iRhythm prices IPO above the range, raises $107m

iRhythm Technologies yesterday increased the scale of its initial public offering, pricing the flotation above its prior range at $17 per share and increasing the number of shares on offer.

Earlier this month iRhythm said it planned to float 5.35 million shares priced between $13 and $15 apiece. Yesterday the San Francisco-based company added nearly 1.1 million shares, for a total of 6.44 million, raising $107 million.

The additional shares include a 142,000-share underwriters over-allotment option. iRhythm has said it plans to use the proceeds to expand the commercial and clinical footprint of its Zio wearable cardiac monitor. The company initially indicated last month that it planned to raise $86 million with the IPO.

The company won 510(k) clearance for the Zio device in 2009. It’s designed to be worn for 14 days to log heartbeat data; the company says Zio has been used on 500,000 patients, collecting some 125 million hours of “curated heartbeat data, creating what we believe to be the world’s largest repository of ambulatory ECG patient data.”

“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. 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 said in its 1st registration filing.

iRhythm, which employed 356 workers as of June 30, said annual sales grew 66.4% to $36.1 million last year, as losses widened 44.3% to -$22.8 million. Sales grew 79.9% during the 1st half of this year, to $28.6 million, with losses up 12.8% to -$10.6 million, according to the filing.

The company said it had reimbursement contracts with government and private health insurers covering 200 million of the roughly 290 million U.S. patients whose insurance covers the device as of June 30.

“We believe we have the first mover advantage in the market, particularly related to the progress we have made in securing government and commercial payor coverage and contracts,” iRhythm said in original filing. The company estimated that Zio’s market opportunity is as large as $1.4 billion.

Apart from its San Francisco headquarters, iRhythm has facilities in Lincolnshire, Ill., and Houston; the Zio device is made at a plant in Cypress, Calif., the company said.

iRhythm listed on the NASDAQ exchange under the “IRTC” symbol. J.P. Morgan and Morgan Stanley are joint bookrunners on the flotation.

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