all the necessary impacts of including the technicians as part of the system and expect to be on file with the agency in the third quarter of 2025. We're taking this proactive voluntary approach to continue to demonstrate our commitment to addressing the most recent questions and concerns of the FDA following their July inspection. This approach will result in our voluntary efforts to perform additional testing and documentation ahead of time in anticipation of questions that the agency may ask and demonstrate to the FDA the rigor with which we plan to approach product submissions in the future. While we understand that this may be disappointing, we believe that this is what is required to ensure thoroughness and completeness of our FDA 510(k) application to the agency and the best approach to ensure we iRhythm up in a way to continually lead the field of innovation for years to come. Shifting to iRhythm’s core business performance, we were pleased with the third quarter results as we achieved $147.5 million in revenue, representing 18.4% growth year-over-year. This solid quarter of execution was driven by record demand from existing accounts combined with another record quarter of new account openings. Our teams continued to drive traction within primary care channels, penetrating deeper into large integrated delivery networks, and also expanding within our large national value-based care accounts during the third quarter that should drive substantial cost-efficient top-line growth in future quarters. Both pilot programs mentioned in prior quarters are now beginning to expand beyond pilot phase into early commercial launch. Importantly, overall volume growth came not only from our Zio XT business, but also from our Zio AT business, where momentum has accelerated in recent months. The third quarter of 2024 represented the largest quarter of Zio AT registrations ever, fueled by a record number of new Zio AT account openings, something that we are on pace to top once again in the fourth quarter. Overall, it is extremely exciting that one out of every 200 people in the US will wear a Zio this year, and there is a Zio going on a patient every 15 seconds. Exemplary of these efforts, we celebrated a number of milestones during the third quarter and also had a number of exciting developments to better support our customers and better serve our patients. First, we celebrated our 1 millionth patient registered for Zio monitor, our newest generation long-term continuous monitor, and unveiled data at HRX 2024, which we believe demonstrates Zio monitor's superior real-world performance. Zio monitor has demonstrated fewer early wear terminations, longer wear duration, longer analyzable time, and fewer patient complaints compared to our legacy Zio XT device. Additionally, this longer wear duration, which generally leads to greater analyzable time, may further improve diagnostic yield building upon Zio XT's superior yield among ACM devices as demonstrated by CAMELOT findings. Additionally, we also celebrated that our teams have crossed the milestone of 2 million registrations through EHR integrated accounts and have launched our first health system on Aura, Epic's network to exchange orders and results across their community. iRhythm is the first medical device company to join the Epic community on their Aura platform. And through our collaboration with Epic, we estimate that organizations can save up to 75% of the time it typically takes to integrate Zio services into their local instance of Epic. By streamlining access to Zio Services via each our integration, clinicians and health care systems can improve operational efficiency, which we believe can reduce cost to serve and allow health care providers to devote more time to what matters most, patient care. Furthermore, we believe that this collaboration can expand access to Zio services across the continuum of patient care with an integrated delivery network from cardiology to primary care to emergency departments and beyond. We are very excited to begin offering this solution more broadly to existing and new Zio customers starting in early 2025. Lastly, during the Q3, our digital product development team celebrated the milestone of more than 1,000,000 patients having used the MyZio patient app and also released the latest iteration of Zio Suite for our customers. This latest software platform features an enhanced user experience relative to the legacy system. This has been a highly requested feature for the past few years from our commercial field team. For our customers, the latest Zio Suite update includes navigation updates and user management enhancements to improve workflow and experience. These milestones and developments are some of the latest examples of how iRhythm continues to lead through innovation and ingenuity, and I am incredibly proud of the collaboration of our internal teams as we achieve these important milestones. Turning to progress against our levers for long-term sustainable growth, we also made meaningful strides this past quarter in our international expansion efforts as well as our product innovation initiatives. In the United Kingdom, our teams garnered more than 10,000 registrations in a single quarter for the first time ever, and we also enabled the introduction of the MyZio app to our UK patients, allowing them to log symptoms and access educational content digitally. The clinical significance around MyZio usage and overall impact on symptom rhythm correlation is very clear. Patients using the MyZio app were 4 times more likely to record at least one symptom during an arrhythmia compared to patients using a paper log booklet. We have been thrilled with this expansion in our UK market and are excited to bring Zio to more patients there. Also, in Europe, we reached a critical company milestone during the Q3 with the commercial launch in Austria, the Netherlands, Switzerland, and Spain, highlighting our continued commitment to bring our innovative digital health care solutions to millions of people worldwide. We're in the very early stages and have started to receive physician orders, and we'll continue to ramp our commercial efforts, contracting with local hospitals, engaging key opinion leaders at leading academic centers, and generating clinical evidence to help physicians in these markets appreciate the value that Zio services can drive for their practices. In Japan, we were also extremely excited to have received the Japanese PMDA regulatory approval for Zio monitor in September. Zio is the 1st product in Japan to deliver arrhythmia monitoring services utilizing artificial intelligence and the only 14-day cardiac monitoring service in its category to receive Japanese regulatory approval as an improved device without a clinical trial. Our Japanese reimbursement dossier was submitted following regulatory approval, and we have already fielded a few questions from the MHLW regarding our application. As we navigate these negotiations, we continue to work with our planned distributor in Japan to get them ready for launch. We continue to anticipate commercial launch in 2025, representing our foray into the 2nd largest ambulatory cardiac monitoring market in the world. On the innovation front, we could not be more excited to have entered a technology licensing agreement with BioIntelliSense to incorporate medical-grade connected multi-sensor capabilities into our ACM products, positioning us to significantly expand the capabilities of our product platform over the next several years. While this is a long-term strategic play, we believe that incorporation of BioIntelliSense's proprietary technology into future iterations of the Zio platform could not only enable iRhythm to maintain premium positioning within our core ACM market but also broaden our product platform capabilities to potentially serve additional channels and indications over time. Patch-based pulse oximetry, accelerometry-based heart rate and respiratory rate, and noninvasive blood pressure capabilities represent natural complements to iRhythm's best-in-class ambulatory cardiac monitoring services and ECG data as these additional vitals provide a more holistic view into patient health, uncover risk factors in patients, and optimize workflow efficiencies for overloaded hospital systems and physicians. But we also believe that these platform capabilities will be necessary to ensure long-term positioning as we believe the ACM market may further develop to have progressively more multi-parameter sensing capabilities and deliver broader clinical insights. These naturally expanded capabilities may then enable us to enter other adjacent indications such as obstructive sleep apnea over the next several years in disease states where multiparametric vitals are important for clinical diagnosis. By utilizing our balance sheet to fund this type of technology development and partnering with an exceptional team at BioIntelliSense, I'm very excited to collaborate and accelerate the next chapter of connected patient care. Finally, I'm so thrilled that our recent accomplishments are being recognized externally by a variety of third parties for our innovative technologies and population health improvements that our teams are committed to every day. In May, iRhythm was recognized on Newsweek's list of the World's Best Digital Health Companies for 2024. Its inaugural list ranks the top 400 companies from over 35 different countries and evaluates companies' impact, financial performance, and online engagement. More recently, Newsweek also named iRhythm as one of America's Greenest Companies, a list that recognizes the top 500 companies in the US based on environmental sustainability and scores companies on more than 25 parameters based on greenhouse gas emissions, water usage, waste generation, and data sustainability disclosure commitments. Additionally, we are very happy to announce that we have been named one of the top four finalists for the 2024 Fierce Life Sciences Innovation Awards in the categories of Digital Health Solutions and Population Health Management and Patient Engagement Solutions. This is a major achievement in a highly competitive field with winners to be announced in December. As these recent accolades demonstrate, iRhythm is committed to driving significant growth in a responsible, sustainable, and profitable way for the benefit of all of our stakeholders. With that, I'll now turn the call over to Dan to discuss our recent financial performance.

Thanks, Quentin. As a reminder, unless otherwise noted, the financial metrics that I discuss today will be presented on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release and on our IR website. Our third quarter 2024 results demonstrated continued momentum in our core markets as we achieved revenue of $147.5 million representing 18.4% year-over-year growth. As Quentin mentioned, these results were driven by record demand from existing accounts combined with another record quarter of new account openings. New store growth, with new store defined as accounts that have been opened for less than 12 months, accounted for approximately 36% of our year-over-year volume growth. Home enrollment for Zio Services in the US was approximately 23% of volume in the third quarter. Gross margin for the third quarter was 68.8%, in line with our stated expectations. Compared to the second quarter 2024, the slight decrease was driven by the absence of some favorable one-time items noted during the prior quarter that benefited gross margin, while sustainable clinical operations and manufacturing efficiencies continued to benefit us in the third quarter. Compared to the prior year, gross margin improvement was driven by the advancement in automation and operational efficiency as well as reduced costs related to excess Zio XT inventory associated with the Zio monitor commercial launch in our third quarter 2023. Third quarter adjusted operating expenses were $143.8 million, up 14.9% sequentially and up 34.3% year-over-year. Compared to the third quarter of 2023, this increase in adjusted operating expenses was primarily driven by a $32.1 million charge for technology licensed that was recognized as acquired in-process research and development expense during the third quarter. In alignment with SEC guidance around non-GAAP financial measures related to acquired IPR&D expense, iRhythm does not exclude acquired IPR&D expense from its non-GAAP results. Normalizing for this expense during the quarter, adjusted operating expenses would have been approximately $111.7 million or up approximately 4.3% year-over-year, demonstrating our continued progress toward realizing operating leverage within our P&L. As noted in prior quarters, we continue to incur incremental legal and consulting fees as well as other company expenses related to FDA remediation efforts and DOJ subpoena activities. The company increased its remediation activities in the Q3, bringing on additional consulting support, as Quentin noted previously. We now expect incremental expenses related to these activities to be approximately $11 million to $13 million in 2024 and a $15 million run rate per year going forward with these expenses continuing into 2025. Once we are through our remediation efforts, we expect the majority of these expenses to subside. Importantly, recent corporate actions intended to better align headcount resources to our corporate priorities and efficiently scale will help offset incremental FDA remediation expenses in the near term while positioning iRhythm to deliver sustainable profitability into the future. Adjusted net loss in the Q3 of 2024 was approximately negative $39.2 million or a loss of $1.26 per share compared to an adjusted net loss of $24.1 million or an adjusted net loss of $0.79 per share in the Q3 of 2023. Adjusted EBITDA in the Q3 of 2024 was negative $19.9 million or negative 13.5% of revenue compared to 0.3% in the Q3 of 2023 and 3.4% of revenue in the Q2 of 2024. Excluding the $32.1 million of acquired IPR&D, which was not contemplated in our previously issued guidance, adjusted EBITDA during the Q3 2024 would have been 8.3%. Turning to guidance. We are narrowing our 2024 revenue outlook as presented earlier this year and now anticipate full-year revenue to range between $582.5 million to $587.5 million. We continue to believe that the year will be driven by sustained volume growth in our core US market as we continue to drive penetration in both existing and new customer accounts. The Q4 of the year is historically our strongest of the year, and we have seen solid trends in the business to start the quarter. We are reiterating our full year 2024 gross margin guidance to a range of 68.5% to 69%, an improvement of approximately 150 basis points at midpoint compared to full year 2023. We have made significant progress year to date with clinical operations and manufacturing efficiencies and believe that these sustainable improvements will continue to lower our cost to serve over time. With respect to adjusted EBITDA margin, we now expect adjusted EBITDA margin for the full year 2024 to range from approximately negative 2% to negative 1.5% of full year revenues. As noted earlier, the charge for acquired IPR&D will not be excluded from our non-GAAP results. We expect the charge for acquired IPR&D to be in the range of $32.5 to $33.5 million for the full year. As noted earlier, we now anticipate legal and consulting fees related to FDA remediation efforts and DOJ matters will be approximately $11 million to $13 million for the full year. These expenses will be offset by the corporate activities that were executed to better align headcount resources to corporate priorities and to ensure efficient scaling into the future. Taken together, absent our transaction with BioIntelliSense, our adjusted EBITDA margin guidance would have been unchanged to prior guidance. Finally, we ended the Q3 in a strong financial position with approximately $522 million in unrestricted cash and short-term investments. During the Q3, we began to see improvements in working capital resulting from the recovery of delayed billings associated with the change health care cybersecurity incident in the Q1, and we anticipate further improvements to cash collections and normalized levels of DSO as we exit 2024. To close, our financial accomplishments in the Q3 demonstrate continued commercial momentum in the business and solid operational execution by the iRhythm teams. We are in a strong financial position and are ensuring capital and resources are allocated to FDA remediation priorities while appropriately investing for the long-term growth of the business. And our teams are focused on implementing sustainable efficiencies to drive continued profitability expansion into the future. With that, we would like to now open the call for questions.

Thank you, Dan. Our first question today comes from Alan Gong with J.P. Morgan. Please go ahead. Your line is open.

Hey, Allen. Thanks for the question. This is Quentin here. Before I jump in and answer that question, I wanted to share with our audience. This is a bit unusual, but we did learn that subsequent to starting our call this afternoon. We get notice from the FDA that they have cleared our second 510(k) submission with that Zio AT product for the design enhancements that we had put forward as part of our warning letter remediation efforts. So, I think another good sign that we continue to make good progress with the FDA down the path of remediation and certainly pleased to see that second 510(k) approval come through. So, I wanted to share that with the group as I think that's important information to get out there. Regarding your question on MCT, I think it's very important to understand. This is completely our decision. It is a proactive voluntary decision on our part, coming out of the 483 observations here in July, as we certainly accept the FDA's position that the qualified technicians are a part of the product, as we brought new leadership on board with us and also engaged incremental outside experts to help us think through and navigate this position. It's become very clear that there are certain remediation efforts that we need to demonstrate some very quick progress against in the spirit of understanding the FDA's position and making sure that they see that we are aligned to it. But also knowing that with the qualified technician being part of the product, there is some incremental work that we can do to bolster that submission when we make it for MCT to head off any questions that we would expect are going to come from the FDA as part of that, now that the qualified technicians are in fact part of the product.

Yes, thanks, Allen for the question. This is Dan. I think you heard from our prepared remarks, seeing really good momentum in the business, a lot of strength there. We talked about the new accounts onboarding in Q3. So, feel really good about what that means for future growth, and that really is nice and balanced across both XT and AT. So, feel like there's a good setup for Q4, and our guidance reflects that.

Our next question today comes from Macauley Kilbane with William Blair. Please go ahead.

Hi, everyone. This is Macauley on for Margaret tonight. Thanks for taking the question. Dan, maybe just to follow-up on that. I and, obviously, a record number of new accounts in the quarter, which is great to see. Could you just maybe talk about the profile of the average account that's coming on board, whether these are competitive switches. I'd assume they're coming on with both monitor and AT, but just to level set us there. And then as you mentioned, it feels like the accumulation of record ads here the last few quarters should allow you to accelerate that volume growth, to north of 20% as we look towards 2025. Just wondering, expectations as we look beyond Q4 and into next year.

Yes. Macauley, this is Dan. I could start and Quentin can add to it. So, you're right to point out the record number of new account adds in terms of a good indicator for future growth. The profile of those accounts, I think, is pretty consistent with where we're winning in the past, with maybe one exception being there are a number of large accounts that are recently won or in the pipeline. The timing of those accounts in terms of converting them into a full launch and how they really ramp is a bit longer to be honest, which you would naturally expect as these accounts are bigger; they're often launching with full EHR integration and that takes time. It takes IT resources on their side to execute on that EHR integration. So, we are seeing the selling cycle a little bit extended as it relates to those accounts. Otherwise, the profile is pretty similar. You do know we're expanding more and more in the primary care, so naturally turning on more and more primary care accounts. We feel really good about what that means for future growth. As it relates to going forward, in 2025, again, I think this sets us up well for 2025. You did hear our comments on Zio MCT being pushed out the submission there and ultimately the commercial launch into 2026. We thought of that as kind of a $10 million plus incremental revenue opportunity in 2025. So that does need to be accounted for. And then you think about international, we're just getting started with the four European countries that we launched in the Q3. Those will take a bit of time to ramp. We'll see that start to contribute in 2025. And then of course, Japan launching, call it mid-year next year, which will have a little bit of contribution to 2025.

I would just point out, Macauley, our unit volume growth has accelerated every quarter this year. Each quarter, it stepped up from the prior quarter and in our guidance, our Q4 unit volume growth will step up once again. So, we continue to feel good about the momentum in the business. I think starting to see these Zio AT accounts come back online and adding at rates even faster than what they were prior to the warning letter being issued or the field advisory notice being put out there almost a year and a half ago is really encouraging to see, and I commented on the fact that we're seeing that in Q4 as well. So, we're very bullish from that perspective. We're excited to see Epic Aura get implemented and begin to be launched here in the fourth quarter with a handful of accounts, but then turned on as we moved into 2025, to our entire commercial team. So, that excites us. But to Dan's point, MCT is going to be delayed, and we want to make sure that we're thoughtful about that. But the AT business has been strong.

Great, thanks for taking the question. I wanted to touch on the BioIntelliSense licensing agreement, and that push into vital signs beyond Zio's capabilities today. Maybe you could provide us more color around commercial aspirations for this deal. When could we see a product with these features out there in the market? And I know a competitor of yours in the remote monitoring space has talked about the inpatient opportunity from their multi-parameter patch. So, checking to see if that's somewhere you would like to push into at some point too. Thanks.

Yes, Kallum, look, we're really excited about the BioIntelliSense partnership that we've been able to bring together. I think this is very much a longer-term strategic investment that we've made with the idea of bringing these multi-sensing capabilities on a single platform off of the chest. And I think that their PPG capability is a bit unique differentiated, bringing pulse oximetry opportunities to us off the chest, accelerometry, advanced accelerometry that gets us some heartbeat, respiratory rate, heart rate analysis, all things that are going to improve the overall offering that I think will help us continue to protect the ACM space, but ultimately go beyond that in the multi-vital sign monitoring. The inpatient setting, it's interesting to us. I think the real opportunity quite frankly is to disrupt the hospital into the home setting. And I think that we know how to do that in ambulatory setting better than anybody else. I think we bring a very large IDTF capability to it, which allows us to monitor remotely very well. And so, I think we have a real opportunity to disrupt that space and time, but that's going to be a few years out. That will become a product that makes its way into our bag behind the MCT product that we're going to focus on first, but it's one that gets us very excited about. I think it also gives us a direct line into how we get to a home sleep test off of the chest that ultimately will benefit our sleep activities that we've talked about historically as well. So, a lot of strategic implications in there, a terrific partner. I look forward to what we're going to be able to do together.

Hi. Good evening. Apologies for the background noise. Wanted to ask a little bit more detail on the remediation efforts, and bringing cardiac technicians into the fold. Can you talk a little bit about the processes that need to happen to take the IDTF folks into the kind of the quality assurance here? And as a second part follow-up, with the delay on MCT, are there any opportunities on R&D side to maybe further wear time on that product or make other improvements that you plan now that you have a few extra quarters to do it? Thanks.

Yes. Good question. I think from an IDTF perspective, and bringing them into the fold of our quality management system. I will tell you, there's not going to be any impact to the patients in terms of how they experience the product or the physicians and how they experience the product. But it is internal workflow and how we think about documenting our quality management system, how we think about complaints, reporting, risk analysis, statistical analysis that we apply to it. All of those things are impacted as a result of bringing the technician into the product and service offering. It also means that it becomes part of any future submissions when we go to the FDA for new approvals, which is why the MCT product is going to be delayed a bit here as we work to bring into the submission any and all implications that involving the technician now has with the product. So, I don't expect it to impact how it shows up in the marketplace and how the patient experiences it or how the physician experiences it, but it does have some internal process and documentation requirements that just take time to work through and get completed. I also do believe Marie that we're starting to see the broader industry begin to be impacted by some of this. I think there's other players in our space, who deal in the MCT space that are beginning to see how the FDA has worked through iRhythm and identified their strong point of view around the qualified technicians and their inclusion in the product. And now we're starting to see that play out with industry partners as well on a case by case basis. So, I do think this is broader industry, not just, iRhythm specific. With respect to MCT, our wear time on the next generation of our Zio AT or what will now become Zio MCT will have a longer wear duration to it. That has been something that's been part of the design from the very get-go. When we talk with our customers and we receive the feedback from the market, the most critical aspect of making Zio AT more competitive is the wear time. And so, we will extend that wear time in this next submission and continue to address those market needs with that product.

Thank you and good afternoon everyone. I wanted maybe to talk a little bit about the expansion in the UK and internationally. You also got approval in Japan during the quarter. You talked about ramping up with your partner. But can you maybe help us think about the extent to which international represents an incremental contributor or perhaps helps offset some of the MCT delay in the $10 million that Dan referenced and how we should think about that ramp OUS?

Yes. Well, we're certainly very excited about the international business. We've been in the UK market for a period of time now. We continue to work from a reimbursement perspective with the public health systems, but we're making very good progress on the private side, sort of in parallel. So, we're going after that market in two different ways. And then by opening up these new incremental European markets being Switzerland, Spain, Austria, and the Netherlands. That certainly is exciting for us as we think about the product getting started there and we're already starting to see the first orders come through from those opportunities, but that's going to be our primary focus in the EU out of the gate. Japan is probably the most exciting international market out there for us. We couldn't be more excited about the fact that we do have the high medical needs designation. We're working with them from a reimbursement perspective now. We would expect that in the first part of 2025 and to be launching into that market commercially in the first half of 2025. So, how quickly that ramps is something that we're going to monitor. I don't expect, David, to get out ahead of ourselves there. We're going to want to see this play in the market and build some momentum and success before we start to really get ahead of ourselves there. But that's just something that we're going to have to learn with experience. But when you see the excitement that's growing in and around the Zio product in those international markets, just the brand awareness of the product, when you go to those international trade shows and meetings with the KOLs within the country, it's very clear of the awareness of Zio and I think it sets us up for some nice success early on. But we'll guide you on the particular impact in 2025 as we get closer to it. It will be an incremental contributor. International, this year is, call it one, pushing on 2% of overall revenue. I think you're going to see that grow over the next 3%, 4%, 5 years to 8%, 9% of revenue.

Great. Thanks for taking the questions. I have a couple of just kind of clarification questions that I'll ask as my question. It sounds you heard the prepared remarks around the Q3 2025 submission for MCT. Then heard in the comments, the recent 510(k) clearance or that second clearance that we had been expecting. It sounds like the delay of MCT is more based on some of the incorporations you're making from the updates we heard on the 43 earlier in the year and they were on the CCTs. So just the first question again is that correct? Is there no update or no change now to the Q3 2025 submission based on again this update around the second 510(k) clearance? And then for the $10 million called out, of the maybe incremental impact from the delay? I'm just trying to get a sense for what the baseline of that would have been off of. I know the longer-term guide is the 20% on the top line. You're doing 18% to 19% this year. So it's a good way for next year to think about the impact of maybe 18%, 19% growth off of where you shake out this year. Take out maybe half or 70% of the $10 million and that's the baseline maybe or the outlook for next year. Thank you.

Yes. We're not going to guide specifically, David, the 2025 just yet. I think the way you just described that is the right way to begin to think about it. When you think about the impact of MCT next year, obviously, this is a product that we think can really accelerate the AT profile. We're very happy with how AT is performing right now, but I also have a very, very strong point of view that it's just not quite the right product for the market. And that when we do have that right product, it's going to be able to accelerate that growth profile. But I think that you're thinking about the way you just described there for 2025 is the right way when you think about adjusting for the MCT delay. There are no changes in this MCT product submission from a design perspective or features perspective as a result of the 510(k) approvals that we've received with Zio AT. That has not been anything that the FDA has asked for. To be quite clear, the MCT product has design enhancements that were already in it that were designed to address some of the concerns that the FDA had in Zio AT to begin with. Think about that as the max trigger limit and how we reduce that even further, but those are already designed into the product. What's very clear in working with the FDA is that by bringing the technician into the workflow and the defined product itself and service, there are a lot of questions of how the technicians interact with the software and ultimately get to the final report. So, there is human factor testing that we will perform to provide in that submission to show the FDA exactly how that interaction works. But these are questions that they've been asking on the Zio AT submissions. And it's clear that they're most likely to ask these with Zio MCT as well now, and we need to go ahead and prepare that ahead of time and go ahead and submit it, which is going to take a bit of time to complete, but it's the right thing to do. And again, demonstrates our commitment to addressing the FDA's expectations and making sure that we do that in a satisfactory way.

Hi, thanks for taking the questions. Quentin, I guess a couple for me. One is, you put a stake in the ground for Q3 2025 for MCT, and you've identified the incremental spend that you need or that you think you need to remediate. This has been a bit of a challenge for you guys. Just the timelines and what is required and how much spend is required. I guess, what can you tell us to get confident that these are the right timelines and this is the right spending level and you have all the information you need to start being able to make progress with the FDA versus having ongoing delays?

Yeah. Rich, I think it's a fair question. I think with respect to the spend, the $15 million of remediation, I think it's important to note that our remediation efforts at this point are going beyond what the FDA has identified in the warning letter as well as the recent 483 observations. We have taken a step back and we're looking at the entire quality management system, every aspect of it, trying to anticipate where the FDA would look or may look if they were to come back for subsequent inspections. And we want to make sure that the entire quality management system is up to their expectation. It's a big part of why we've engaged another outside expert who has experience in building and remedying these quality management systems, navigating through warning letters and even worse for companies. And we're having them perform periodic audits as we go through the process to ensure that progress is being made. Ultimately, they will audit the entire QMS, Quality Management System, at the end of this process here in 2025, looking at it from beginning to end, every aspect of it to ensure that it's up to a level that we can all be happy with and that we can feel very confident if the FDA were to come in and want to look in that particular area, we would more than meet their need. So that has been our approach; rather than just focus on addressing the FDA's concerns they've identified, let's go after the entire quality management system and look at the entire thing from a holistic perspective. That's why the spend will continue here throughout 2025 at about that $15 million rate that Dan noted. I do want to point out that we've taken other corporate actions that will offset the $15 million next year. So, from a profitability perspective, you're going to continue to see really nice improvements in the profit profile of the company, again in 2025, while we work through remediating this. Ultimately, when that spend goes away, it will drop through to the bottom line. With respect to the timeline of Q3 2025, I think it's important to note that if we wanted to, we could submit the MCT submission in the very near term. The reality is that we know that there are going to be questions that are going to be asked and that there's work that needs to be done to address the aspect of involving and including the technicians as part of the product. We're going to take the time to go ahead and do the work necessary upfront and try to address those questions before they're asked. So, when we look at the timeframes internally, we'll be driving ourselves to something more aggressive than that Q3 timeframe. But I think the Q3 timeframe is the right way to set expectations, considering the moving pieces that we've seen in the past, and that's our best estimate to do it.

Our next question comes from William Plovanic with Canaccord Genuity. Your line is open.

Great. Thanks for taking my questions. Quentin, I was just hoping you could just help us with kind of cadence milestones to really measure against as you move forward. You've given us a point in time for the Q3 filing. But is there anything we need to see with the 483 letters, can that be come up warning letter? Do you expect that? Are there any milestones on the remediation that we could expect to see or should anticipate? What are the mileposts or guideposts as you go forward on your way to the path to file that MCT filing? Thanks.

Yeah. No, I can't speculate on where the FDA may or would go with this. Obviously, we're doing all that we can to demonstrate very clearly to them that we're committed to remedying their concern. But even beyond that, looking at the entire quality management system and rebuilding the entire thing from the ground up. And we've shared that directly with the FDA. They're also very much familiar with the third parties that we brought in to help here. They know the level of work that they hold themselves to and the audit scrutiny that we're going to subject ourselves to as they perform their audits as we go across our against the progress that we're making. So, we're trying to demonstrate very clearly that there really is no cost that's going to prohibit us from remedying this situation with the FDA, and it is the top priority in our entire company. And I think that's very important to note.

Thank you, and our next question comes from Suraj Kalia with Oppenheimer. Please go ahead.

Perfect. Hey, Quentin, two questions. I'll post both of them upfront. So, on Zio MCT, I just want to make sure I understand this correctly. Will there still be some level of event trigger thresholds built into the system that the FDA would essentially say yes, this is the right amount; go with this, given the form factor? That's one question.

Yes. Thanks, Suraj. With respect to MCT, first of all, the Zio AT product that we just received final approval on both the catch up and the design enhancements continues to have a trigger limit in it, right? The FDA has gotten very comfortable with that feature being in the product. With Zio MCT, there will continue to be the potential of a trigger limit being met in it. But I can tell you, the prevalence is dialed down significantly through better utilization of the AI capabilities that we have, the algorithm, but also power management. So, there is still a trigger limit potential in it, but the expectation of when it will be met is far, far less. But again, this is something that the FDA has demonstrated to us that they can get very comfortable with, and we've seen it in the approvals. With respect to the multi-parameter sensing, I think there's a lot of different things that it opens up for us. But one thing that we've seen very clearly in our own market research and particularly dealing with our own customers being cardiologists, EPs, even moving into the primary care spaces, enriching the data that they have at their fingertips, even with their existing patients today becomes very valuable to them. I'll give you a good example of a cardiac rhythm patient that we're monitoring for an arrhythmia. If that physician sees or more importantly does not see an arrhythmia, but was able to identify that their oxygen levels were depleting during the wear of the sensor, they're going to want to still treat that patient. They're going to find a different way to treat the patient, but they never would have known that they needed to with the arrhythmia monitoring only. So, I think enriching the data that we can provide to that physician becomes very important. Sleep analysis is another one that becomes very interesting to us. We know that the majority of sleep patients ultimately originate from a cardiologist or an EP. I think in the future, it will become even more common to see them originating out of a primary care physician's office. But if we can provide that information right off of the chest, off the patch that they're wearing for cardiac arrhythmia monitoring and identify that a patient is at high risk of sleep disease, I think it becomes a natural enabler for us to become sort of the company that can identify and diagnose sleep disease and then move the patient on forward through some therapy, some funnel of care, which that is not what's interesting to us. We don't want to be a therapeutic company necessarily. We're not going to treat sleep disease, but if we can diagnose it on the front end, just like we do cardiac arrhythmias, that becomes very interesting to us. I think there's a lot that we can do with a multi-parameter sensing capability that is very, very interesting to us. I would say we hear a lot of talk around RPM. I am not too interested just in the remote patient monitoring space. That doesn't get me excited, but what does get me excited is some of these other features that we can enrich and make more valuable for our existing customer base or find ways to monitor vital signs, remotely move care out of the hospital into the home, and more important than RPM codes and reimbursement there is the ability to reduce the cost of care for these hospitals or these large networks that we're already partnering with as they care for their patients. I think that cost avoidance is where the real value is at.

We have no further questions in the queue. So, I'll turn the call back over to the management for any closing remarks.

Thank you, operator. I would say, look, we're very pleased with the operational progress that we've made through the first 9 months of 2024, and we're looking forward to a strong finish to the year. There are a lot of meaningful operational improvements that we're seeing beginning to play through and the momentum that we see in the growing business, it's exciting, particularly on the profitability side. However, our immediate and primary focus is completing the FDA remediation work and working collaboratively with them to address their concerns. And we look forward to providing further updates into the future. With that, again, thank you for joining us and we'll talk later. Goodbye.

This concludes our call today. Thank you for joining. Your line will now be disconnected.