You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in Item 1 of Part I of this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.” Overview We are a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. Our principal business is the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services that we believe allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology. Each iRhythm ACM System combines a wire-free, patch-based, 14-day wearable biosensor (FDA-cleared, CE-marked and/or Japan PMDA-approved, as applicable) that continuously records ECG data with a proprietary, cloud-based data analytic software (FDA-cleared, CE-marked, and Japan PMDA-approved) to help physicians monitor patients and diagnose arrhythmias. Since first receiving clearance from FDA for our technology in 2009, we have supported physician and patient use of this technology and provided ACM services from our Medicare-enrolled IDTFs and with our qualified technicians. We have provided our iRhythm Services using our iRhythm ACM System. Since receiving FDA clearance, we have provided the iRhythm Services via more than 13 million patient reports and have collected over 3 billion hours of curated heartbeat data. We receive revenue for our iRhythm Services primarily from third-party payors, which include contracted third-party payors and CMS. The remainder of our revenue comes from healthcare institutions, which are typically hospitals or private physician practices, who purchase the iRhythm Services from us directly. We rely on third-party billing partners to submit patient claims and collect from commercial payors, certain government agencies, and patients. The following are iRhythm Services shown as a percentage of revenue: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Contracted third-party payors 51% 52% 52% 52% Centers for Medicare & Medicaid Services 26% 24% 26% 24% Healthcare institutions 17% 17% 16% 17% Non-contracted third-party payors 6% 7% 6% 7% Cybersecurity Incident In June 2026, a threat actor improperly obtained certain sensitive information of ours maintained on certain third-party-hosted business applications (the “Cybersecurity Incident”). We promptly activated our cybersecurity response plan and launched an investigation with the support of external advisors and cybersecurity experts to assess and contain the threat, and, as of the date of the filing of this Quarterly Report on Form 10-Q, we have not identified evidence of ongoing unauthorized access to our systems. 28 During the second quarter of 2026, we incurred losses related to the unauthorized activity, including investigation and remediation costs. We maintain cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cybersecurity Incident. While we expect to incur further expenses related to the Cybersecurity Incident, inclusive of customer and patient notifications and identity protection, we plan to seek reimbursement of some of these losses by submitting claims to our insurers. There can be no assurance that such coverage will be sufficient to cover all losses we may incur, and the exact timing and amount of any such reimbursements is not known at this time. As of the date of the filing of this Quarterly Report on Form 10-Q, we believe that the Cybersecurity Incident is not reasonably likely to have a material impact on our financial condition or results of operations. For more information about risks relating to the impact of the Cybersecurity Incident, see Item 1A. “Risk Factors” in Part II of this Quarterly Report on Form 10-Q. We have also been named as a defendant in several lawsuits related to the Cybersecurity Incident (Refer to Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q). Key Business Metric Non-GAAP Financial Measure Adjusted EBITDA is a key measure we use to assess our financial performance and it is also used for internal planning and forecasting purposes. We believe Adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operational performance across our historical financial periods. In addition, this measure is frequently used by analysts, investors, and other interested parties to evaluate and assess performance. We define Adjusted EBITDA for a particular period as net income (loss) before income tax provision, depreciation and amortization, interest expense, and interest income and as further adjusted for stock-based compensation expense, changes in fair value of strategic investments, impairment charges, business transformation costs, certain intellectual property litigation expenses, certain corporate litigation settlements (net of expected insurance recoveries), costs related to the Cybersecurity Incident (net of expected insurance recoveries), and loss on extinguishment of debt. Business transformation costs include costs associated with professional services, employee termination and relocation, third-party merger and acquisition, integration, and other costs to augment and restructure the organization, inclusive of both outsourced and offshore resources. Adjusted EBITDA is a non-GAAP financial measure and is presented for supplemental informational purposes only and should not be considered as an alternative or substitute to financial information presented in accordance with GAAP. This measure has certain limitations in that it does not include the impact of certain expenses that are reflected in our unaudited condensed consolidated statements of operations that are necessary to run our business. We may identify additional charges and gains to exclude from Adjusted EBITDA that are significant in nature which may impact period to period comparability and do not represent the ongoing results of the business. Other companies, including other companies in our industry, may not use this measure or may calculate this measure differently than as presented in this Quarterly Report on Form 10-Q, limiting its usefulness as a comparative measure. The following table presents a reconciliation of Net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA (in thousands): 29 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net loss1 $ (381) $ (14,218) $ (14,314) $ (44,918) Interest expense 3,294 3,278 6,584 6,551 Interest income (4,776) (5,321) (9,655) (10,240) Changes in fair value of strategic investments (822) (2,152) (2,269) (2,995) Income tax provision (benefit) — (183) 500 482 Depreciation and amortization 5,222 5,105 10,264 10,315 Stock-based compensation 20,039 22,827 41,530 46,171 Impairment charges — 2,479 — 2,479 Business transformation costs 1,158 925 1,504 1,428 Intellectual property litigation expenses 4,928 2,956 8,617 3,788 Litigation settlements 13,950 — 13,950 — Cybersecurity incident 686 — 686 — Adjusted EBITDA $ 43,298 $ 15,696 $ 57,397 $ 13,061 1 Net loss for the three and six months ended June 30, 2026 includes $0.3 million and $0.6 million of acquired in-process research and development expense, and $1.7 million and $2.0 million for the three and six months ended June 30, 2025, respectively. Macroeconomic Factors Our future results of operations and liquidity could be materially adversely affected by macroeconomic factors contributing to delays in payments of outstanding receivables, supply chain disruptions or shortages, commodity price increases, tariffs on imports, and inflationary pressure, uncertain or reduced demand, a tightening labor market, and the impact of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers. The current macroeconomic environment is impacting our customers, both financially and operationally. Hospitals are experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care. Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs, interest rate volatility make access to credit more expensive, and unrealized losses decrease available cash reserves. As a consequence of the financial pressures and decreased profitability, some hospitals have indicated that they are lowering their capital investment plans and tightening their operational budgets. Private and government payors around the world are increasingly challenging the utilization and overall cost charged for medical products and services. The containment of healthcare costs has become a priority of governments on a global basis. Private and government payors may decline to cover and reimburse for claims or portions of claims. Climate-related events, including the increasing frequency of extreme weather events, natural disasters, or other catastrophic events may cause damage or disruption to our domestic or global customers or our operations, which could have an adverse effect on our business, operating results, and financial condition. We have adapted our iRhythm Services to meet the immediate needs of physicians, customers, and patients and significantly increased the utilization of our home enrollment service, which allows patients to receive and wear the single-use Zio patch without going to a healthcare facility. Our hybrid work arrangements and decision to pursue a sublease have previously resulted in an impairment of our right-of-use asset and related leasehold improvements and furniture and fixtures. As we continue to evaluate our global real estate footprint, we may incur additional impairment charges related to real property lease agreements. 30 Revenue, net The majority of our revenue is derived from provision of our iRhythm Services to customers in the United States. We earn revenue from the provision of our iRhythm Services primarily from contracted third-party payors, CMS, and healthcare institutions. A small percentage of our revenue is from non-contracted third-party payors. We recognize revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which considers the amount submitted for payment and the amount received. These estimates require significant judgment by management. In determining the amount to accrue for the iRhythm Services (including a delivered report), we consider factors such as claim payment history from both payors and patient, available reimbursement, including whether there is a contract between us and the payor or healthcare institution and historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments. We have historically experienced reduced revenue during the third quarter, as well as during the year-end holiday season. We believe this is the result of physicians and patients taking vacations and patients electing to delay our monitoring services during the summer months or holidays. Revenue may be impacted by the outcome of adjudications with contracted and non-contracted payors, as well as changes in CMS reimbursement rates that are updated annually. Cost of Revenue Cost of revenue includes direct labor, material costs, tariffs, equipment and infrastructure expenses, amortization of internal-use software, allocated overhead, royalties, and shipping and handling. Direct labor includes payroll-related costs including stock-based compensation involved in manufacturing, clinical data curation, and customer service. Material costs include both the disposable materials costs of the Zio patches and amortization of the PCBAs. Each Zio XT and Zio monitor includes a PCBA, and each Zio AT includes a PCBA and gateway board, the cost of which is amortized over the expected useful life of the board. We expect cost of revenue to increase in absolute dollars as our revenue increases due to increased direct labor, direct materials, and variable spending, as well as amortization of internal-use software, partially offset by economies of scale in relation to fixed costs such as overhead and facilities costs. Our gross margin has been and will continue to be affected by a variety of factors, including increased contracting with third-party payors and institutional providers. We have in the past been able to increase our pricing as third-party payors become more familiar with the benefits of the iRhythm Services and move to contracted pricing arrangements. We expect increases to the cost of revenues due to increases to materials and electronics components pricing, labor rates, shipping rates, amortization of capitalized internal-use software, along with increases in the general level of inflation and tariffs on imports (which may complicate and increase costs associated with our supply chain). We expect to partially offset these increases by reduced costs from obtaining volume purchase discounts for our material costs, implementing scan-time algorithms and process improvements, automating manufacturing assembly and packaging, and through software-driven and other workflow enhancements to reduce labor costs. We experienced an improvement in our gross margin from 2023 to 2025, and continue to focus on improving annual gross margins in the future, while navigating through the macroeconomic and supply chain headwinds discussed above that we expect to face. Research and Development Expenses We expense research and development costs as they are incurred. Research and development expenses include payroll-related costs, including stock-based compensation, consulting services, clinical studies, laboratory supplies, milestone payments and allocated facility overhead costs. We expect our research and development costs to increase in absolute dollars as we hire additional personnel to develop new product and service offerings, product enhancements, and clinical evidence. Acquired In-Process Research and Development Expenses Our in-process research and development (“IPR&D”) acquired in an asset acquisition for use in research and development activities with no alternative future use is expensed in the unaudited condensed consolidated statements of operations. 31 Selling, General and Administrative Expenses Our sales and marketing expenses consist of payroll-related costs, including stock-based compensation, sales commissions, travel expenses, consulting, public relations costs, direct marketing, tradeshow and promotional expenses, and allocated facility overhead costs. Our general and administrative expenses consist primarily of payroll-related costs for executive, finance, legal and administrative personnel, including stock-based compensation. Other significant expenses include professional fees for legal and accounting services, consulting fees, recruiting fees, bad debt expense, third-party patient claims processing fees, business transformation, and travel expenses. Litigation Settlements Litigation settlements consist of amounts recorded to settle outstanding claims against us, net of expected insurance recoveries. Impairment Charges Impairment charges consist of amounts recorded to write down the carrying value of long-lived assets to fair value. Interest Income Interest income consists of interest income received on our cash and cash equivalents and marketable securities. Interest Expense Interest expense is attributable to borrowings under our 2029 Notes. See Note 8, Debt, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our debt. Other Income, Net Other income, net consists primarily of changes in fair value of our strategic loan and equity investments, as well as realized and unrealized foreign currency exchange gains or losses. 32 Results of Operations Comparison of the Three and Six Months Ended June 30, 2026 and 2025 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change (in thousands, except percentages) * Revenue, net $ 224,172 $ 186,687 $ 37,485 20 % $ 423,562 $ 345,364 $ 78,198 23 % Cost of revenue 60,967 53,830 7,137 13 % 119,004 103,291 15,713 15 % Gross profit 163,205 132,857 30,348 23 % 304,558 242,073 62,485 26 % Operating expenses: Research and development 19,843 21,012 (1,169) (6) % 41,201 42,531 (1,330) (3) % Acquired in-process research and development 299 1,698 (1,399) (82) % 595 1,994 (1,399) (70) % Selling, general and administrative 131,655 126,376 5,279 4 % 267,539 246,333 21,206 9 % Litigation settlements 13,950 — 13,950 N/M 13,950 — 13,950 N/M Impairment charges — 2,479 (2,479) N/M — 2,479 (2,479) N/M Total operating expenses 165,747 151,565 14,182 9 % 323,285 293,337 29,948 10 % Loss from operations (2,542) (18,708) 16,166 (86) % (18,727) (51,264) 32,537 (63) % Interest and other income, net: Interest income 4,776 5,321 (545) (10) % 9,655 10,240 (585) (6) % Interest expense (3,294) (3,278) (16) — % (6,584) (6,551) (33) 1 % Other income, net 679 2,264 (1,585) (70) % 1,842 3,139 (1,297) (41) % Total interest and other income, net 2,161 4,307 (2,146) (50) % 4,913 6,828 (1,915) (28) % Loss before income taxes (381) (14,401) 14,020 (97) % (13,814) (44,436) 30,622 (69) % Income tax provision (benefit) — (183) 183 N/M 500 482 18 4 % Net loss $ (381) $ (14,218) $ 13,837 (97) % $ (14,314) $ (44,918) $ 30,604 (68) % N/M - Not meaningful * Certain numbers expressed may not sum due to rounding. Revenue, net Revenue, net increased by $37.5 million, or 20%, to $224.2 million during the three months ended June 30, 2026, as compared to $186.7 million during the three months ended June 30, 2025. Revenue, net increased by $78.2 million, or 23%, to $423.6 million during the six months ended June 30, 2026, as compared to $345.4 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase in revenue was primarily attributable to an increase in volume of iRhythm Services resulting from increased demand. In particular, during the three and six months ended June 30, 2026, total revenue volume for both Zio monitor and Zio AT grew, compared to the prior year, resulting from existing and new account growth within our third-party payors, CMS, and healthcare institutions customer groups. We have experienced higher volumes from larger healthcare enterprise accounts which utilize both Zio monitor and Zio AT. Overall average selling price increased modestly during the three and six months ended June 30, 2026, as compared to the prior year period, driven primarily by Zio monitor volume across our customer base. In the three and six months ended June 30, 2026, we experienced contractual allowance reserve improvements resulting from improved market access, contracting execution, and collection performance. During the three and six months ended June 30, 2025, we recognized higher contractual allowance reserves, resulting from billing disruptions due to the Change Healthcare cybersecurity incident in the first quarter of 2024, as well as higher payor claim denials. Additionally, during the three and six months ended June 30, 2026, we also experienced annual reimbursement increases across certain payor categories, including CMS, as compared to the same periods during 2025. 33 Cost of Revenue Cost of revenue increased by $7.1 million, or 13%, to $61.0 million during the three months ended June 30, 2026, as compared to $53.8 million during the three months ended June 30, 2025. Cost of revenue increased by $15.7 million, or 15%, to $119.0 million during the six months ended June 30, 2026, as compared to $103.3 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase was primarily due to increases in material component costs (inclusive of tariffs), amortization costs related to Zio monitor and Zio AT PCBA, material and PCBA scrap costs, headcount-related costs, and freight costs associated with the increase in volume of iRhythm Services. During the first half of 2026, we experienced lower per unit costs relating to manufacturing efficiencies, primarily relating to Zio monitor. Research and Development Expenses Research and development expenses decreased by $1.2 million, or 6%, to $19.8 million during the three months ended June 30, 2026, as compared to $21.0 million during the three months ended June 30, 2025. Research and development expenses decreased by $1.3 million, or 3%, to $41.2 million during the six months ended June 30, 2026, as compared to $42.5 million during the six months ended June 30, 2025. The decrease in research and development expenses for the three and six months ended June 30, 2026 was primarily due to lower headcount-related costs (including stock-based compensation), which support ongoing FDA remediation and sustaining activities, product development consulting, and further development, enhancement, and functionality of our current and future product offerings. Acquired In-Process Research and Development Expenses Acquired IPR&D expenses decreased by $1.4 million, or 82%, to $0.3 million during the three months ended June 30, 2026, as compared to $1.7 million during the three months ended June 30, 2025. Acquired IPR&D expenses decreased by $1.4 million, or 70%, to $0.6 million during the six months ended June 30, 2026, as compared to $2.0 million during the six months ended June 30, 2025. During the three and six months ended June 30, 2025, we recognized additional IPR&D expense as a result of recognizing an increase in our contingent consideration liability related to regulatory milestones. See Note 5, Fair Value Measurements, and Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $5.3 million, or 4%, to $131.7 million during the three months ended June 30, 2026, as compared to $126.4 million during the three months ended June 30, 2025. Selling, general and administrative expenses increased by $21.2 million, or 9%, to $267.5 million during the six months ended June 30, 2026, as compared to $246.3 million during the six months ended June 30, 2025. For the three and six months ended June 30, 2026, the increase in selling, general, and administrative expenses was primarily attributable to increases in marketing and promotional costs, legal and professional fees for litigation matters, provisions for credit losses, and claims processing fees. The increase was offset by lower headcount-related costs (including stock-based compensation). Intellectual property litigation costs relating to our patent litigation with Welch Allyn, Inc. (“Welch Allyn”) and Bardy Diagnostics, Inc. (“BardyDx”), wholly-owned subsidiaries of Baxter International, Inc. (“Baxter”), during the three and six months ended June 30, 2026 were $4.9 million and $8.6 million, respectively, as compared to $3.0 million and $3.8 million for the three and six months ended June 30, 2025, respectively. Business transformation costs for the three and six months ended June 30, 2026 were $1.2 million and $1.5 million, respectively, as compared to $0.9 million and $1.4 million for the three and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2026, we incurred $0.7 million related to the Cybersecurity Incident. Litigation Settlements During the three and six months ended June 30, 2026, we recorded a litigation settlement expense, net of expected insurance recoveries, of $14.0 million associated with the settlement of a putative class action lawsuit. See Note 7, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Impairment Charges Impairment charges were nil during the three and six months ended June 30, 2026, as compared to $2.5 million during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system. We do not intend to commercially launch the Zio Watch. 34 Interest Income Interest income decreased by $0.5 million to $4.8 million during the three months ended June 30, 2026, as compared to $5.3 million during the three months ended June 30, 2025. Interest income decreased by $0.6 million to $9.7 million during the six months ended June 30, 2026, as compared to $10.2 million during the six months ended June 30, 2025. The decrease for the three and six months ended June 30, 2026 was primarily attributable to lower interest rates on invested balances, as compared to the same period in 2025, offset by higher average invested balances in 2026. Interest Expense Interest expense remained flat during the three and six months ended June 30, 2026, as compared to $3.3 million and $6.6 million during the three and six months ended June 30, 2025, respectively. The interest expense is primarily attributable to the 2029 Notes borrowed in March 2024. Other Income, Net Other income, net decreased by $1.6 million to $0.7 million during the three months ended June 30, 2026, as compared to $2.3 million during the three months ended June 30, 2025. Other income, net decreased by $1.3 million to $1.8 million during the six months ended June 30, 2026, as compared to $3.1 million during the six months ended June 30, 2025. The decreases were primarily attributable to the changes in the fair value of our strategic loan investments recognized during the three and six months ended June 30, 2025. Income Tax Provision (Benefit) No income tax expense was recognized during the three months ended June 30, 2026, as compared to an income tax benefit of $0.2 million during the three months ended June 30, 2025, representing an increase in the income tax provision of $0.2 million. Income tax provision remained flat for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The income tax provision for each of the three and six-month periods primarily relates to state and foreign taxes. On July 4, 2025, legislation referred to as the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA makes certain provisions of the Tax Cuts and Jobs Act of 2017 permanent and makes changes to some U.S. corporate tax provisions, many of which have different effective dates. Key corporate tax provisions of the OBBBA include the restoration of 100% bonus depreciation, the introduction of new Section 174A permitting immediate expensing of domestic research and experimental expenditures, modifications to Section 163(j) interest expense limitations, and the expansion of Section 162(m) aggregation requirements. We continue to evaluate the impact of the OBBBA, but do not expect the OBBBA to have a material impact on our effective tax rate. Liquidity and Capital Resources Overview As of June 30, 2026, we had cash and cash equivalents of $246.7 million, marketable securities of $344.6 million, and accounts receivable, net of $84.3 million. We continuously review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the current macroeconomic environment, including inflation, interest rate volatility, and potential instability in the global banking system. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. We believe that our current cash, cash equivalents, and marketable securities balances, together with income to be derived from the sales of our iRhythm Services, will be sufficient to meet our liquidity requirements for at least the next 12 months. On September 3, 2019, we entered into a Development Collaboration Agreement with Verily Life Sciences LLC, an Alphabet company (“VLS”) and Verily Ireland Limited (“VIL” and together with VLS, “Verily”) (such Development Collaboration Agreement, as amended by Amendment No. 1 dated April 26, 2021 and Amendment No. 2 dated January 24, 2022, the “Development Agreement”). The Development Agreement involved joint development and production of intellectual property between us and Verily. In August 2025, we and Verily mutually terminated the Development Agreement, subject to our continued rights to a license to certain intellectual property associated with a mobile app developed under the Development Agreement. During the year ended 2025, we recorded an impairment charge of $2.5 million associated with capitalized internal-use software in development relating to the Zio Watch with our clinically integrated ZEUS system. 35 On August 30, 2024, we entered into a Technology License Agreement (as amended, the “License Agreement”) with BioIS, pursuant to which (i) we will receive a perpetual fully paid up license to certain of BioIS’ intellectual property, technology and products for research, development and commercialization of potential next generation products and services in certain fields of use, including (x) an exclusive license to develop and commercialize pulse oximetry, accelerometry, and trending non-invasive blood pressure technologies for use within our ambulatory cardiac monitoring products and services, and (y) a limited, non-exclusive license to develop and commercialize products and services for use in unattended, home-based diagnostic testing and assessment of central and obstructive sleep apnea, and (ii) iRhythm and BioIS agreed to negotiate in good faith a supply agreement for pulse oximetry hardware. Under the terms of the License Agreement, during the third quarter of 2024 we paid BioIS an upfront fee of $15.0 million in cash consideration. In connection with the License Agreement, we also purchased an aggregate of $40.0 million of convertible promissory notes from BioIS of which $20.0 million of the convertible promissory notes (“Milestone Notes”) were designated for satisfaction of our regulatory milestone payment obligations. The Milestone Notes, plus accrued and unpaid interest, if any, will be cancelled, if outstanding, upon the achievement of the regulatory milestones up through December 31, 2026. In June 2025, BioIS achieved the first of two regulatory milestones. As of June 30, 2026, we are in the process of completing all required contractual conditions in order to cancel $10.0 million in Milestone Notes plus accrued and unpaid interest. On June 3, 2026, we entered into a binding Stipulation and Agreement of Settlement (the “Securities Settlement Agreement”) to fully resolve the putative class action securities litigation. The Securities Settlement Agreement provides for a settlement payment of $45.0 million, inclusive of lead plaintiff’s attorneys' fees and litigation expenses in exchange for the complete dismissal with prejudice of the action and a release of all claims against the named defendants in connection with the action, without any admission of fault, liability, wrongdoing or damages by the defendants. During the three and six months ended June 30, 2026, we recorded a litigation settlement liability of $45.0 million within accrued liabilities on our unaudited condensed consolidated balance sheet. We are entitled to recover approximately $40.0 million related to litigation legal fee defense costs as well as the settlement liability under applicable insurance policies, which has been recorded within prepaid expenses and other current assets on our unaudited condensed consolidated balance sheet. As of June 30, 2026, we incurred approximately $9.0 million in litigation legal fee defense costs expected to be recovered through insurance, with a remaining amount of approximately $31.0 million in settlement costs expected to be recovered through insurance, of which we have received $4.1 million in insurance recoveries. As a result, during the three and six months ended June 30, 2026, we recorded litigation settlement expense, net of expected insurance recoveries, of approximately $14.0 million in the accompanying unaudited condensed consolidated statement of operations. On July 31, 2026, we entered into a settlement and license agreement (the “Baxter Settlement Agreement”) with Baxter, Welch Allyn, Inc. and BardyDx (collectively, the "Baxter Parties") to resolve all outstanding patent litigation among the parties. Under the Baxter Settlement Agreement, we paid the Baxter Parties $50.0 million on July 31, 2026. The Baxter Settlement Agreement also provides each party and its affiliates with a worldwide, royalty-free, non-exclusive, fully paid-up license under the patents asserted in the litigation and other related patents and patent applications, in each case, to exploit products and services comprising or involving certain sensors used for cardiac monitoring. Except for the $50.0 million settlement payment, the Baxter Settlement Agreement does not require either party to pay royalties or other compensation. The Baxter Settlement Agreement also includes mutual covenants not to sue for six years from the effective date of the Baxter Settlement Agreement with respect to the exploitation of licensed products and services and mutual agreements not to challenge the licensed patents and patent applications, unless such licensed patents are enforced against the applicable party or its affiliates. On August 5, 2026, we entered into a definitive agreement to acquire Vital Connect, Inc. ("VitalConnect"), a wearable biosensor technology and ambulatory cardiac monitoring company. Consideration for the acquisition totals $287.5 million, consisting of $237.5 million in cash and $50.0 million in our common stock, subject to customary adjustments. The definitive agreement also provides customary termination rights to each of the parties and provides that we will pay a reverse termination fee of $9.0 million to VitalConnect if the definitive agreement is terminated under specified circumstances related to the failure to obtain required antitrust approvals. In addition, we will provide VitalConnect with interim financing to fund its normal course of operations and certain specified expenses as the parties work towards closing, with an initial funding of $10.0 million and additional increments thereafter, up to an aggregate maximum amount of $30.0 million. The transaction is subject to regulatory approval and is expected to close by the end of 2026. Because the acquisition had not closed as of the issuance date of the accompanying condensed consolidated financial statements, no amounts have been recognized related to the transaction. 36 Six Months Ended June 30, 2026 2025 Net cash provided by operating activities $ 24,907 $ 19,768 Net cash used in investing activities (18,423) (139,054) Net cash provided by financing activities 4,229 8,823 Operating Activities During the six months ended June 30, 2026, cash provided by operating activities was $24.9 million, as compared to cash provided by operating activities of $19.8 million during the six months ended June 30, 2025. Cash provided by operating activities increased by $5.1 million, primarily attributable to reductions in our net loss driven by our revenue growth and timing of payments associated with our accounts payable and accrued liabilities, Offsetting these increases in cash provided from operating activities were increases in our prepaid and other current assets, as well as other long-term assets. Investing Activities During the six months ended June 30, 2026, cash used in investing activities was $18.4 million, a decrease of $120.6 million, as compared to cash used in investing activities of $139.1 million during the six months ended June 30, 2025. The decrease in cash used in investing activities was primarily attributable to a net change in marketable securities activity of $123.3 million, consisting of an increase in the maturities of marketable securities of $208.3 million partially offset by an increase in purchases of marketable securities of $85.0 million. This decrease was partially offset by increases in purchases of strategic investments and of property and equipment of $2.0 million and $0.7 million, respectively, during the six months ended June 30, 2026. Financing Activities During the six months ended June 30, 2026, cash provided by financing activities was $4.2 million, a decrease of $4.6 million as compared to $8.8 million during the six months ended June 30, 2025. The decrease was related to lower proceeds from the issuance of common stock primarily from stock option exercises in connection with our employee equity incentive plan. 1.50% Senior Convertible Notes due 2029 On March 7, 2024, we completed an offering of $661.3 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 1.50% and a maturity date of September 1, 2029 (the “2029 Notes”). The proceeds include the full exercise of the option granted by us to the initial purchasers of the 2029 Notes to purchase up to an additional $86.3 million aggregate principal amount of notes. Interest on the 2029 Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024. The net proceeds from the offering, after deducting initial purchasers’ discounts and estimated costs directly related to the offering, were $643.8 million. The initial conversion rate of the 2029 Notes is 6.7927 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $147.22 per share, subject to adjustments. The 2029 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. We used approximately $72.4 million of the net proceeds from the offering to pay the cost of the 2029 Capped Calls, as described below. In addition, we used approximately $80.2 million of the net proceeds from the offering for the repayment in full of the indebtedness outstanding from the Initial Tranche of the Braidwell Term Loan Facility (as each such term is defined below). We also used approximately $25.0 million of the net proceeds from the offering to repurchase 229,252 shares of our common stock at a purchase price of $109.05 per share in privately negotiated transactions effected through one of the initial purchasers or its affiliate. These repurchases could increase (or reduce the size of any decrease in) the market price of our common stock, and could result in a higher effective conversion price for the 2029 Notes. We intend to use the remainder of the net proceeds from the offering for general corporate purposes. No principal payments are due on the 2029 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2029 Notes includes customary terms and covenants, including certain events of default after which the 2029 Notes may be due and payable immediately. 37 On January 12, 2026, we implemented the Holding Company Transaction. The Holding Company Transaction constituted a Merger Event as defined under the Indenture. The Holding Company Transaction did not constitute a Fundamental Change or a Make-Whole Fundamental Change as defined under the Indenture. As a result of the Holding Company Transaction, holders of the 2029 Notes had the right to exchange their 2029 Notes at any time up through March 4, 2026, the 35th trading day following the effective date of the Holding Company Transaction. During the three and six months ended June 30, 2026, holders exchanged $3,000 principal amount of their 2029 Notes, which was settled in cash at our discretion. On January 12, 2026, in connection with the Holding Company Transaction, we entered into a supplemental indenture to the Indenture (the “First Supplemental Indenture”) in order to (a) provide that (i) the right to convert each $1,000 principal amount of 2029 Notes into shares of iRhythm Technologies common stock was changed to a right to convert such principal amount of 2029 Notes into shares of our common stock; (ii) iRhythm Technologies shall continue to have the right to determine the form of consideration to be paid or delivered, as the case may be, upon conversion of the 2029 Notes; (iii) any amount payable in cash upon conversion of the 2029 Notes in accordance with the Indenture shall continue to be payable in cash; (iv) any shares of common stock of iRhythm Technologies that iRhythm Technologies would have been required to deliver upon conversion shall instead be deliverable in shares of our common stock; and (v) the Daily VWAP (as defined in the Indenture) shall be calculated based on the value of a share of our common stock; and (b) provide for the full and unconditional guarantee by us of the obligations of iRhythm Technologies under the 2029 Notes and the Indenture. In connection with the offering of the 2029 Notes, we entered into the privately negotiated capped call transactions (the “2029 Capped Calls”) with certain financial institutions. The 2029 Capped Calls will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes, the number of shares of our common stock that will initially underlie the 2029 Notes. The 2029 Capped Calls are expected generally to reduce potential dilution to our common stock upon conversion of the 2029 Notes and/or offset any cash payments that we could be required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap. The 2029 Capped Calls have an initial cap price of $218.10 per share, subject to adjustments, which represents a premium of 100% over the closing price of our common stock of $109.05 per share on The Nasdaq Global Select Market on March 4, 2024. We completed the purchase of the 2029 Capped Calls on March 7, 2024, for the amount of $72.4 million. Contractual Obligations Our contractual obligations as of December 31, 2025, are presented in our Annual Report on Form 10-K filed with the SEC on February 19, 2026 (the "Annual Report"). There were no significant changes to our lease obligations during the six months ended June 30, 2026. As of June 30, 2026, our purchase commitments totaled $106.1 million, primarily related to inventory and revenue cycle service fees and expected to be due within a year. See Note 8, Debt, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for changes in our debt obligations during the six months ended June 30, 2026. Guarantor Information In connection with the Holding Company Transaction, on January 12, 2026, we, as guarantor, iRhythm Technologies, and U.S. Bank Trust Company, National Association, entered into the First Supplemental Indenture. As of June 30, 2026, there was $661.2 million in aggregate principal amount of issued and outstanding 1.50% Convertible Senior Notes due 2029 of iRhythm Technologies, our wholly owned subsidiary, that are fully and unconditionally guaranteed by us. Accordingly, pursuant to Rule 3-10 of Regulation S-X, separate consolidated financial statements of iRhythm Technologies, Inc. have not been presented. As permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded summarized financial information for iRhythm Technologies because the assets, liabilities and results of operations of iRhythm Technologies are not materially different than the corresponding amounts in our consolidated financial statements. 38 Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Annual Report. Updates to our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The critical accounting estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Annual Report. There were no material changes to our critical accounting estimates during the six months ended June 30, 2026. 39