In this day and age, if it a product exists you already know a company is looking to integrate cloud computing and machine learning. iRhythm is looking to do just that, but with your heart.
iRhythm technologies is a company that makes wireless pacemaker patches that are interconnected to smartphones to diagnose heart issues. Up over 50% year to date, it certainly has not missed a beat.
Numbers don’t lie
IRTC is not the type of stock you should hold without a long term horizon. As it stands they are pre-earnings, but revenues have continued to grow at an astounding pace, since 2014 at a CAGR of 66%. As new patients continue to discover and be prescribed to use the rhythm pacemaker, the revenue growth will continue. Currently they have yet to grow outside of the US market and still have much room to grow in the US market. We can expect 50%+ growth per year for the foreseeable future. Guidance for 2018 is in line for around 73% revenue growth. The company sees in the future once to scale high gross margins on the product, around 80% with EBITDA margins around a very high 30%. The company has a clean balance sheet with net cash to keep the business “beating” along.
Although you’re paying such a premium valuation company for a pre-profit company, you’re getting best in class technology that is said to have significant better outcomes than competitors. Straight to the point this is disruptive in a space that is only going to grow with the demographics to back it.
So how does it work?
The patch works by using good old high-tech bio-sensing technology as well as cloud based analytics and machine learning technology to help monitor and diagnose patients. These two, in combination, provide vital information, as these allow iRhythm to predict events such as stroke before they happen.
Risks.
This is a company that’s been trading higher than your blood pressure after buying Valeant at $300, and with no earnings and no earnings expected within the short term. iRhythm ideal for people with long time horizons, like say little 3 year old billy’s education savings or 26 year old marks retirement savings. potential competition down the line may be a fear, but with a top of the line disruptor such as rhythm, it’s worth taking a look at on a pull back for a buying opportunity for a long term disruptor.
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