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IRhythm Pushes a Proactive Approach to Monitoring · Vanguards of Healthcare by Bloomberg Intelligence

0:20
Speaker 1: Welcome to another episode of the Vanguards of Healthcare series.
0:22
Speaker 1: My name is Matt Hendrickson, the medical technology analyst at
0:25
Speaker 1: Bloomberg Intelligence, which is the in house equity research platform
0:29
Speaker 1: of Bloomberg LP. We're pleased to have back with us today.
0:32
Speaker 1: Quentin Blackford, CEO of Igrhythm, a medical device company that
0:36
Speaker 1: is a key leader in long term cardiac monitors to
0:39
Speaker 1: detect arrhythmius and other cardiac signals. You can dive deeper
0:43
Speaker 1: into the financials by typing an IRTC equity go on
0:47
Speaker 1: your Bloomberg terminal. Quentin, thank you for joining us again.
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Speaker 2: Matt, thanks for having me back. I've always enjoyed the
0:52
Speaker 2: opportunity to spend time with you, so it's good to
0:54
Speaker 2: be back.
0:55
Speaker 1: It's always been a great conversation. And yeah, I kind
0:57
Speaker 1: of looked back on what we were talking about about
1:00
Speaker 1: this time last year and a lot has changed for
1:03
Speaker 1: the company. Not the revenue growth. You're still having that
1:06
Speaker 1: twenty percent plus revenue growth so far over the last
1:09
Speaker 1: few quarters, but it's now that half the profitability that
1:13
Speaker 1: is going to be interesting to discuss with you. And
1:15
Speaker 1: then you know, as we can kind of see what
1:17
Speaker 1: are the further growth drivers going down the road. But
1:20
Speaker 1: why don't we start with just a quick overview for
1:23
Speaker 1: the you know listeners who are new to the story,
1:25
Speaker 1: didn't listen to last year's episode. What does IGORITHM develop?
1:31
Speaker 1: And maybe a quick background in your career path that
1:34
Speaker 1: got you to the CEO role.
1:36
Speaker 2: Sure, so you think about igrhythm I mean, we're a
1:39
Speaker 2: digital healthcare company that's focused on really trying to disrupt
1:43
Speaker 2: and transform the way that cardiac arrhythmias are identified and
1:47
Speaker 2: ultimately diagnosed. We think there's a much better way than
1:50
Speaker 2: traditional means of monitoring for arrhythmia's. The traditional technology has
1:56
Speaker 2: been out there fifty sixty years and never really innovented upon,
1:59
Speaker 2: and we're disrupting that space and we're having tremendous success
2:02
Speaker 2: with it. Part of that thesis is that longer duration
2:06
Speaker 2: monitoring is much superior to shorter duration monitoring, and I'm
2:09
Speaker 2: sure we'll get into some of that, but the clinical
2:12
Speaker 2: data is starting to align that really, really well, and
2:15
Speaker 2: we are transforming that market. We are the market leader
2:18
Speaker 2: in cardiac rhythm monitoring, particularly with patch based monitoring, with
2:22
Speaker 2: about seventy two percent of that market category that we own,
2:26
Speaker 2: and we continue to grow well north to twenty percent.
2:29
Speaker 2: So excited with the disruption that we're creating in cardiac
2:33
Speaker 2: rhythm monitoring. At the same time, we believe we're building
2:36
Speaker 2: a platform that can do so much more. And so
2:39
Speaker 2: you think about our offering today. We've got a pretty
2:41
Speaker 2: unique innovative device that the patient wears with tremendous patient
2:46
Speaker 2: compliance out to fourteen days, and we are then powered
2:49
Speaker 2: with AI capabilities that monitor or review those strips, identify
2:54
Speaker 2: any arrhythmias that are present. And then we have a
2:56
Speaker 2: digital platform where we make it very easy to provide
2:59
Speaker 2: a service to our physician customers, for them to be
3:02
Speaker 2: able to monitor a meaningful amount of patients and do
3:04
Speaker 2: it very easy, seamlessly, and with a very high degree
3:08
Speaker 2: of accuracy. We know physicians agree with this ninety nine
3:10
Speaker 2: percent of the time, and so we're disrupting that space,
3:12
Speaker 2: but we think there's a platform there that we could
3:14
Speaker 2: take well beyond just cardiac arithmia. So we're excited with
3:17
Speaker 2: respect to what we're building. And who I Rhythm is.
3:20
Speaker 2: You asked a real quickly just my background. You know,
3:23
Speaker 2: I've spent twenty five years in healthcare. I started in
3:25
Speaker 2: the orthopedic industry and really moved more into medtech about
3:29
Speaker 2: fifteen years ago. I love sort of the blurring of
3:31
Speaker 2: lines between medical technology consumerism. I started to see that
3:37
Speaker 2: really play out at my time at Dexcom, where I
3:40
Speaker 2: was the chief operating officer for roughly five years or
3:43
Speaker 2: so and then joined I Rhythm here to lead the
3:45
Speaker 2: company as we tried to disrupt the cardio vascular space.
3:49
Speaker 2: So exciting journey always been a part of high growth,
3:52
Speaker 2: fast paced organization, sort of really maturing those companies and
3:56
Speaker 2: helping them scale from a state of being unprofitable into
3:59
Speaker 2: a profit state, and that's exactly what we plan in
4:02
Speaker 2: here at Rhythm as well.
4:03
Speaker 1: Yeah, and I like how you talked about blurring the
4:05
Speaker 1: medtech and the consumer side, So we're definitely going to
4:08
Speaker 1: talk about that broader range of the spectrum for kind
4:11
Speaker 1: of patient monitoring. But let's stick with kind of the
4:14
Speaker 1: more specific med tech side of cardiac monitoring. Those are
4:20
Speaker 1: the ones that I strict FDA approval, Those are the
4:23
Speaker 1: ones that the physicians are prescribing to the patients. How
4:26
Speaker 1: is that marketing ball over the last few years, My
4:31
Speaker 1: understanding is that there's kind of now a group of
4:36
Speaker 1: companies that are doing just the patch. There's a group
4:39
Speaker 1: of companies that are doing just the algorithm side or
4:42
Speaker 1: the analysis side of it, and then there's companies like
4:45
Speaker 1: you that kind of are doing the full comprehensive pathsway
4:49
Speaker 1: for monitoring these patients. Is that the right way to
4:52
Speaker 1: think about it as we kind of go through twenty
4:54
Speaker 1: twenty six.
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Speaker 2: Well, I think there's certainly sort of those categories of
4:59
Speaker 2: players with in the market as you define them, whether
5:02
Speaker 2: it's a holistic solution of device plus algorithmic capability plus
5:06
Speaker 2: back end IDTF interpretation, or other companies out there that
5:10
Speaker 2: might just provide the back end software capability. I think
5:13
Speaker 2: you'll find those that are having the most success in
5:15
Speaker 2: the market and that really own the majority of the
5:17
Speaker 2: market are certainly those that have the end to end solution.
5:20
Speaker 2: I think you look at the physicians, you look at
5:22
Speaker 2: the health networks that leverage our services and our capabilities.
5:26
Speaker 2: They're looking for a service provider that can provide that
5:29
Speaker 2: end to end solution and really take care of all
5:32
Speaker 2: cardiac rhythm monitoring for them and get them the outcomes
5:35
Speaker 2: and the diagnosis that they're looking for. And so we
5:38
Speaker 2: certainly are having a tremendous amount of success within that
5:41
Speaker 2: space in the market, which is the vast majority of it.
5:44
Speaker 2: I think what's interesting is I talked a little bit
5:46
Speaker 2: earlier about us disrupting the cardiac monitoring space and moving
5:51
Speaker 2: towards longer duration monitoring. We know through clinical data nearly
5:55
Speaker 2: sixty five percent of all arrhythmias are missed within the
5:58
Speaker 2: first forty eight hours of monitoring. Yet the standard of
6:01
Speaker 2: care and the traditional way of monitoring for arrhythmias is
6:04
Speaker 2: twenty four or forty eight hour short duration Holter event
6:08
Speaker 2: style monitors. We are trying to obsolete that, and the
6:11
Speaker 2: data is showing us that that we are far superior
6:13
Speaker 2: and finding these arrhythmias. Most arrhythmias are found sort of
6:16
Speaker 2: between day five in day eight. But at the same time,
6:19
Speaker 2: there's still nearly two million short duration monitors that are
6:22
Speaker 2: being provided each and every year in the marketplace, and
6:25
Speaker 2: so we're focused on disrupting that aspect of it today. Matt,
6:29
Speaker 2: I think what's encouraging to us is that the market
6:33
Speaker 2: is so much larger than the way folks have historically
6:37
Speaker 2: viewed it. And what I mean by that is, if
6:39
Speaker 2: you go look through medical records just that the history
6:43
Speaker 2: of patients and you look through their medical records, you
6:45
Speaker 2: will see indications or symptoms present within their medical records,
6:51
Speaker 2: yet they've never been diagnosed with any sort of an arrhythmia.
6:55
Speaker 2: And when you start to look at that population of
6:56
Speaker 2: folks in the US alone, we would argue that it's
6:59
Speaker 2: at least twenty seven million people in the US alone
7:02
Speaker 2: that likely have cardiac arrhythmias that have just never been diagnosed,
7:06
Speaker 2: and they're most likely confusing those symptoms with other disease states.
7:09
Speaker 2: There's a tremendous amount of overlap with type two diabetes,
7:12
Speaker 2: with COPD, with CKD sleep disease. Those are all comorbid
7:17
Speaker 2: disease states that I think arrhythmias are getting confused within
7:20
Speaker 2: and we're just not diagnosing them appropriately, and so are
7:23
Speaker 2: we are making a significant push to go find those
7:27
Speaker 2: patients make sure that they're monitored proactively to the point
7:32
Speaker 2: where you can almost prevent the downstream catastrophic event from
7:36
Speaker 2: ever happening, or that patient ever having to get admitted
7:38
Speaker 2: into the hospital into the er, which then drives a
7:42
Speaker 2: tremendous amount of cost out of the system. If we
7:44
Speaker 2: can avoid those things from taking place, so I think
7:47
Speaker 2: the market is very healthy today. I think, you know,
7:49
Speaker 2: we play in it very well clearly, with seventy two
7:52
Speaker 2: percent market share of the patch based monitoring market today,
7:55
Speaker 2: we really own that and we're growing well there. But
7:58
Speaker 2: the market is a whole lot bigger than what people
8:01
Speaker 2: I believe today, you know, sort of measure it to be.
8:04
Speaker 1: Well, that's that's actually interesting because and we can just
8:08
Speaker 1: let's just jump into that right now, because I feel
8:10
Speaker 1: like your presentation you talk about kind of a current
8:13
Speaker 1: ten million patients in the US, combination of long term
8:18
Speaker 1: use monitors, the mobile mobile cardiac telemetry segment international for
8:25
Speaker 1: the you know, the initial penetration into those international markets,
8:30
Speaker 1: this additional twenty seven million, and you kind of mentioned
8:33
Speaker 1: things that you know, there's other co morbidities. What is
8:36
Speaker 1: the commercial strategy. What is the business strategy to start
8:40
Speaker 1: implementing a physician to say, okay, I'm seeing these co morbidities.
8:47
Speaker 1: These co morbidities are actually probably indicating something in the future.
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Speaker 1: Let's just get the monitors started as a quick you know,
8:54
Speaker 1: an early stage to prevent further complications down the road.
8:59
Speaker 2: Yeah, it's a good, great question. I think it's the
9:01
Speaker 2: important one that we're working to solve as we sort
9:05
Speaker 2: of work through this right now. The first is the
9:09
Speaker 2: realization that there's not enough capacity within the cardiologist and
9:13
Speaker 2: the EP offices to monitor a whole lot more patients
9:17
Speaker 2: than what they're monitoring today, which means care has to
9:22
Speaker 2: move up the care pathway then to find these patients earlier.
9:25
Speaker 2: And if you think about where are these patients showing
9:27
Speaker 2: up in our healthcare system today, the majority of them
9:29
Speaker 2: are in primary care, and so we have to move
9:33
Speaker 2: further upstream into primary care and be able to meet
9:36
Speaker 2: the patients where they're already at. And so one of
9:38
Speaker 2: the biggest efforts we have going on in the company
9:40
Speaker 2: right now is to move prescribing up the care pathway
9:44
Speaker 2: into primary care. It does not mean that we're turning
9:48
Speaker 2: away from a cardiologist or an EP, absolutely not. As
9:51
Speaker 2: a matter of fact, what we're doing is we're ensuring
9:54
Speaker 2: that that cardiologist or EP ends up getting a much
9:56
Speaker 2: better targeted, profiled patient that they should spending their time with,
10:01
Speaker 2: so that their time is better spent and it's more valuable.
10:04
Speaker 2: And what I love about this approach, and you know,
10:06
Speaker 2: we were just at HRS not too long ago. You
10:10
Speaker 2: saw the experts in cardiology, you know EPs on stage
10:15
Speaker 2: talking about the fact that cardiac rhythm monitoring needs to
10:18
Speaker 2: move upstream, it needs to be performed at primary care,
10:22
Speaker 2: and all bills be used as a tool that is
10:24
Speaker 2: a rule in or a rule out device. And I
10:27
Speaker 2: think that's exactly right, because we can help identify what
10:30
Speaker 2: patients then should be referred on to cardiology or EP
10:34
Speaker 2: or importantly, and it just as important, maybe not even
10:37
Speaker 2: more important, is which patients should not be ruled or
10:40
Speaker 2: should not be referred further on, because that's just sort
10:44
Speaker 2: of clogging up the system. And so we're going after
10:46
Speaker 2: it in two ways. One, we're working within our large
10:50
Speaker 2: independent health networks where we already have a large presence
10:52
Speaker 2: with cardiologist and EPs, and those cardiologists and EPs are
10:56
Speaker 2: actually inviting the primary care physician within their networks to
11:00
Speaker 2: the table. They're educating, they're informing and helping get that
11:04
Speaker 2: primary care physician comfortable to prescribe. Now, sometimes the primary
11:08
Speaker 2: care physician in that scenario might not be comfortable diagnosing
11:13
Speaker 2: off of our report. So they might be comfortable prescribing
11:16
Speaker 2: the device and getting it onto the patient earlier, but
11:18
Speaker 2: they're not comfortable diagnosing it. In that situation, with our
11:22
Speaker 2: digital tool, a cardiologist an EP can actually go right
11:26
Speaker 2: into the digital tool, review the report themselves having seen
11:29
Speaker 2: that patient and diagnose whether there was an arrhythma present
11:32
Speaker 2: or not, and also indicate yes, I want to see
11:34
Speaker 2: the patient or no, I don't. That has been our
11:37
Speaker 2: biggest mover into primary care thus far. The other angle
11:41
Speaker 2: we're taking is we're going right after what we call
11:43
Speaker 2: these large innovative channel partners. These are generally large national
11:47
Speaker 2: primary care groups that understand sort of value based care,
11:52
Speaker 2: population health management. Many times they will go into a
11:55
Speaker 2: payer or a self insured employer and say, look, we
11:59
Speaker 2: will help man this population of folks at a particular cost,
12:03
Speaker 2: will capitate that cost for you, which guarantees you x
12:06
Speaker 2: percent of savings, and then if they can manage the
12:09
Speaker 2: cost of caring for that patient underneath that capitated price,
12:13
Speaker 2: they keep all the margin. And in those scenarios, the
12:16
Speaker 2: first thing they do is they put a zoo patch
12:18
Speaker 2: on and we're having great success. Innovative channel partners is
12:22
Speaker 2: in the mid single digits, is a percent of our
12:24
Speaker 2: total revenue today. It's the fastest growing channel in our
12:27
Speaker 2: business today. This was nascent. You know, eighteen months ago,
12:31
Speaker 2: two years ago, it really didn't exist, and so we're
12:33
Speaker 2: seeing a meaningful push through those channels to open up
12:36
Speaker 2: the primary care segment. But that's important because if the
12:39
Speaker 2: twenty seven million patients are going to be found, they're
12:41
Speaker 2: going to have to be treated earlier in the care pathway.
12:44
Speaker 2: It's going to have to happen in primary care. The
12:47
Speaker 2: last thing we're doing there, and we're at the very
12:49
Speaker 2: early stages of this, but we announced in our last
12:51
Speaker 2: earnings call we're now implementing with our first commercial partner
12:56
Speaker 2: an AI capability where we integrate our AI tools into
13:01
Speaker 2: their electronic medical records and our AI can look through
13:05
Speaker 2: that medical record history at a patient level and identify
13:10
Speaker 2: sort of flag where we think in arrhythmia is likely present,
13:13
Speaker 2: but that patient's never been diagnosed, and we can create
13:16
Speaker 2: that awareness for that client, for that payer or that
13:19
Speaker 2: at risk entity. And what's encouraging is in the first
13:22
Speaker 2: two pilots that we ran, which was a total of
13:24
Speaker 2: about two thousand patients total, that we said we think
13:28
Speaker 2: those patients have arrhythmias, when in fact, you put a
13:31
Speaker 2: patch on those two thousand patients, eighty five percent of
13:34
Speaker 2: them did have an arrhythmia yet had never been diagnosed
13:37
Speaker 2: up to that point. So the ability to find these
13:39
Speaker 2: patients is something that we're finding we're able to do now.
13:42
Speaker 2: We're providing those software tools, those AI tools to our
13:45
Speaker 2: clients to proactively point them to where the patients are at.
13:49
Speaker 2: So I think the twenty seven million will absolutely open up.
13:52
Speaker 2: It's a matter of moving care earlier in the pathway,
13:55
Speaker 2: making sure there's enough capacity in the system to even
13:58
Speaker 2: prescribe and then diagnose and then care for them a patient.
14:01
Speaker 1: And it's there's nothing though. Don't you don't need a
14:03
Speaker 1: new or expanded FDA indication, you don't need new reimbursement.
14:09
Speaker 1: This is just more of a product and market awareness
14:13
Speaker 1: story for these primary care physicians, as though they're not
14:16
Speaker 1: the doctors that are going to hrs as frequently as
14:18
Speaker 1: the EPs are or the electrophysiologists are. So this seems
14:23
Speaker 1: like just getting that market out there. How is that
14:26
Speaker 1: integration going? Is I mean, because I know you've talked
14:29
Speaker 1: about the electric health record integration, you've talked about epic
14:34
Speaker 1: aura in the past. Is this finally the realization of
14:37
Speaker 1: that kind of partnership or is this an internal project
14:40
Speaker 1: that you're doing parallel to your work with epic Aura.
14:45
Speaker 2: I think it's a combination of both, Matt. I think
14:48
Speaker 2: it's Internally, it's a meaningful focus for us. Our initiatives
14:54
Speaker 2: are very much focused on opening up primary care and
14:57
Speaker 2: getting to these patients earlier and bringing solutions to our
15:02
Speaker 2: customers that can identify where these patients likely exist so
15:06
Speaker 2: that they can easily find them and get patches on
15:09
Speaker 2: them the way that they need to. So internally, we
15:12
Speaker 2: absolutely are leaning into this and we're building the organization
15:14
Speaker 2: to pursue it, so we can think about structural considerations,
15:18
Speaker 2: setting up small commercial teams and efforts to go after
15:21
Speaker 2: this opportunity. We've designed our organization a way that allows
15:24
Speaker 2: us to do that. However, at the same time, you
15:28
Speaker 2: find ways to make sure that the workflow is incredibly easy.
15:31
Speaker 2: It's why the epic Aura integration was so important for us.
15:34
Speaker 2: If we can get integrated in these large health networks,
15:37
Speaker 2: maybe where our relationships started with a cardiologist or an
15:40
Speaker 2: ep but all of a sudden we've integrated our platform
15:43
Speaker 2: together with AURA well that primary care physician can now
15:46
Speaker 2: very easily see the ZEO patch available to them within
15:49
Speaker 2: their integrated system. So ORA was an important step and
15:53
Speaker 2: sort of addressing workflow, ease and simplicity to get into
15:57
Speaker 2: primary care. And I think EPIC also saw it, and
16:00
Speaker 2: to be honest with you, our competitors I've seen it
16:02
Speaker 2: because now they're also pushing for the same thing into
16:05
Speaker 2: Epic Aura as fast followers, which I think confirms our strategy.
16:10
Speaker 2: The other thing is, you know, we might have pushed
16:14
Speaker 2: into primary care, but to your point, you go to
16:17
Speaker 2: HRS and you hear sort of EPs the experts in
16:22
Speaker 2: what I would say in this space identifying the fact
16:25
Speaker 2: that this is so easy to use and so accurate
16:27
Speaker 2: it needs to go to primary care. I think the
16:30
Speaker 2: entire industry is now starting to recognize that, you know,
16:35
Speaker 2: what we're pushing for is in fact where the market's going,
16:38
Speaker 2: and that it needs to move there. So it started
16:41
Speaker 2: with an internal effort, I think it's starting to become
16:42
Speaker 2: a much more broad market, market based effort.
16:45
Speaker 1: Interesting, and let's just kind of then circle back, because
16:49
Speaker 1: we talked about kind of the medtech component of the market,
16:52
Speaker 1: but you're also seeing this general wellness side of the
16:55
Speaker 1: business with it, whether it's whoop, whether it's or ring,
16:58
Speaker 1: whether it's Google's new fit how does that play in
17:02
Speaker 1: this spectrum overall? And you know, if I remember correctly,
17:06
Speaker 1: it was twenty seventeen, twenty eighteen when Apple Watch first
17:10
Speaker 1: had its hardy acharithmia detection on its watch. Is this
17:15
Speaker 1: kind of a two point zero version of that update
17:18
Speaker 1: to kind of that general wellness side.
17:20
Speaker 2: I think, I think you're going to continue to see
17:22
Speaker 2: things evolve on the wellness side. And so to your point,
17:24
Speaker 2: what was there in seventeen to what is there now
17:27
Speaker 2: is certainly continue to evolve and enhance and improve. But
17:31
Speaker 2: I think you know, it's important to keep in mind
17:34
Speaker 2: these are wellness features. They're not diagnostic grade capability, and
17:39
Speaker 2: there's a very big differentiation. And so the way I
17:41
Speaker 2: think about it as consumer wearables are really creating awareness
17:46
Speaker 2: and engagement with patients, but ultimately they lead to a
17:50
Speaker 2: ZEO patch getting prescribed, to get to a formal diagnosis
17:53
Speaker 2: to where clinical action can be taken. And I think
17:57
Speaker 2: that's important if you look at the moment within our
18:01
Speaker 2: own company, I mean last year alone, we grew twenty
18:03
Speaker 2: six percent, a meaningful step up from where we've been
18:05
Speaker 2: in the past, delivered nearly seven hundred and fifty million
18:08
Speaker 2: dollars in revenue, will deliver somewhere between eight seventy five
18:12
Speaker 2: to eight hundred and eighty five million. You know, this
18:14
Speaker 2: year again growing very healthily in the face of the
18:19
Speaker 2: wearable proliferation, if you will. And I think what's happening
18:24
Speaker 2: is these wearable devices are becoming one of the greatest
18:26
Speaker 2: lead generators that we could create for our own technology.
18:30
Speaker 2: Because what happens is the patient gets notified or alerted
18:33
Speaker 2: on their wearable, they end up seeing their physician and
18:36
Speaker 2: they're saying, hey, this device is telling me x y
18:39
Speaker 2: Z and all of a sudden they're wearing a Zeo patch.
18:41
Speaker 2: And so we're big fans of the wearable space. We
18:44
Speaker 2: think the wearables are going to create continue to create
18:46
Speaker 2: awareness that ultimately lead to the utilization of our technology,
18:51
Speaker 2: and that's certainly what we're seeing in our results thus far.
18:53
Speaker 1: Yeah, because I have to imagine a doctor is not
18:57
Speaker 1: going to take a patient who comes in with their
18:59
Speaker 1: apple lotch with their or ring and say, hey, I
19:01
Speaker 1: got this detection on my ring. They're not going to
19:03
Speaker 1: make a treatment based off of that. They're going to
19:05
Speaker 1: be probably the first thing they say is okay, let's
19:07
Speaker 1: put a Zeo patch on you, right.
19:08
Speaker 2: I think that's exactly right, and that's exactly what we're
19:10
Speaker 2: seeing in practice. It's clear that these devices are not
19:14
Speaker 2: indicated for medical grade diagnosis. Their label is very clear
19:19
Speaker 2: around that, and ultimately the physician, I think, you know,
19:23
Speaker 2: they know they need to get to a more accurate
19:25
Speaker 2: diagnostic tool, and certainly when you think about the risk
19:28
Speaker 2: that they would or wouldn't want to take on, I
19:29
Speaker 2: think they want that confirmatory diagnosis in their records as well,
19:33
Speaker 2: and so it bodes well for for I rhythm in
19:36
Speaker 2: that scenario.
19:37
Speaker 1: Yeah, I would have to agree with that too. I
19:39
Speaker 1: feel like I would a doctor would want to make
19:41
Speaker 1: sure they have the medical grade side and I think
19:43
Speaker 1: that's the biggest barrier now between those general wellness ones
19:47
Speaker 1: and kind of the med tech ones that Zeo patches.
19:50
Speaker 1: And speaking of the Zeo patch, though you're creating the
19:52
Speaker 1: new MCT, the new mobile cardiac telemetry device, what is
19:58
Speaker 1: the what is the what is the progress for that
20:01
Speaker 1: to get into to commercial launch?
20:05
Speaker 2: Well, working together with the FDA on this currently, we're
20:08
Speaker 2: super excited about the MCT product. This is a category
20:13
Speaker 2: in the marketplace that we just don't play real well.
20:16
Speaker 2: In I mentioned the fact that we had seventy two
20:18
Speaker 2: percent market share and long term cardiac patch based monitoring,
20:22
Speaker 2: we only have about call it you know, fourteen percent
20:25
Speaker 2: share or so in the MCT space. We think that
20:29
Speaker 2: there's an opportunity if we had the right product there,
20:32
Speaker 2: that we should probably have twenty five to thirty five,
20:34
Speaker 2: even forty five percent of that market. I don't I
20:36
Speaker 2: don't think it's realistic to think we're going to get
20:38
Speaker 2: to seventy percent of that market, but I think we
20:41
Speaker 2: should have more than where we are today. And every
20:43
Speaker 2: ten points of market share is roughly eighty two hundred
20:45
Speaker 2: million dollars of incremental annual revenue to us. So this
20:48
Speaker 2: is several hundred million dollars of opportunity for us when
20:51
Speaker 2: we have the right product in that segment. We've grown
20:55
Speaker 2: well today with our older generation AT product. At the
20:58
Speaker 2: same time, we know it doesn't meet the knee to
21:00
Speaker 2: the marketplace the way it needs to be really successful there,
21:02
Speaker 2: and that's what this new MCT product will do for us.
21:04
Speaker 2: And so we're working with the FDA. We're working through
21:08
Speaker 2: providing test data now specific to some of the changes
21:11
Speaker 2: we had to make on MCT to get the Mobile
21:13
Speaker 2: Gateway brought into the product configuration at the recommendation of
21:16
Speaker 2: the FDA. We'll hand that information back to them later
21:19
Speaker 2: this year, and I would expect to approval in the
21:21
Speaker 2: first half of next year, which sets up then the
21:23
Speaker 2: ability to launch that new MCT product as quickly as possible.
21:26
Speaker 2: So we're excited around MCT. We know that this is
21:30
Speaker 2: something that can move the needle for us. We need
21:33
Speaker 2: to get to the new MCT product, which we're excited for.
21:35
Speaker 2: But this is a meaningful opportunity. You know, several hundred
21:39
Speaker 2: million dollars of ANGER revenue. I think that we can
21:41
Speaker 2: go capture if we just get a market position more
21:45
Speaker 2: representative of what we have in LTCM.
21:47
Speaker 1: Yeah, and let me ask let me ask two questions
21:49
Speaker 1: that I think they're related. I just one has come
21:51
Speaker 1: a confirmational one. But first off, what's kind of the
21:54
Speaker 1: biggest gap between the AT product that's currently in the
21:57
Speaker 1: market and this the new one that is going to
22:01
Speaker 1: plans to be out by first half of twenty twenty seven.
22:03
Speaker 1: I mean, you talked about mobile Gateway, what is that exactly?
22:07
Speaker 1: And is that gap between the AT and the new product?
22:11
Speaker 2: Yeah, the biggest gap with AT right now is duration
22:15
Speaker 2: of monitoring. So our current AT product only goes to
22:19
Speaker 2: fourteen days, and we know that a big portion of
22:23
Speaker 2: this market, the majority of the market expects monitoring that's
22:27
Speaker 2: closer to thirty days, and our market research would tell
22:30
Speaker 2: us you, at a minimum have to be over twenty
22:32
Speaker 2: and so we'll be at twenty one days with the
22:34
Speaker 2: introduction of the first zo MCT product, and then we'll
22:38
Speaker 2: look to extend that duration beyond there the gateway. Quite honestly,
22:43
Speaker 2: as we were working through the submission with the FDA,
22:45
Speaker 2: it became apparent just around cybersecurity questions that they were
22:48
Speaker 2: asking and sort of them understanding our future roadmap. And
22:52
Speaker 2: we've built a wonderful relationship with the FDA where we
22:55
Speaker 2: are very clear and transparent with them on what's coming
22:57
Speaker 2: down the pipe. It was evident to that we were
23:00
Speaker 2: going to have to make a move to the mobile
23:02
Speaker 2: gateway sooner versus later, and so as some of those
23:05
Speaker 2: questions were coming up around cybersecurity with our current MCT submission,
23:10
Speaker 2: we had a choice. We could either design some incremental
23:12
Speaker 2: features into the old gateway to meet the FDA's requirements,
23:17
Speaker 2: but we knew that that would quickly be obsoleted because
23:19
Speaker 2: we were going to have to move to the new
23:21
Speaker 2: gateway in the next gen, if you will, the next
23:23
Speaker 2: generation of the device, or we could go ahead and
23:25
Speaker 2: just make the decision right now to move to a
23:28
Speaker 2: mobile gateway, make sure that we're addressing the cyberseriity concerns
23:32
Speaker 2: and not have to make that transition down the road.
23:34
Speaker 2: So we ultimately made that decision working together with the FDA.
23:38
Speaker 2: Certainly it was their desired pathway as well. And you know,
23:41
Speaker 2: we've been working to build a very strong collaborative relationship
23:45
Speaker 2: with the FDA over the last two three years and
23:47
Speaker 2: this is a continuation of that. So feel good with
23:49
Speaker 2: where we're at. Excited to get the product in the market,
23:52
Speaker 2: and you know, we'll be there in the first half
23:54
Speaker 2: of next year, and I think be able to make
23:57
Speaker 2: some noise with it.
23:58
Speaker 1: Interesting and yeah, i'd be good to get that. You know,
24:01
Speaker 1: A nice catalysts to have investors look out for for
24:03
Speaker 1: twenty twenty seven. You know, I thinking of other catalysts
24:07
Speaker 1: as well. I mean you you I Rhythm is consistently
24:10
Speaker 1: publishing new clinical data. You mentioned earlier, the data of
24:15
Speaker 1: how ulter monitors isn't being able to detect things past
24:20
Speaker 1: the forty eight hours that data was present at HRS.
24:24
Speaker 1: What are some of the other key data that's kind
24:26
Speaker 1: of been published recently that is, you know, you want
24:29
Speaker 1: listeners to be aware of and you know, looking ahead
24:32
Speaker 1: for the rest of twenty twenty six going into you know,
24:35
Speaker 1: maybe HRS twenty twenty seven, is there any kind of
24:38
Speaker 1: ke data that is, you know, something that listeners should
24:42
Speaker 1: highlight and be aware of or put on their radar.
24:44
Speaker 2: Yeah, you know, I think Avalon and Camelot are two
24:48
Speaker 2: studies that have been out there for over a year now,
24:51
Speaker 2: but they are making the most headweight into the marketplace,
24:56
Speaker 2: if you will, in terms of what customers large health
24:59
Speaker 2: network at risk entities are and payers are paying attention to.
25:03
Speaker 2: Where it is very clear that ZEO is the superior
25:06
Speaker 2: cardiac monitoring market across really all modalities, whether it's LTCM
25:12
Speaker 2: events style monitors, MCT style monitors, We're superior. We're faster
25:18
Speaker 2: time to diagnosis, we have a higher diagnostic yield, we
25:21
Speaker 2: require lower healthcare resource utilization in the offices where our
25:26
Speaker 2: devices are utilizing. So that the advantage is clear and
25:29
Speaker 2: we show it in a CMS population. We showed it
25:32
Speaker 2: in a commercial payer population with Avalon. What I'm excited
25:35
Speaker 2: about is you're going to see another very large payer
25:38
Speaker 2: published data later this year looking back at their own
25:42
Speaker 2: data set that's going to show ZEO head to head
25:44
Speaker 2: relative to other monitoring capabilities, competitive monitoring and modalities in
25:49
Speaker 2: the space. And I'm excited to get that data out there.
25:52
Speaker 2: So I won't get out in front of what we
25:54
Speaker 2: think is going to tell us, but you know, you
25:56
Speaker 2: look at Camelot, you look at Avalon, was pretty clear there.
26:01
Speaker 2: I suspect we're going to be very pleased with what
26:03
Speaker 2: we see in the new study that will come out
26:04
Speaker 2: later this year. The other aspect is you should expect
26:08
Speaker 2: to see some cost outcomes related data from some of
26:11
Speaker 2: our large innovative channel partners who are proactively patching these
26:16
Speaker 2: undiagnosed patients. And I've been really encouraged to see what
26:20
Speaker 2: the measurable cost reduction is in that population. That more
26:24
Speaker 2: than justifies why proactively monitoring these populations where you think
26:29
Speaker 2: there is in a risk of an arrhythmia to go
26:31
Speaker 2: ahead and get a patch on them. So we'll see
26:33
Speaker 2: some of that data get published later this year. That's
26:35
Speaker 2: independent data from I Rhythm Publishing, and so I can't
26:40
Speaker 2: speak exactly on what that timeframe would be. It's sort
26:42
Speaker 2: of in their control, but we know of the work
26:44
Speaker 2: being done and we're excited to get that out there.
26:47
Speaker 2: The other thing that we just continue to demonstrate and
26:50
Speaker 2: our trials continue to reinforce, is just the prevalence of
26:53
Speaker 2: arrhythmias in comorbid disease states. You're going to continue to
26:57
Speaker 2: see more and more of this sort of data get
27:00
Speaker 2: published which identifies that these arrhythmias are very real, They're
27:03
Speaker 2: very present in other disease states. In most cases, they're
27:06
Speaker 2: likely being confused with other issues rather than cardiac arrhythmias,
27:12
Speaker 2: and I think we need to clear up that for
27:14
Speaker 2: our physicians and make sure these patients are getting diagnosed appropriately.
27:17
Speaker 2: So you're going to see trials that continue to articulate
27:20
Speaker 2: the prevalence of arrhythmias in those populations, even you know,
27:23
Speaker 2: getting into obesity, even pregnancy, the prevalence of arrhythmias within
27:28
Speaker 2: the pregnancy space. That it's interesting. They're out there and
27:32
Speaker 2: we need to make sure that physicians are aware of
27:34
Speaker 2: them and helping you know, these patients navigate through those appropriately.
27:38
Speaker 2: So a lot to come on the data side. To
27:41
Speaker 2: your point, we invest a lot in data. We like
27:44
Speaker 2: to let our products sort of speak for itself and
27:46
Speaker 2: the data speak for itself, and I think it overwhelmingly
27:49
Speaker 2: continues to point that Zeo's the superior product in the space.
27:52
Speaker 1: Yeah, I remember we were talking this time last year
27:54
Speaker 1: about Camelot and you know, several hundred thousand patient data points,
27:58
Speaker 1: and it sounds like it's the gift that keeps on
28:00
Speaker 1: giving as you kind of be able to expand the
28:02
Speaker 1: awareness for the product. What else can you do? You
28:05
Speaker 1: talked about going beyond PARTI acharithmias for your the monitor.
28:11
Speaker 2: What are the.
28:12
Speaker 1: Next branches long term that you can use this patch for.
28:16
Speaker 2: I think it's a combination of things that we can
28:19
Speaker 2: do off of our platform, and it happens in different ways.
28:22
Speaker 2: So one of the things I'm most excited about here
28:25
Speaker 2: at the company is our move into the sleep space.
28:28
Speaker 2: And that's a combination of leveraging the call point that
28:32
Speaker 2: we have today with our cardiologist, our EPs, and now
28:36
Speaker 2: primary care folks. I mean nearly thirty five percent of
28:39
Speaker 2: all prescribing in our company comes through primary care now,
28:42
Speaker 2: so we've created a large presence into the primary care world.
28:44
Speaker 2: What more service, what more value can we offer to
28:47
Speaker 2: those customers in a very easy, streamlined, seamless workflow. And
28:53
Speaker 2: I think one of those areas that we can disrupt
28:56
Speaker 2: easily is sleep. There's a tremendous amount of overlap of
29:00
Speaker 2: sleep disease with cardiac arrhythmias. Sixty to eighty percent of
29:04
Speaker 2: folks who have aphib have sleep apnea, and so our
29:09
Speaker 2: physician customers are already looking for sleep disease, but it's
29:13
Speaker 2: very cumbersome. They're leveraging a whole slew of independent third
29:17
Speaker 2: party sleep idtfs that are out there. They're not you know,
29:21
Speaker 2: coalesced at all, So it's a very broken sort of process.
29:24
Speaker 2: Patients get lost in that process all the time. We
29:27
Speaker 2: believe we can make it as easy as the click
29:29
Speaker 2: of a button right in our Zeo suite in terms
29:31
Speaker 2: of do you want to monitor for sleep or do
29:32
Speaker 2: you not? And in the near term, we'll provide a
29:35
Speaker 2: home sleep test sort of a third party home sleep
29:38
Speaker 2: test that will provide the opportunity to get to a
29:41
Speaker 2: sleep diagnosis, will leverage our IDTF capabilities and other IDTF
29:45
Speaker 2: kept building is to interpret the report and we can
29:47
Speaker 2: put that right back into our Zeo Suite run end,
29:50
Speaker 2: which makes this very easy for our physicians to get
29:53
Speaker 2: to a sleep diagnosis. Ultimately, we want to off of
29:56
Speaker 2: our device be able to diagnose sleep disease out into
30:00
Speaker 2: the future, so verticalize that entire offering and sort of
30:05
Speaker 2: not have to lean on outside parties to help us
30:07
Speaker 2: provide that service. So it's a step deffort, if you will.
30:10
Speaker 2: The first one is to really bring an entire service
30:13
Speaker 2: capability to our customers that make it seamless. We do
30:17
Speaker 2: the work behind the scenes to get to a diagnosis
30:19
Speaker 2: and provide that back to the positions. Ultimately, we'll want
30:22
Speaker 2: to verticalize it by being our own, very own product
30:25
Speaker 2: that is monitoring for sleep while monitoring for cardiacgarithm is
30:28
Speaker 2: over time. So it's a step effort, but I think
30:31
Speaker 2: it's a massive, massive market opportunity for us to go disrupt.
30:34
Speaker 1: Okay, and it sounds like you can already detect certain
30:40
Speaker 1: sleep apneas, certain sleep irregularities with the patch already. It
30:47
Speaker 1: just you need to be able to get the right
30:49
Speaker 1: approvals and check the right boxes before you can flip
30:52
Speaker 1: that switch. Is that the right way to think about it.
30:54
Speaker 2: Yeah, I think it's a couple things. I think we
30:56
Speaker 2: have a high degree of belief that we can see
30:58
Speaker 2: the prevalence or the presence of sleep disease through the
31:03
Speaker 2: EKG signal that's coming off our cardiac patch right a
31:07
Speaker 2: rhythm monitoring. We believe we can see the presence of
31:10
Speaker 2: sleep disease in there. That's something that we got to
31:13
Speaker 2: work with the FDA and provide data and ultimately get
31:15
Speaker 2: that approval for And I think that's going to take
31:17
Speaker 2: some bit of time, but I do think there's an
31:20
Speaker 2: opportunity to indicate for our customers, Hey, we think sleep
31:23
Speaker 2: disease may or may not be present, you ought to
31:26
Speaker 2: go ahead and prescribe a home sleep test to get
31:29
Speaker 2: to a formal diagnosis. So we can create awareness earlier
31:33
Speaker 2: for physicians of where we think sleep disease is likely present,
31:36
Speaker 2: and then ultimately down the road we'll be able to
31:38
Speaker 2: provide that confirmatory diagnosis. The other challenge, Matt, is just
31:42
Speaker 2: how you get reimbursed in this space. So even if
31:45
Speaker 2: we got to the point where we could identify and
31:48
Speaker 2: diagnose sleep disease off of our patch, which we do believe,
31:50
Speaker 2: over time, we're going to be able to do there's
31:53
Speaker 2: work to do on the reimbursement side to be able
31:55
Speaker 2: to get reimbursed for sleep detection off of a chest
32:00
Speaker 2: or patch. The codes as as designed today would require
32:04
Speaker 2: you to have other peripheral signals coming into into what
32:09
Speaker 2: you're pulling together to get to a diagnosis. We think
32:13
Speaker 2: we can show through data that you don't need those
32:15
Speaker 2: peripheral measures, that you can get it all off the chest.
32:18
Speaker 2: And I think that when you can show that data,
32:20
Speaker 2: payers will pay attention and likely you can evolve codes.
32:23
Speaker 2: But that that's an effort that you've got to go
32:26
Speaker 2: through to get there, right, So in the near term
32:27
Speaker 2: we'll have to meet the requirements of code with where
32:30
Speaker 2: it's at and provide those different measures. But over time
32:34
Speaker 2: I would imagine codes can evolve.
32:36
Speaker 1: Yeah, So it just requires the block and in tackling
32:38
Speaker 1: side of the execution.
32:40
Speaker 2: That's right, yep.
32:41
Speaker 1: Yeah. And the other thing that you know talking about
32:45
Speaker 1: market execution is the international We really haven't talked too
32:48
Speaker 1: much about the international markets, but it's your international business
32:54
Speaker 1: is a creative to that twenty six percent growth, and
32:57
Speaker 1: it's still a very small portion of your revenue base.
33:01
Speaker 1: So how does how are you taking that step function
33:05
Speaker 1: of entering new countries, being able to expand within those
33:07
Speaker 1: countries to be able to maintain that growth. That's a
33:10
Speaker 1: creative to the corporate average.
33:12
Speaker 2: Yeah, that's a good question. I mean, I think the
33:14
Speaker 2: opportunity to disrupt the international space, just like we did
33:18
Speaker 2: the US space, is real. There's no reason to believe
33:22
Speaker 2: that the benefits of longer duration monitoring aren't present in
33:26
Speaker 2: the international markets just like they are in the US markets.
33:29
Speaker 2: We know that they are. We can see it in
33:30
Speaker 2: our own data sets. The challenge is the reimbursement environment
33:35
Speaker 2: is very unique and specific to each country and requires
33:39
Speaker 2: work to be done and data to be presented at
33:42
Speaker 2: that country level to move sort of reimbursement codes and
33:46
Speaker 2: way to get paid for your product, and that takes time,
33:50
Speaker 2: and so our focus in international has been more about
33:53
Speaker 2: get into the key markets where we believe we can
33:55
Speaker 2: have success and drive change from a code perspective and
33:59
Speaker 2: reimbursement perspective to capture the value that we think our
34:03
Speaker 2: service delivers. Because of that, we focused in markets like
34:06
Speaker 2: the UK, like Japan, like Switzerland, those you know, and
34:12
Speaker 2: we're into Spain, Netherlands, you know, as well, and but
34:18
Speaker 2: really at the end of the day, we're going to
34:19
Speaker 2: stay focused in those countries for the time being. We're
34:22
Speaker 2: we're not looking to go more broadly into more countries
34:24
Speaker 2: right now. It's about going deeper in those countries, establishing
34:28
Speaker 2: the value that we deliver, ultimately getting reimbursement aligned to
34:32
Speaker 2: the value that we deliver, and then once we prove
34:35
Speaker 2: that we can do that, we can look to move
34:37
Speaker 2: into other markets beyond the ones that we're focused on.
34:40
Speaker 2: So right now we're going to stay focused on the
34:42
Speaker 2: ones that we're in and go deep in those countries,
34:45
Speaker 2: and then with that success, we'll look to go into
34:47
Speaker 2: other countries. But right now, our focus is in the
34:49
Speaker 2: core countries that we're in right now, which is meaningful
34:52
Speaker 2: runway to growth. If you just look at the countries
34:55
Speaker 2: we're serving, there's about three million ambulatory cardiac monitoring tests
34:59
Speaker 2: being performed every single year in those countries already. The
35:03
Speaker 2: majority of those are short duration Halter style monitors, which
35:06
Speaker 2: we know we provide a better outcome too. We just
35:11
Speaker 2: got to shift mind share in those local countries.
35:14
Speaker 1: Yeah, and one of the key countries are what Japan,
35:16
Speaker 1: the UK, any other ones that are kind of noteworthy.
35:21
Speaker 2: The Japan and UK are the two most noteworthy. Japan's
35:23
Speaker 2: the second largest market in the world. Over one and
35:26
Speaker 2: a half million tests are being performed there. We have
35:28
Speaker 2: a high medical needs designation that is specific to ZEO
35:32
Speaker 2: in that local market. May've asked us to run a
35:35
Speaker 2: head to head study against local Japanese manufactured product on
35:39
Speaker 2: the Japanese population. We're in the midst of that trial.
35:43
Speaker 2: We should be in a place where we can present
35:45
Speaker 2: that data back to them in the first half to
35:48
Speaker 2: mid part of next year, and that should articulate the
35:50
Speaker 2: differentiation of our solution versus the traditional standard of care today,
35:55
Speaker 2: and that's where we would hope to see a different
35:57
Speaker 2: level of reimbursement for our product. We've seen some good
36:00
Speaker 2: early indications, you know, the the reimbursement authorities came out
36:05
Speaker 2: and gave us a twenty dollars uplift on the product
36:09
Speaker 2: about two months ago without any real data, just more
36:12
Speaker 2: market experience. So I think they're seeing already the value
36:15
Speaker 2: of it. But obviously we think the value that we
36:17
Speaker 2: deliver as far beyond where we're getting reimbursed today, so
36:20
Speaker 2: we'll keep pushing into it. But Japan's the second largest
36:23
Speaker 2: market in the world, Big Opportunity, UK is a very
36:26
Speaker 2: healthy market. Again, those two markets alone are going to
36:30
Speaker 2: drive our international growth. But then there are some of
36:33
Speaker 2: those EU countries that are a bit smaller markets that
36:36
Speaker 2: we'll focus on, you know, building, but we're not going
36:39
Speaker 2: to go broader at this point in time.
36:41
Speaker 1: Yeah, And then you know, kind of it's interesting because
36:43
Speaker 1: it sounds like, you know, being able to you're almost
36:47
Speaker 1: essentially picking your favorite children because you know, you're you're
36:49
Speaker 1: allocating certain finances to those specific countries that dive deeper
36:53
Speaker 1: instead of just throwing money out through all different countries,
36:56
Speaker 1: which kind of then you know, we talked earlier that
36:59
Speaker 1: you know, the difference betwe I mean a year ago
37:00
Speaker 1: and now is that you're reaching that sustainable profitability and
37:04
Speaker 1: not even just adjusted ebadah, but you're showing gap net
37:07
Speaker 1: income being positive. You showed positive free cash flow all
37:10
Speaker 1: those ones that you can't make. You know, some companies
37:13
Speaker 1: can make certain adjustments to adjusted ebadad to maybe it
37:15
Speaker 1: look better, but you can't adjust free cash flow. How
37:18
Speaker 1: are you looking to scale the business as you're kind
37:23
Speaker 1: of you know, you know, on the paths to get
37:25
Speaker 1: into a billion dollars in sales. One of the things is,
37:28
Speaker 1: you know, how do you scale that I DTF or
37:31
Speaker 1: the independent diagnostic testing facilities? Uh, And you know, basically,
37:35
Speaker 1: how do you continue that path of profitability while you're
37:38
Speaker 1: still making these investments to you know, scale revenue.
37:42
Speaker 2: It's a great question, and I'm glad you sort of
37:45
Speaker 2: brought up the whole progress around profitability. I think it's
37:47
Speaker 2: an important part of how we're maturing our company. You know,
37:52
Speaker 2: we we aspire to be a growth company, and we're
37:55
Speaker 2: going to make the investments necessary to make sure that
37:57
Speaker 2: we can continue to be a growth company, but we
38:00
Speaker 2: want it to be profitable growth, and so we're very
38:02
Speaker 2: focused on ensuring that we're good stewards of the business,
38:05
Speaker 2: we're good operators of the business, and that we're bringing
38:08
Speaker 2: efficiencies into our company. We're at all possible. When we
38:13
Speaker 2: started down this journey, you know, we were losing roughly
38:15
Speaker 2: twenty percent EBITDAH margins on every revenue dollar. We're now
38:20
Speaker 2: you know, north to ten percent positive, we're guiding well
38:24
Speaker 2: above that over the course of the full year. This year,
38:26
Speaker 2: to your point, last year was the first year of
38:28
Speaker 2: a full year being EBADAH profitable, free cash flow positive,
38:34
Speaker 2: delivered a fourth quarter of gap profitability. We see the
38:37
Speaker 2: path of being gap profitable on a full year basis
38:40
Speaker 2: in the not too distant future. Those are all big,
38:42
Speaker 2: big milestones, but we're doing it, Matt at the same
38:46
Speaker 2: time that we're making investments into open up new opportunities.
38:49
Speaker 2: So we're investing heavily in opening up primary care, We're
38:52
Speaker 2: investing heavily in opening up the innovative channel partners, we're
38:55
Speaker 2: investing in opening up the sleep channel. Right. These are
38:58
Speaker 2: all being done while we're driving those profitability improvements. And
39:02
Speaker 2: the way that we're doing is being very focused, very disciplined,
39:05
Speaker 2: and tactical around where we can bring cost out, drop
39:10
Speaker 2: some of that through to the bottom line, and continue
39:12
Speaker 2: to improve the profitability profile, but also reinvest some of
39:15
Speaker 2: those back into those areas that are better served to
39:17
Speaker 2: drive growth into the future. And so if you look
39:19
Speaker 2: at you know, cost a good soul gross margin as
39:22
Speaker 2: an example, we have improved the gross margin profile of
39:27
Speaker 2: our company consistently year after year for the last four years.
39:32
Speaker 2: That is a very focused, intentional effort of bringing automation
39:37
Speaker 2: into the manufacturing centers, bringing automation into the packaging centers
39:41
Speaker 2: into our logistics and distribution channels, really thinking differently around
39:45
Speaker 2: how we can be more efficient there packaging, how we
39:48
Speaker 2: can package more efficiently. These are intentional efforts and you're
39:51
Speaker 2: seeing it show up in the results. You know, from
39:53
Speaker 2: an operating expense perspective, we still spend way too much
39:57
Speaker 2: money on GNA just pure GNA. Look at GNA as
40:00
Speaker 2: a percent of revenue. This doesn't include selling cost or
40:03
Speaker 2: marketing costs. As pure general and administrative, we're still sitting
40:07
Speaker 2: in the mid forty percent of revenue. A lot of companies,
40:11
Speaker 2: I would say the majority of companies of our profile
40:14
Speaker 2: would have g and A spend sitting in the low
40:17
Speaker 2: twenty to mid twenty percent of revenue. So we still
40:20
Speaker 2: have a meaningful ways to go there, and there's a
40:22
Speaker 2: lot that we're doing to address it. Some of its
40:24
Speaker 2: systems related, some of its infrastructure related that that we
40:27
Speaker 2: just got to bring new capabilities and new ways of
40:29
Speaker 2: doing business, which we're focused on. But you're going to
40:32
Speaker 2: continue to see meaningful improvements and profitability for our company.
40:35
Speaker 2: We're not going to stop with what we've got it
40:37
Speaker 2: to This year, we said we want to get to
40:40
Speaker 2: fifteen percent adjusted EBADAH margins at a billion dollars, we
40:43
Speaker 2: see a clear path to a billion dollars in revenue
40:46
Speaker 2: in the not too distant future. We feel very comfortable
40:49
Speaker 2: we can get to fifteen percent adjusted EBITDAH margins at
40:51
Speaker 2: that revenue level, but we won't stop there. Yeah. As
40:55
Speaker 2: I look at the business, I think this is a
40:57
Speaker 2: business that can certainly get into the mid twenties from
40:59
Speaker 2: an EBITT perspective, and our goal and intent is to
41:03
Speaker 2: take it there over time while balancing, you know, the
41:06
Speaker 2: investments we need to make to make sure that this
41:09
Speaker 2: is a growth company first and foremost. And I see
41:12
Speaker 2: that pathway there.
41:13
Speaker 1: Yeah, and you're definitely we're definitely seeing the balance of
41:16
Speaker 1: both that path to profitability and the revenue growth still
41:20
Speaker 1: with kind of your guidance. So let's just close out.
41:22
Speaker 1: I mean, we covered a lot of ground on the
41:25
Speaker 1: consumer side of the spectrum, new products, new data, new
41:29
Speaker 1: business strategy, going into the primary care physicians to get
41:33
Speaker 1: the diagnostic process started earlier for these patients. Is there
41:37
Speaker 1: anything else that you see or where do you see
41:40
Speaker 1: this kind of ambulatory cardiac monitoring or not even cardiac
41:43
Speaker 1: monitoring or just ambulatory monitoring in five years, maybe going
41:48
Speaker 1: to your days at dexcom and seeing how dex commed
41:50
Speaker 1: and there's continuous glucose monitors or cgms go from kind
41:55
Speaker 1: of a type one insulin intensive, very sick patient base
41:58
Speaker 1: to now I can order one online. Is there a
42:02
Speaker 1: pathway for that in the future or is that still
42:05
Speaker 1: too soon to tell?
42:07
Speaker 2: I don't think it's too soon. I think we know
42:09
Speaker 2: that this has to ultimately get to a place where
42:11
Speaker 2: you're creating awareness at the patient or consumer level. So
42:15
Speaker 2: it's not a question of will it get there, it's
42:17
Speaker 2: more a question of how fast does it get there,
42:20
Speaker 2: And it's on our roadmap. We know that if there's
42:23
Speaker 2: twenty seven million folks out there who have cardiac arrhythmias,
42:26
Speaker 2: part of unlocking that is going to be creating awareness
42:29
Speaker 2: at the patient level themselves. And so how do we
42:32
Speaker 2: target the right individuals in the right way to make
42:35
Speaker 2: them aware that they may, in fact, or even more
42:40
Speaker 2: are very likely to have a cardiac arrhythmia and they
42:42
Speaker 2: should get monitored. We have to solve that, and we've
42:46
Speaker 2: got in our minds how we're going to solve that,
42:48
Speaker 2: but it does include sort of going direct to the
42:50
Speaker 2: patient and making the device available to them in other
42:53
Speaker 2: ways and other means. And I think the analogy of
42:56
Speaker 2: the dex com experiences is something that I certainly pull from.
43:01
Speaker 2: And I've got you know, folks here who can help,
43:03
Speaker 2: you know, relate back to that experience as well. And
43:05
Speaker 2: so I think we understand it well, we know where
43:07
Speaker 2: it has to go. I think direct to the patient,
43:10
Speaker 2: direct to the consumer is going to be a part
43:11
Speaker 2: of the future and has to be if the market
43:13
Speaker 2: is at least twenty seven million folks, and quite honestly
43:16
Speaker 2: that the data would indicate it might even be more
43:18
Speaker 2: than that. And so I think you have to go
43:20
Speaker 2: to the patient. I think that you know, over the
43:23
Speaker 2: next three, four or five years, I think you're going
43:26
Speaker 2: to see a very meaningful shift in the way healthcare
43:30
Speaker 2: is sort of administered, and in particular around sort of
43:34
Speaker 2: products of our style. And what I mean by that is,
43:37
Speaker 2: you know, you hit the nail on the head. We
43:39
Speaker 2: should think about IRATHM as ambulatory monitoring, not just ambulatory
43:42
Speaker 2: cardiac monitoring, because we are going into new disease states
43:45
Speaker 2: with our platform. But you're going to see a shift,
43:48
Speaker 2: and we're seeing it already too much more of a preventative,
43:52
Speaker 2: proactive monitoring to find these things earlier in the patient
43:58
Speaker 2: journeys and help eliminate and prevent and reduce downstream cost
44:04
Speaker 2: that is absolutely preventable. We know that if we can
44:08
Speaker 2: find a rhythm as earlier and treat those patients, the
44:11
Speaker 2: ability to reduce the likelihood of stroke or even worse
44:15
Speaker 2: resulting in hospitalizations is absolutely avoidable. We can bend that curve,
44:19
Speaker 2: and we're showing it in our innovative channel partners right now.
44:23
Speaker 2: So I think there's going to be a massive move
44:25
Speaker 2: to preventative, proactive, predictive care, of which we're leading the effort,
44:29
Speaker 2: and that's exciting for us. I think, well, we'll be
44:32
Speaker 2: looked at as one of those companies who are really
44:34
Speaker 2: pioneering a new way of health care. But we have
44:37
Speaker 2: to get away from this reactive symptom based care like
44:42
Speaker 2: it's too late if that's what we're waiting to make
44:43
Speaker 2: decisions upon. And I think we're changing that for healthcare.
44:47
Speaker 2: So we're excited about that. And I believe the markets
44:49
Speaker 2: are just so much larger than what most people believe
44:52
Speaker 2: them to be, and I think that's going to be
44:53
Speaker 2: validated over the next several years.
44:55
Speaker 1: Yeah, I totally agree with the proactive versus the reactive
44:59
Speaker 1: state of the MO. But Quentin, thank you so much
45:01
Speaker 1: for joining us today. It was another fabulous conversation with you.
45:05
Speaker 2: Well. Thanks for affording us the time and an opportunity
45:07
Speaker 2: to be together. I always enjoy it, So thanks a lot.
45:09
Speaker 1: Yes, and thank you to our producers at did Dia
45:11
Speaker 1: Somani and Mariamwaile for all the behind the scenes work.
45:16
Speaker 1: And thank you to our listeners for tuning in today.
45:18
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45:25
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