iRhythm Raises 2026 Outlook as Q3 Revenue Rises 14.9%

iRhythm Holdings (NASDAQ: IRTC) increased its 2026 revenue and adjusted EBITDA margin guidance after third-quarter revenue rose 14.9% from a year earlier and profitability improved on an adjusted basis. The updated forecast includes VitalConnect from the acquisition’s Oct. 5 closing date, adding a broader range of cardiac and vital-sign monitoring capabilities to iRhythm’s existing platform.

The company now expects 2026 net revenue of $890 million to $895 million, compared with its prior range of $880 million to $890 million. It forecasts an adjusted EBITDA margin of 15.5% to 16%, up from the previous 13% to 14% range. iRhythm did not provide a GAAP reconciliation for its forward-looking adjusted EBITDA target because certain components cannot be reasonably predicted.

Revenue Growth and Wider GAAP Loss

iRhythm reported third-quarter revenue of $221.6 million, up from $192.9 million in the year-earlier period. The company attributed the performance to continued commercial adoption and market expansion. Gross margin increased by 310 basis points to 74.2%.

Adjusted EBITDA reached $51.2 million, compared with $21.6 million a year earlier, while adjusted EBITDA margin expanded by 1,190 basis points to 23.1%. Adjusted operating expenses declined 2% to $138.6 million.

On a GAAP basis, however, iRhythm’s quarterly net loss widened to $29.9 million, or $0.90 per diluted share, from $5.2 million, or $0.16 per share, a year earlier. The latest quarter included $49.8 million of litigation settlement charges and $6.6 million of business-transformation costs, including $6 million associated with the VitalConnect acquisition.

Excluding specified items, adjusted net income was $27.8 million, compared with an adjusted net loss of $2 million in the third quarter of 2025. Adjusted diluted earnings were $0.82 per share, versus an adjusted loss of $0.06 per share.

Free cash flow was negative $11.5 million, compared with positive $20.1 million a year earlier. Net cash provided by operating activities was $4.4 million and included $50 million of costs related to the Baxter patent-litigation settlement, while capital expenditures totaled $16 million.

VitalConnect Expands Monitoring Portfolio

The VitalConnect acquisition broadens iRhythm’s portfolio beyond its long-term continuous monitoring business to include mobile cardiac telemetry and multi-vital monitoring. VitalConnect’s four-in-one platform supports short-term Holter monitoring, extended Holter monitoring, cardiac event monitoring and mobile cardiac telemetry, with capabilities spanning ambulatory, inpatient, remote-monitoring and hospital-to-home settings.

iRhythm expects the transaction to contribute to revenue growth beginning in 2027 and said it is preserving its 15% adjusted EBITDA margin target for that year. The company plans to use its commercial organization, market-access capabilities and clinical services to scale the acquired platform.

The broader commercial strategy remains centered on expanding the U.S. core business, increasing adoption among primary-care providers and entering additional international markets. During the quarter, 60% of registration volume came from accounts integrated with electronic health records, and 80 of iRhythm’s 100 largest customers had completed EHR integration.

Internationally, iRhythm is in early commercialization in Japan, the United Kingdom and selected European countries. Its stated priorities include generating local clinical evidence in Japan, securing additional health-system contracts and expanding into primary care in the UK, and embedding Zio into clinical practice in Switzerland, Spain, Austria and the Netherlands.

Product and Market-Access Priorities

The company received U.S. Food and Drug Administration clearance for a next-generation artificial-intelligence algorithm that it plans to launch in the first half of 2027. It also submitted FDA 510(k) applications seeking pediatric use of the Zio Monitor in its long-term continuous monitoring business.

Management identified primary-care adoption as an important route to a larger U.S. market and is pursuing integrated delivery networks and large national accounts. Other areas of focus include proactive monitoring programs and initial commercial pilots in obstructive sleep apnea.

The outlook remains subject to uncertainties involving product approvals, reimbursement rates and coverage, competition, legal proceedings and the performance of current and prospective products. iRhythm also noted that it operates in a rapidly changing market and that actual results could differ materially from its forward-looking expectations.