iRhythm Holdings, Inc. (IRTC) Earnings Call Transcript & Summary

Good day, and welcome to the iRhythm Technologies' 2020 Annual Meeting of Stockholders. I would now like to turn the call over to Abhi Talwalker. Please go ahead.

Thank you. Good afternoon, ladies and gentlemen. I am Abhi Talwalker, Chairman of the Board of Directors of iRhythm Technologies, and it is a pleasure to welcome you to iRhythm Technologies' 2020 Annual Meeting of Stockholders, which is being held virtually for the first time due to health and safety concerns caused by the COVID-19 pandemic. As provided for in the company's bylaws, I will act as Chairperson of this meeting. I have asked Matthew Garrett, our Chief Financial Officer and Secretary, to act as secretary of this meeting and record the minutes. Before proceeding further, let me introduce the Directors and Director nominees of the company who are with us via web conference or by phone: Renee Budig; Bruce G. Bodaken; Cathleen Noel Bairey Merz, M.D.; Mark J. Rubash; Raymond W. Scott; Ralph Snyderman, M.D.; and Kevin King. I would also like to introduce the corporate officers who are in attendance by web conference or by phone. As noted before, Kevin King, Chief Executive Officer; Matthew Garrett, Chief Financial Officer and Secretary; Dan Wilson, Executive Vice President of Strategy, Corporate Development and Investor Relations. Also with us today are Steve Sullins, representing PricewaterhouseCoopers LLP; Philip Oettinger, representing Wilson Sonsini Goodrich & Rosati, our outside Corporate Counsel; and [ Chris Vico ], our inspector of elections. I will now turn the meeting over to Matthew Garrett, the company's Chief Financial Officer and Secretary, who will conduct the formal part of the meeting.

Thanks, Abhi. To ensure that we satisfy all the legal requirements of today's meeting, the formal portion of the meeting will be conducted from a script and we will answer any questions at the end of the meeting. Shareholders can submit a question through the question section of the webcast portal. The annual meeting is being held for the following purposes: first, to elect 2 Class I Directors to serve until the 2023 Annual Meeting of Stockholders or until their successors are duly elected and qualified; second, to adopt and approve the amendments to our Certificate of Incorporation to phase out the classified structure of our Board of Directors; third, to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; and four, to hold an advisory vote to approve named executive officer compensation. In order to ensure that the business of the meeting proceeds in an orderly fashion, we ask that you please observe the rules of procedure. The annual meeting is being held in accordance with the company's bylaws and Delaware law. During the formal meeting, we will address the matters described in the company's proxy statement dated April 29, 2020. Balloting will be completed and announcement will be made regarding the preliminary results, and then the formal meeting will be adjourned. After we complete the formal meeting, there will be an opportunity for stockholders to ask questions of the company's officers. During the formal meeting, questions should be restricted to the procedures for the meeting and the proposals under consideration. I thank you for your consideration. Notice of the meeting. I have proof by affidavit of Broadridge Financial Solutions, Inc., our proxy service provider, that notice and proxy materials were mailed on or about April 29, 2020, to all stockholders of record at the close of business on April 28, 2020, the record date for the meeting. We have at this meeting a record of stockholders as of that date. The affidavit, together with copies of the notice and proxy statement and the proxy, will be filed with the minutes of the meeting. Inspector of elections. We have appointed [ Chris Vico ] to act as inspector of elections for this annual meeting. The inspector of election has signed an oath of office, which will be filed with the minutes of this meeting. Quorum. The inspector of elections has advised me that a majority of the outstanding shares entitled to vote at this meeting are either represented virtually or by proxy. Therefore, the meeting is duly constituted, and we may proceed with business. Voting procedures. Let me briefly describe the voting procedures. Each holder of common stock is entitled to 1 vote for each share of common stock held of record at the close of business on the record date. Any stockholder who has not yet voted or wishes to change their vote, they do so by clicking on the voting button on their web portal and following the instructions located there. As a reminder, only shareholders who have entered their 16-digit control number will be able to vote via the web portal. Stockholders who have previously sent in proxies or voted via telephone or internet and do not want to change their vote, do not need to take any further action. Your vote will be counted. The polls will be closed to voting after we go through the matters to be voted upon. We will not accept ballots, proxies, revocations or changes of votes after the closing of the polls. Does anyone have any questions regarding these procedures?

At this time, there are no questions.

Okay. Great. Thank you. So it is now 10:07 Pacific Time on June 19, 2020, and the polls for each matter to be voted on at this meeting are now open. First, the election of Class I Directors. The first item of business is the Directors. The company's Board of Directors is divided into 3 classes, each with a 3-year term. There are 2 Class I Directors, 3 Class II Directors and 3 Class III Directors. The Class I Directors will be elected at today's meeting. Those 2 nominees receiving the highest number of votes of the shares present in person or represented by proxy at this meeting and entitled to vote will be elected as Directors. Directors elected at this -- at today's meeting will hold office until 2023's Annual Meeting of Stockholders or until their successors are duly elected and qualified. As indicated in the company's proxy statement, the following 2 individuals are nominated by the Board of Directors to serve as Class I Directors: Kevin M. King and Raymond W. Scott. Both of these Directors are currently serving as members of our company's Board of Directors. Pursuant to the notice of this annual meeting and the proxy statement dated April 29, 2020, the Board of Directors recommends that stockholders vote in favor of this proposal and the proxies solicited by the Board of Directors will be voted in favor of these nominees unless otherwise instructed by the stockholder. The company's bylaws require that the stockholder provide advanced notice to the company of a stockholder's intent to nominate persons as Directors. No such notice was received. Accordingly, I declare the nominations for Directors closed. Are there any questions concerning director elections?

At this time, there are no questions.

So I'll move on to item 2, the amendment to our Certificate of Incorporation to phase out the classified structure of our Board of Directors. Under our current Certificate of Incorporation, our Board of Directors is divided into 3 classes with members of each class holding office for staggered 3-year terms. The Board is asking the stockholders to adopt and approve amendments to our Certificate of Incorporation to phase out the present 3-year staggered terms of our Directors and instead provide for annual elected -- election of Directors. Pursuant to Article 9 of our Certificate of Incorporation, the approval of amendments to our Certificate of Incorporation requires the affirmative vote of the holders of at least 66.66% of the voting power of all shares of our capital stock outstanding as of the record date. The Board of Directors recommends that stockholders vote in favor of this proposal, and the proxies solicited by the Board will be voted in favor of this proposal, unless otherwise instructed by the stockholder. The next item of business is to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. The Audit Committee of the Board, which is comprised entirely of independent Directors, appointed PricewaterhouseCoopers LLP as the company's independent registered public accounting firm. As such, PricewaterhouseCoopers LLP will audit our consolidated financial statements for our fiscal year ending December 31, 2020, and perform audit-related services and consultation in connection with various accounting and financial reporting matters. PricewaterhouseCoopers LLP may also perform certain nonaudit services for the company. The Board is asking stockholders for ratification of the selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for our fiscal year ending December 31, 2020. The ratification of the appointment of PricewaterhouseCoopers LLP requires the affirmative vote of a majority of votes present and entitled to vote at the annual meeting in order to approved. Stockholder ratification is not required by the company's bylaws. However, the Board is submitting this to the stockholders for ratification as a matter of good corporate practice. If the stockholders do not ratify the selection of PricewaterhouseCoopers's LLP as independent auditors, the Audit Committee may reconsider the appointment. The Board of Directors recommends that stockholders vote in favor of this proposal and the proxies solicited by the Board will be voted in favor of this proposal, unless otherwise instructed by the stockholder. Steve Sullins is present from PricewaterhouseCoopers LLP and is available to answer any appropriate questions that you may have at this time. Are there any questions concerning the proposal or questions directed towards Steve?

At this time, there are no questions.

Thank you. And then finally, the final item for business is to hold an advisory vote to approve named executive officer compensation. This item is discussed on Page 20 of the proxy statement. Are there any questions concerning this proposal?

At this time, there are no questions.

As a reminder, any stockholder who has not yet voted or wishes to change their vote may do so right now by clicking on the voting button on their web portal and following the instructions there. Only shareholders who have entered their 16-digit control number will be able to vote via the web portal. Please complete all voting within the next 2 minutes, and the preliminary results will be reported shortly. [Voting]

All right. It is now 10:13 Pacific Time on June 19, 2020, and the polls for each matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or revocations will be accepted. At this time, the inspector of elections will provide us with a preliminary report of the voting results. Chris?

Regarding proposal #1, regarding the election of Directors, the 2 nominees named in the proxy statement, Kevin M. King and Raymond W. Scott, have each been elected to serve as Class I Directors for the 3-year term expiring at the 2023 Annual Meeting of Stockholders or until their successors are duly elected and qualified. Proposal #2, amendment of the Certificate of Incorporation in favor of declassifying the Board, holders of at least 66.66% of the shares of the capital stock outstanding as of the record date affirmatively voted to adopt and approve the amendments to the company's Certificate of Incorporation to phase out the classified structure of Board of Directors. Proposal #3, a majority of the shares voted in favor of the ratification of PricewaterhouseCoopers LLP as the company's independent auditor. Proposal #4, the compensation of the company's named executive officers was approved on an advisory basis.

Thank you, Chris. I declare that each of the 2 nominees have been elected, the amendment to the company's Certificate of Incorporation to phase out the classified Board structure was approved, the ratification of PricewaterhouseCoopers LLP was approved and the named executive officer compensation is approved on an advisory basis. These are the preliminary results of voting. The final count may vary following final examination of the proxies and ballots. The final results of voting, including any ballots and proxies recorded during this meeting, will be set forth in the report of the inspector of election and will be included in the minutes of the meeting. The final results will also be reported in the Form 8-K report filed with the SEC. This Annual Meeting of Stockholders is now adjourned. Thank you for your attendance, and we will proceed with the question-and-answer period. Kevin King and I will now entertain questions from the shareholders. [Operator Instructions] Subject to the rules above, the questions and comments of all stockholders are welcome. However, the secretary of the annual meeting or his designee will screen all questions and comments and eliminate any questions that are irrelevant to the business of the annual meeting or conduct of the company's operations, related to pending or threatened litigation, derogatory references that are not in good taste or related to personal grievances. Before we go any further, I would like to note that during the course of the question-and-answer period, representatives of the companies may make forward-looking statements regarding future events for the future financial performance of the company, which involve risks and uncertainties. Such statements are only predictions and actual events or results could differ materially from those predictions due to the number of risks and uncertainties. I refer you to the documents that the company files from time to time with the Securities and Exchange Commission, specifically the company's last filed quarterly report on Form 10-Q, which was filed on May 8, 2020. This document contains and identifies important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. We will now take your questions.

At this time, there are no questions.

Okay. Thank you. As there are no questions at this time, I want to thank all of you for attending today's virtual meeting and for the interest you have shown in the affairs of your company. We very much appreciate your virtual attendance. And as always, thank you for your support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.