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Why iRhythm Technologies Stock Skyrocketed 248% in 2020

What happened

Shares of iRhythm Technologies (NASDAQ: IRTC), which makes wearable biosensors for detecting cardiac arrhythmias, soared 248% in 2020, according to data from S&P Global Market Intelligence. That performance made it one of the five best performing medical device stocks of the year.

For context, the S&P 500 index returned 18.4% last year.

iRhythm stock started 2021 with a loss of its winning groove. It's down 6.5% through Jan. 7, whereas the broader market has returned 2% over this period.

Image source: Getty Images.

So what

We can attribute iRhythm stock's powerful performance last year largely to investor optimism about the digital healthcare company's growth potential. Indeed, prior to its sales being hurt by the COVID-19 pandemic, its revenue was growing briskly. That said, potential investors should know that the company is not yet profitable.

In the first quarter, iRhythm's revenue jumped 31% year over year to $63.5 million. Management estimates that the coronavirus crisis -- which blew up at the tail end of the quarter -- hurt sales by about $2 million. So absent the pandemic, revenue would have risen roughly 36% year over year. Net loss was $9.1 million, or $0.34 per share, down slightly from a net loss of $8.3 million, or $0.34 per share, in the year-ago period.

In the second quarter, which was entirely affected by the pandemic, revenue edged down 3% year over year to $50.9 million. Net loss was $20.4 million, or $0.75 per share, down from a net loss of $10.7 million, or $0.43 per share, in the same period in 2019.

In the third quarter, iRhythm's revenue rose 32% year over year to $71.9 million. Net loss was $4.7 million, or $0.17 per share, up from a net loss of $18.3 million, or $0.72 per share, in the year-ago period. That result sped by the Wall Street consensus estimate of a loss of $0.51 per share.

"As we exited the quarter, many centers were prescribing Zio at or above the daily average we saw in February, prior to the impact of COVID-19," CEO Kevin King said in the earnings release. "While the pandemic undoubtedly created unprecedented challenges, it also served to escalate awareness as to the benefits of Zio as our digital platform allows for cardiac monitoring independent of patient and physician location."

Now what

Management didn't provide guidance for the fourth quarter. Wall Street is currently modeling for Q4 revenue to increase nearly 30% year over year to $76.6 million. Analysts are also expecting a loss of $0.31 per share, compared to a loss of $0.65 per share in the year-ago period.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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