iRhythm: Continued Pressures On Revenue Model

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About: iRhythm Technologies, Inc. (IRTC)
by: Kerrisdale Capital Management
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Kerrisdale Capital Management
Hedge fund manager, long/short equity, value, special situations
Summary

CMS provides granular detail on the building blocks for reimbursement calculations. The details provide investors with a roadmap to evaluate the ultimate reimbursement rate for the Zio procedures.

An analysis of iRhythm’s allowance for doubtful accounts implies that the company may be stretching to exceed revenue expectations and is potentially managing bad debt expense to show operating leverage.

Medicare’s change in reimbursement guidelines for implantable loop recorders is likely to hurt iRhythm’s Zio growth as early as Q1 of 2019.

We expect BioTelemetry’s application for a Category I CPT code for extended Holter monitoring to be submitted for the September 2019 CPT Editorial Panel meeting.

I. CMS provides plenty of detail with which to evaluate the eventual Zio reimbursement rate

Our initial report on iRhythm (IRTC) engendered much fruitful discussion with many analysts on both the sell side