iRhythm develops and manufactures heart monitoring devices designed to diagnose arrythmias. The Company’s principal product is a monitoring patch that provides electrocardiogram (“ECG”) monitoring for up to 14 days, called Zio XT. The Zio XT is intended for non-critical patients, as it does not provide real-time reporting.
In 2017, iRhythm developed Zio AT, a device the Company described as “offer[ing] the full benefits of [its] Zio XT Service, with the addition of real-time data transmission and notification of actionable clinical events.” Actionable arrhythmic events include atrial fibrillation, a condition that can cause troubling symptoms and serious medical complications, including blood clots that can lead to stroke and heart failure. The Zio AT comes with a cellular transmittal device that provides connectivity between the Zio AT and the proprietary algorithmic software that analyzes the ECG data and detects arrhythmic events for the 14-day wear period. Importantly, given its purported capabilities to provide “real-time” notifications of arrhythmic events, the Zio AT device is marketed to high-risk patients as a mobile cardiac telemetry device. These types of heart monitors that are approved for high-risk patients and provide near real-time alerts are also referred to as “real-time” monitors. Real-time monitors sell for a premium over monitors that do not provide real-time notifications of arrhythmic events.
The complaint alleges that, throughout the Class Period, Defendants falsely represented to investors that the Zio AT monitor was a real-time monitor intended for high-risk patients. Specifically, Defendants repeatedly touted the potential growth for the Zio AT as an innovative product that had only just begun to penetrate the market for real-time monitoring, which investors looked upon favorably given the premium selling price associated with devices approved for high-risk patients. As a result of these misrepresentations, the price of iRhythm common stock traded at artificially inflated prices throughout the Class Period.
Then, on May 4, 2023, the Company announced that “on April 4, 2023, [it] received a Subpoena Duces Tecum from the Consumer Protection Branch, Civil Division of the U.S. Department of Justice, requesting production of various documents regarding [its] products and services.” Although the Company refrained from providing additional detail about the DOJ’s request, in a May 5, 2023, report, J.P. Morgan analysts noted that one of iRhythm’s competitors, Boston Scientific, had also disclosed that it received a subpoena from the DOJ relating to its real-time monitoring product, which indicated to the analysts that the DOJ investigation into iRhythm was related to the Zio AT.
Finally, on May 30, 2023, iRhythm disclosed that it had received a warning letter from the FDA, which addressed a series of deficiencies tied to the marketing and capabilities of the Zio AT device. In particular, the FDA noted that iRhythm had falsely marketed the Zio AT as approved for use in high-risk patients that require real-time cardiac monitoring. In truth, according to the FDA, Zio AT is only approved for “long-term monitoring of arrhythmia events for non-critical care patients where real-time monitoring is not needed.” As a result of these disclosures, the price of iRhythm common stock declined precipitously.
If you are a long-term stockholder of iRhythm, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at [email protected], by telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
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Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
[email protected]
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