iRhythm Technologies won a pair of lucrative reimbursement codes from Medicare, leading IRTC stock to surge Friday.
Specifically, the Chicago-area Medicare Administrative Contractor increased how much it will pay for two of iRhythm's wearable heart-monitoring devices. In response, iRhythm boosted its 2022 revenue expectations by $10 million.
"We believe iRhythm has a durable revenue growth profile with a visible path to profitability," Needham analyst David Saxon said in a report to clients.
On today's stock market, IRTC stock jumped 5.8% to close at 124.97.
IRTC Stock: Sales Beat, Though Losses Grow
iRhythm makes wearable devices that monitor for irregular heart rhythms. It combines a medical device worn for up to two weeks with cloud-based data analytics. And, in the first quarter, Saxon says the company showed "underlying strength."
Sales popped more than 24% to $92.4 million and easily beat views for $86.8 million, according to FactSet. The company reported deeper-than-expected losses, however, at $1.71 per share. Analysts called for $1.10 and, in the year-earlier quarter, iRhythm reported a smaller 95-cent per-share loss.
For the year, iRhythm now expects $410 million to $420 million in sales — raising both the top and bottom ends of the outlook by $10 million. IRTC stock analysts currently call for $417.3 million in sales.
The Chicago shift is an unexpected boon. Two of iRhythm's devices will receive reimbursements of $329 and $342. The same devices in Houston only receive $223 and $233. As a result, iRhythm will likely focus on processing a higher number of Medicare volumes in Chicago, Saxon said.
He kept his buy rating on IRTC stock.
Will Shares Retake Their 50-Day Line?
Shares look likely to overtake their 50-day moving average at the open, MarketSmith.com shows.
IRTC stock is also highly rated by at least one IBD Digital standard. Shares have a Relative Strength Rating of 97, putting them in the leading 3% of all stocks in terms of 12-month performance.
Shares accelerated from August 2021 to touch a fresh high in early April. Since then, shares have fallen off. Retaking its 50-day line — which can act as a ceiling pressuring stocks downward — could help IRTC stock make a reversal.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
