iRhythm to test the IPO market with up to $86M offering

iRhythm, the maker of the Zio wearable heart monitor, plans an initial public offering to raise up to $86 million it will use to step up the commercial and clinical reach of the device, the company said in an SEC filing.

The San Francisco-based company registered its intentions with the regulatory agency last week and will trade under “IRTC” on the Nasdaq exchange. Bookrunners for the offering are JP Morgan and Morgan Stanley.

In 2009 the company won FDA 510(k) clearance for the wearable Zio device, which records heartbeat data over a 14-day period. In its filing, iRhythm said the device has been used by about a half-million patients in collecting more than 100 million hours of data, which the company considers one of the largest repositories of ambulatory ECG patient data in the world.

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“This data provides us with a competitive advantage by informing our proprietary machine-learned algorithms, which may enable operating efficiencies, gross margin improvement and business scalability,” the company said in the filing. “We believe the Zio service is well-aligned with the goals of the U.S. healthcare system: improving population health, enhancing the patient experience and reducing per-capita cost.”

The company estimates the market for Zio to be as much as $1.4 billion. As of June 30, iRhythm said it had reimbursement contracts in the U.S. with government and private health insurers covering about 200 million of an estimated 290 million patients whose insurance covers the device.

Earlier this year, Gilead Sciences ($GILD) initiated a major Phase II/III trial of its hypertrophic cardiomyopathy candidate eleclazine that incorporates iRhythm’s Zio to measure an exploratory endpoint. The cardiac monitoring patch was to measure an exploratory trial endpoint--the change in arrhythmia burden including premature ventricular complexes, nonsustained ventricular tachycardia and paroxysmal atrial fibrillation.

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