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Registered number: 10055682 (England and Wales)














IRHYTHM TECHNOLOGIES LTD.

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
IRHYTHM TECHNOLOGIES LTD.
 
 
COMPANY INFORMATION


Directors
P M Murphy 
D G Wilson 




Registered number
10055682



Registered office
Seal House
56 London Rd

Bagshot

United Kingdom

GU19 5HL




Independent auditors
ZEDRA Corporate Reporting Services (UK) Limited





 
IRHYTHM TECHNOLOGIES LTD.
 

CONTENTS



Page
Strategic Report
 
1 - 2
Directors' Report
 
3 - 4
Independent Auditors' Report
 
5 - 8
Statement of Comprehensive Income
 
9
Statement of Financial Position
 
10 - 11
Statement of Changes in Equity
 
12
Notes to the Financial Statements
 
13 - 24

 
IRHYTHM TECHNOLOGIES LTD.
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
iRhythm Technologies Ltd ('the Company') is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. Operating in support of its parent company, iRhythm Technologies, Inc., the Company's business is designing, developing, and commercializing device-based technology to provide ambulatory cardiac monitoring services that allow clinicians to diagnose certain arrhythmias quicker and more efficiently than other services that rely on traditional technology. 
The Company’s products and services, called Zio Systems and Zio Services, deliver a patient-friendly design that enables between 98%-99% patient compliance with minimal ECG data noise or artifact, thereby potentially delivering superior clinical accuracy to physicians diagnosing arrhythmias and reducing the cost of care for healthcare systems by avoiding costly downstream adverse events. The Company has developed a proprietary system that combines an FDA-cleared and CE-marked wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data, with a proprietary FDA-cleared and CE-marked cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias (collectively, the “Zio System”). The Company currently offers three Zio System options — the Zio Monitor System, the Zio XT System, and the Zio AT System.  

Business review
 
Profit on ordinary activities before taxation for the year ended 31 December 2023 was £612,345 (2022: £453,936). As of 31 December 2023 the net assets of the Company amount to £4,110,134 (2022: £2,715,918).
During the fiscal year total revenue remained flat year over year. Turnover is derived from providing digital healthcare services to customers and intercompany recharges to its parent company, iRhythm Technologies, Inc., 2023 digital healthcare services revenue was £2,600,628 (2022: £4,234,184) and 2023 intercompany sales was £7,824,389 (2022: £6,164,183)

Principal risks and uncertainties
 
The Company's short and long-term success is subject to numerous risks and uncertainties, many of which involve factors that are difficult to predict or beyond the Company’s control. 
Risks related to the Company’s industry include reimbursement by Medicare is highly regulated and subject to change, and the Company’s failure to comply with applicable regulations, including regulations not designed for remote diagnostic tests like Zio Services, which could prevent the Company from receiving reimbursement under the Medicare program and some commercial payors, subject to penalties, and adverse reputation, business, and results of operations. 
The Company’s revenue relies on Zio Services, currently the only offering. If Zio Services or future service offerings fail to gain, or lose, the business will suffer. 
The market for remote cardiac monitoring solutions is highly competitive. If competitors can develop or market monitoring devices and services that are more effective or gain greater acceptance in the marketplace than any services and related devices we develop, our commercial opportunities will be reduced or eliminated.
Although our current Zio Systems are comprised of medical devices that have received FDA marketing authorization (510(k) clearance) as well as regulatory certifications in the EU and the UK, the Company may regularly engage in product enhancements and other iterative changes to existing products, as well as seek to develop new technology or use of technology for new indications for use. These medical device developments may trigger further regulatory reviews and the results of those reviews are unpredictable.

Page 1

 
IRHYTHM TECHNOLOGIES LTD.
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Financial key performance indicators
 
The Company's key performance indicator is turnover. Total turnover remained consistent this year (2022: 22% increase). Digital healthcare services revenue decreased by 39%, primarily due to the ramp-down of a significant program. Intercompany revenue increased by 27% due to ramp up of sales and marketing activity with parent company iRhythm Technologies, Inc.

Other key performance indicators
 
The Company monitors market penetration and increases in market share.

Future developments
The Company continues to innovate to create trusted solutions that detect, predict, and prevent disease. The key elements of the Company’s strategy include further penetration and expansion of the U.S. ambulatory cardiac monitoring market, pursuing international expansion opportunities, exploring adjacent market opportunities, and advancing the Company’s system portfolio and core technology offering.


This report was approved by the board and signed on its behalf.


D G Wilson
Director

Date: 14 November 2024
Page 2

 
IRHYTHM TECHNOLOGIES LTD.
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

As permitted by S414c (11) certain information required to be presented in the Directors' Report has been otherwise included in the Strategic Report.

Directors

The directors who served during the year were:

P M Murphy 
D J Devine (resigned 10 March 2023) 
B A Bobzien 

The following changes to directorships were made post year end but prior to the approval of these financial statements:
B A Bobzien (resigned 31 August 2024)
D G Wilson (appointed 1 September 2024)

Results and dividends

The profit for the year, after taxation, amounted to £366,146 (2022 - £366,126).

The directors have not proposed a dividend for the current year (2023: £NIL).

Future developments

There are no key future developments.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Page 3

 
IRHYTHM TECHNOLOGIES LTD.
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

There was one non-adjusting post balance sheet event - please see note 19.

This report was approved by the board and signed on its behalf.
 


D G Wilson
Director

Date: 14 November 2024
Page 4

 
IRHYTHM TECHNOLOGIES LTD.
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF IRHYTHM TECHNOLOGIES LTD.
 

Opinion


We have audited the financial statements of iRhythm Technologies Ltd. (the 'Company') for the year ended 31 December 2023, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Page 5

 
IRHYTHM TECHNOLOGIES LTD.
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF IRHYTHM TECHNOLOGIES LTD. (CONTINUED)

Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual ReportOur opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 6

 
IRHYTHM TECHNOLOGIES LTD.
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF IRHYTHM TECHNOLOGIES LTD. (CONTINUED)

Auditors' responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

the responsible individual ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the Company through discussions with directors and other management, and from our commercial knowledge and experience;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Company, including the Companies Act 2006, taxation legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
 
We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

We identified a fraud risk in relation to revenue recognition is significant in line with ISA 240 and designed and implemented appropriate audit procedures in this area. Audit procedures included but were not limited to substantive testing from customer contracts and internal sales reports. We traced these to sales invoices and subsequent bank receipts. Lastly, we reviewed the bank for large and unusual transactions external to the normal customer base.
To address the risk of fraud through management bias and override of controls, we:
 
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.

 
Page 7

 
IRHYTHM TECHNOLOGIES LTD.
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF IRHYTHM TECHNOLOGIES LTD. (CONTINUED)

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
 
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance; 
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC and the Company’s legal advisors.
 
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance.
Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.




Edward Wallis ACA (Senior Statutory Auditor)
for and on behalf of
ZEDRA Corporate Reporting Services (UK) Limited
Chartered Accountants and Statutory Auditors
Birchin Court
5th Floor
19-25 Birchin Lane
London
United Kingdom
EC3V 9DU


20 November 2024
Page 8

 
IRHYTHM TECHNOLOGIES LTD.
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
10,425,017
10,398,367

Cost of sales
  
(133,230)
(811,344)

Gross profit
  
10,291,787
9,587,023

Administrative expenses
  
(9,659,341)
(9,103,883)

Operating profit
 5 
632,446
483,140

Interest receivable and similar income
  
6,227
482

Interest payable and similar expenses
  
(26,328)
(29,686)

Profit before tax
  
612,345
453,936

Tax on profit
 9 
(246,199)
(87,810)

Profit for the financial year
  
366,146
366,126

There was no other comprehensive income for 2023 (2022£NIL).

The notes on pages 13 to 24 form part of these financial statements.
Page 9

 
IRHYTHM TECHNOLOGIES LTD.
REGISTERED NUMBER:10055682

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

  

Fixed assets
  

Tangible assets
 10 
471,351
575,601

  
471,351
575,601

Current assets
  

Debtors: amounts falling due within one year
 11 
5,761,710
2,445,985

Bank and cash balances
  
1,376,818
2,735,770

  
7,138,528
5,181,755

Creditors: amounts falling due within one year
 12 
(3,045,081)
(2,530,487)

Net current assets
  
 
 
4,093,447
 
 
2,651,268

Total assets less current liabilities
  
4,564,798
3,226,869

  

Creditors: amounts falling due after more than one year
 13 
(454,664)
(510,951)

  
4,110,134
2,715,918

  

  

Net assets
  
4,110,134
2,715,918

Page 10

 
IRHYTHM TECHNOLOGIES LTD.
REGISTERED NUMBER:10055682
    
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Capital and reserves
  

Called up share capital 
  
1,000
1,000

Share premium account
 15 
19,167
19,167

Capital contribution reserve
 15 
2,396,952
1,368,882

Profit and loss account
  
1,693,015
1,326,869

  
4,110,134
2,715,918


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 

D G Wilson
Director

Date: 14 November 2024

The notes on pages 13 to 24 form part of these financial statements.
Page 11

 
IRHYTHM TECHNOLOGIES LTD.
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Share premium account
Capital contribution reserve
Profit and loss account
Total equity

£
£
£
£
£


At 1 January 2022
1,000
19,167
794,283
960,743
1,775,193



Profit for the year
-
-
-
366,126
366,126
Total comprehensive income for the year
-
-
-
366,126
366,126

Share based payment
-
-
574,599
-
574,599



At 1 January 2023
1,000
19,167
1,368,882
1,326,869
2,715,918



Profit for the year
-
-
-
366,146
366,146
Total comprehensive income for the year
-
-
-
366,146
366,146

Share based payment
-
-
1,028,070
-
1,028,070


At 31 December 2023
1,000
19,167
2,396,952
1,693,015
4,110,134
Page 12

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

iRhythm Technologies Ltd. is a private company, limited by shares, incorporated in England. The registered office can be found on the company information page.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework'  and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 101 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions under FRS 101:
the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share-based payment
the requirements of IFRS 7 Financial Instruments: Disclosures
the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
 - paragraph 79(a)(iv) of IAS 1;
the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation of Financial Statements
the requirements of IAS 7 Statement of Cash Flows
the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member

This information is included in the consolidated financial statements of iRhythm Technologies, Inc. as at 31 December 2023 and these financial statements may be obtained from www.sec.gov.

  
2.3

Going concern

The Company is in a net asset position at the balance sheet date, supported by cash reserves and an intercompany receivable. The Company has received written confirmation from its parent company, iRhythm Technologies, Inc., that it will continue to provide financial support for a period of at least 12 months from the date of signing these financial statements. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.

Page 13

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Turnover

Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Rendering of services

The Company's turnover is derived from the provision of digital healthcare services to its customers.
Turnover is recognised as services are used by the customer. Turnover can only be recognised when each of the following criteria are met:

the amount of turnover can be measured reliably;

it is probable that the Company will receive the consideration due under the contract

The Company also recharges its expenditure on a cost plus basis to its parent company iRhythm Technologies, Inc., in accordance with an intercompany services agreement.

 
2.5

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Page 14

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.6

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

 
2.7

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

 
2.8

Interest income

Interest income is recognised in profit or loss using the effective interest method.

  
2.9

Share based payments

Certain employees of the Company are entitled to stock option grants, Restricted Stock Units ("RSUs") and shares under the Employee Stock Purchase Programme ("ESPP") in iRhythm Technologies, Inc., the parent company. The share options and ESPP shares are granted at an independently determined fair value using the Black-Scholes option pricing model. The RSU shares are valued at the fair value at the grant date. Shares granted under the 2016 Equity Incentive Plan are granted at a price of not less than 100% of the fair market value of the common stock at the date of grant. Shares granted under the Employee Stock Purchase Plan are discounted at a rate of 85% of the lower of the fair market value of the Company's common stock on the first date of the offering period or on the last day of the purchase period as defined in the terms of the agreement.
An expense equivalent to the fair value of the share options granted is recognised evenly over the vesting period, with a corresponding amount being recognised in the capital contribution reserve.

Page 15

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Short-term leasehold improvements
-
3 years
Fixtures and fittings
-
5 years
Computer equipment
-
5 years
Right-of-use asset
-
Life of the lease

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.11

Debtors

Short term debtors are measured at transaction price, less any impairments. Amounts owed by group undertakings are intercompany loans which are repayable on demand, no interest is charged on these loans.

 
2.12

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash held on deposit by service providers is included within bank and cash balances, as these amounts are highly liquid and repayable without penalty on notice of not more than 24 hours.

 
2.13

Creditors

Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.

Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Page 16

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.14

Leases

The Company as a lessee

The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate, 4.75%. This rate has been based on the incremental borrowing rate obtained by the parent company.

Lease payments included in the measurement of the lease liability comprise:

variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;


The lease liability is included in 'Creditors' on the Statement of Financial Position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are included in the Tangible Fixed Assets as applicable, in the Statement of Financial Position.

The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 2.10.

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient.

Page 17

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and recorded amount of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form a basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources.
Incremental borrowing rate
In accordance with IFRS 16, management have been required to assess the time value of money in relation to long term liabilities. As a result, 4.75% has been identified as the Company's incremental borrowing rate, which has been based on the incremental borrowing rate obtained by the parent company, in connection with its own borrowings.


4.


Turnover

An analysis of turnover by class of business is as follows:


2023
2022
£
£

Digital healthcare services
2,600,628
4,234,184

Intercompany sales
7,824,389
6,164,183

10,425,017
10,398,367


All digital healthcare service sales arose within the United Kingdom and the intercompany sales arose in accordance with the intercompany services agreement with the parent company, iRhythm Technologies, Inc., a company incorporated in the United States.


5.


Operating profit

The operating profit is stated after charging:

2023
2022
£
£

Research & development charged as an expense
126,161
77,897

Depreciation of tangible fixed assets
104,250
106,101

Exchange differences
(76,545)
275,534

Share-based payments
1,018,993
407,060

Page 18

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
17,250
16,500


7.


Employees

2023
2022
£
£

Wages and salaries
3,886,619
3,798,198

Social security costs
812,542
697,557

Cost of defined contribution scheme
209,960
173,838

4,909,121
4,669,593


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Employees
51
50


8.


Interest payable and similar expenses

2023
2022
£
£


Interest on lease liabilities
26,328
29,686

26,328
29,686

Page 19

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
246,199
87,810

Total current tax
246,199
87,810

Deferred tax

Taxation on profit on ordinary activities
 
246,199
 
87,810

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.5% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
612,345
453,936


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
144,027
86,248

Effects of:


Expenses not deductible for tax purposes
245,552
14,196

Capital allowances
(1,804)
(15,008)

Adjustments to tax charge in respect of prior periods
(36,188)
-

Short term timing difference leading to an increase (decrease) in taxation
(8,949)
1,692

Tax deduction arising from exercise of employee options
(96,439)
682

Total tax charge for the year
246,199
87,810


Factors that may affect future tax charges

On 24 May 2021, Finance Bill 2021 was substantively enacted. The result of this is that the main rate of corporation tax for the UK has increased to 25% from 1 April 2023.

Page 20

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

10.


Tangible fixed assets





Short-term leasehold property
Fixtures and fittings
Computer equipment
Right of use asset
Total

£
£
£
£
£



Cost or valuation


At 1 January 2023
14,285
52,748
9,202
714,084
790,319



At 31 December 2023

14,285
52,748
9,202
714,084
790,319



Depreciation


At 1 January 2023
13,095
29,012
1,880
170,731
214,718


Charge for the year on owned assets
1,190
10,547
3,604
88,909
104,250



At 31 December 2023

14,285
39,559
5,484
259,640
318,968



Net book value



At 31 December 2023
-
13,189
3,718
454,444
471,351



At 31 December 2022
1,190
23,736
7,322
543,353
575,601

Page 21

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

11.


Debtors

2023
2022
£
£


Amounts owed by group undertakings
5,545,056
2,125,805

Other debtors
100,531
56,076

Prepayments and accrued income
116,123
264,104

5,761,710
2,445,985



12.


Creditors: Amounts falling due within one year

2023
2022
£
£

Trade creditors
224,686
62,741

Corporation tax
156,391
148,700

Other taxation and social security
1,913,895
1,382,480

Lease liabilities
90,512
78,616

Other creditors
54,300
-

Accruals and deferred income
605,297
857,950

3,045,081
2,530,487




13.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Lease liabilities
454,664
510,951

454,664
510,951



14.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



1,000 (2022 - 1,000) Ordinary shares of £1.00 each
1,000
1,000


Page 22

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

15.


Reserves

Share premium account

The share premium account represents the excess of the issue price over the par value on shares issued less transaction costs arising on issue. 

Capital contribution reserve

Certain employees of the Company have been granted options to purchase shares or granted Restricted Stock Units in iRhythm Technologies, Inc., the parent company. The share options and RSUs are granted at an independently determined fair value.
An expense equivalent to the fair value of the share options granted is recognised evenly over the vesting period, four years, with a corresponding amount being recognised in the capital contribution reserve.
On forfeiture or cancellation of an individual's share based payments, vesting is stopped and outstanding shares are transferred from the capital contribution reserve to the profit and loss reserve.


16.

Leases

Company as a lessee

The Company leases its office space and is capitalised in accordance with IFRS 16. 
The Company entered into a new lease in January 2021 for a minimum period of three years.


The following amounts in respect of leases, where the Company is a lessee, have been recognised in profit or loss:

2023
2022
£
£

Interest on lease liabilities (IFRS 16)
26,328
29,686

Depreciation charge on right-of-use assets
88,909
88,909


17.


Controlling party

iRhythm Technologies, Inc., is the parent of the smallest group for which consolidated financial statements are drawn up of which the Company is a member. The registered office of the parent company is 699 8th Street, Suite 600, San Francisco, CA 94103.

Page 23

 
IRHYTHM TECHNOLOGIES LTD.
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

18.


Post balance sheet events

In October 2024, the Company received confirmation from HMRC that its digital healthcare services were within the scope of standard rated VAT in the UK. The Company had been reserving anticipated amounts due to HMRC and will now remit this balance. Included within other taxation and social security at the year end is an amount of £1,865,785 which is expected to decrease over the coming 12 months as it is remitted to HMRC.
This is a non-adjusting post balance sheet event. 
There were no adjusting or other non-adjusting events occurring between the end of the reporting period and the date these financial statements were approved.
 
Page 24