IRhythm Technologies Inc.

10/30/2025 | Press release | Distributed by Public on 10/30/2025 15:22

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in Item 1 of Part I of this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Quarterly Report on Form 10-Q entitled "Risk Factors."
We are a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology.
Each Zio System combines an FDA-cleared, CE-marked and Japan PMDA-approved wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data with a proprietary, FDA-cleared, CE-marked, and Japan PMDA-approved cloud-based data analytic software to help physicians monitor patients and diagnose arrhythmias. Since receiving FDA clearance, we have provided the iRhythm Services to over eight million patients and have collected over 2 billion hours of curated heartbeat data.
Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of our technology and provided ambulatory cardiac monitoring services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our iRhythm Services using our Zio Systems.
We receive revenue for the iRhythm Services primarily from third-party payors, which include contracted third-party payors and CMS. The remainder of our revenue comes from healthcare institutions, which are typically hospitals or private physician practices, who purchase the iRhythm Services from us directly. We rely on third-party billing partners to submit patient claims and collect from commercial payors, certain government agencies, and patients.
The following are iRhythm Services shown as a percentage of revenue:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Contracted third-party payors 51% 53% 52% 54%
Centers for Medicare and Medicaid 25% 24% 24% 24%
Healthcare institutions 17% 16% 17% 15%
Non-contracted third-party payors 7% 7% 7% 7%
Key Business Metric
Non-GAAP Financial Measure
Adjusted EBITDA is a key measure we use to assess our financial performance and it is also used for internal planning and forecasting purposes. We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operational performance across our historical financial periods. In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance.
We define Adjusted EBITDA for a particular period as net loss before income tax (benefit) 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 and restructuring charges, business transformation costs, certain intellectual property litigation expenses and settlements, 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. Beginning in the first quarter of 2025, we have excluded third-party attorneys' fees and expenses associated with patent litigation brought against the Company by Welch Allyn, Inc. and Bardy Diagnostics, Inc., subsidiaries of Baxter International, Inc. Factors we considered in arriving at this determination to exclude these patent litigation costs from our Adjusted EBITDA include frequency and complexity of the patent litigation, the counterparty involved, and the expected magnitude of patent litigation costs for this matter.
Adjusted EBITDA is a non-GAAP financial measure and is presented for supplemental informational purposes only and should not be considered as an alternative or substitute to financial information presented in accordance with GAAP. This measure has certain limitations in that it does not include the impact of certain expenses that are reflected in our unaudited condensed consolidated statements of operations that are necessary to run our business. We may identify additional charges and gains to exclude from Adjusted EBITDA that are significant in nature which may impact period to period comparability and do not represent the ongoing results of the business. Other companies, including other companies in our industry, may not use this measure or may calculate this measure differently than as presented in this Quarterly Report on Form 10-Q, limiting its usefulness as a comparative measure.
The following table presents a reconciliation of Net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Net loss1
$ (5,212) $ (46,182) $ (50,130) $ (111,956)
Interest expense 3,281 3,329 9,832 9,501
Interest income (5,944) (6,456) (16,184) (16,198)
Changes in fair value of strategic investments (894) (1,059) (3,889) (1,059)
Income tax provision
24 188 506 414
Depreciation and amortization 5,173 5,135 15,488 15,426
Stock-based compensation 21,006 17,158 67,177 59,970
Impairment charges - 641 2,479 641
Business transformation costs 913 7,360 2,341 8,656
Intellectual property litigation expenses 3,212 - 7,000 -
Loss on extinguishment of debt - - - 7,589
Adjusted EBITDA $ 21,559 $ (19,886) $ 34,620 $ (27,016)
1 Net loss for the three and nine months ended September 30, 2025, includes $0.3 million and $2.3 million of acquired in-process research and development expense, respectively. Net loss for the three and nine months ended September 30, 2024 includes $32.1 million of acquired in-process research and development expense.
Macroeconomic Factors
Our future results of operations and liquidity could be materially adversely affected by macroeconomic factors contributing to delays in payments of outstanding receivables, supply chain disruptions, including shortages, tariffs on imports, and inflationary pressure, uncertain or reduced demand, and the impact of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers.
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.
We have adapted our iRhythm Services to meet the immediate needs of physicians, customers, and patients and significantly increased the utilization of our home enrollment service, which allows patients to receive and wear the single-use Zio patch without going to a healthcare facility.
Our hybrid work arrangements and decision to pursue a sublease have previously resulted in an impairment of our right-of-use asset and related leasehold improvements and furniture and fixtures. As we continue to evaluate our global real estate footprint, we may incur additional impairment charges related to real property lease agreements.
Revenue, net
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.
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.
We have historically experienced reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this is the result of physicians and patients taking vacations and patients electing to delay our monitoring services during the summer months or holidays. Revenue may be impacted by the outcome of adjudications with contracted and non-contracted payors, as well as changes in CMS reimbursement rates that are updated annually.
Cost of Revenue
Cost of revenue includes direct labor, material costs, equipment and infrastructure expenses, amortization of internal-use software, allocated overhead, royalties, and shipping and handling. Direct labor includes payroll-related costs including stock-based compensation involved in manufacturing, clinical data curation, and customer service. Material costs include both the disposable materials costs of the Zio patches and amortization of the PCBAs. Each Zio XT patch and Zio Monitor patch includes a PCBA, and each Zio AT patch includes a PCBA and gateway board, the cost of which is amortized over the expected useful life of the board. We expect cost of revenue to increase in absolute dollars as our revenue increases due to increased direct labor, direct materials, and variable spending, as well as amortization of internal-use software, partially offset by economies of scale in relation to fixed costs such as overhead and facilities costs.
Our gross margin has been and will continue to be affected by a variety of factors, including increased contracting with third-party payors and institutional providers. We have in the past been able to increase our pricing as third-party payors become more familiar with the benefits of the iRhythm Services and move to contracted pricing arrangements. We expect increases to the cost of revenues due to increases to materials and electronics components pricing, labor rates, shipping rates, amortization of capitalized internal-use software, along with increases in the general level of inflation and tariffs on imports (which may complicate and increase costs associated with our supply chain). We expect to partially offset these increases by reduced costs from obtaining volume purchase discounts for our material costs, implementing scan-time algorithms and process improvements, automating manufacturing assembly and packaging, and through software-driven and other workflow enhancements to reduce labor costs. We experienced an improvement in our gross margin from 2023 to 2024, and continue to focus on improving annual gross margins in the future, while navigating through the macroeconomic and supply chain headwinds discussed above that we expect to face.
Research and Development Expenses
We expense research and development costs as they are incurred. Research and development expenses include payroll-related costs, including stock-based compensation, consulting services, clinical studies, laboratory supplies, milestone payments and allocated facility overhead costs. We expect our research and development costs to increase in absolute dollars as we hire additional personnel to develop new product and service offerings, product enhancements, and clinical evidence.
Acquired In-Process Research and Development Expenses
Our in-process research and development ("IPR&D") acquired in an asset acquisition for use in research and development activities with no alternative future use is expensed in the unaudited condensed consolidated statements of operations.
Selling, General and Administrative Expenses
Our sales and marketing expenses consist of payroll-related costs, including stock-based compensation, sales commissions, travel expenses, consulting, public relations costs, direct marketing, tradeshow and promotional expenses, and allocated facility overhead costs.
Our general and administrative expenses consist primarily of payroll-related costs for executive, finance, legal and administrative personnel, including stock-based compensation. Other significant expenses include professional fees for legal and accounting services, consulting fees, recruiting fees, bad debt expense, third-party patient claims processing fees, business transformation, and travel expenses.
Impairment Charges
Impairment charges consist of amounts recorded to write down the carrying value of long-lived assets to fair value.
Interest Income
Interest income consists of interest income received on our cash and cash equivalents and marketable securities.
Interest Expense
Interest expense is attributable to borrowings under our loan agreements and 2029 Notes. 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 further information on our debt.
Loss on Extinguishment of Debt
Loss on extinguishment of debt reflects the losses incurred in the early repayment of debt. 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 further information on our loss on extinguishment of debt.
Other Income (Expense), Net
Other income (expense), 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.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2025, and 2024
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 $ Change % Change 2025 2024 $ Change % Change
(in thousands, except percentages) *
Revenue, net $ 192,884 $ 147,538 $ 45,346 31 % $ 538,248 $ 427,514 $ 110,734 26 %
Cost of revenue 55,762 46,062 9,700 21 % 159,053 135,051 24,002 18 %
Gross profit 137,122 101,476 35,646 35 % 379,195 292,463 86,732 30 %
Operating expenses:
Research and development 21,033 15,694 5,339 34 % 63,564 52,378 11,186 21 %
Acquired in-process research and development 302 32,069 (31,767) (99) % 2,296 32,069 (29,773) (93) %
Selling, general and administrative 124,216 103,375 20,841 20 % 370,549 318,797 51,752 16 %
Impairment charges
- 641 (641) N/M 2,479 641 1,838 287 %
Total operating expenses 145,551 151,779 (6,228) (4) % 438,888 403,885 35,003 9 %
Loss from operations (8,429) (50,303) 41,874 (83) % (59,693) (111,422) 51,729 (46) %
Interest and other income (expense), net:
Interest income 5,944 6,456 (512) (8) % 16,184 16,198 (14) - %
Interest expense (3,281) (3,329) 48 (1) % (9,832) (9,501) (331) 3 %
Loss on extinguishment of debt - - - - % - (7,589) 7,589 N/M
Other income, net
578 1,182 (604) (51) % 3,717 772 2,945 381 %
Total interest and other income (expense), net 3,241 4,309 (1,068) (25) % 10,069 (120) 10,189 (8,491) %
Loss before income taxes (5,188) (45,994) 40,806 (89) % (49,624) (111,542) 61,918 (56) %
Income tax provision
24 188 (164) (87) % 506 414 92 22 %
Net loss $ (5,212) $ (46,182) $ 40,970 (89) % $ (50,130) $ (111,956) $ 61,826 (55) %
N/M - Not meaningful
* Certain numbers expressed may not sum due to rounding.
Revenue, net
Revenue, net increased by $45.3 million, or 31%, to $192.9 million during the three months ended September 30, 2025, as compared to $147.5 million during the three months ended September 30, 2024. Revenue, net increased by $110.7 million, or 26%, to $538.2 million during the nine months ended September 30, 2025, as compared to $427.5 million during the nine months ended September 30, 2024. For the three and nine months ended September 30, 2025, 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, 2025, Zio AT as a proportion of our total revenue volume grew significantly compared to the prior year primarily as a result of new customer account growth. Additionally, we have experienced higher volumes from larger healthcare enterprise accounts which utilize both Zio Monitor and Zio AT. Offsetting the revenue growth from volume and product mix were higher contractual allowance reserves recognized during the three and nine months ended September 30, 2025, partially resulting from revisions of estimated reserves in 2025 from billing disruptions due to the Change Healthcare cybersecurity incident from the first quarter of 2024, as well as partially resulting from higher payer claims denials from revenue growth associated with our contracted third-party payors and CMS. Overall average selling price slightly increased during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Overall average selling price remained relatively stable during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.
Cost of Revenue
Cost of revenue increased by $9.7 million, or 21%, to $55.8 million during the three months ended September 30, 2025, as compared to $46.1 million during the three months ended September 30, 2024. Cost of revenue increased by $24.0 million or 18%, to $159.1 million during the nine months ended September 30, 2025, as compared to $135.1 million during the nine months ended September 30, 2024. For the three and nine months ended September 30, 2025, 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 scrap costs, headcount-related costs, and freight costs associated with the increase in volume of iRhythm Services.
Research and Development Expenses
Research and development expenses increased by $5.3 million, or 34%, to $21.0 million during the three months ended September 30, 2025, as compared to $15.7 million during the three months ended September 30, 2024. Research and development expenses increased by $11.2 million, or 21%, to $63.6 million during the nine months ended September 30, 2025, as compared to $52.4 million during the nine months ended September 30, 2024. The increase in research and development expenses for the three and nine months ended September 30, 2025 was primarily due to higher employee-related costs (including stock based compensation) which include supporting ongoing FDA remediation and sustaining activities, product development consulting costs, and costs to further development, enhancement, and functionality of our current and future product offerings.
Acquired In-Process Research and Development Expenses
Acquired IPR&D expenses decreased by $31.8 million, or 99%, to $0.3 million during the three months ended September 30, 2025, as compared to $32.1 million during the three months ended September 30, 2024. Acquired IPR&D expense decreased by $29.8 million or 93%, to $2.3 million during the nine months ended September 30, 2025, as compared to $32.1 million during the nine months ended September 30, 2024. The decrease in Acquired IPR&D expense for the three and nine months ended September 30, 2025 was primarily due to the Technology License Agreement (the "License Agreement") we entered into with BioIntelliSense, Inc. ("BioIS") during the third quarter of 2024. The $32.1 million charge for acquired IPR&D in the third quarter of 2024 consisted of an upfront license acquisition fee of $15.0 million along with contingent consideration related to regulatory milestones for the license acquisition fee of $17.1 million. As noted above, for the three and nine months ended September 30, 2025, we recognized acquired IPR&D expenses of $0.3 million and $2.3 million, respectively, as additional license acquisition fee contingent consideration 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.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $20.8 million, or 20%, to $124.2 million during the three months ended September 30, 2025, as compared to $103.4 million during the three months ended September 30, 2024. Selling, general and administrative expenses increased by $51.8 million, or 16%, to $370.5 million during the nine months ended September 30, 2025, as compared to $318.8 million during the nine months ended September 30, 2024. For the three and nine months ended September 30, 2025, the increase in selling, general, and administrative expenses were primarily attributable to increases in headcount-related costs (including stock-based compensation), legal and professional fees, provisions for credit losses, and claims processing fees. Additionally, during the three and nine months ended September 30, 2025 the Company incurred $3.2 million and $7.0 million, respectively, related to certain intellectual property litigation costs, which were not incurred during the comparable periods in 2024. Business transformation costs for the three and nine months ended September 30, 2025 were $0.9 million and $2.3 million, respectively, as compared to $7.4 million and $8.7 million for the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2024, business transformation costs primarily related to severance, professional fees, and third-party merger and acquisition fees.
Impairment Charges
During the three and nine months ended September 30, 2025, we recorded impairment charges of nil and $2.5 million, respectively, 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. During the three and nine months ended September 30, 2024, we recorded an impairment charge of $0.6 million related to internal-use software in development not expected to be completed. 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.
Interest Income
Interest income decreased by $0.5 million to $5.9 million during the three months ended September 30, 2025, as compared to $6.5 million during the three months ended September 30, 2024. Interest income remained relatively flat at $16.2 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease for the three months ended September 30, 2025 is primarily attributable to lower interest rates on invested balances, as compared to the same period in 2024. Interest income remained flat for the nine months ended September 30, 2025, as compared to the prior period, due to higher average invested balances in 2025 offset by lower interest rates on invested balances.
Interest Expense
Interest expense remained relatively flat during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Interest expense increased by $0.3 million to $9.8 million during the nine months ended September 30, 2025, as compared to $9.5 million during the nine months ended September 30, 2024. The increase in interest expense during the nine months ended September 30, 2025, is primarily attributable to the $661.3 million 2029 Notes borrowed in March 2024.
Other Income, Net
Other income, net decreased by $0.6 million to $0.6 million during the three months ended September 30, 2025, as compared to other income, net of $1.2 million during the three months ended September 30, 2024. Other income, net increased by $2.9 million to $3.7 million during the nine months ended September 30, 2025, as compared to $0.8 million during the nine months ended September 30, 2024. The decrease in other income, net for the three months ended September 30, 2025 was primarily attributable to changes in unrealized gains and losses over foreign currency. The increase in other income, net, for the nine months ended September 30, 2025 is primarily attributable to the increase in fair value of our strategic investments.
Loss on Extinguishment of Debt
Loss on extinguishment of debt was $7.6 million for the nine months ended September 30, 2024. The loss was related to the early extinguishment of both the SVB Loan Agreement and the Braidwell Term Loan Facility during the first quarter of 2024. 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 details of our financing activities.
Income Tax Provision
Income tax provision decreased by $0.2 million, or 87%, during the three months ended September 30, 2025, as compared to an income tax provision of $0.2 million during the three months ended September 30, 2024. Income tax provision increased by $0.1 million, or 22%, to $0.5 million during the nine months ended September 30, 2025 as compared to $0.4 million during the nine months ended September 30, 2024.
On July 4, 2025, the United States enacted tax reform legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The provisions of the OBBBA did not have a material impact on our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025. We do not expect the OBBBA to have a material impact on our effective tax rate. However, we do anticipate future cash tax benefits due to changes in the tax laws for depreciation and research and development expenses.
Liquidity and Capital Resources
Overview
As of September 30, 2025, we had cash and cash equivalents of $255.6 million, marketable securities of $309.6 million, and accounts receivable, net of $76.2 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. During the first quarter of 2024, we experienced a temporary delay in the billing of our contracted and non-contracted payer customers, performed by our third-party claims processing vendor. The delay was due to a cybersecurity incident experienced by Change Healthcare, a division of UnitedHealth Group, in which our third-party vendor did engage for services relating to billing and collections. While we substantially cleared the billing backlog as of the end of the first quarter of 2024, the delay in billing resulted in a temporary delay in our cash collections. We have received the majority of our cash collections from the delayed billings. During the first quarter of 2025, we experienced higher levels of contractual adjustments associated with our gross accounts receivable. Additionally, through our revenue cycle management transformation we have focused our efforts in part to resolve payor claims denials and unpaid portions of patient-responsible balances in a more timely basis.
We believe that our current cash, cash equivalents, and marketable securities balances, together with income to be derived from the sales of our iRhythm Services, will be sufficient to meet our liquidity requirements for at least the next 12 months.
Under the terms of the Development Collaboration Agreement dated September 3, 2019, as amended, between us and Verily Life Sciences LLC ("VLS") and Verily Ireland Limited ("VIL" and together with VLS, "Verily"), we agreed to make milestone payments to Verily up to an aggregate of $12.75 million upon achievement of various development and regulatory milestones. During the three months ended September 30, 2025, we formally terminated the Development Collaboration Agreement with Verily, including no further milestone payment obligations. Through termination of the Development Collaboration Agreement, we and Verily achieved milestones tied to payments totaling $11.0 million. In the second quarter of 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with the Company's clinically integrated ZEUS system. We continue to expand our product development program into other clinical-grade wearables to detect and characterize arrhythmias while integrating with clinicians' workflows.
On August 30, 2024, we entered into a Technology License Agreement (the "License Agreement") with BioIS, pursuant to which (i) we will receive a perpetual fully paid up license to certain of BioIS' intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services, and (ii) iRhythm and BioIS agreed to negotiate in good faith a supply agreement for pulse oximetry hardware.
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 the Company's regulatory milestone payment obligations. The Milestone Notes, plus accrued and unpaid interest, if any, shall 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, 2025, 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.
The following table summarizes our cash flows for the periods indicated (in thousands):
Nine Months Ended September 30,
2025 2024
Net cash provided by (used in) operating activities $ 54,651 $ (15,842)
Net cash used in investing activities
(228,258) (824)
Net cash provided by financing activities 9,648 508,394
Operating Activities
During the nine months ended September 30, 2025, cash provided by operating activities was $54.7 million, as compared to cash used in operating activities of $15.8 million during the nine months ended September 30, 2024. Cash provided by operating activities increased by $70.5 million primarily attributable to reductions in our net loss driven by our revenue growth, timing of cash collections associated with our accounts receivable, and timing of payments associated with our accounts payable and accrued liabilities. These increases in cash provided by operating activities were offset by increase to both inventory and prepaid expenses and other current assets, supporting growth in our operations and securing additional inventory stock.
Investing Activities
During the nine months ended September 30, 2025, cash used in investing activities was $228.3 million, an increase of $227.4 million, as compared to cash used in investing activities of $0.8 million during the nine months ended September 30, 2024. The increase in cash used in investing activities was primarily attributable to a net increase in the change in marketable securities of $287.6 million, primarily from an increase in the purchases of marketable securities of $338.1 million, as well as an increase in purchases of property and equipment of $7.5 million. This was offset by a decrease of $52.7 million in cash used for the purchases of strategic investments, as well as cash used of $15.0 million for purchases of acquired in-process research and development from BioIS, during the nine months ended September 30, 2024.
Financing Activities
During the nine months ended September 30, 2025, cash provided by financing activities was $9.6 million, a decrease of $498.7 million as compared to $508.4 million during the nine months ended September 30, 2024. The decrease was primarily attributed to $661.3 million in proceeds from the issuance of our 2029 Notes during the nine months ended September 30, 2024. The decrease was offset by $37.8 million associated with the payment of the SVB Loan Agreement and related termination costs, payment of $5.8 million associated with the Braidwell Term Loan Facility debt issuance and termination costs, payment of $17.4 million associated with debt issuance costs for our 2029 Notes, payment of $72.4 million for the purchase of the 2029 Capped Calls, and payment of $25.0 million for the repurchase of shares of our common stock. Additionally, proceeds from the issuance of common stock associated with employee equity incentive plans increased by $4.2 million.
1.50% Senior Convertible Notes due 2029
On March 7, 2024, we completed an offering of $661.3 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 1.50% and a maturity date of September 1, 2029 (the "2029 Notes"). The proceeds include the full exercise of the option granted by us to the initial purchasers of the 2029 Notes to purchase up to an additional $86.3 million aggregate principal amount of notes. Interest on the 2029 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024. The net proceeds from the offering, after deducting initial purchasers' discounts and estimated costs directly related to the offering, were $643.8 million. The initial conversion rate of the 2029 Notes is 6.7927 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $147.22 per share, subject to adjustments. The 2029 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion.
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.
No principal payments are due on the 2029 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2029 Notes includes customary terms and covenants, including certain events of default after which the 2029 Notes may be due and payable immediately.
In connection with the offering of the 2029 Notes, we entered into the privately negotiated capped call transactions (the "2029 Capped Calls") with certain financial institutions. The 2029 Capped Calls will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes, the number of shares of our common stock that will initially underlie the 2029 Notes. The 2029 Capped Calls are expected generally to reduce potential dilution to our common stock upon conversion of the 2029 Notes and/or offset any cash payments that we could be required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap. The 2029 Capped Calls have an initial cap price of $218.10 per share, subject to adjustments, which represents a premium of 100% over the closing price of our common stock of $109.05 per share on The Nasdaq Global Select Market on March 4, 2024.
Braidwell Debt
On January 3, 2024 (the "Closing Date"), we entered into the Credit, Security and Guaranty Agreement (the "Braidwell Credit Agreement") with Braidwell Transactions Holdings LLC - Series 5 ("Braidwell"), which provided for a senior secured term loan in an aggregate principal amount of up to $150.0 million (the "Braidwell Term Loan Facility"). An initial tranche of $75.0 million ("Initial Loan") was funded on the Closing Date. An additional tranche of $75.0 million was accessible through the one year anniversary of the Closing Date, so long as we satisfied certain customary conditions.
Our net proceeds from the Initial Loan were approximately $35.0 million, after deducting costs, fees and expenses, and repayment of our existing term loan from Silicon Valley Bank, as discussed below.
On March 7, 2024, in conjunction with the issuance of the 2029 Notes, we used approximately $80.2 million of the net proceeds for the repayment in full of the $75.0 million outstanding Initial Loan and $5.2 million for interest, fees and expenses associated with terminating the Braidwell Credit Agreement.
SVB Term Loan
On January 3, 2024, in connection with the entry into the Braidwell Credit Agreement, we used approximately $37.8 million of the net proceeds for the repayment in full of the $35.0 million outstanding principal balance as well as interest, fees and expenses associated with terminating the agreement. Upon termination of the SVB Loan Agreement, SVB's security interest in our assets and property was released. We continue to hold $8.4 million in letters of credit with SVB, securing them with cash on deposit.
Contractual Obligations
Our contractual obligations as of December 31, 2024, are presented in our Annual Report on Form 10-K filed with the SEC on February 20, 2025. There were no significant changes to our lease obligations during the nine months ended September 30, 2025. As of September 30, 2025, we had approximately $77.1 million of open purchase order commitments in the ordinary course of business, the majority of which are due within one 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, 2025.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. 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 1, 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There were no material changes to our critical accounting estimates during the nine months ended September 30, 2025.
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