iRhythm Holdings, Inc.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
IRTC$90.22-30.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001388658-26-000072
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001388658-26-000094
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 110 current paragraphs.
69 unchanged; 33 reworded; 8 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
On October 5, 2026, we completed the acquisition of Vital Connect, Inc., a Delaware corporation ("VitalConnect"), with VitalConnect becoming our indirect wholly-owned subsidiary. VitalConnect is a leader in wearable biosensor technology and is expanding its presence in ambulatory cardiac monitoring. VitalConnect's platform combines the FDA-cleared VitalPatch along with proprietary AI-powered algorithms, and cloud-based workflow solutions to enable patient monitoring. VitalConnect's platform is designed to provide continuous, actionable patient data through an easy-to-use experience for patients and healthcare providers in the remote and inpatient settings. The acquisition of VitalConnect expands our capabilities across ambulatory cardiac monitoring, creating a broader portfolio to serve diverse clinical needs. We also anticipate that the combination may create commercial acceleration opportunities by leveraging our scale, customer relationships, and go-to-market capabilities.
Current report
2 Business transformation costs include $6.0 million associated with the VitalConnect acquisition for the three and nine months ended September 30, 2026.
Current report
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025
Current report
During the three and nine months ended September 30, 2026, we recorded litigation settlement expenses, net of expected insurance recoveries, of $49.8 million and $63.7 million, respectively. During the three and nine months ended September 30, 2026, we recorded $50.0 million in litigation settlement expense associated with the settlement and license agreement (the “Baxter Settlement Agreement”) executed in the third quarter of 2026 with Baxter and its wholly-owned subsidiaries, Welch Allyn and BardyDx. During the three and nine months ended September 30, 2026, we recorded a net litigation settlement benefit of approximately $(0.2) million during the three months ended September 30, 2026 and a net litigation settlement expense of $13.7 million during the nine months ended September 30, 2026, respectively, associated with settlement of the putative securities class action lawsuit. See Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Current report
Income Tax Provision
Current report
On October 5, 2026, we completed the previously announced acquisition of VitalConnect. As a result of this, VitalConnect became our indirect wholly-owned subsidiary. We paid approximately $237.5 million in cash, subject to customary final adjustments, and will issue up to 423,334 shares of common stock in connection with the closing of the VitalConnect acquisition. In August 2026, we provided VitalConnect with $10.0 million of interim working capital financing to fund its normal course of operations and certain specified expenses as both parties worked toward closing the acquisition.
Current report
Revolving Credit Facility
Current report
On November 3, 2026, we, as guarantor, our wholly-owned subsidiary, iRhythm Technologies, as borrower, and certain of our other subsidiaries, as guarantors, entered into entered into a senior secured credit agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, which provides for a $300 million senior secured revolving credit facility with sublimits of $10.0 million in the aggregate for loans and letters of credit denominated in foreign currencies, $30.0 million for the issuance of letters of credit and $10.0 million for swingline loans (the "Revolving Credit Facility"). The Revolving Credit Facility matures on November 3, 2031, subject to an earlier springing maturity 91 days before the scheduled maturity of certain unsecured, subordinated or junior-lien indebtedness (including the 2029 Notes) if certain conditions exist. Any borrowings under the Revolving Credit Facility bear interest, at the borrower’s option, at (i) the Term SOFR rate (or, for borrowings denominated in certain foreign currencies, the applicable benchmark rate for such currency) plus a spread of 2.00% to 2.75% or (ii) an alternate base rate plus a spread of 1.00% to 1.75%, in each case based on our senior secured net leverage ratio. We are also obligated to pay an ongoing commitment fee on undrawn amounts. Funds borrowed under the Revolving Credit Facility may be used for general corporate purposes. No amounts were borrowed under the Revolving Credit Facility at closing. See Part II, Item 5 of this Quarterly Report on Form 10-Q for additional information regarding the Revolving Credit Facility including details of the springing maturity feature.
Removed paragraphs (6)
Previous report
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
Previous report
During the three and six months ended June 30, 2026, we recorded a litigation settlement expense, net of expected insurance recoveries, of $14.0 million associated with the settlement of a putative class action lawsuit. See Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Previous report
Income Tax Provision (Benefit)
Previous report
On September 3, 2019, we entered into a Development Collaboration Agreement with Verily Life Sciences LLC, an Alphabet company (“VLS”) and Verily Ireland Limited (“VIL” and together with VLS, “Verily”) (such Development Collaboration Agreement, as amended by Amendment No. 1 dated April 26, 2021 and Amendment No. 2 dated January 24, 2022, the “Development Agreement”). The Development Agreement involved joint development and production of intellectual property between us and Verily.
Previous report
In August 2025, we and Verily mutually terminated the Development Agreement, subject to our continued rights to a license to certain intellectual property associated with a mobile app developed under the Development Agreement. During the year ended 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system.
Previous report
On August 5, 2026, we entered into a definitive agreement to acquire Vital Connect, Inc. ("VitalConnect"), a wearable biosensor technology and ambulatory cardiac monitoring company. Consideration for the acquisition totals $287.5 million, consisting of $237.5 million in cash and $50.0 million in our common stock, subject to customary adjustments. The definitive agreement also provides customary termination rights to each of the parties and provides that we will pay a reverse termination fee of $9.0 million to VitalConnect if the definitive agreement is terminated under specified circumstances related to the failure to obtain required antitrust approvals. In addition, we will provide VitalConnect with interim financing to fund its normal course of operations and certain specified expenses as the parties work towards closing, with an initial funding of $10.0 million and additional increments thereafter, up to an aggregate maximum amount of $30.0 million. The transaction is subject to regulatory approval and is expected to close by the end of 2026. Because the acquisition had not closed as of the issuance date of the accompanying condensed consolidated financial statements, no amounts have been recognized related to the transaction.
Reworded paragraphs (33)
Previous wording
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ACM services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our iRhythm Services using our iRhythm ACM System. Since receiving FDA clearance, we have provided the iRhythm Services via more than 13 million patient reports and have collected over 3 billion hours of curated heartbeat data.
Current wording
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ACM services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our iRhythm Services using our iRhythm ACM System. Since receiving FDA clearance, we have provided the iRhythm Services via more than 14 million patient reports and have collected over 3 billion hours of curated heartbeat data.
Previous wording
The following are iRhythm Services shown as a percentage of revenue:
Current wording
The following table presents iRhythm revenue by payor type as a percentage of revenue:
Previous wording
In June 2026, a threat actor improperly obtained certain sensitive information of ours maintained on certain third-party-hosted business applications (the “Cybersecurity Incident”). We promptly activated our cybersecurity response plan and launched an investigation with the support of external advisors and cybersecurity experts to assess and contain the threat, and, as of the date of the filing of this Quarterly Report on Form 10-Q, we have not identified evidence of ongoing unauthorized access to our systems.
Current wording
In June 2026, a threat actor improperly obtained certain sensitive information of ours maintained on certain third-party-hosted business applications (the “Cybersecurity Incident”). We promptly activated our cybersecurity response plan and launched an investigation with the support of external advisors and cybersecurity experts to assess and contain the threat, which has since been completed, and, as of the date of the filing of this Quarterly Report on Form 10-Q, we have not identified evidence of ongoing unauthorized access to our systems.
Previous wording
During the second quarter of 2026, we incurred losses related to the unauthorized activity, including investigation and remediation costs. We maintain cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cybersecurity Incident. While we expect to incur further expenses related to the Cybersecurity Incident, inclusive of customer and patient notifications and identity protection, we plan to seek reimbursement of some of these losses by submitting claims to our insurers. There can be no assurance that such coverage will be sufficient to cover all losses we may incur, and the exact timing and amount of any such reimbursements is not known at this time. As of the date of the filing of this Quarterly Report on Form 10-Q, we believe that the Cybersecurity Incident is not reasonably likely to have a material impact on our financial condition or results of operations. For more information about risks relating to the impact of the Cybersecurity Incident, see Item 1A. “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.
Current wording
During the second and third quarters of 2026, we incurred financial losses related to the unauthorized activity, including investigation and remediation costs. We maintain cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cybersecurity Incident. While we expect to incur further expenses related to the Cybersecurity Incident, inclusive of ongoing customer and patient notifications and identity protection, we plan to seek reimbursement of some of these losses by submitting claims to our insurers. There can be no assurance that such coverage will be sufficient to cover all losses we may incur, and the exact timing and amount of any such reimbursements is not known at this time. As of the date of the filing of this Quarterly Report on Form 10-Q, we believe that the Cybersecurity Incident is not reasonably likely to have a material impact on our financial condition or results of operations. For more information about risks relating to the impact of the Cybersecurity Incident, see Item 1A. “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.
Previous wording
We have also been named as a defendant in several lawsuits related to the Cybersecurity Incident (Refer to Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).
Current wording
We have also been named as a defendant in several lawsuits related to the Cybersecurity Incident. See Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Previous wording
We define Adjusted EBITDA for a particular period as net income (loss) before income tax provision, depreciation and amortization, interest expense, and interest income and as further adjusted for stock-based compensation expense, changes in fair value of strategic investments, impairment charges, business transformation costs, certain intellectual property litigation expenses, certain corporate litigation settlements (net of expected insurance recoveries), costs related to the Cybersecurity Incident (net of expected insurance recoveries), and loss on extinguishment of debt. Business transformation costs include costs associated with professional services, employee termination and relocation, third-party merger and acquisition, integration, and other costs to augment and restructure the organization, inclusive of both outsourced and offshore resources.
Current wording
We define Adjusted EBITDA for a particular period as net income (loss) before income tax provision, depreciation and amortization, interest expense, and interest income and as further adjusted for stock-based compensation expense, changes in fair value of strategic investments, impairment charges, business transformation costs, certain intellectual property litigation expenses, certain litigation settlements (net of expected insurance recoveries), costs related to the Cybersecurity Incident (net of expected insurance recoveries), and loss on extinguishment of debt. Business transformation costs include costs associated with professional services, employee termination and relocation, third-party merger and acquisition, integration, and other costs to augment and restructure the organization, inclusive of both outsourced and offshore resources.
Previous wording
1 Net loss for the three and six months ended June 30, 2026 includes $0.3 million and $0.6 million of acquired in-process research and development expense, and $1.7 million and $2.0 million for the three and six months ended June 30, 2025, respectively.
Current wording
1 Net loss for the three and nine months ended September 30, 2026 includes $0.3 million and $0.9 million of acquired in-process research and development expense, and $0.3 million and $2.3 million for the three and nine months ended September 30, 2025, respectively.
Previous wording
The current macroeconomic environment is impacting our customers, both financially and operationally. Hospitals are experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care. Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs, interest rate volatility make access to credit more expensive, and unrealized losses decrease available cash reserves. As a consequence of the financial pressures and decreased profitability, some hospitals have indicated that they are lowering their capital investment plans and tightening their operational budgets. Private and government payors around the world are increasingly challenging the utilization and overall cost charged for medical products and services. The containment of healthcare costs has become a priority of governments on a global basis. Private and government payors may decline to cover and reimburse for claims or portions of claims. Climate-related events, including the increasing frequency of extreme weather events, natural disasters, or other catastrophic events may cause damage or disruption to our domestic or global customers or our operations, which could have an adverse effect on our business, operating results, and financial condition.
Current wording
The current macroeconomic environment is impacting our customers, both financially and operationally. Hospitals are experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care. Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs, interest rate volatility makes access to credit more expensive, and unrealized losses decrease available cash reserves. As a consequence of the financial pressures and decreased profitability, some hospitals have indicated that they are lowering their capital investment plans and tightening their operational budgets. Private and government payors around the world are increasingly challenging the utilization and overall cost charged for medical products and services. The containment of healthcare costs has become a priority of governments on a global basis. Private and government payors may decline to cover and reimburse for claims or portions of claims. Climate-related events, including the increasing frequency of extreme weather events, natural disasters, or other catastrophic events may cause damage or disruption to our domestic or global customers or our operations, which could have an adverse effect on our business, operating results, and financial condition.
Previous wording
The majority of our revenue is derived from provision of our iRhythm Services to customers in the United States. We earn revenue from the provision of our iRhythm Services primarily from contracted third-party payors, CMS, and healthcare institutions. A small percentage of our revenue is from non-contracted third-party payors.
Current wording
The majority of our revenue is derived from the provision of our iRhythm Services to customers in the United States. We earn revenue from the provision of our iRhythm Services primarily from contracted third-party payors, CMS, and healthcare institutions. A small percentage of our revenue is from non-contracted third-party payors.
Previous wording
We recognize revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which considers the amount submitted for payment and the amount received. These estimates require significant judgment by management. In determining the amount to accrue for the iRhythm Services (including a delivered report), we consider factors such as claim payment history from both payors and patient, available reimbursement, including whether there is a contract between us and the payor or healthcare institution and historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments.
Current wording
We recognize revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which considers the amount submitted for payment and the amount received. These estimates require significant judgment by management. In determining the amount to accrue for the iRhythm Services (including a delivered report), we consider factors such as claim payment history from both payors and patients, available reimbursement, including whether there is a contract between us and the payor or healthcare institution and historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments.
Previous wording
Other income, net consists primarily of changes in fair value of our strategic loan and equity investments, as well as realized and unrealized foreign currency exchange gains or losses.
Current wording
Other income, net consists primarily of changes in fair value of our strategic loan and equity investments, non-operating service income, as well as realized and unrealized foreign currency exchange gains or losses.
Previous wording
Revenue, net increased by $37.5 million, or 20%, to $224.2 million during the three months ended June 30, 2026, as compared to $186.7 million during the three months ended June 30, 2025. Revenue, net increased by $78.2 million, or 23%, to $423.6 million during the six months ended June 30, 2026, as compared to $345.4 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase in revenue was primarily attributable to an increase in volume of iRhythm Services resulting from increased demand. In particular, during the three and six months ended June 30, 2026, total revenue volume for both Zio monitor and Zio AT grew, compared to the prior year, resulting from existing and new account growth within our third-party payors, CMS, and healthcare institutions customer groups. We have experienced higher volumes from larger healthcare enterprise accounts which utilize both Zio monitor and Zio AT.
Current wording
Revenue, net increased by $28.7 million, or 15%, to $221.6 million during the three months ended September 30, 2026, as compared to $192.9 million during the three months ended September 30, 2025. Revenue, net increased by $106.9 million, or 20%, to $645.2 million during the nine months ended September 30, 2026, as compared to $538.2 million during the nine months ended September 30, 2025. For the three and nine months ended September 30, 2026, the increase in revenue was primarily attributable to an increase in volume of iRhythm Services resulting from increased demand. In particular, during the three and nine months ended September 30, 2026, total revenue volume for both Zio monitor and Zio AT grew, compared to the prior year, resulting from existing and new account growth within our third-party payors, CMS, and healthcare institutions customer groups. We have experienced higher volumes from larger healthcare enterprise accounts which utilize both Zio monitor and Zio AT.
Previous wording
Overall average selling price increased modestly during the three and six months ended June 30, 2026, as compared to the prior year period, driven primarily by Zio monitor volume across our customer base. In the three and six months ended June 30, 2026, we experienced contractual allowance reserve improvements resulting from improved market access, contracting execution, and collection performance. During the three and six months ended June 30, 2025, we recognized higher contractual allowance reserves, resulting from billing disruptions due to the Change Healthcare cybersecurity incident in the first quarter of 2024, as well as higher payor claim denials. Additionally, during the three and six months ended June 30, 2026, we also experienced annual reimbursement increases across certain payor categories, including CMS, as compared to the same periods during 2025.
Current wording
Overall average selling price increased modestly during the three and nine months ended September 30, 2026, as compared to the prior year period, driven primarily by Zio monitor volume across our customer base. In the three and nine months ended September 30, 2026, we experienced contractual allowance reserve improvements resulting from improved market access, contracting execution, and collection performance. During the three and nine months ended September 30, 2025, we recognized higher contractual allowance reserves, resulting from billing disruptions due to the Change Healthcare cybersecurity incident in the first quarter of 2024, as well as higher payor claim denials. Additionally, during the three and nine months ended September 30, 2026, we also experienced annual reimbursement increases across certain payor categories, including CMS, as compared to the same periods during 2025.
Previous wording
Cost of revenue increased by $7.1 million, or 13%, to $61.0 million during the three months ended June 30, 2026, as compared to $53.8 million during the three months ended June 30, 2025. Cost of revenue increased by $15.7 million, or 15%, to $119.0 million during the six months ended June 30, 2026, as compared to $103.3 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase was primarily due to increases in material component costs (inclusive of tariffs), amortization costs related to Zio monitor and Zio AT PCBA, material and PCBA scrap costs, headcount-related costs, and freight costs associated with the increase in volume of iRhythm Services. During the first half of 2026, we experienced lower per unit costs relating to manufacturing efficiencies, primarily relating to Zio monitor.
Current wording
Cost of revenue increased by $1.3 million, or 2%, to $57.1 million during the three months ended September 30, 2026, as compared to $55.8 million during the three months ended September 30, 2025. Cost of revenue increased by $17.0 million, or 11%, to $176.1 million during the nine months ended September 30, 2026, as compared to $159.1 million during the nine months ended September 30, 2025. For the three months ended September 30, 2026, the increase was primarily due to amortization costs related to Zio monitor and Zio AT PCBA, headcount-related costs, and freight costs associated with the increase in volume of iRhythm Services. Partially offsetting this increase, in the third quarter we recognized approximately $3.1 million in tariff refunds received under the International Emergency Economic Powers Act. For the nine months ended September 30, 2026, the increase was primarily due to amortization costs related to PCBAs in Zio monitor and Zio AT, material and PCBA scrap costs, headcount-related costs, and freight costs associated with the increase in volume of iRhythm Services, which was partially offset by the tariff refunds as discussed above. During the nine months ended September 30, 2026, we experienced lower per unit costs relating to manufacturing efficiencies, primarily relating to Zio monitor.
Previous wording
Research and development expenses decreased by $1.2 million, or 6%, to $19.8 million during the three months ended June 30, 2026, as compared to $21.0 million during the three months ended June 30, 2025. Research and development expenses decreased by $1.3 million, or 3%, to $41.2 million during the six months ended June 30, 2026, as compared to $42.5 million during the six months ended June 30, 2025. The decrease in research and development expenses for the three and six months ended June 30, 2026 was primarily due to lower headcount-related costs (including stock-based compensation), which support ongoing FDA remediation and sustaining activities, product development consulting, and further development, enhancement, and functionality of our current and future product offerings.
Current wording
Research and development expenses decreased by $0.4 million, or 2%, to $20.6 million during the three months ended September 30, 2026, as compared to $21.0 million during the three months ended September 30, 2025. Research and development expenses decreased by $1.8 million, or 3%, to $61.8 million during the nine months ended September 30, 2026, as compared to $63.6 million during the nine months ended September 30, 2025. The decrease in research and development expenses for the three and nine months ended September 30, 2026 was primarily due to lower headcount-related costs (including stock-based compensation), which support ongoing FDA remediation and sustaining activities, product development consulting, and further development, enhancement, and functionality of our current and future product offerings.
Previous wording
Acquired IPR&D expenses decreased by $1.4 million, or 82%, to $0.3 million during the three months ended June 30, 2026, as compared to $1.7 million during the three months ended June 30, 2025. Acquired IPR&D expenses decreased by $1.4 million, or 70%, to $0.6 million during the six months ended June 30, 2026, as compared to $2.0 million during the six months ended June 30, 2025. During the three and six months ended June 30, 2025, we recognized additional IPR&D expense as a result of recognizing an increase in our contingent consideration liability related to regulatory milestones. See Note 5, Fair Value Measurements, and Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Current wording
Acquired IPR&D expense was $0.3 million for each of the three months ended September 30, 2026 and 2025. Acquired IPR&D expenses decreased by $1.4 million, or 61%, to $0.9 million during the nine months ended September 30, 2026, as compared to $2.3 million during the nine months ended September 30, 2025. During the nine months ended September 30, 2025, we recognized additional IPR&D expense as a result of recognizing an increase in our contingent consideration liability related to regulatory milestones. See Note 5, Fair Value Measurements, and Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Previous wording
Selling, general and administrative expenses increased by $5.3 million, or 4%, to $131.7 million during the three months ended June 30, 2026, as compared to $126.4 million during the three months ended June 30, 2025. Selling, general and administrative expenses increased by $21.2 million, or 9%, to $267.5 million during the six months ended June 30, 2026, as compared to $246.3 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase in selling, general, and administrative expenses was primarily attributable to increases in marketing and promotional costs, legal and professional fees for litigation matters, provisions for credit losses, and claims processing fees. The increase was offset by lower headcount-related costs (including stock-based compensation). Intellectual property litigation costs relating to our patent litigation with Welch Allyn, Inc. (“Welch Allyn”) and Bardy Diagnostics, Inc. (“BardyDx”), wholly-owned subsidiaries of Baxter International, Inc. (“Baxter”), during the three and six months ended June 30, 2026 were $4.9 million and $8.6 million, respectively, as compared to $3.0 million and $3.8 million for the three and six months ended June 30, 2025, respectively. Business transformation costs for the three and six months ended June 30, 2026 were $1.2 million and $1.5 million, respectively, as compared to $0.9 million and $1.4 million for the three and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2026, we incurred $0.7 million related to the Cybersecurity Incident.
Current wording
Selling, general and administrative expenses increased by $1.4 million, or 1%, to $125.6 million during the three months ended September 30, 2026, as compared to $124.2 million during the three months ended September 30, 2025. Selling, general and administrative expenses increased by $22.6 million, or 6%, to $393.2 million during the nine months ended September 30, 2026, as compared to $370.5 million during the nine months ended September 30, 2025. For the three and nine months ended September 30, 2026, the increase in selling, general, and administrative expenses was primarily attributable to increases in legal and professional fees for litigation and merger and acquisition matters, provisions for credit losses, and claims processing fees. The increase was partially offset by lower headcount-related costs (including stock-based compensation). Intellectual property litigation costs relating to our patent litigation with Welch Allyn, Inc. (“Welch Allyn”) and Bardy Diagnostics, Inc. (“BardyDx”), wholly-owned subsidiaries of Baxter International, Inc. (“Baxter”), during the three and nine months ended September 30, 2026 were $1.2 million and $9.8 million, respectively, as compared to $3.2 million and $7.0 million for the three and nine months ended September 30, 2025, respectively. Business transformation costs for the three and nine months ended September 30, 2026 were $6.6 million and $8.1 million, respectively, as compared to $0.9 million and $2.3 million for the three and nine months ended September 30, 2025, respectively, and included $6.0 million associated with the VitalConnect acquisition for the three and nine months ended September 30, 2026. For the three and nine months ended September 30, 2026, we incurred $0.1 million and $0.8 million, respectively, related to the Cybersecurity Incident.
Previous wording
Impairment charges were nil during the three and six months ended June 30, 2026, as compared to $2.5 million during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system. We do not intend to commercially launch the Zio Watch.
Current wording
Impairment charges were $0.7 million during the three and nine months ended September 30, 2026, as compared to nil and $2.5 million during the three and nine months ended September 30, 2025, respectively. Our impairment charge of $0.7 million recorded in the third quarter of 2026 is associated with capitalized internal-use software in development that we do not intend to place in service. During the nine months ended September 30, 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system. We do not intend to commercially launch the Zio Watch.
Previous wording
Interest income decreased by $0.5 million to $4.8 million during the three months ended June 30, 2026, as compared to $5.3 million during the three months ended June 30, 2025. Interest income decreased by $0.6 million to $9.7 million during the six months ended June 30, 2026, as compared to $10.2 million during the six months ended June 30, 2025. The decrease for the three and six months ended June 30, 2026 was primarily attributable to lower interest rates on invested balances, as compared to the same period in 2025, offset by higher average invested balances in 2026.
Current wording
Interest income decreased by $1.2 million to $4.7 million during the three months ended September 30, 2026, as compared to $5.9 million during the three months ended September 30, 2025. Interest income decreased by $1.8 million to $14.4 million during the nine months ended September 30, 2026, as compared to $16.2 million during the nine months ended September 30, 2025. The decrease for the three and nine months ended September 30, 2026 was primarily attributable to lower yields on our investment portfolio, as compared to the same period in 2025, partially offset by higher average invested balances in 2026.
Previous wording
Interest expense remained flat during the three and six months ended June 30, 2026, as compared to $3.3 million and $6.6 million during the three and six months ended June 30, 2025, respectively. The interest expense is primarily attributable to the 2029 Notes borrowed in March 2024.
Current wording
Interest expense remained flat during the three and nine months ended September 30, 2026, as compared to $3.3 million and $9.8 million during the three and nine months ended September 30, 2025, respectively. The interest expense is primarily attributable to the 2029 Notes issued in March 2024.
Previous wording
Other income, net decreased by $1.6 million to $0.7 million during the three months ended June 30, 2026, as compared to $2.3 million during the three months ended June 30, 2025. Other income, net decreased by $1.3 million to $1.8 million during the six months ended June 30, 2026, as compared to $3.1 million during the six months ended June 30, 2025. The decreases were primarily attributable to the changes in the fair value of our strategic loan investments recognized during the three and six months ended June 30, 2025.
Current wording
Other income, net increased by $0.7 million to $1.3 million during the three months ended September 30, 2026, as compared to $0.6 million during the three months ended September 30, 2025. Other income, net decreased by $0.6 million to $3.1 million during the nine months ended September 30, 2026, as compared to $3.7 million during the nine months ended September 30, 2025. The increase in other income, net for the three months ended September 30, 2026 was primarily attributable to non-operating service income earned during the period. The decrease in other income, net for the nine months ended September 30, 2026 was primarily attributable to the changes in the fair value of our strategic loan investments recognized during the nine months ended September 30, 2025.
Previous wording
No income tax expense was recognized during the three months ended June 30, 2026, as compared to an income tax benefit of $0.2 million during the three months ended June 30, 2025, representing an increase in the income tax provision of $0.2 million. Income tax provision remained flat for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The income tax provision for each of the three and six-month periods primarily relates to state and foreign taxes.
Current wording
No income tax expense was recognized during the three months ended September 30, 2026, as compared to an immaterial income tax provision during the three months ended September 30, 2025. Income tax provision remained flat for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The income tax provision for each of the three and nine-month periods primarily relates to state and foreign taxes. We do not expect the acquisition of VitalConnect, completed on October 5, 2026, to change our conclusion to maintain a full valuation allowance. Refer to Note 12, Subsequent Events, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.
Previous wording
As of June 30, 2026, we had cash and cash equivalents of $246.7 million, marketable securities of $344.6 million, and accounts receivable, net of $84.3 million. We continuously review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the current macroeconomic environment, including inflation, interest rate volatility, and potential instability in the global banking system. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds.
Current wording
As of September 30, 2026, we had cash and cash equivalents of $394.7 million, marketable securities of $166.0 million, and accounts receivable, net of $81.1 million. We continuously review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the current macroeconomic environment, including inflation, interest rate volatility, and potential instability in the global banking system. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds.
Previous wording
Under the terms of the License Agreement, during the third quarter of 2024 we paid BioIS an upfront fee of $15.0 million in cash consideration. In connection with the License Agreement, we also purchased an aggregate of $40.0 million of convertible promissory notes from BioIS of which $20.0 million of the convertible promissory notes (“Milestone Notes”) were designated for satisfaction of our regulatory milestone payment obligations. The Milestone Notes, plus accrued and unpaid interest, if any, will be cancelled, if outstanding, upon the achievement of the regulatory milestones up through December 31, 2026. In June 2025, BioIS achieved the first of two regulatory milestones. As of June 30, 2026, we are in the process of completing all required contractual conditions in order to cancel $10.0 million in Milestone Notes plus accrued and unpaid interest.
Current wording
Under the terms of the License Agreement, during the third quarter of 2024 we paid BioIS an upfront fee of $15.0 million in cash consideration. In connection with the License Agreement, we also purchased an aggregate of $40.0 million of convertible promissory notes from BioIS of which $20.0 million of the convertible promissory notes (“Milestone Notes”) were designated for satisfaction of our regulatory milestone payment obligations. The Milestone Notes, plus accrued and unpaid interest, if any, will be cancelled, if outstanding, upon the achievement of the regulatory milestones up through December 31, 2026. In June 2025, BioIS achieved the first of two regulatory milestones. As of September 30, 2026, we were in the process of completing all required contractual conditions in order to cancel $10.0 million in Milestone Notes plus accrued and unpaid interest. In October 2026, iRhythm and BioIS completed all of the required contractual conditions associated with cancellation of $10.0 million in Milestone Notes plus accrued and unpaid interest, by offsetting contingent consideration liabilities with BioIS.
Previous wording
On June 3, 2026, we entered into a binding Stipulation and Agreement of Settlement (the “Securities Settlement Agreement”) to fully resolve the putative class action securities litigation. The Securities Settlement Agreement provides for a settlement payment of $45.0 million, inclusive of lead plaintiff’s attorneys' fees and litigation expenses in exchange for the complete dismissal with prejudice of the action and a release of all claims against the named defendants in connection with the action, without any admission of fault, liability, wrongdoing or damages by the defendants. During the three and six months ended June 30, 2026, we recorded a litigation settlement liability of $45.0 million within accrued liabilities on our unaudited condensed consolidated balance sheet. We are entitled to recover approximately $40.0 million related to litigation legal fee defense costs as well as the settlement liability under applicable insurance policies, which has been recorded within prepaid expenses and other current assets on our unaudited condensed consolidated balance sheet. As of June 30, 2026, we incurred approximately $9.0 million in litigation legal fee defense costs expected to be recovered through insurance, with a remaining amount of approximately $31.0 million in settlement costs expected to be recovered through insurance, of which we have received $4.1 million in insurance recoveries. As a result, during the three and six months ended June 30, 2026, we recorded litigation settlement expense, net of expected insurance recoveries, of approximately $14.0 million in the accompanying unaudited condensed consolidated statement of operations.
Current wording
On June 3, 2026, we entered into a binding Stipulation and Agreement of Settlement (the “Securities Settlement Agreement”) to fully resolve the putative class action securities litigation. The Securities Settlement Agreement provides for a settlement payment of $45.0 million, inclusive of lead plaintiff’s attorneys' fees and litigation expenses in exchange for the complete dismissal with prejudice of the action and a release of all claims against the named defendants in connection with the action, without any admission of fault, liability, wrongdoing or damages by the defendants. We recorded a litigation settlement liability of $45.0 million as of September 30, 2026, which is included within accrued liabilities on our unaudited condensed consolidated balance sheets. We are entitled to recover approximately $40.0 million related to litigation legal fee defense costs as well as the settlement liability under applicable insurance policies, which has been recorded within prepaid expenses and other current assets on our unaudited condensed consolidated balance sheets. In August 2026, we and our insurance carriers funded an escrow settlement account for $45.0 million, of which the insurance carriers and we funded $35.0 million and $10.0 million, respectively, with our portion recorded as restricted cash – current within our condensed consolidated balance sheets. As of September 30, 2026, we incurred approximately $8.7 million in litigation legal fee defense costs expected to be recovered through insurance, with a remaining amount of approximately $31.3 million in settlement costs expected to be recovered through insurance, of which we have received $5.0 million in insurance recoveries. As a result, during the three and nine months ended September 30, 2026, we recorded litigation settlement expense, net of expected insurance recoveries, of approximately $(0.2) million benefit and $13.7 million, respectively, related to the Securities Settlement Agreement in the accompanying unaudited condensed consolidated statements of operations.
Previous wording
On July 31, 2026, we entered into a settlement and license agreement (the “Baxter Settlement Agreement”) with Baxter, Welch Allyn, Inc. and BardyDx (collectively, the "Baxter Parties") to resolve all outstanding patent litigation among the parties. Under the Baxter Settlement Agreement, we paid the Baxter Parties $50.0 million on July 31, 2026. The Baxter Settlement Agreement also provides each party and its affiliates with a worldwide, royalty-free, non-exclusive, fully paid-up license under the patents asserted in the litigation and other related patents and patent applications, in each case, to exploit products and services comprising or involving certain sensors used for cardiac monitoring. Except for the $50.0 million settlement payment, the Baxter Settlement Agreement does not require either party to pay royalties or other compensation. The Baxter Settlement Agreement also includes mutual covenants not to sue for six years from the effective date of the Baxter Settlement Agreement with respect to the exploitation of licensed products and services and mutual agreements not to challenge the licensed patents and patent applications, unless such licensed patents are enforced against the applicable party or its affiliates.
Current wording
On July 31, 2026, we entered into the “Baxter Settlement Agreement with Baxter, Welch Allyn and BardyDx (collectively, the "Baxter Parties") to resolve all outstanding patent litigation among the parties. Under the Baxter Settlement Agreement, we paid the Baxter Parties $50.0 million on July 31, 2026. The Baxter Settlement Agreement also provides each party and its affiliates with a worldwide, royalty-free, non-exclusive, fully paid-up license under the patents asserted in the litigation and other related patents and patent applications, in each case, to exploit products and services comprising or involving certain sensors used for cardiac monitoring. Except for the $50.0 million settlement payment, the Baxter Settlement Agreement does not require either party to pay royalties or other compensation. The Baxter Settlement Agreement also includes mutual covenants not to sue for six years from the effective date of the Baxter Settlement Agreement with respect to the exploitation of licensed products and services and mutual agreements not to challenge the licensed patents and patent applications, unless such licensed patents are enforced against the applicable party or its affiliates. During the three and nine months ended September 30, 2026, we recognized the $50.0 million settlement payment in Litigation settlements on our unaudited condensed consolidated statements of operations.
Previous wording
During the six months ended June 30, 2026, cash provided by operating activities was $24.9 million, as compared to cash provided by operating activities of $19.8 million during the six months ended June 30, 2025. Cash provided by operating activities increased by $5.1 million, primarily attributable to reductions in our net loss driven by our revenue growth and timing of payments associated with our accounts payable and accrued liabilities, Offsetting these increases in cash provided from operating activities were increases in our prepaid and other current assets, as well as other long-term assets.
Current wording
During the nine months ended September 30, 2026, cash provided by operating activities was $29.3 million, as compared to cash provided by operating activities of $54.7 million during the nine months ended September 30, 2025. Cash provided by operating activities decreased by $25.3 million, primarily attributable to the $50.0 million settlement and license payment to Baxter made in the third quarter of 2026 to resolve patent litigation. Excluding this litigation settlement impact were improvements in our operating performance, driven by our revenue growth and timing of payments and receipts associated with our accounts payable, accrued liabilities, and accounts receivable.
Previous wording
During the six months ended June 30, 2026, cash used in investing activities was $18.4 million, a decrease of $120.6 million, as compared to cash used in investing activities of $139.1 million during the six months ended June 30, 2025. The decrease in cash used in investing activities was primarily attributable to a net change in marketable securities activity of $123.3 million, consisting of an increase in the maturities of marketable securities of $208.3 million partially offset by an increase in purchases of marketable securities of $85.0 million. This decrease was partially offset by increases in purchases of strategic investments and of property and equipment of $2.0 million and $0.7 million, respectively, during the six months ended June 30, 2026.
Current wording
During the nine months ended September 30, 2026, cash provided by investing activities was $134.8 million, an increase of $363.0 million, as compared to cash used in investing activities of $228.3 million during the nine months ended September 30, 2025. The increase in cash provided by investing activities was primarily attributable to a net favorable change in marketable securities activity of $374.6 million, consisting of a $344.3 million increase in sales and maturities of marketable securities, and a $30.3 million decrease in purchases of marketable securities. These were partially offset by the advance payment made in the third quarter of 2026 in connection with the VitalConnect acquisition of $10.0 million, and an increase in purchases of property and equipment of $1.8 million, during the nine months ended September 30, 2026.
Previous wording
During the six months ended June 30, 2026, cash provided by financing activities was $4.2 million, a decrease of $4.6 million as compared to $8.8 million during the six months ended June 30, 2025. The decrease was related to lower proceeds from the issuance of common stock primarily from stock option exercises in connection with our employee equity incentive plan.
Current wording
During the nine months ended September 30, 2026, cash provided by financing activities was $4.6 million, a decrease of $5.0 million as compared to $9.6 million during the nine months ended September 30, 2025. The decrease was related to lower proceeds from the issuance of common stock primarily from stock option exercises in connection with our employee equity incentive plan.
Previous wording
We used approximately $72.4 million of the net proceeds from the offering to pay the cost of the 2029 Capped Calls, as described below. In addition, we used approximately $80.2 million of the net proceeds from the offering for the repayment in full of the indebtedness outstanding from the Initial Tranche of the Braidwell Term Loan Facility (as each such term is defined below). We also used approximately $25.0 million of the net proceeds from the offering to repurchase 229,252 shares of our common stock at a purchase price of $109.05 per share in privately negotiated transactions effected through one of the initial purchasers or its affiliate. These repurchases could increase (or reduce the size of any decrease in) the market price of our common stock, and could result in a higher effective conversion price for the 2029 Notes. We intend to use the remainder of the net proceeds from the offering for general corporate purposes.
Current wording
We used approximately $72.4 million of the net proceeds from the offering to pay the cost of the 2029 Capped Calls, as described below. In addition, we used approximately $80.2 million of the net proceeds from the offering for the repayment in full of the indebtedness outstanding from the initial tranche of the Braidwell term loan facility. We also used approximately $25.0 million of the net proceeds from the offering to repurchase 229,252 shares of our common stock at a purchase price of $109.05 per share in privately negotiated transactions effected through one of the initial purchasers or its affiliate. These repurchases could increase (or reduce the size of any decrease in) the market price of our common stock, and could result in a higher effective conversion price for the 2029 Notes. We intend to use the remainder of the net proceeds from the offering for general corporate purposes.
Previous wording
On January 12, 2026, we implemented the Holding Company Transaction. The Holding Company Transaction constituted a Merger Event as defined under the Indenture. The Holding Company Transaction did not constitute a Fundamental Change or a Make-Whole Fundamental Change as defined under the Indenture. As a result of the Holding Company Transaction, holders of the 2029 Notes had the right to exchange their 2029 Notes at any time up through March 4, 2026, the 35th trading day following the effective date of the Holding Company Transaction. During the three and six months ended June 30, 2026, holders exchanged $3,000 principal amount of their 2029 Notes, which was settled in cash at our discretion.
Current wording
On January 12, 2026, we implemented the Holding Company Transaction. The Holding Company Transaction constituted a Merger Event as defined under the Indenture. The Holding Company Transaction did not constitute a Fundamental Change or a Make-Whole Fundamental Change as defined under the Indenture. As a result of the Holding Company Transaction, holders of the 2029 Notes had the right to exchange their 2029 Notes at any time up through March 4, 2026, the 35th trading day following the effective date of the Holding Company Transaction. During the second quarter of 2026, holders exchanged $3,000 principal amount of their 2029 Notes, which was settled in cash at our discretion.
Previous wording
Our contractual obligations as of December 31, 2025, are presented in our Annual Report on Form 10-K filed with the SEC on February 19, 2026 (the "Annual Report"). There were no significant changes to our lease obligations during the six months ended June 30, 2026. As of June 30, 2026, our purchase commitments totaled $106.1 million, primarily related to inventory and revenue cycle service fees and expected to be due within a year. See Note 8, Debt, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for changes in our debt obligations during the six months ended June 30, 2026.
Current wording
Our contractual obligations as of December 31, 2025, are presented in our Annual Report on Form 10-K filed with the SEC on February 19, 2026 (the "Annual Report"). As of September 30, 2026, our purchase commitments totaled $98.1 million, primarily related to inventory and revenue cycle service fees and expected to be due within a year. See Note 8, Debt, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for changes in our debt obligations during the nine months ended September 30, 2026.
Previous wording
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Annual Report. Updates to our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The critical accounting estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Annual Report. There were no material changes to our critical accounting estimates during the six months ended June 30, 2026.
Current wording
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Annual Report. Updates to our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The critical accounting estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Annual Report. There were no material changes to our critical accounting estimates during the nine months ended September 30, 2026.