Home enrollment ticking up a little bit. Compliance tends to be a little bit lower there. And as PCP and some other of these sort of alternative channels come into place, there’s a little bit different return dynamic for those. However, once everyone is on monitor, we feel really good about that return device rate improving nicely over the time horizon. Thank you.
Operator: The final question today comes from Suraj Kalia from Oppenheimer. Please go ahead. Your line is open.
Suraj Kalia: Quentin, can you hear me all right?
Quentin Blackford: Yes, we got you.
Suraj Kalia: Perfect. So I guess I’ll just quickly throw one for you, Quentin, one for Brice. So Quentin, in terms of sleep, I guess I’m curious, why sleep. Just given OSA is so predictable, and the relative complexity of algorithms is — if I can loosely use it de minimis compared to AF, which is complex, right? So I’m trying to understand what value proposition you see there? And Brice, quickly, if I could, the SFO IDTF. Has a decision been made — I mean, if you guys are at 60% and going higher there is obviously a trade-off between OpEx and top line, right? So I’m curious what the read-throughs per report currently are in terms of technicians? Thank you for taking my questions.
Quentin Blackford: Thanks, Suraj. So I’ll hit that first one on sleep. Look, I think the prevalence of OSA is incredibly high. And the reality is these patients need a diagnosis. And the further reality is that so many of them start with the cardiologists, the EP or even the primary care physician. Ultimately, they get referred on to a sleep specialist or they get a diagnosis performed right there by that cardiologist EP or a primary care physician. We have access to these very same customers. And as we sit down in our advisory groups with these customers, and we ask for ways to streamline their practice or ways that we could add incremental value consistently at the very top of the list. If not, the absolute top of the list is help us figure out how to deal with this cumbersome challenging process that we have with our sleep patients.
So many times, we’ll refer them on to a sleep specialist. They can’t be seen for five, six, seven months. They get lost in the fray. They never get a diagnosis, and they’re back in my office trying to figure out what is going on. With our call point, with our digital platform, ZioSuite being integrated right into the accounts, and our IDTF capabilities, we think it’s a natural synergy and a very easy opportunity to enable these physicians to be able to prescribe a home sleep test, we send that device to the home just like we do in our home enrollment program. And we leverage IDTF capabilities to perform the analysis and ultimately put a diagnosis back into the hands of the physician. You think about it, serving north of two million patients a year now, 60% to 70% of all patients who have Afib will have OSA as well.
There’s a natural synergy here between what we do and what our customers or what our call point is looking for and what we’re able to offer. So we’re incredibly excited by it. I think it could be a tremendous opportunity for us. Our product into the future. We believe we’ll have the opportunity to diagnose sleep disease right off with the patch as we continue to enhance its feature set. And so again, it’s just natural to step into this and take advantage of what we’ve built to date and the service offering that we become known for, which is easy to use and highly predictable, highly accurate. Brice?
Brice Bobzien: Yes, Suraj. So a question on the CCTs and the San Francisco Center of Excellence. So remember, the CCT costs themselves run through gross margin, not through OpEx. The administrative component, there’s a piece of it that resides down in OpEx, but the vast majority of that rolls through gross margin. And so I would say the read-throughs as they stand now, there’s a little bit of inefficiency, which is causing the pressure on gross margin as it stands now. And that’s that natural progression we expect in the back half of the year. Again, to the tune of about 200 basis points. There is no reason to believe the efficiency level will be any different in the Center of Excellence than what we would see in either one of the other two IDTFs over time.
And so frankly, we hired a tremendously talented group where you could see potential efficiency gains there over time. So again, we feel great about the gross margin play through over time. It’s just going to take a little bit of time for them to get up to the efficiency levels, that we see with the other IDTFs.
Operator: Thank you. We have no further questions on the line, so I’ll hand back to the management team for any closing remarks.
Quentin Blackford: Well, thank you for joining us today. We’re extremely pleased about the start to 2024 and couldn’t be more excited about the growing momentum in our business as we begin to explore opening new adjacencies like sleep and continue to expand into the primary care channel. In the back half of the year set up to demonstrate significant financial leverage as we continue to progress in our efforts to become more operationally excellent as we grow. In addition, we have many catalysts to growth that remain in front of us, which are yet to contribute to our success, including a new innovative Zio MCT solution, entry into the second largest ACM market in the world in Japan, expand further into primary care and step into adjacent sleep markets.
iRhythm’s future has truly never been brighter than it is today, and I’m grateful to each of our employees around the world as they’re doing a great job in progressing our efforts forward. We’ll see over the course of the next couple of months. Goodbye.
Operator: This concludes today’s conference call. Thank you all for joining. You may now disconnect your lines.
