By Bill Alpert

The market has left medical device stocks in the dust, but heart monitor maker iRhythm Technologies is proving an exception. As doctors and hospitals slap its Zio patch monitors on more patients, the stock has doubled this year.

Sales grew 31% in the September quarter that iRhythm reported last week, and the San Francisco-based firm expects to report its first profit in the current quarter.

"We're seeing validation of the proactive approach to monitoring," CEO Quentin Blackford told Barron's. "Up until now, everything's been reactive. Somebody has a symptom, somebody shows up in the emergency room and they wind up putting a patch on them."

Worn for a couple of weeks, the Zio monitor looks for irregular heart rhythms, such as atrial fibrillation -- a racing heartbeat that can presage a stroke or heart attack. Doctors already use patch monitors to study millions of patients each year with known heart problems. As many as 25 million Americans might have atrial fibrillation without showing symptoms, and iRhythm's fans hope doctors will use its patch to screen older patients who are at moderate risk of heart problems.

The anticoagulant drugs and cardiac ablation procedures for treating atrial fibrillation aren't without complication, so large studies are trying to determine if the additional arrhythmias found by devices like Zio are truly stroke threats. There is evidence that treating screened patients reduces strokes.

But many healthcare systems aren't waiting. Nearly 20 large healthcare systems are screening with Zio patches, and that helped September quarter revenue reach $193 million, and beat Wall Street's estimates. iRhythm raised its sales forecast for the year, to between $735 million and $740 million. Sales might grow another 17% in 2026, says the analyst consensus.

Blackford expects the company to report its first, small, quarterly profit in this December quarter. iRhythm has a positive operating cash flow margin of about 10%, but steady cash net profit might not arrive until 2027, when William Blair analyst Brandon Vazquez projects the company will report almost 60 cents a share in profit (adjusted for noncash costs).

At $178 a share, the stock has already reached a high multiple of those expected earnings. But Vazquez still rates iRhythm as a Buy. So does Oppenheimer's Suraj Kalia, who raised his price target after last week's report, from $175 to $225. Both analysts say that Zio screening will prove to save lives and cut healthcare costs.

With profits in sight for this device maker, its stock has become more suitable for more institutional investors. iRhythm's beat should go on.

Write to Bill Alpert at william.alpert@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 05, 2025 13:38 ET (18:38 GMT)

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