Investment Research report

iRhythm Technologies, Inc.

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Research Overview

INDEX:
S&P 500
Sector:
Healthcare
Position:
Short
Date:
Aug 18, 2025

After conducting a forensic financial review of iRhythm Technologies, Inc. (Nasdaq: IRTC) (“iRhythm" or the "Company") a medical technology company that supplies ambulatory cardiac monitors used to detect arrhythmias and other cardiac abnormalities that can indicate atrial fibrillation, Spruce Point believes that risks related to an ongoing Department of Justice investigation into product deficiencies that jeopardize lives are underappreciated. Our research, which includes a survey of 100 practicing cardiologists, supports our case that the Company’s key product offering is mature and undifferentiated and that its purported growth prospects rest too heavily on the unpromising asymptomatic market, AI capabilities, and international expansion. With just 11% upside to consensus price target, we believe owning IRTC shares is a poor risk / reward. Based on our evaluation, we estimate 40% - 70% potential long-term downside and material market underperformance risk.

The report highlights several key concerns with the Company, including:

• Overlooked systemic problems in iRhythm’s products and practices which have put patients’ lives at risk and have elicited FDA scrutiny and warning letters.  

• A Department of Justice investigation into cover ups and delayed disclosures by Company management related to fatal product flaws and regulatory violations

• Insiders have sold approximately $90 - $160 million of stock during the period of inaction depending on the issue referenced.

• Overhyped AI capabilities that are reliant on underqualified and outsourced personnel and inaccurate algorithms, causing mistrust from physicians.

• We believe the Company’s potential for growth in the asymptomatic market is largely overstated and has the potential to disappoint investors, particularly due to a strong lack of cardiologist support.

• Numerous headwinds that we expect to constrain the Company’s growth, coupled with declining revenue quality, poor financial transparency, and a history of poor profitability.

• The Company is valued at an approximate 100% and 200% premium to other medical device and medical testing services companies, respectively.

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