Zio patch maker iRhythm files for $86M IPO

By Jonah Comstock
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iRhythm, maker of the wearable-and-wireless-but-not-connected Zio heart rate monitoring system, has filed with the SEC to raise up to $86 million in an initial public offering. 

The Zio patch, iRhythm's sole product as of now, is a small wearable sensor, used for multi-day monitoring of arrhythmias in cardiac patients (up to a fortnight). Unlike many participants in that space, however, the device does not wirelessly transmit data to a mobile device. Instead, readings are stored in the patch itself, which is then mailed back to iRhythm at the end of the monitoring period. 

Zio is noteworthy for two reasons. First, it was found to be more accurate, cheaper and better received by patients than a Holter monitor, the standard of care for at-home heart rate monitoring, in a small study conducted by Scripps Health in 2014. Second, the ZIO patch has secured reimbursement from at least one private payer (Aetna). The company added a mobile app last November, but still didn't connect their device to the app.

"Since our Zio Service was cleared by the U.S. Food and Drug Administration, or FDA, in 2009, we have provided the Zio Service to over 500,000 patients and have collected over 125 million hours of curated heartbeat data," the company wrote in its IPO document. "We believe the Zio Service is well-positioned to disrupt an already-established $1.4 billion U.S. ambulatory cardiac monitoring market by offering a user-friendly device to patients, actionable information to physicians and value to payors."

According to the document, the company is not profitable but is posting reasonable sales numbers. The company did $28.6 million in revenues in the six months ending June 2016, but posted a net loss of $10.6 million for that period. iRhythm has raised more than $100 million in VC money between 2007 and 2014. 

Around the time of the Scripps study, digital health luminary Dr. Eric Topol speculated on the future of Zio's technology in an interview with MobiHealthNews. 

"I'm thinking the Holter monitor has had a long course, since 1949, and it might be on the way out," he said at time. "The Holter monitor is very obtrusive for patients. You really can't have normal function for that period of time. You can't take a shower, you can't exercise. It's not a very good device and moreover, you have to have the patient come to the hospital to get a formal hook-up procedure and disconnect and there's a fee for that. It's antiquated technology and the time has come to say 'we can do better'. ... I think there's little reason to use a Holter when you have technologies like this that are going to be much more useful and much more powerful."