iRhythm Technologies (NASDAQ:IRTC) dropped 2% Monday morning after Spruce Point Capital Management released a short report targeting the cardiac monitoring company.
The report, titled “Investor Complacency is Off the Charts,” suggested that iRhythm shares could face 40%-70% long-term downside, projecting a potential trading range of roughly $43 to $94 per share. Spruce Point raised concerns regarding both the company’s cardiac monitoring products and the credibility of its management team.
According to the report, Spruce Point found indications that the Department of Justice might be investigating a potential cover-up by iRhythm management related to possibly dangerous product defects. The firm highlighted FDA findings that the company’s devices could put patients at risk, specifically noting issues with the Zio AT device, which allegedly stopped transmitting patient data above certain limits.
The short seller also questioned iRhythm’s growth prospects in the asymptomatic patient market, which the company has identified as a major opportunity. Spruce Point’s survey of 100 cardiologists reportedly showed that testing asymptomatic patients “has not been adopted as a standard of care by any credible organization.”
The report additionally argued that iRhythm’s offerings are undifferentiated amid growing competition, including from consumer devices like Apple (NASDAQ:AAPL) and Samsung (USOTC:SSNHZ) smartwatches, which can detect arrhythmias with “near-comparable sensitivity.”
Spruce Point concluded that iRhythm’s current market valuation of about $5.4 billion, representing 7x 2026 projected revenue, is unjustified for what it described as a “niche and commoditized single product company with a history of poor profitability.”
iRhythm Technologies stock price
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