iRhythm Holdings, Inc.IRTC
iRhythm Holdings, Inc. Revenue Disclosure
BUSINESS SEGMENT AND REVENUE
Reportable Segments
Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the chief operating decision maker (“CODM”). The Company has one reportable and one operating segment, its global ambulatory cardiac monitoring business. The Company’s Chief Executive Officer, who is the Company’s CODM, reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and assessing financial performance.
The key measure of the Company's segment profit or loss is consolidated net loss, which is reported on the Company's consolidated statements of operations. Consolidated net loss is used to measure actual results versus expectations. The measure of segment assets is reported on the consolidated balance sheets as total assets.
Significant segment expenses within loss from operations, as well as within net loss, include cost of revenue, research and development, acquired in-process research and development ("IPR&D"), selling, general and administrative expenses, and impairment and restructuring charges which are each separately presented on the Company’s consolidated statements of operations. Other segment items within net loss include interest and other income (expense), net, and income tax provision.
Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers by payor type. The Company believes these categories aggregate the payor types by nature, amount, timing, and uncertainty of its revenue streams. Disaggregated revenue by payor type and major service line for the years ended December 31, 2025, 2024, and 2023 were as follows (in thousands, except percentages):
| Year Ended December 31, | ||||||||||||||||||||||||||
2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | |||||||||||||||||||||
| Contracted third-party payors | $ | 392,234 | 52 | % | 311,605 | 53 | % | $ | 267,195 | 54 | % | |||||||||||||||
| Centers for Medicare and Medicaid | 179,350 | 24 | % | 142,389 | 24 | % | 122,414 | 25 | % | |||||||||||||||||
| Healthcare institutions | 125,613 | 17 | % | 95,115 | 16 | % | 71,001 | 14 | % | |||||||||||||||||
| Non-contracted third-party payors | 49,941 | 7 | % | 42,730 | 7 | % | 32,071 | 7 | % | |||||||||||||||||
| Total | $ | 747,138 | $ | 591,839 | $ | 492,681 | ||||||||||||||||||||
Revenue generated from the United States comprised substantially all of the Company's revenue. No other country or customer, with the exception of CMS, comprised 10% or greater of the Company's revenue during each of the years ended December 31, 2025, 2024, and 2023.
Accounts Receivable, Provision for Credit Losses, and Contractual Allowances
Accounts receivable includes amounts due to the Company from healthcare institutions, third-party payors, and government payors and their related patients, as a result of the Company's normal business activities. Accounts receivable is reported on the consolidated balance sheets net of an estimated provision for credit losses and contractual allowances.
The Company establishes a provision for credit losses for estimated uncollectible receivables based on its assessment of the collectability of customer accounts and recognizes the provision as a component of selling, general and administrative expenses. The Company records a provision for contractual allowances, as a reduction of revenue, based on the estimated differences between contracted amounts and expected collection rates for services performed. Such provisions are based on the Company's historical experience and expected future claims denials. The Company updates the estimate for this provision each reporting period.
The Company regularly reviews the allowances by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay.
The following table presents the changes in the provision for credit losses (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of year | $ | 16,248 | $ | 20,289 | $ | 18,475 | |||||||||||
| Provision for credit losses | 30,835 | 22,583 | 17,105 | ||||||||||||||
| Write-offs | (32,448) | (26,624) | (15,291) | ||||||||||||||
| Balance, end of year | $ | 14,635 | $ | 16,248 | $ | 20,289 | |||||||||||
The following table presents the changes in the contractual allowance (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of year | $ | 50,961 | $ | 52,689 | $ | 41,389 | |||||||||||
| Add: provision for contractual adjustments | 68,831 | 50,880 | 52,523 | ||||||||||||||
| Less: contractual adjustments | (70,866) | (52,608) | (41,223) | ||||||||||||||
| Balance, end of year | $ | 48,926 | $ | 50,961 | $ | 52,689 | |||||||||||
Contract Liabilities
ASC 606, Revenue from Contracts with Customers, requires an entity to present a revenue contract as a contract liability when the Company has an obligation to transfer goods or services to a customer for which the Company has received consideration from the customer, or an amount of consideration from the customer is due and unconditional (whichever is earlier).
Certain of the Company’s customers pay the Company directly for the Zio LTCM Service upon patient registration or shipment of devices. Such advance payments are recognized as deferred revenue and are recorded as revenue when Zio reports are delivered to the healthcare provider. During the years ended December 31, 2025 and 2024, $2.9 million and $3.1 million related to the contract liability balance at the beginning of 2025 and 2024 was recognized as revenue, respectively. The deferred revenue liability was $4.2 million and $2.9 million as of December 31, 2025 and 2024, respectively.
Contract Costs
Under ASC 340, Other Assets and Deferred Costs (“ASC 340”), the incremental costs of obtaining a contract with a customer are recognized as an asset. Incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained.
The Company maintains short-term sales incentive compensation programs. As a practical expedient, ASC 340 permits the Company to immediately expense contract acquisition costs, because the asset that would have resulted from capitalizing these costs will be amortized in one year or less.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.