Shares of iRhythm (IRTC) - Get iRhythm Technologies, Inc. Report dropped after Chief Executive Mike Coyle resigned for personal reasons after six months in the post, surprising the Wall Street analyst community.
Citi downgraded the stock of the San Francisco company, which produces medical devices to treat heart arrythmia, to neutral from buy. J.P. Morgan called the change "a clear negative."
At last check the shares were off 16% to $63.74. The stock touched a 52-week high above $286 in late January.
Coyle joined the company in January. He resigned as president, CEO and a director. Douglas Devine, who joined the company as chief financial officer a year ago, has stepped in as interim CEO while the board searches for a successor.
In a statement, iRhythm said it doesn't expect the transition to affect its efforts toward "what it considers to be more appropriate Medicare pricing for Zio XT, including its discussions with Novitas and other Medicare administrative contractors and its pursuit of national pricing with the Centers for Medicare and Medicaid Services."
Zio is the company's heart-monitoring device.
Citi analyst Joanne Wuensch said the CEO transition coinciding with the company’s reimbursement negotiations may mean iRhythm’s shares trade “sideways for a while” after Wednesday's decline.
Wuensch lowered her price target on iRhythm to $78 from $105.
Truist analyst Kaila Krum said the resignation was a surprise. She spoke with Cole and said he'd had a challenging time trying to strike a balance between the company’s reimbursement negotiations and his responsibilities.
Krum expects “frustration selling” as some investors may expect the change to have an impact on its reimbursement strategy, even as the company said it shouldn't affect the process.
At J.P. Morgan, analyst Robbie Marcus said, "Given Mike’s status as an industry heavyweight, which lent a lot of credibility to the company’s ongoing reimbursement negotiations, and the fact that he just started the CEO role in January, we see this leadership update as a clear negative."
BTIG said investors will perceive the “unexpected transition as another negative headline that renews doubt about IRTC’s reimbursement outlook and future performance.”