Q2 2022 iRhythm Technologies Inc Earnings Call

August 4, 2022

If you would like to ask a question during the presentation. You may do so by pressing star followed by one on your telephone keypad. We ask that you ask one question with one follow up if you happen to change your mind at all please press star followed by chain I'm now going to hand over to Stephanie <unk> director of Investor Relations to begin. Please go ahead. Thank.

Thank you all for participating in today's call earlier today, our rhythm released financial results for the second quarter ended June 32022.

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 provision of the private Securities Litigation Reform Act of 1995.

Any statements contained in this call, but are not statements of historical facts should be deemed to be forward looking statements.

These are based upon our current estimates.

On various assumptions and reflect management's intention 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 occur.

Accordingly, you should not place undue reliance on these statements.

Our 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 U S. 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 this 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 the most directly comparable GAAP financial measures.

This conference call contains time sensitive information and is accurate only as of the live broadcast today August four 2022.

Our rhythm 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 IRA them President and CEO .

Thank you Stephanie good afternoon, and thank you all for joining us Doug Devine, our Chief operating Officer, and Chief Financial Officer, and Dan Wilson, Our EVP of corporate strategy and development joining me on today's call.

My prepared remarks today cover progress we've made throughout the first half of 2022 and discuss the near and long term growth initiatives for our business.

Then turn the call over to Doug to provide a detailed review of our second quarter financial results.

Starting with our second quarter results, we were pleased with the performance during the quarter with revenues up 10% sequentially and 26% year over year, and we achieved record quarterly registrations amidst a difficult market environment.

Our topline results were ahead of expectations and position us well for the second half of 2022 and beyond.

We also continued to make progress in driving an increased focus on operational discipline, delivering nearly 200 basis points of sequential improvement in our gross margin profile.

In our core U S commercial business, we achieved another record of quarterly registration is driven by an all time high number of new accounts doing business with us in the quarter with new account openings in the second quarter up 22% compared to the first quarter of 2022.

Our volume performance outperformed the market year to date, driven by our strong growth in primary care and other specialty segments as we continue to grow our overall share of the market.

While we realized our highest level of daily registration as ever in the month of June we have already seen seasonality typical of the summer months and there continues to be clinical staffing shortages and a challenging macroeconomic environment, which we anticipate will continue through the back half of the year.

On the pricing front, we shared last month at CMS published the proposed calendar year 2023 physician fee schedule, which contained proposed payment rates for the two main CPT codes related to long term continuous ECG monitoring in.

In the proposed rule CMS published data that implies payment rates ranging from $207 to $295 across the company's 300, Etfs. We estimate that proposed rates will have an immaterial impact on our overall asps in calendar year 2023 for calendar year 2022.

We are now in a public comment period that runs through early September before CMS issued the final rule anticipated in early November for implementation on January one 2023.

During the open comment period, we are continuing to fully participate in the rule, making process to share relevant information at CMS finalizes their rates for calendar year 2023.

Turning to updates on the innovation front, we were excited to announce that we gained five 10-K clearance for the clinically integrated <unk> system for the zeal watch.

This is an important early step in expanding our platform to more patients who may benefit from preventative and proactive cardiac monitoring.

This new system produced in partnership with barely combined deep learned algorithms with our proven and trusted ECG monitoring service in a clinical grade long term noninvasive wearable device using.

Using a continuous PPG AI based algorithm the zeal watch not only detects afib, but also characterize the amount of basis overtime to calculated afib burden estimate with accuracy comparable to the <unk> patch as a reference.

This contextualism mission of patient Nate the presence or absence collected through the monitoring period is important and clinically meaningful to aid in a potential diagnosis.

With full integration and towards <unk> service does Youll watch is intended to be complementary to deal monitors by adding a modality, but longer wear times for patients who require long term monitoring.

We plan to introduce the <unk> system for a limited market evaluation in 2023.

Yes.

Another highlight of our ongoing product innovation efforts zeal monitor our next generation Biosensor has demonstrated an initial positive impact on patient compliance following an initial launch several months ago.

While preliminary we are encouraged by the impact of this lighter smaller and thinner form factor could potentially have on a patient's experience, while also providing opportunity for greater manufacturing and scalability efficiencies.

We continue to anticipate full scale commercialization and conversion to this next generation device in 2023.

And finally, we were excited to launch a new clinical resource center on our website to enable clinicians centralized access to clinical evidence on demand Webinars and case studies.

This resource serves as a gateway to published clinical evidence offering summaries of significant research as well as the list of more than 35 clinically relevant published articles to support the clinical validity of deal.

Furthermore, the webinar library posts on demand educational videos, featuring respected physicians and clinical staff discussing the impacts and outcomes of their experiences with zero.

A case study section offers evidence illustrating how the Geo services helped healthcare systems improved cardiac patient care.

Turning toward progress against the pillars that we've identified for our future success.

Im excited that we have rounded out our executive leadership team to include a number of new individuals', which we believe will be important for growth and transformation of the business in the coming years Dr.

Dr. <unk> <unk>, our recently appointed Chief Medical Officer, and Chief Scientific Officer has hit the ground running in its first two months to drive innovation lead research and evidence generation and enhance our clinical vision.

Patterson, who joined the company as our new Chief Commercial officer in late July has extensive experience driving revenue growth through strategic sales and marketing execution in global markets, which will be leveraged as we expand geographically and into adjacent spaces.

<unk> Fernandes has also recently joined algorithm as our chief Human resource officer to develop and lead implementation of strategies to support our global growth imperatives.

And a wealth of experience in leading HR functions in large global organizations as well as companies with fast paced high growth focused environments.

Finally, we are also excited to have bright spots and join US on August eight as our new Chief Financial Officer to guide our organization through financial and operational transformation as well as help position the company to scale internal processes as we prepare for future growth.

We're excited to welcome these seasoned leaders into our leadership team and look forward to executing on our vision of building IRA them into a market leader in the digital healthcare space.

Finally, we're also pleased to announce that we will hold an investor day on the morning of September 21 in New York City for analysts and investors of the company.

This half day event will focus on key elements of our refreshed vision renewed long term business strategy details of our growth pillars and long range financial targets.

We appreciate that investors and stakeholders have been asking for greater granularity on these topics and we are excited to be able to host this event in person as well as via live video webcast.

Narratives, bringing.

Bringing a wealth of experience in leading HR functions in large global organizations as well as companies with fast paced high growth focused environments.

In conclusion, we finished the first half of 2022, having made steady progress against our goals and in a strong position to capitalize on the sizable opportunities ahead of us to serve millions more patients.

We see significant runway for growth within our core market that we serve today as we continue to shift the standard of care to zero the gold standard in this space.

I am very excited to welcome these seasoned leaders into our leadership team and look forward to executing on our vision of building IRA them into a market leader in the digital healthcare space.

With more than $200 million of cash on the balance sheet and a clear path to being profitable. We continue to invest in our mid and long term initiatives that will leverage our technology platform and new geographies and across new markets. We are excited about our future here at algorithm.

Finally, we're also pleased to announce that we will hold an investor day on the morning of September 20, <unk> in New York City for analysts and investors of the company.

This half day event will focus on key elements of our refreshed vision renewed long term business strategy details of our growth pillars and long range financial targets.

I'll now turn the call over to Doug to discuss our financials.

Thanks Clayton.

Our second quarter results demonstrated the strength of our business as revenue grew 26% year on year and 10% quarter on quarter.

We appreciate that investors and stakeholders have been asking for greater granularity on these topics and we are excited to be able to host this event in person as well as via live video webcast.

Registrations in new account Onboarding continued growth and new stores again contributed strongly to our growth.

Taking a more detailed look at our second quarter financial results on a sequential basis revenue increased 10% quarter on quarter from $92 million to $102 million.

We see significant runway for growth within our core market that we serve today as we continue to shift the standard of care to deal the gold standard in this space.

We had strong growth in the number of new accounts on boarded increasing by 22% from first to the second quarter.

Average volume from new accounts was flat from the first quarter to the second quarter.

Looking at new store same store mix, new stores defined as accounts that have been opened for less than 12 months accounted for 38% of our year over year growth down from 55% in the first quarter of 2022.

I'll now turn the call over to Doug to discuss our financials.

Thanks Quentin.

Our second quarter results demonstrated the strength of our business as revenue grew 26% year on year and 10% quarter on quarter.

<unk> home enrollment was about 20% in the second quarter, approximately flat compared to the first quarter.

Registrations in new account Onboarding continued growth and new stores again contributed strongly to our growth.

Turning our attention to the rest of the P&L gross margin for the second quarter was 68, 8% a one 9% increase from gross margin of 66, 9% during the first quarter.

Taking a more detailed look at our second quarter financial results on a sequential basis revenue increased 10% quarter on quarter from $92 million to $102 million.

Increases in volume and a reduction in average unit cost contributed to stronger gross margins during the second quarter versus the first quarter.

We had strong growth in the number of new accounts on boarded increasing by 22% from first to the second quarter.

Second quarter adjusted operating expenses net of restructuring were $93 5 million up 12% from the first quarter and up 29% year over year.

Average volume from new accounts was flat from the first quarter to the second quarter.

Nonrecurring costs related to executive transitions and professional services contributed to the increases in operating expenses.

Adjusted EBITDA of negative $5 million during the second quarter was down 0.2 million versus adjusted EBITDA of negative $4 8 million during the first quarter.

<unk> home enrollment was about 20% in the second quarter, approximately flat compared to the first quarter.

Cash and short term investments declined $4 3 million from the first quarter to $204 5 million.

Turning our attention to the rest of the P&L gross margin for the second quarter was 68, 8% a one 9% increase from gross margin of 66, 9% during the first quarter.

Adjusted EBITDA losses were the primary uses of cash.

Accounts receivable increased by $2 1 million to $57 4 million from $55 3 million in the first quarter.

Increases in volume and a reduction in average unit costs contributed to stronger gross margins during the second quarter versus the first quarter.

<unk> driven by the increase in revenue from the first quarter to the second quarter.

Second quarter adjusted operating expenses net of restructuring were $93 5 million up 12% from the first quarter and up 29% year over year.

Net loss was negative $23 9 million or a loss of <unk> 80 per share compared to a net loss of negative $17 4 million or <unk> 59 per share in the same period of the prior year.

Nonrecurring costs related to executive transitions and professional services contributed to the increases in operating expenses.

Turning to updated guidance for 2022, we expect full year revenue to range between $415 million and $420 million, reflecting year over year growth of 29% to 30%.

Adjusted EBITDA of negative $5 million during the second quarter was down 0.2 million versus adjusted EBITDA of negative $4 8 million during the first quarter.

We expect gross margin to range between 68% and 69%.

Cash and short term investments declined $4 3 million from the first quarter to $204 5 million.

We expect operating expenses to range between $375 million and $385 million.

Adjusted EBITDA losses were the primary uses of cash.

And we expect adjusted EBITDA to range between negative $12 5 million and negative $17 5 million.

Accounts receivable increased by $2 1 million to $57 4 million from $55 3 million in the first quarter.

The adjusted EBITDA will exclude restructuring costs, and we will continue to exclude stock compensation expense.

Merrily driven by the increase in revenue from the first quarter to the second quarter.

Net loss was negative $23 9 million or a loss of <unk> 80 per share compared to a net loss of negative $17 4 million or <unk> 59 per share in the same period of the prior year.

We continue to anticipate adjusted EBITDA breakeven or better by the fourth quarter of 2022.

Looking at the third quarter, we expect volumes to be approximately flat to the second quarter due to continued staffing limitations with providers and high levels of patient and provider vacations in the July August timeframe. As previously stated we expect to see about $7 million of benefit from the NGL price.

Turning to updated guidance for 2022, we expect full year revenue to range between $415 million and $420 million, reflecting year over year growth of 29% to 30%.

We expect gross margin to range between 68% and 69%.

And second half 2022, roughly evenly split between the third and fourth quarters.

We expect operating expenses to range between $375 million and $385 million.

And with that Clinton, Dan and I would like to open the call for questions.

Operator.

And we expect adjusted EBITDA to range between negative $12 5 million and negative $17 5 million.

Thank you we will now start today's Q&A session. If you would like to ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by pace just to remind you that we ask that you ask one question with one follow up what I'm trying to ask a question. Please show your phone is on mute exactly.

The adjusted EBITDA will exclude restructuring costs, and we will continue to exclude stock compensation expense.

We continue to anticipate adjusted EBIT breakeven or better by the fourth quarter of 2022.

First question today comes from <unk> <unk> from Morgan Stanley . Your line is my license.

Thanks for taking the question. This is Calvin on for superior Congrats on a good quarter. Two from me I wanted to start with a two part geographic volume ship question.

So with national pricing kind of now potentially in place for 23, a I wanted to confirm your plan of shifting volume overtime to San Francisco is perhaps a two year timeline in a reasonable timeframe as you think about executing the shift of claims in human capital and B is the plan to shift.

<unk> in second half 2022, roughly evenly split between the third and fourth quarters.

And with that Clinton, Dan and I would like to open the call for questions.

Washington, the claims to the NGF region throughout the balance of this year like you previously planned and then redirect those defenses discussed sometime next year with that MGM portion just kind of stay in Illinois more on a permanent basis.

Operator.

Yes.

Just to remind you that we ask that you ask one question with one follow up what I'm trying to ask a question. Please show your phone is on mute exactly.

Yeah, well thanks for the question I appreciate it.

I think.

My answer will address both of those questions in one response, if not follow up with a clarifying question feel free to.

Last question today comes from <unk> <unk> from Morgan Stanley . Your line is not licensed.

One of the greatest benefits that we have with getting our final rules put in place is that for the first time, we're able to effectively.

Thanks for taking the question. This is Calvin on for superior Congrats on a good quarter. Two from me I wanted to start with a two part geographic volume ship question.

Really manage.

Across all three of our <unk> in the most operationally efficient manner possible, we haven't been able to do that historically and so now that we have a final rule coming into place that's going to allow us to do that in a way that we just haven't historically been able to do which means processing through Houston processing through Chicago Lincoln Shire and also the processing through the San Francisco locations. So we're excited by.

So with national pricing kind of now potentially in place for 23.

I wanted to confirm your plan of shifting volume overtime to San Francisco.

Perhaps a two year timeline in a reasonable timeframe as you think about executing the shift of cleans in human capital and B is the plan to shift.

Portion of the claims to the NGF region throughout the balance of this year like you previously planned and then redirect those defenses discussed sometime next year with that MGM portion just kind of stay in Illinois border permanent basis.

The opportunity that gets created from that perspective, and keep in mind more than half of our volumes come from the western part of the United States today. So.

So naturally being able to serve those locally to those etfs are that San Francisco at ETF is advantageous to us. So we certainly are excited by that we will continue down the path with Ngls over the course of this year I think that just naturally takes advantage of the capacity.

Yes.

Yeah, well thanks for the question appreciate it.

I think.

My answer will address both of those questions in one response, if not follow up with a clarifying question feel free to.

And what we have built out there have been building out there throughout the rest of this year and I would expect volumes will continue to remain there into next year as well. So I think that will continue to be a part of how we operate into the future.

One of the greatest benefits that we have with getting our final rules put in place is that for the first time, we're able to effectively.

Really manage.

Across all three of our IV TFS and the most operationally efficient manner possible, we haven't been able to do that historically and so now that we have a final rule coming into place that's going to allow us to do that in a way that we just haven't historically been able to do which means processing through Houston processing through Chicago, Lincoln Shire, and also with processing through the San Francisco locations. So we're excited.

Thanks very helpful. If I could just add a quick follow up so looking forward to the September analyst day I was wondering if you could talk a little bit about your outlook for just the support for silent AF reimbursement from here on the on the.

<unk> really of guard AF likely not providing.

Statistically significant results just given the enrolment so thoughts on how this ultimately ship payer momentum shifts USPS TF guidelines or <unk>.

The opportunity that gets created from that perspective, and keep in mind more than half of our volumes come from the western part of the United States today.

And stops that you've got to be a needle mover or something else.

So naturally being able to serve those locally to those etfs are that San Francisco at ETF is advantageous to us. So we certainly are excited about that we will continue down the path with Ngls over the course of this year I think that just naturally take advantage of the capacity and what we have built out there have been building out there throughout the rest of this year and I would.

So much.

Yes look we're very excited with the progress that continues to be made in the silent AF efforts and our know your rhythm program and the discussions with many of the commercial payers in the different potential partners that are out there we'll share a lot more around that at the analyst day, but I would tell you. We're excited by what we're seeing we're excited by the.

<unk> volumes will continue to remain there into next year as well. So I think that will continue to be a part of how we operate into the future.

Engagement from a payer's perspective with respect to how we are.

Positioning the program how we've designed the program in terms of longer term reimbursement I think that's going to continue to take some time to build up.

Create evidenced with but I do see it on the commercial payer side, something thats very interesting and quite a bit of a engagement with our partners that are out there and look forward to sharing much more of that in the analyst day.

Statistically significant results just given the enrollment so thoughts on how this ultimately ship payer momentum shifts USPS TF guidelines or <unk>.

Great. Thanks, so much.

Our next question today comes from Alan <unk> from J P. Morgan Your line is now open.

And stops that your data would be a needle mover or something else and thanks. So much.

Yes look we're very excited with the progress that continues to be made in the silent AF efforts and our know your rhythm program is the discussions with many of the commercial payers in different potential partners that are out there we'll share a lot more around that at the analyst day, but I would tell you. We're excited by what we're seeing we're excited by the.

Hey, guys.

My first question and then kind of just wanted to follow up.

To the question on the <unk>. So given the kind of preliminary guide you gave at the time of the preferreds will release. It sounds like you are planning to have a mix.

Dts or at least going to as long as going through a mix of about Etfs due 2023, but when we think about longer term see how the 2024. It sounds like you see some benefit to maintaining some level of volumes at all three of the ITT apps that we're talking about through Texas.

Engagement from a payer's perspective with respect to how we are.

Positioning the program how we've designed the program in terms of longer term reimbursement I think that's going to continue to take some time to build up.

Create evidenced with but I do see it on the commercial payer side, it's something that's very interesting and quite a bit of engagement with our partners that are out there and look forward to sharing much more of that in the analyst day.

Texas, and Illinois, and California is that going to be continuing on into 2024 or do you plan to shift predominantly all of your revenues to San Francisco, given the favorable GPC either.

Great. Thanks, so much.

Our next question today comes from Alan <unk> from Jpmorgan. Your line is now open.

Yes, and I think that's something that we'll continue to evaluate into the future and having the ability to leverage all three I'd Etfs now online.

Hey, guys.

My first question and then kind of just wanted to follow up.

While we've been able to do historically is going to give us the opportunity to see where we are most efficient in how we can most efficiently manage through volumes into the future. We're expecting significant growth in this company as we think about that.

To the question on the ITT F. So given the kind of preliminary guide you gave at the time of the preferreds will release. It sounds like you are planning to have a mix.

The opportunity that this third quarter market just to move this is a standard of care, but then to expand into the primary care channel. There is there is tremendous volume growth.

Dts or at least going out long is going through a mix of about Etfs through 2023, but when we think about longer term say 2024. It sounds like you see some benefit to maintaining some level of volumes at all three of the Etfs that we're talking about through Texas.

So how we're best served are positioned to serve that volume demand as it comes is something we'll evaluate over the course of 'twenty three and we will talk about 24, as we get closer to it but I guess what has me. Most excited is for the first time, we can really begin to leverage the operational efficiencies that exist in the company.

Texas, and Illinois, and California is that going to be continuing on into 2024 or do you plan to shift predominantly all of your revenues to San Francisco, given the favorable GPC either.

What we have historically, so we're looking forward to that.

Yes, and I think that's something that we'll continue to evaluate into the future.

Got it and I appreciate that the <unk> won't be launching until next year or.

Having the ability to leverage all three Etfs now Mike.

Or the Zeus, but when we think about kind of as a rule in the portfolio. How should we think about it playing alongside your current launch of the Nexgen patch and symptomatic Aaas and how should we think about the role of it in asymptomatic because I think.

What we've been able to do historically is going to give us the opportunity to see where we are most efficient in how we can most efficiently manage through volumes into the future. We're expecting significant growth in this company as we think about that.

When investors were originally contemplating the watch everything you read is maybe a solution for asymptomatic given the longer wear times. Thank you very much.

The big opportunity that this third quarter market just to move this the standard of care, but then to expand into the primary care channel. There is there is tremendous volume growth.

Yes, thanks Alan.

So our best served are positioned to serve that volume demand as it comes is something we'll evaluate over the course of 'twenty three and we will talk about 'twenty four is closer to it but I guess what has me. Most excited is for the first time, we can really begin to leverage the operational efficiencies that exist as a company.

I'll ask Dan to comment on that I can jump in as well that you want to comment on it.

Yeah, Thanks, Alex for the question.

I can start here in Clinton County.

<unk> did add anything he'd like to add so.

We're excited about <unk> and <unk>.

Cited about the potential that it adds to our portfolio as we look at the market, we see a clear gap.

What we have historically, so we're looking forward to that.

Got it and I appreciate that the <unk> won't be launching until next year.

In terms of.

Between.

Kind of long term monitoring as it is defined today between 14% to 30 days and then longer term the only real option out there today.

Or the Zeus, but when we think about kind of as a rule in the portfolio how should we think about it playing alongside.

Your current launch of the Nexgen patch and symptomatic Aaas and how should we think about the role of it in asymptomatic because I think.

<unk>, which is an invasive procedure. So we see a clear opportunity for a non invasive clinic.

When investors were originally contemplating the watch everything that is maybe a solution for asymptomatic given the longer wear times. Thank you very much.

Clinical grade long term monitoring platform like real watch.

We're excited to have achieved regulatory clearance and getting that into the market next year, we do see a number of clinical use cases both.

Yeah. Thanks, Alan I'll ask Dan to comment on that I can jump in as well do you want to comment on it.

On the symptomatic and potentially on the asymptomatic side will.

Yeah, Thanks, Alex for the question.

Certainly share more details around that in terms of how we are evaluating those opportunities and prioritizing those opportunities as we get closer to market.

I can start here in Clinton County.

Hey, Dan anything you'd like to add so.

We're excited about <unk> excited about the potential that it adds to our portfolio as we look at the market, we see a clear gap.

But certainly see.

Opportunities for that.

For <unk>, our portfolio and in the market.

In terms of.

Yes between.

Kind of a long term monitoring as it is defined today between 14% to 30 days and then longer term the only real option out there today.

Thank you. Our next question comes from Joanna <unk> from Citi.

Please go ahead.

Good afternoon, and thank you for taking the question.

<unk>, which is an invasive procedure, so we see a clear opportunity for noninvasive clinic.

It seems to me like we're going to be talking more about the international opportunity and it's also seems to me some of your new hires may be more targeted to that.

Clinical grade long term monitoring platform likely a watch.

Could you just sort of give us some mile high view of how you think about that contributing maybe not this year, but over the next couple of years.

We're excited to have achieved regulatory clearance and getting that into the market next.

Next year, we do see a number of clinical use cases both.

Yes, sure Joanne certainly international for Us is as.

On the symptomatic and potentially on the asymptomatic side will.

A meaningful opportunity that I think we've just begun to scratch the surface with.

Certainly share more details around that in terms of how we are evaluating those opportunities and prioritizing those opportunities as we get closer to market.

The presence we have in the U K.

As we've shared before we will start that will start market access efforts.

Number of countries in the back part of this year, notably the Netherlands, and Germany, France, Sweden. Those are some of the particular countries that are on our road map each one of those countries.

But certainly see.

Opportunities for that.

<unk> in our portfolio and in the market.

With respect to getting reimbursement in place, but maybe to think about.

Thank you. Our next question comes from Joanna <unk> from Citibank. Please go ahead.

<unk> contribution is there's really probably 2002.

Good afternoon, and thank you for taking the question.

24, I think youll see a market valuation and you'll see it begin to took a bit of work.

It seems to me like we're going to be talking more about the international opportunity and it's also seems to me some of your new hires may be more targeted to that.

With product being pulled in the country in the bag.

I think thats really going on.

More of a market evaluation sort of.

Could you just sort of give us some mile high view of how you think about that contributing maybe not this year, but over the next couple of years.

And then in that 2004 timeframe, so hope for that.

With respect to how we're thinking about it I think as we get into 2023, we'll continue to explore other opportunities that are out there. We are moving forward with Japan's largest HCM growth.

Yes, sure Joanne certainly international for US is as a meaningful opportunity that I think we've just begun to scratch the surface with.

The presence we have in the U K.

As we've shared before we'll start we'll start market access efforts.

We expect to submit for regulatory approval in the not too distant future.

Select number of countries in the back part of this year, notably the Netherlands, Germany, France, Sweden, and those are some of the particular countries on the road about each one of those countries.

But what we see that thats, probably not a 2004 timeframe as well so right now it's feeling like 'twenty four is the right right timeframe to really start to think about some contribution but you'll hear more about it over the course of 'twenty three for sure.

With respect to getting reimbursement in place, but slightly.

And as a follow up do you think that the reimbursement is in place and most of these markets or do you think youll have to go to back for that there. Thank you.

<unk>.

Revenue contribution is there's really probably 2024, I think you'll see a market valuation just use to begin to work.

What's been interesting is ambulatory cardiac monitoring is in place in each of those countries Theres reimbursement established already the holter monitors incredibly popular there that the challenge is how do we articulate our value differentiation in clinical distinction relative to those offerings and that's what the market access that reserves are.

And with product vehicles in the country in the back.

I think thats really going to.

More of a market evaluations sort of.

And then in that 2004 timeframe, so hopefully that.

With respect to how we're thinking about it I think as we get into 2023, we'll continue to explore other opportunities that are out there.

Sure, but reimbursement is is there in terms of monitoring so that gives us a platform to start from and then to articulate our value and work for different reimbursement levels is really what we're focused on but we're not going to have to.

We are moving Japan's largest AC world, we expect to submit the override.

Inventory at approval.

In the future.

Articulate the need for monitoring that's understood, which is a big part of why we selected the countries that we did select to be quite honest with you.

But what we see that's probably a stupid not a 2004 timeframe as well so right now it's feeling like 'twenty four is the right right timeframe to really start to think about some contribution but you'll hear more about it over the course of 'twenty three for sure.

Thanks.

Okay.

Our next question comes from Mark Margaret pays out from William Blair. Your line is now open.

And as a follow up do you think that the reimbursement that's in place and most of these markets or do you think youll have to go to back for that there. Thank you.

Hi, This is Brandon on for Margaret Thanks for taking the question.

Whats interesting is ambulatory.

Congrats on a great quarter, and I wanted to talk a little bit about the new openings.

Ambulatory cardiac monitoring is in place in each of those countries Theres reimbursement established already the holter monitors incredibly popular there.

In the past, we used to talk about individual cardiology practices and that kind of going into IBM you.

The challenge is how do we articulate our value differentiation in clinical distinction relative to those offerings and that's what the market access that reserve or four but reimbursement is is there in terms of monitoring so that gives us a platform to start from and then to articulate our value and work for different reimbursement levels is really what we're focused on but we're not going to have to.

You guys, obviously had a great record quarter of new account openings. So can you talk a little bit about what those new accounts look like where are you guys kind of focus right now, whereas we've been coming from.

What the size of the Pixar and volumes and how they ramp.

Articulate the need for monitoring that's understood, which is a big part of why we selected the countries that we did select to be quite honest with you.

Yes sure Brandon.

We continue to make great progress in the cardiologists sort of special STP space with respect to new account openings, we haven't really seen that trend line change from historical sort of levels of the last several quarters or so but what we're seeing is that the interest level in the primary care physician space in some of these other specialties that is.

Thanks.

Our next question comes from Mark Margaret pays out from William Blair. Your line is now open.

Hi, This is Brandon on for Margaret Thanks for taking the question.

Elevating up and we've talked very specifically around the fact that we have a high degree of confidence that youre going to see the primary care physician begin to utilize this sort of technology in their practice.

Congrats on a great quarter, and I wanted to talk a little bit about the new openings.

In the past, we used to talk about individual cardiology practices and that kind of growing into IBM.

And not only that our point of view when you talk with payers. They also articulate the fact that they believe more and more of this sort of monitoring is going to.

Obviously, you had a great record quarter of new account openings. So can you talk a little bit about what those new accounts look like where are you guys kind of focus right now, whereas we've been coming from.

Going to find its way into that primary endpoint.

Yes.

Would any other speak I'd like to take over that question would you like to ask the next one.

What's the size of the pits are in volumes and how they ramp.

Sorry, you're not able to hear me.

I can hear you Glenn.

Yes sure Brandon.

Okay.

So I'll continue on if you can please interrupt me, but the.

We continue to make great progress in the cardiologists sort of specialist EP space with respect to new account openings, we haven't really seen that trend line change from historical sort of levels of the last several quarters or so but what we're seeing is that the interest level in the primary care physician space in some of these other specialties.

The point is we've got a strong belief that the primary care physician space will open up and we're seeing that begin to be validated in our new account openings were a higher and higher mix is coming from that primary care channel. So.

It's validating our belief our thesis that that will be a significant space for us into the future I do believe the average size of a primary care physician.

Is elevating up and we've talked very specifically around the fact that we have a high degree of confidence that youre going to see the primary care physician begin to utilize this sort of technology in their practice and.

Office in terms of the prescribing levels is going to be less than what you see in the cardiologist space and I see that I think that's why we've seen a pretty good level of average volume from new accounts would be pretty consistent.

And not only that our point of view when you talk with payers. They also articulate the fact that they believe more and more of this sort of monitoring is going to.

Doug mentioned that.

Going to find its way into that primary endpoint because it would any other fee. If you like to take over that question would you like me to ask the next one.

But it does put a little bit of pressure on that just because I think the PCP office is a bid bid smaller there's a lot more of them, but they are a bit smaller. So we're mindful of that I think we need more experience to be honest with you to really identify what the right average volume is there and so I'm not going to comment on that just yet but.

Sorry, you're not able to hear me alright.

I can hear you Glenn.

Okay.

So I'll continue on if he can't please interrupt me but.

We're very excited by the momentum that's being built in that primary care space.

Great.

In terms of Clinton <unk> been bringing on a lot of new experienced leadership, obviously with great backgrounds.

It's validating our belief our thesis that that will be a significant space for us into the future I do believe the average size of a primary care physician.

Im kind of curious as you look at the organization and we look forward a couple of years, what kind of commercial changes or do you think that either needs to make you have been from grower for several years. This wasn't really a story thats kind of quote unquote needed fixing, but perhaps you have identified the things that could take you to the next level.

And you've brought into management to do that what what are some of those opportunities.

Doug mentioned that.

But it does put a little bit of pressure on that just because I think the PCP office is a bit smaller there's a lot more of them, but they are a bit smaller. So we're mindful of that I think we need more experience to be honest with you to really identify what the right average volume is there and so I'm not going to comment on that just yet but.

<unk> seen and what could we expect in terms of commercial or operational changes over the coming years.

Well look I am excited to have the leadership team finally set.

We have with us around the table, who were were go into battle with for the future now and excited to be able to really get after it from that perspective, we've added a lot of global capabilities and incredibly strong commercial.

We're very excited by the momentum that's being built in that primary care space.

Great and.

In terms of Clinton, you've been bringing on a lot of new experienced leadership, obviously with great backgrounds.

Experience set from.

From different perspectives, one the one that has experience with med device.

Im kind of curious as you look at the organization and we look forward a couple of years, what kind of commercial changes or do you think that either needs to make you better grower for several years. This wasn't really a story thats kind of quote unquote needed fixing, but perhaps you have identified the things that could take you to the next level.

Sort of medical background, but also blending the lines with consumerism, which is where I think the future of this sort of technology will go and continue to blur those lines and so that excites me.

When you look about it I think theres a couple of different things from a commercial perspective.

We have to continue to evolve the model here in the U S that allows us to continue to pursue the primary care physician space I think thats done in multiple ways not just simply putting feet on the street I think the marketing aspect becomes a much bigger part of who we are and how we move forward and how we create awareness, but not only awareness.

<unk> brought in some management to do that what what are some of those opportunities.

<unk> seen and what could we expect in terms of commercial or operational changes over the coming years.

Well look I am excited to have the leadership team finally set.

We have with us around the table, who we are.

Education that articulates why we're unique and different.

Go into battle with for the future now and excited to be able to really get after it from that perspective, we've added a lot of global capabilities and incredibly strong commercial.

Versus any other monitoring capability that's out there because we truly are differentiated with our AI capability the algorithmic.

Efforts that have been put forward and the data that stands behind our products. So we've got to continue to elevate.

<unk> said from different perspectives, one the one that has experience with med device.

Our ability in that sense, but I think you will see us evolve in the U S marketplace, and then internationally every market's a little bit unique and different.

Sort of medical background, but also blending the lines with consumerism, which is where I think the future of this sort of technology will go and continue to blur those lines and so that excites me.

And I think that how we approach that having skills around our leadership table, who have been there before have seen what success looks like there is only going to position us for greater success and faster success. So I'm excited to see what that looks like as we move into the future, but we're in the middle of understanding exactly what that design looks like.

When you look about it I think theres a couple of different things from a commercial perspective.

As we go so we'll talk more about it into the future, but we now have the capability in the organization that I believe that meets up very well with the opportunity that sits in front of us.

Great. Thank you.

Education that articulates why we're unique and different just versus any other monitoring capability. That's out there because we truly are differentiated with our AI capability the algorithmic.

Our next question comes from David <unk> from <unk> Securities. Your line is now open.

Hey, guys. Thanks for taking my question and congrats on the strong quarter.

That have been put forward and the data that stands behind our products. So we've got to continue to elevate.

First just on <unk>.

Our ability in that sense, but I think you will see us evolve in the U S marketplace and then internationally every market is a little bit unique and different.

I guess the first part of the question is is that product at all or has that product at all been having a positive impact as it relates to opening the new accounts that you saw in the quarter.

I think in the past.

Discuss how the product is 14 day, where device, whereas the majority of the market and I believe reimbursement kind of covers this longer 30 day.

We're monitoring devices. So can you just talk about what the maybe future iterations of that device would be and how that would open up the market to you guys.

As we go so we'll talk more about it into the future, but we now have a capability in the organization that I believe but meets up very well with the opportunity that sits in front of us.

Sure.

We hold I would call it mid <unk> in terms of sort of market share of the overall ECM market.

Great. Thank you.

Yes, we're probably around 7% when we think about the the MCT space of where <unk> really can play and it just speaks to the opportunity that sits there from a product perspective in.

Our next question comes from David <unk> from <unk> Securities. Your line is now open.

Hey, guys. Thanks for taking my question and congrats on the strong quarter.

In terms of new account openings.

First just on <unk> I guess at first.

It has the opportunity to open some new accounts. The vast majority are being opened with XT and 80 happens to get pulled into it sort of after the fact, so it's not that the lead into many of these new account openings.

The question is is that product at all or has that product at all been having a positive impact as it relates to opening the new accounts that you saw in the quarter and I think in the past you've discussed how the product is 14 day, where device, whereas the majority of the market and I believe reimbursement.

I believe there is that opportunity into the future, but today XD is really continuing to be that door opener.

In terms of the the product configuration itself 14 days versus 30 days, we understand there is a difference there and the reality is in 30 days of monitoring.

Comfort is longer 30 day, we're monitoring devices. So can you just talk about what the maybe future iterations of that device would be and how that would open up the market to you guys.

Get on average about 12 really good days of.

Sure.

Feedback and data that you are paying attention to and monitoring with our 14 day product youre going to get 14. Good days of monitoring so I think theres, a little bit of education that needs to continue to be had.

Today, we hold I would call it mid <unk> in terms of.

Sort of market share of the overall HCM market.

Yes, we're probably around 7% when we think about the the MCT space of where <unk> really can play and it just speaks to the opportunity that sits there from a product perspective.

<unk> made on our part but I also think there are some things we can do from a product.

Features and functionality that can close that gap down in terms of 14% to 30 days and so.

In terms of new account openings.

It has the opportunity to open some new accounts. The vast majority are being opened with XT and it happens to get pulled into it sort of after the fact, so it's not that the lead into many of these new account openings.

We're focused on that effort I won't give around specifics of exactly how we're looking at that product offering, but we are looking to continue to evolve it and I think become even more effective player in that space.

I believe there is that opportunity into the future, but today <unk> is really continuing to be that door opener.

I don't see any reason why we can't hold the same sort of market share there that we hold in the <unk> business over time, as we continue to educate and close that gap on the product side.

In terms of the the product configuration itself 14 days versus 30 days, we understand there's a difference there and the reality is in 30 days of monitoring, though youre going to get on average about 12 really good days of.

Alright that makes sense I guess as it relates to the Zeus.

Does he have swatch.

Just wondering what the as far as on the products and developed kind of what the differentiation here is between some of the existing.

Our feedback and data that you are paying attention to and monitoring with our 14 day product youre going to get 14. Good days of monitoring so I think theres, a little bit of education that needs to continue to be had.

Watching out there that suggest that they could identify at least something similar to what is used once it's going up and just following up on Dan's comments around potentially maybe going after or looking at a little bit of the implantable loop recorder market with the watch I guess, how do you kind of move into that space or address that space and build or develop the market there.

Made on our part but I also think there are some things we can do from a product.

<unk> features and functionality that can close that gap down in terms of 14% to 30 days and so.

Okay.

So maybe I'll, let Dan and continue on with his response and I'm happy to take the latter part of how we enter into it but then you want to comment on that.

I don't see any reason why we can't hold the same sort of market share there that we hold in the <unk> business over time, as we continue to educate and close that gap on the product side.

Yes, I can start Quintin you should chime in.

So David I would say the distinction is pretty straightforward as we think about how <unk> compares to consumer wearables.

Alright that makes sense I guess as it relates to the Zeus.

Watching Zeus is designed as a prescription diagnostic grade wearable.

Does he have swatch.

Just wondering what the as far as on the products and developed kind of what the differentiation here is between some of the.

That integrates into clinical workflows and provides critical context that is important to patient care and specifically estimating afib burden, we know thats an important clinical metric.

<unk>.

Watch it out there that suggest that they could identify at least something similar to what did you just want to be going up and just following up on Dan's comments around potentially maybe going after or looking at a little bit of the implantable loop recorder market with the watch I guess, how do you kind of move into that space or adjust that space and build or develop the market there.

Physicians in.

And Thats one.

No.

As trusted.

We deliver our zeos surface for <unk> and <unk>.

That's exactly what we're looking to deliver.

With <unk> as well.

<unk> purpose built to kind of deliver that same level of service.

Okay.

So maybe I'll, let Dan and continue on with his response and I'm happy to take the latter part of how we enter into it but then you want to comment on that.

<unk>.

And part of that is generating the clinical evidence to back that up and that is part of our.

Yes, I can start quoting you should chime in.

Initial efforts as we enter a market evaluation efforts next year.

David I would say the distinction is pretty straightforward as we think about how <unk> compares to consumer wearables.

Glenn do you want to you want to continue on from there.

Watching Zeus is designed as a prescription diagnostic grade wearable.

Yes.

I think you hit the nail on the head though.

Very different offering than what folks come to.

That integrates into clinical workflows and provides critical context that is important to patient care and specifically estimating afib burden, we know thats an important clinical metric.

Love about algorithm and zero as the entire offering including the service component that.

Ours, you'll watch will have with it and continue to differentiate and set it apart in terms of how we enter this space.

For physicians in and Thats one.

In many respects we're already in many of these accounts, where IL hours are being implemented or or implanted.

Yes.

As trusted.

We deliver our <unk> service for <unk> and <unk>.

That's exactly what we're looking to deliver.

And so we have a contact points into the centers we.

With <unk> as well so it's purpose built to.

We just haven't had the right solution necessarily or an alternative solution may be to the ISR. The interesting thing in that space as our market data would tell us that only 30% of all patients recommended for an IRR will actually have the procedure done.

Deliver that same level of service.

<unk> and part of that is generating the clinical evidence to back that up and that is part of our.

Just not wanting to have something implanted in the body.

Initial efforts as we enter market evaluation efforts next year.

We have a tremendous opportunity to offer up an alternative solution to.

Glenn you want to you want to continue on from there.

Continuous monitoring over a longer period of time.

Yes.

I think you hit the nail on the head though.

Could even be over years.

Very different offering right.

<unk> come to love about <unk> is the entire offering including the service component that.

Sure.

The watch over that period of time, the compare to sort of the timeframe that an IRR might be implanted for so I like the way we're positioned there. We can continue to do work around how we take it to market, but I think we continue to find different ways different opportunities for this product to potentially play in the marketplace that excites me.

Ours, you'll watch will have with it and continue to differentiate and set it apart in terms of how we enter this space.

In many respects we're already in many of these accounts, where <unk> are being implemented or or implanted.

Very helpful. Thank you.

And so we have a contact points into the centers.

Our next question comes from Marie Thibault from <unk>. Your line is now open.

Good afternoon. Thanks for taking the question I wanted to ask the first one here and try to level set on what an average sort of reimbursement rate would be.

Just not wanting to have something implanted in the body.

When you consider the guidance you've given what you said immaterial impact on.

We have a tremendous opportunity to offer up an alternative solution to.

Calendar year 'twenty three versus 22.

Continuous monitoring over a longer period of time.

Given there's been so many moving parts I wanted to try to understand is that average maybe somewhere around the 250 to $2 75 range. What are you seeing as sort of the average when you think about the Medicare reimbursement rate.

Could even be over years.

Sure.

And the watch over that period of time to compare to sort of the timeframe that an IRR might be implanted for so I like the way we're positioned there. We can continue to do work around how we take it to market, but I think we continue to find different ways different opportunities for this product.

Yes, I think it's a good question.

I think from a couple of different perspectives. The $2 50 is about the right way to think about it that's how we've thought about it when we look out across the analysts' models on how each of you have modeled it I think on average the streets sitting somewhere around $2 50, as well. So I think that's the right way to think about it in average rate in 2023.

To potentially play in the marketplace that excites me.

Very helpful. Thank you.

Our next question comes from Marie Thibault from <unk>. Your line is now open.

Good afternoon, thanks for taking the questions I wanted to ask the first one here and try to level set on what an average sort of reimbursement rate would be.

Which is pretty comparable to where the average rate for 2022. So that's how we're thinking about it.

Okay. That's really helpful. I appreciate that.

And then wanted to go back to your question Youre comments on primary care physicians that is a really interesting potential growth opportunity I'm wondering if you have carved out a portion of your sales force to focus on that market is there sort of a differentiation on how you approach those doctors or or sort of educate them on how to use the device.

When you consider the guidance, we've given which you said immaterial impact on.

Calendar year 'twenty three versus 22.

Given there's been so many moving parts I wanted to try to understand is that average maybe somewhere around the 250 to 275 range. What are you seeing as sort of the average when you think about the Medicare reimbursement rate.

Any color there would be helpful. Thank you.

Yes, I think it's a good question.

I think that's that's where we have the opportunity to really elevate up our ability our capability.

I think from a couple of different perspectives. The $2 50 is about the right way to think about it that's how we've thought about it when we look out across the analyst models on how each of you have modeled it I think on average the streets sitting somewhere around $2 50 as well.

To target those sort of opportunities with the right tools and education.

For the time being.

Most of the progress that's been made there have been or.

I think that's the right way to think about at an average rate in 2023, which is pretty comparable to where the average rate for 2022. So that's how we're thinking about it.

Our top reps seeing that as an opportunity and going in and beginning to educate the accounts on their own.

We've tried to create that opportunity in the field force by adding what we call key account managers or customer experienced managers that may be will step in and maintain the existing accounts that that we have working with us who have been long term customers and free up the territory manager to go out there and hunt for new business, what we find is.

Okay. That's really helpful. I appreciate that and then I wanted to go back to your question. Your comments on primary care physicians, that's a really interesting potential growth opportunity I wonder.

I'm wondering if you have carved out a portion of your sales force to focus on that market is there sort of a differentiation on how you approach those doctors are sort of.

They are seeing the opportunity in the primary care space and Theyre naturally sort of hunting there on their own.

Educate them on how to use the device any color there would be helpful. Thank you.

That's great to see in terms of the results that we're putting up in terms of the new account openings, but it's also being done without what I think are the most effective and most efficient tools that we can create and I think thats a big part of <unk>.

I think that's that's where we have the opportunity to really elevate up our ability our capability.

To target those sort of opportunities with the right tools and education.

Bringing in some incremental focus on the marketing side on the educational side building out capabilities investing into our team that are here.

For the time being.

Most of the progress that's been made there have been or.

You can see us really make some some headway there. So we're excited about it but we're in the early stages and I would tell you theres a lot of progress to be made there.

Our top reps seeing that as an opportunity and going in and beginning to educate the accounts on their own.

And we've tried to create that opportunity in the field force by adding what we call key account managers or customer experienced managers that may be will step in and maintain the existing accounts that that we have working with us who have been long term customers and free up the territory manager to go out there and hunt for new business, what we find.

Very interesting thank you.

Our next question comes from Bill <unk> from Canaccord. Your line is now open.

Great. Thanks, good evening.

Couple of financial questions, if I may.

Just.

On the guidance, Doug as we think about the <unk>.

As they are seeing the opportunity in the primary care space and Theyre naturally sort of hunting there on their own.

Incremental 7 million $3 5 million in the third quarter from the Ngls was there any contribution from Ngls in the second quarter or is that up and above what we saw from Ngls in the second quarter.

Bringing in some incremental focus on the marketing side on the educational side building out capabilities investing into our team that are here.

Yes Bill.

We certainly ran some tests claims through.

The second quarter.

You can see us really make some some headway there. So we're excited about it but we're in the early stages and I would tell you theres a lot of progress to be made there.

We as we've talked about before we have an existing staff.

How does the mgs out of our Chicago, North Chicago Office, and so we have we've now kind of wrapped up.

Very interesting thank you.

Our next question comes from Bill <unk> from Canaccord. Your line is now open.

The people the existing Chicago staff into this.

Kind of mid July ish.

And so so so think of the 7 million $3 5 million of quarters.

Great. Thanks, good evening.

Yes couple of financial questions, if I may.

Incremental benefit youre going to see going forward for.

Just.

On the guidance, Doug as we think about the incremental 7 million $3 5 million in the third quarter from the Ngls was there any contribution from Ngls in the second quarter or is that up and above what we saw from Ngls in the second quarter.

For the rest of this year okay.

Thats helpful. And then just I was wondering if you could provide us any directional guidance on the levels of growth or any other metrics regarding your payer mix, including the contracted third party contracted CMS and health care institutions.

Yes.

Yes Bill.

To jump on that.

We certainly ran some tests claims through.

Yes.

Yes, so bell on that one.

In the second quarter.

We as we've talked about before we have an existing staff.

Yes.

When youre looking at it on a year on year basis Youre seeing.

About 10% more of our mix going to CMS and that's a combination of two factors one is the pricing that.

Out of the Mgs out of our Chicago, North Chicago Office.

And so we have we've now kind of wrapped up.

We're seeing better pricing than we were seeing last year, but the second is that.

The existing Chicago staff into this.

I kind of mid July ish.

There were some shifts in pricing.

And so I still think of the 7 million $3 5 million a quarter is the incremental benefit youre going to see going forward.

<unk>.

And our mix is continuing to rich and incremental way towards CLA as well.

For the rest of this year okay. Thanks.

Not we've been working on the non contracted some non contract has not been.

Thank you that's helpful. And then just I was wondering if you could provide us any directional guidance on the levels of growth or any other metrics regarding your payor mix <unk>.

We're not seeing any real growth in the non contracted segments.

<unk> the contracted third party nine contracted CMS and health care institutions.

Okay and then.

If I could ask just one last follow up question, it's kind of a clarification.

Yes feel free jump on that.

You talked about the PCP I don't know if you talked a lot about the post Havre and if you have specialized.

Yes, and yes, so bell on that one.

Yes.

The reps are doing the same thing, where they're kind of focusing on those accounts going in any clarity on that would be greatly appreciate it. Thanks. So much.

When youre looking at it on a year on year basis, Youre seeing about 10% more of our mix going to CMS and that's a combination of two factors one is the pricing.

Yes on that last one that continues to be an opportunity for us. We're in a very very small amount of tab centers today.

We're seeing better pricing than we were seeing last year, but the <unk>.

Is that.

Today.

There was some shifts in pricing.

I think in terms of priority and focus is certainly something that's on our list and we see it as an opportunity primary care has been higher on that to date.

And our mix is continuing to rich and incremental way towards CLA as well.

But not a lot of contribution coming out of the area today.

Not.

We've been working on the non contracted some non contract has not been.

Yes.

Thanks for taking my questions.

We're not seeing any real growth in the non contracted segment.

Mhm.

Our next question comes from Suraj Kalia from <unk>. Your line is now open.

Okay and then.

If I could ask just one last follow up question.

Okay.

Good afternoon, everyone.

Kind of a clarification.

Can you hear me alright.

You talked about the PCP I don't know if you talked a lot about the post Havre and if you have specialized.

We got your disruption perfect Hey, so Quentin. Thanks, I know you guys provided a lot of information on the call Spitz.

The reps are doing the same thing, where they're kind of focusing on those accounts going in any clarity on that would be greatly appreciate it. Thanks. So much.

Specifically on optimizing TFS in 'twenty, three and beyond coincide.

Yes on that last one that continues to be an opportunity for us we're in a very very small amount of travel centers.

Would that be different technicians reviews at the three locations or does business format that you anticipate moving forward.

Hey.

I think in terms of priority and focus.

So I think that's the hardest thing.

It's something that's on our list and we see it as an opportunity primary care has been higher on that to date.

Yeah.

Yes.

Sorry go ahead, the reason I forgive me the reason I ask this.

But.

Not a lot of contribution coming out of the area today.

Just figuring out some cost levels of review.

Thanks for taking my questions.

How it impacts the P&L.

Mhm.

Our next question comes from Suraj Kalia from <unk>. Your line is now open.

Yes, I think thats exactly sort of the the opportunity that we have to evaluate and take a look at that now.

Okay.

Clinton.

Depending on the complexity as reported or sorry, the data that comes off the device it off with a patient.

Good afternoon, everyone.

Can you hear me alright.

We got your disruption perfect Hey, so Quentin. Thanks, I know you guys provided a lot of information on the call.

We will identify or dictates or level of review is required.

Whether it's a more simple sort of a repeat of our more complex or redo and we're going to have the opportunity.

Specifically on optimizing TFS in 'twenty, three and beyond Quintin.

How do we maximize those speak to the future obviously, a different cost of doing business within each one of those.

Will there be different technicians reviews at the three locations or does business format.

Geographic perspective, we've got to contemplate that.

Youll anticipate moving forward.

With different service level that we can offer to our patients.

So I think that's the hardest thing.

Yeah.

Timeliness of turnaround times, when you can start to consider it.

Yes.

Sorry go ahead, the reason I forgive me the reason I ask this.

Cost of freight cost.

Just figuring out some cost levels of review.

Things with that difference it takes centers on distributions as opposed to we're offsetting that.

How it impacts the P&L.

Got it.

That business model.

Yes, I think thats exactly sort of the the opportunity that we have to evaluate and take a look at that now.

Historically, we would have a real opportunity.

Most.

Operational perspective.

Depending on the complexity as reported or sorry, the data that comes off the device it off with a patient will identify or dictates or what level of review is required.

Max.

On a go forward basis, having a final rule in place I think it makes it much easier for us to look at it through that lens and make the right decision for the company.

Whether it's a more simple sort of a repeat of our more complex.

Quick additional question I will hop back in the queue and Zeus.

Plus or redo.

And so we're going to have the opportunity.

So forgive me maybe I missed this how do you anticipate billing for Zeus.

We maximize those efficiencies through the future obviously at a different cost of doing business within each one of those.

I think that that would be one part and Youll obviously are.

Geographic perspective, we've got to contemplate that.

Looking at different strategies for market penetration.

Service level that we can offer to our patients and triggered just timeliness of turnaround times. When you can start to consider a cost and freight costs.

I heard your commentary about using.

Tapping into <unk> and <unk>, so on and so forth and I'm curious.

Things with different it takes centers or distribution centers. Those are all things that we said at ICR.

Because INR.

Primary uses as we understand.

Whether that's unexplained syncope open votes of syncope.

Business models.

It's a.

Normally we would have the opportunity to look at it most efficient.

A bunch of randomized trials that have been done the space I'd be curious.

Operational perspective.

That is a route you're anticipating going.

Max but on a go forward basis, having a final rule in place I think it makes it much easier for us to look at it through that lens and make the right decision for the company.

E pouring of the resources are seeking any additional cover on billing <unk> clinical trials would be greatly appreciate it gentlemen, thank you for taking my question.

Quick additional question I will hop back in the queue and Zeus.

Yes, thanks for the questions for us.

I think you hit the nail on the head with the reimbursement aspect. That's one of the pathways. We got to continue to work through and it's part of why we talk about a market evaluation out in 2023 versus a whole lot sooner. We know that the pathway that we've got to have discussions with payers around and really determine how this fits and how how the reimbursement.

Forgive me, maybe I missed this how do you anticipate billing for Zeus.

I think that that would be one part and Youll obviously are.

Looking at different strategies for market penetration.

I heard your commentary about using.

Tapping into <unk> and <unk>, so on and so forth and I'm curious.

Inscape will work so well.

Because INR.

We're evaluating that I think it looks different depending on the utilization of how the device is used.

Primary uses as we understand.

Whether that's unexplained syncope open votes of syncope.

If it were part of the know your rhythm program that might be a little bit different than traditional pathway outside of that so we've got some learning to do there, but we do think there's a place for this in the marketplace with respect to <unk> I think that's just an identification of another opportunity where something like this device could bit it's early stages.

It's a.

A bunch of randomized trials that have been done the space I'd be curious.

That is a route you're anticipating going.

E pouring of the resources for our city any additional color on billing <unk> clinical trials would be greatly appreciate it gentlemen, thank you for taking my question.

We've got to continue to evaluate.

Sort of how to compete how to win in that space and what that looks like so it's early stages. I think we're just sharing some ideas of what gets us excited with that sort of diagnostic capability and that wearable factor and that doesn't exist today in the marketplace. So work to be done, but the opportunities we see it.

Yes, thanks for the questions for us.

Yeah.

Thank you.

Our final question comes from Michael <unk> from Wolfe Research. Your line is now open.

Inscape will work so well.

We're evaluating that I think it looks different depending on the utilization of how the device is used.

Hey, good evening, Thank you for taking the questions.

I just want to make sure I understand the bridge in the current.

Calendar year 'twenty two guidance.

Lot of moving parts on pricing so for the full year revenue growth of call it 30%.

The question really is what's the contribution from price and volume.

We got to continue to evaluate.

In that outlook and then in the context of initially I think no VITAS.

Sort of how to compete how to win in that space and what that looks like so it's early stages. I think we're just sharing some ideas of what gets us excited with that sort of diagnostic capability and that wearable factor that doesn't exist today in the marketplace. So work to be done, but the opportunity as we see it.

Move to $2 <unk> was a 10% lift.

<unk> is now coming into the mix that seems to be another two or three or four points.

So it gets me to kind of 12 or 14 points of price and then MCT is experiencing a 20 I think to 30% lift this year in payment rates.

Yeah.

Thank you.

Our final question comes from Michael <unk> from Wolfe Research. Your line is now open.

That's another two or three points, so I'm kind of like mid teens total mid teens, plus total pricing benefit.

Hey, good evening, Thank you for taking the questions.

For the year from all of this and I just wanted to get the updated view on how you see it and what is what.

I just want to make sure I understand the bridge in the current.

Calendar year 'twenty two guidance.

Lot of moving parts on pricing so for the full year revenue growth of call it 30%.

What is embedded.

In the guidance at this point for full year volume growth.

Sure Mike I can speak to that we came into the year continue to to reiterate sort of our views around our volume expectations being around that 20% growth rate from.

The question really is what's the contribution from price and volume.

In that outlook and then in the context of initially I think no VITAS.

From a volume perspective, Youre right when you look at those various price.

Move to $2 <unk> was a 10% lift.

<unk> is now coming into the mix that seems to be another two or three or four points.

Affects youre getting into call it the mid teens lower mid teens, but you're not meaningfully off but then we contemplate sort of that low to mid single digit commercial pricing pressure that we commented on and I think that continues to be a very accurate way to look at it.

So it gets me to kind of 12 or 14 points of price and then MCT is experiencing a 20 I think to 30% lift this year in payment rates.

That's another two or three points, so I'm kind of like mid teens total mid teens, plus total pricing benefit.

And model, it which gets you down to call it roughly 10% contribution from price on that 20% volume. That's your 30% growth rate. So that's how we think about it continue to to look at it at the midpoint of the year and we can update that in the future if we need to.

For the year from all of this and I just wanted to get the updated view on how you see it and what is what.

What is embedded.

In the guidance at this point for full year volume growth.

Right that good segue to my follow up I'm curious for the updated thinking on.

Sure Mike I can speak to that we came into the year continue to to reiterate sort of our views around our volume expectations being around that 20% growth rate from.

In 2023 proposed rule moves to final.

You have a national rate with Medicare.

From a volume perspective, Youre right when you look at those various price.

Yes.

I think the national average rates in the $2 15 zone. So what's the latest fresh thinking on if this moves forward at current proposed rates is there risk too.

Your rates with Medicare advantage plans private payers or.

Is there not any any fresh thoughts on on that would be welcome. Thank you for taking the questions.

Yes, we've spent a lot of time looking at this across the payer landscape that we have an understanding.

And model, it which gets you down to call it roughly 10% contribution from price on about 20% volume. That's your 30% growth rate. So that's how we think about it continue to to look at it.

What positions, we have with the payers.

The discussions, we're having sort of the tone of those discussions.

I continue to believe the right way to think about it considering just kind of where things are at in the current price points. We have is that.

The midpoint of the year and we can update that in the future if we need to.

I appreciate that good segue to my follow up I'm curious for the updated thinking on.

Low to mid single digit pricing pressure from a commercial payer perspective feels like the right right place to be.

In 2023 proposed rule moves to final.

If we see something that changes or causes us to think differently about it will we will be happy to talk about and address it but I continue to believe that's the right way to think about it into the future and certainly how we're thinking about our models right now.

You have a national rate with Medicare.

Yes.

I think the national average rates in the $2 15 zone. So what's the latest fresh thinking on if this moves forward at current proposed rates is there risk too.

Your rates with Medicare advantage plans private payers or.

Okay.

Thank you that does conclude today's Q&A session I will now refer you back to the management team for closing remarks.

Is there not any any fresh thoughts on that would be welcome. Thank you for taking the questions.

Okay.

Well look thanks for thanks for joining us today.

Yes, we've spent a lot of time looking at this across the payer landscape that we have an understanding.

I want to make sure that I think the opportunity just to thank our entire IRA them team for the terrific progress that's been made to date and the momentum that's being built in the business. Overall, we continue to be excited by the future that sits in front of us and look forward to executing against the goals and the priorities that we've put forward.

What positions, we have with the payers.

The discussions, we're having sort of the tone of those discussions.

I continue to believe the right way to think about it considering just kind of where things are at in the current price points. We have is that.

Low to mid single digit pricing pressure from a commercial payer perspective feels like the right right place to be.

I look forward to the opportunity to see many of you guys here in September at our analyst day, where we will share much more around many of the exciting things happening here at the company with that we will talk to you in just about a month and a half take care.

That concludes today's <unk> Technologies, Inc. Q2, 2022 earnings Conference call you May now disconnect your lines.

Okay.

Thank you that does conclude today's Q&A session I will now refer you back to the management team for closing remarks.

Okay.

Well look thanks for thanks for joining us today.

That concludes today's <unk> Technologies, Inc. Q2, 2022 earnings Conference call you May now disconnect your lines.

Q2 2022 iRhythm Technologies Inc Earnings Call

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