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Good morning. Welcome, everyone, to the second day of the Wells Fargo Healthcare Conference. For this session, I'm pleased to have Dan Wilson, the CFO of iRhythm, and Lisa Pecora, the Senior VP of Finance. Thank you for joining us. Thank you, Nathan. Great to be here. Of course, a lot of exciting things happening at iRithm, but I thought we would start with VitalConnect, which is probably the most pressing for investors. I guess maybe just at a high level, walk us through the underlying deal strategy. Yeah. Yeah. Thank you. Something we're very excited about added to the list of things that we're excited about, I would say, simply put, the deal strategy is really combining great technology and product features, differentiated product features with our commercial engine and clinical service delivery capabilities. And if I was trying to sum it up in a few words, it would be that. In terms of their product and technology, we do see it differentiated and complementary to ZOAT and ultimately ZOMCT, which we'll likely talk about. Some of the capabilities that we see resonating in the market, four-in-one capabilities. capabilities. So, you know, with a single product and platform able to serve, you know, four different modalities seamlessly for patients, getting out to 30 days of wear, particularly in the MCT segment where we really see their technology, you know, differentiated. As you know ZOAT does not go out to thirty days today and we do see that is important to, you, know, certain customers and patients in the market. And then some other features as well that are unique, live-looking capabilities. So at any point in time during the wear period, a clinician can look into the patient's record, see the raw ECG, and that is of value for certain customers in the market. So a lot of things that we're excited about, see a very complementary to both AT and MCT, and we're excited to put the product in the back. Great. You know, on the earnings call, you pointed out that this product is going to let you address 50% of the MCT population that you didn't think you would be able to with ZOAT or ZOMCT. I guess, can you put a finer point on what this 50% on the market is, what type of patients are these, and why Vital Patch is the right product here? Yeah. Yeah. So, you know, We said ZOAT addresses roughly 50% of the MCT segment. We do believe with ZOAMCT coming, that opens up a bit more of the market, call it another 20% of that market or so. There's still a good part of the marketplace that we don't believe we can address right away with both ZOAAT and ZOMCT. Bringing Vital into the portfolio allows us to fully access that market. And it's really around those kind of features that I pointed to. There's absolutely customers in the market that want 30 days of monitoring, and that is a key feature of the Vital platform, that it gives us those capabilities as soon as we add it to the bag. So that's a big one. And then there are, again, customers that expect downgradability capabilities in the platform. We don't offer that with AT today. And then some of the other, you know, kind of tangential features as well, certainly the live look and the multivitals, those are becoming more and more expected and desired by clinicians in the market. And with Vital in the bag, we believe we can meet the full spectrum of the market, unlike long-term continuous monitoring with our XeoMonitor product. the MCT segment is fragment, and we're seeing that very clearly. There's no one-size-fits-all, and so having multiple options in a bag to offer our customers, we believe, is a good strategy. Okay. You know, as we think about your mid-teen share of MCT today, where can this go in the next one to two years? You have well-entrenched competitors in the MCTs space, and I think they have integrated systems at the hospitals, I guess, what are the key factors that would enable you to take share? And if any way you could kind of frame 15%, where does it go in the next one, two years? Yeah. So we have been gaining share nicely in that MCT segment with ZOAT. We had a great year last year with ZoAT and in particular saw that combined with Zomonitor, which is the workhorse tool for, you know, hospitals and accounts. Combining those together in a single platform, there's a lot of operational benefits for, you know for customers. So that's, that is an important piece of it. Continuing to innovate within that MCT segment. Certainly, you know, we're committed to Xeo MCT. Looking forward to getting that cleared first half of next year and then bringing the vital platform in. We believe that, you know, combined with everything we're doing on the commercial side, clinical evidence, market access strategies, EHR integration, that is a big component. You know, putting that all together, we're confident we're going to be able to continue to grow our share in the MCT segment. We're at 70%, you know, over 70% share on the long-term continuous monitoring side. That is the biggest segment of the market. So we believe we're in a kind of differentiated position to ultimately win share in the MCT segment, we need the right products in the bag to do that. And we believe with ZUAT, then ultimately ZUAMCT plus Vital gives us a really good portfolio to go grow our share in that market. You know, another question that we get is with Vital patch in the back, is it really necessary to continue to pursue ZUMCT? You know can you explain why you're still pursuing it? What What is the commercial case for launching both VitalPatch and XeoMCT? Yeah, we do believe they're complementary. And so XeomCT, it's on the same platform as Xeomonitor, as you know, and there's benefits both on our side as well as to a customer. And in situations where customers desire simplicity and patient experience where a patient can put a device on, they don't have to do anything through that wear period, 14 or 21 days, there's a lot of value there. And that's how we've been going to market with ZOAT. That's how мы've been winning in the market. But again, there are clearly customers, clinicians, and patients that want to see 30 days of monitoring. We don't offer that today with AT and get a bit closer with MCT out to 21 days. But there's still that that gap and then some of the other you know features that I was mentioning as well so again believe they're a complementary we're committed to ZOMCT and keeping that you know in the bag with with vital certainly you know inthe near term as we think how the product and technology evolves you know platform evolves over you know five year plus period we'll we'll see what that looks like but certainly in the near to medium term we see you know both as complimentary. Yeah. I mean, there are obviously similarities between the products. How do you prevent channel confusion? Which product do you lead in with? You know, you want to make sure productivity stays good. You know? I guess what will be the rule for which product you will lead in with. Yeah, I think there it really is understanding the customer needs first. You We want to offer a solution that meets the customer's needs and solves the problems that they're looking to solve for, and that requires listening to what the customer wants. And then now we have a product that we can address in a bigger set of problems they're working to solve, I guess. So it really starts with that. Certainly, we believe Xeo Monitor, long-term continuous monitoring, is the right kind of frontline tool. All the workhorse devices I was mentioning, don't see that changing. But then for the MCT segment, having multiple options to serve, again, that fragmented market, you know, we're really excited about. Great. So you disclosed for VitalConnect $65 million of trailing 12-month revenue or annualized revenue. Any color on the underlying growth rate and where the revenue synergies are with, you Obviously, you're talking about your 70% share in LTCM, but just how are you thinking about revenue synergies and growth in that platform? Yeah, on the $65 million that we put out, we figured it was important to give investors an understanding of where Vital Connect currently is. And importantly, that is under our revenue recognition accounting policies where we recognize net revenue. Historically, they've been a very strong grower and have consistently taken share in the overall market and in particular in the MCT segment. They did see a little bit of an operational impact late last year as they cut over from a clinical software back into a different provider. They have grown through that now and the business is back above where it was prior to that cut over. We're excited about what that growth can mean in our commercial infrastructure. They have, I think it's 30 commercial reps versus our commercial team, call it 200 people. So they've been pretty limited and focused from a geographic standpoint commercially. When we close the acquisition and train up our sales force, we intend to launch this nationwide. really excited about what that can mean. Okay. And as far as the third-gen algorithm, will this be ported onto the Vital patch as well? I wouldn't say right away. There is an opportunity there, certainly. I mentioned their clinical backend. They do licensed software from a third party as we think longer term. Obviously, those are capabilities we've built internally, and we'll look at that opportunity we haven't put any timelines out there related to that but we do we do see that as a as an opportunity we've talked about the benefit the algorithm is going to have in our own business and that would extend out you know vitals business if we ultimately get there okay this is that so you know our understanding is vital connects gross margins are significantly below where your gross margins art today you know part of the opportunity with zomct is you know similar form factor to zeo monitors so there are manufacturing efficiencies how does bringing in a new patch you know presumably with new manufacturing process impact your margins you know you stated i think your goal is to maintain gross margins above 70 but you know i i think their margins were significantly below so how do you do that yeah we do think our scale and you know the operational infrastructure that we've built you know we can leverage that with you know against the the vital platform as well that 70 metric that we put out there that doesn't assume a lot of you know cost synergies i think those are real you know over time the algorithm is certainly one of them and just you know broadly leveraging our procurement capabilities manufacturing capabilities etc so um and they they have done a really good job over the last you know 12 18 months improving that that gross margin profile. It's a company we've tracked for a number of years and have always liked the technology. There were a few barriers that ultimately were there that resolved themselves, allowed us to make the acquisition at this time, and gross margin profile was kind of one of those barriers. But we're comfortable where they're at today. We see opportunity to continue to improve that and certainly maintaining 70% gross margin on the combined company. On your earnings call, you reiterated your goal of 15% EBITDA margin in 2027. You know, but it would be helpful to unpack, you know, with VitalConnect in that I think investors are trying to understand, is it dilutive right out the gate? And, you Know, does the 15% also assume any cost synergies from the deal? Yeah, maybe the last part of your question first there. Very, very limited. the the intent of the acquisition is you know really around growth of course we want to do that profitably and that's been our focus in the core business profitable growth that is true for the acquisition as well but really want to you know get the product in a bag and you know grow the combined business you know as best we can and that is going to be our first our first focus so So there are certainly opportunities there over the longer term, but what's contemplated when we reiterated the 15% next year is a very limited amount of cost synergies. Sorry, and remind me of the first part of your question. Just the EBITDA dilution, is it baked into that reiteration, or do you feel like you could flip it to positive EBITD right out of the gate? How are you thinking about that? Yeah, I would say it's baked into that 15%. We always try to run the business in a balanced way where we're balancing both growth and profitability. And when there's upside in profitability, like we've seen in the first half of this year, we look for opportunities to reinvest back into the business to ultimately grow the business both in the near to long term. And I would saying we see the acquisition similarly. We got the business to a really healthy spot from a profitability standpoint. We're a growth-oriented company. We're looking for those growth opportunities, whether it be inorganic or organic. And so we saw this opportunity. We were able to absorb the acquisition while maintaining that 15% adjusted EBITDA. Again, there's certainly opportunities for synergies over the longer term, And we'll provide updated guidance, you know post the close of the acquisition. Okay, you Know, I just wanted to go back to MCT market share. I think in the past You guys have said in multiple Events, I guess that maybe your share could go into that 30 to 40 percent of range over time I think the street is modeling 30 percent by probably 2030 2029 Would you say these estimates are fair for market share expansion and I guess you know how much upside is there in your view sure we haven't obviously put any guidance out you know in in that way in terms of market share but certainly believe that we can get to you know number one in that category that is our intent that's our ambition we believe with innovation and combining that with everything we're doing on the clinical service delivery the operational capabilities and having the right product portfolio is going to allow us to you know ultimately get to that position so 30 to 40 percent is absolutely achievable we haven't put a time frame around that but importantly you know that is our focus we want to move as quickly as we can and that's you know really the ambition of the the vinyl connect acquisition as well as innovation with our own Zio MCT product. Great. Can you just remind us how quickly the MCT category is growing right now? Yeah. High single digits, 8% to 9%. Okay. And so if you could just talk about the implications of having a multivital patch for entry into sleep apnea and maybe even heart failure monitoring. Yeah. We do believe there is opportunity there. That's been a strategy of ours for some time. If you recall, we licensed some technology from Biointellisense a couple years ago, and that is on our product roadmap. We haven't put any kind of timelines around that just yet, but we do believe adding multivitals to the platform both adds value to the core market we're serving today and ambulatory cardiac monitoring. We're seeing that as a kind of differentiated feature of the Vital platform and then ultimately starts to open up other markets like sleep, like heart failure, hospital to home, other markets that we're not actively serving today. And that is an ambition of ours that is part of the rationale of the vital connect acquisition, as well as the biointelligence licensing. And we're excited about what we have kind of in the works there from a product standpoint. Haven't shared a lot of those details intentionally for competitive reasons, but looking forward to continue to innovate there and opening up those market opportunities. Is there an overlap of capabilities between the BioIntellisense licensing and Vital Connect and maybe any areas of differentiation between the two technologies? Yeah. To a degree, there's overlap. Where there's really differentiation is biointelligence's SpO2 capability, so blood oxygen. That is on their product platform. VitalConnect can integrate that into their platform, but it requires a third-party sensor to pull that data into their platform, whereas the biointellcence technology, the technology that we licensed, that can be embedded on the patch. Okay. And just lastly on this, so the open warning letter in the 483 observations, does this have any impact on Vital Connect manufacturing transfer or anything? No, we don't believe so. Okay, you know, just one thing, so you have an LRP out there, it's going to end in 2027, any plans for an analyst day? Yeah, we're certainly thinking about that, you can expect we'll likely have something at some point next year. I haven't set timing on that, but we've been focused for five years on delivering, you know, that LRP that we set back in 2022 on pace to delivering that, which we're really excited about. And we'll certainly look to update investors with an updated long range outlook, certainly getting vital, you know, closed and in the business and the combined outlook would make sense. But we'll look to do at some point next year okay well if there aren't any more questions on vital connect i think we'll just move on to other topics so maybe just on guidance so in the first half you grew over 20 but the new range basically implies second half growth of around 15 i guess talk about what drives this deceleration and you know how much conservatism is baked into it yeah i i wouldn't say conservatistism we do try to be thoughtful you know when we set guidance We've been on a great trajectory, a lot of momentum in the business, have grown revenue over 20%, seven quarters in a row. That obviously sets us up for difficult comps, which we start to see in the second half of the year. But like the setup, like the momentum in a business, certainly want to be thoughtful as we set guidance. that's no change from how we've, you know, approached it historically. The Q3 guidance implies a sequential step down. You know, if I look last year, you actually stepped up about 3% sequentially in Q3. I guess, talk about, you know, is this conservatism? Is there something going on with the seasonality in Q2? Yeah, last year I would say was a bit unique. 2025, we talked about having some big bang launches at the beginning part of the year that really grew through all of 25. And we saw that in Q3 last year. If you look prior to that, in 24 and 23, you don't see quite that same level of step up. One thing I should say about first half to second half this year, we did have price benefit, call it a point or two in the first half. we don't expect that to repeat in the second half so that explains um you know some of the q q2 to q3 um sequential decline uh seasonality is real in our business and we've you know we talk about that at pretty much every september at this at this conference um and that's you know no different you know different this year so um like the momentum in the business try to be thoughtful you know when we set guidance we've had the benefit of a number of things you know hitting and and allowing us to over deliver on guidance that we've set historically that won't obviously you know happen every single time but like our business like the momentum in the business you know try to set guidance thoughtfully and certainly don't want people running ahead of us innovative channels are mid-single digits of your revenue and you called it out as the fastest growing segment in Q2. I guess talk about what you're seeing in these channels in terms of reorder rates and how sustainable is the recent growth that you've seen. And I guess what is assumed in the second half for innovative channels versus the first half? Yeah. Yeah. Really good progress there. Momentum mentioned that innovative channels stepped up to mid single digits as a percent of revenue in Q1. Prior to that, it was trending around the low single digits. So remains the fastest growing channel in the business. And we do believe we're still very early days against what that bigger opportunity is. A lot of encouraging signs there. You know, every partner we've gotten to a pilot has ultimately continued on to a full commercial program. That tells you the value proposition that they're looking for is, you know, is playing through. We present back to them data, you knows, that shows here's how many patients you monitored, here's the diagnostic yield, here's the different arrhythmias that you found in that patient population and that gives them the confidence that this is delivering on the value proposition. So that's very encouraging. Every partner that we have started a program with continues to monitor today and those are all really, really positive signs. We do believe we're still early. We are working towards some economic evidence with a couple partners. We hope to see some of that evidence by the end of this year, we believe that can be, you know, catalyst in the market as well. So really encouraged by it. We've been pretty consistent to say, you want to be thoughtful around that part of our business in particular, given it's pretty concentrated across a small number of partners. There is real seasonality in that business too. If you think about it, these patients are not presenting with symptoms these are pre-identified patients and naturally you know you're probably going to see a bit more seasonality through the summer months and that part of the business versus core business where patients are presenting with symptoms and you know kind of a more urgent you know need to get them on monitoring but really excited about how that business is showing up and certainly like the outlook for that part business as well okay have you given a recent update on how many partners you have now? We have not, and that's likely not a metric we're going to give. What we're seeing is the lines are really starting to blur between our core business and innovative channel. Oftentimes our innovative channel partners, which can be value-based care, you know, primary care groups, ACOs, in the similar, you Know, they'll start sometimes with pre-identified patients and then move to their symptomatic patients, they can approach it in the reverse as well and start with symptomatic patient. So it does start to blur quite a bit with our core business. And we'll think about what the right metrics are to give investors to track that part of our business. But number of partners isn't really the right metric. Okay. Can you just update us on the innovative channel contracting model? And I guess what is, I guess, the realized revenue per patient versus, let's say, a cardiology or PCP channel? Yeah, I would say from an ASP standpoint, you know, it's consistent with overall company averages. There we are billing the account directly. So there's not, you Know, we're not billing the payer on the back end, which does have some benefits just from a, you revenue recognition claims processing you know that sort of thing but very similar ASPs we've talked about the one to many selling model in this channel so we have you know a small dedicated team focused on this channel they're selling into the you know really the top of these groups and when a group turns on they're turning it on you know generally across their entire patient population So we believe it's a very profitable, highly operating leverage part of our business. And so hopefully that answers your question. You previously talked about innovative channel activities becoming more consistent and repeatable. I guess, can you help to frame it relative to cardio and PCP order patterns and utilization? Any metrics you could put around that? We're starting to get there, certainly, as the base has grown from a partner standpoint, from a revenue standpoint, starting to be a little more consistent. I will reiterate my comments, though, that we want to be thoughtful on that part of the business, not get ahead of ourselves. Still a little bit of lumpiness to that partof the business given the concentration and the number of accounts. And then every partner is unique, too. So, you know, which patients they want to target to start varies partner to partner. How quickly they ramp from pilot to full commercial program varies partner to partner, so there is a little, you know, little more unpredictability there, which we want to be thoughtful around. But again, once, you know, once they launch a program, we are seeing consistent, you know, behavior in maintaining the program. So, your LTCM growth has been pretty strong for quite a while now. I think investors are trying to understand how much of this is iRhythm-specific, how much of it is the market broadly, and what is driving that. And part of that is, how much is related to the EHR integrations that you did over the last two years or so? And just help us to understand the EHRA integration. it are you the sole LTCM provider on these integrated accounts or how does that whole concept work? Yeah so it does require you know if if if an account a customer wants to integrate multiple vendors they are separate integrations so you know when we're working with a customer on an integration it is specifically for Zio and we believe you know this is a strategy we have been you working for several years, and we've always been focused, certainly on the clinical service and the clinical superiority part of it, but also being operationally kind of seamless with our customer workflows, and EHR integration is a big part of that. It embeds Zio directly in their native workflows. They don't have to come out of the EHR to order or interpret the results coming back from iRhythm. And we've seen pretty consistently with accounts that even accounts that have been with us for years, once we get to EHR integration, we do see a nice step up from a volume standpoint. So that clearly tells you that you're making it easier to prescribe. You're opening it up to the entire prescriber base within that account. So there's real benefits on the customer side, which is why it's been a strategy of ours for several years. Now over, you know, well over 50% of our volume is through EHR integrations, and that's something we're going to continue to push. Will Vital Patch and ZOMCT automatically become an ordering option on these integrated accounts? I would say we're still evaluating that. You know, our ultimate goal would be to make it, you know, seamless for the customer through a single platform, through EHR integration, that'll likely take some time to build to. Okay. So we're in September. Investors are starting to think about 2027. You know, your full year 2026 guidance implies about 15% growth in Q4. Is that the right jumping off point for 2027? I mean, Shreed is modeling 17% right now. how any framing you could put around that yeah um we we haven't provided 27 guidance um other than the long-range target that we put out you know five years ago calling for over a billion in revenue mentioned that we are on pace to delivering that i would say you know post the closing of the vital connect acquisition will certainly provide updated guidance potentially even for um or give some metrics for 27 to help investors get that dialed in correctly, but we'll do that at the appropriate time. Okay. If we could just touch on a third-gen algorithm, which the FDA recently approved and you expect to launch in the first half of 27. So you expect 100 million of cumulative savings over five years, which would lead to 50% less technician review time. I think that's what you said. I guess, how should we think about the 100 million phasing by year, and how much of it is already kind of embedded in the 2027 15% EBITDA margin? Yeah, so we set that 15% EBITda margin target back in 2022. We were working on our next-gen algorithm, and certainly that's one way to, you know, improve margins. We'll see some benefit from the algorithm next year. initially it will be offset by some amortization and the benefits really start to show as we scale and so you know think about the need to hire you know additional cardiac technicians as our volume scales we're going to reduce that meaningfully with the benefits of the algorithm so you'll really start the benefits you know the benefits 28 and beyond and those benefits start to stack up as we continue to grow. Okay. You know, just one last question on Vital Connect. So will you port everything onto your IDTFs immediately or? Not immediately, no. We'll, again, want to make sure we're, you know, setting us up, setting ourselves up for growth. You know, we don't want to disrupt anything there and believe the two will kind of operate somewhat Not independently, obviously outside the commercial aspect where we do want to train our entire sales force on their technology. From an operational standpoint, not an immediate kind of integration. Okay. You know, Q2 EBITDA margin was 19.3%. Your guide in Q3 down to 12 to 13%, I believe. I guess talk about what's driving the sequential step down. You know, anything to consider. I mean, 19% is also above your 27 LRP. So just help to frame what's happening in the second half in Q3 with the down margin. Yeah, I'll let Lisa take that one. I can take that. Q2, we're very proud of the 19.3. Definitely strong progress on the ability for us to deliver operating leverage. That said, as Dan mentioned earlier, we are very much a growth company. And we want to continue investing to ensure that long-term growth potential. So we talked a little bit during earnings around specific investments that we were making to further unlock primary care. When we talk about the 27 million, at least 27 million undiagnosed patients out there that we want to try and reach, we do believe that primary care is the biggest way to get at that. So you'll see us increasingly investing towards initiatives with primary care, inclusive of we talked about a direct-to-patient marketing initiative that we were kicking off, and that investment will continue through the second half of the year. this direct patient marketing initiative is around creating awareness in the practices for both patients as well as the primary care physicians within it. As much as there can be increased awareness, we feel that that will increase that funnel towards the undiagnosed population. The other aspect I'd point out is adjacencies to increasingly build out that TAM and grow the market. We have talked about different adjacencies such as sleep. We're continuing investing towards the sleep market as well. And R&D and development projects will continue to step up through the balance of the year. So that 13% to 14% for the full year, 12% to 13%, and in Q3, it's really just about continuing to invest for the long-term health of the business. The last 25 seconds, any update on the warning letter of 483s? Not at the moment. We've made really good progress there and put ourselves in a position, we believe, that to ultimately get that cleared. It's really, the timing will be dictated by the FDA and when they come back and do a closing inspection. But I'm really excited about the progress we've made you know, over the last 18 months, two years, and looking forward to ultimately getting that resolved. Great. Well, we're at time, Dan, Lisa. Thank you so much. Pleasure. Thanks so much