FOIAengine: FDA Inspections Prompt FOIA Requests
When CEO Quentin Blackford of iRhythm Technologies, Inc. (NASDAQ: IRTC) began his earnings call on August 1, his wearable heart monitor technology company had survived five years of market ups and downs and had sustained its position as a “leading digital health care company.”
Blackford led with the good financial news: Revenue was up by 19 percent over the second quarter to $148.0 million, beating Wall Street expectations. Turning to Food and Drug Administration regulatory issues, he reported “continued progress” in responding to the FDA warning letters and said that a first response had been submitted, with a second plan “coming soon.”
But the CEO then reported information that reporters and firms had not heard. FDA inspectors had been on-site at the company’s San Francisco and Orange County facilities from July 15 to 31, and there were problems. The inspections resulted in several “Form 483 observations” that focused on quality systems and regulatory compliance. A Form 483 is issued when an FDA inspector finds regulatory violations that could result in adulterated products that could be injurious to health.
The same day as the earnings call, iRhythm filed its 2024 second quarter earnings report, which provided detail about its dealings with the FDA and included an acknowledgement that the “investigations of our executives, our managers, or our company could result in significant liabilities or penalties to us, as well as adverse publicity… which could negatively impact our financial position.”
The next day iRhythm shares declined by over 12 percent. Almost immediately, Freedom of Information Act requests about iRhythm came rolling in to the FDA.
Readers of this space know that we view FOIA requests to the federal government as signals – early warnings of bad publicity, litigation to come, or uncertainties to be hedged and gamed out. Every month, financial firms, law firms, news media, and others make FOIA requests to gain a heads-up on news that could affect a company’s short- and long-term market prospects.
In this case, the multiple FOIA requests about iRhythm were clues to an essential question: Who’s watching? Answer: multiple banks, hedge funds, and law firms. More about that later. But first, some further background on iRhythm.
According to the company’s website, iRhythm “combines wearable biosensors and cloud-based data analytics with powerful proprietary algorithms to distill data from millions of heartbeats into clinically actionable information.” It has developed the Zio line of long-term continuous heart monitoring products that use sophisticated sensors and artificial intelligence to detect, predict, and prevent heart disease such as arrythmia. iRhythm has gained regulatory approvals to sell in the U.S., the Europe Union, and Japan.
iRhythm’s stock price has been volatile over the past five years, climbing as high as $274.21 and declining as low as $41.66. It was down 30 percent for 2024 and stood at $86.25 the day before the August 1 earnings call.
Yet, iRhythm has remained a favorite of investors. InvestorPlace wrote in July that the company offers a “revolutionary product” with “significant growth opportunity” and is a “healthcare stock to buy.” They continued, “(t)he moat around iRhythm is cemented by its AI algorithms.” Zachs Investment Research said on August 7 that iRhythm could be “a solid addition to your portfolio.”
iRhythm’s medical device products are regulated by the FDA, which maintains a global plant inspection program to track regulatory compliance. Before this year’s inspections, iRhythm received from the FDA last year two warning letters regarding its products and manufacturing facilities. A warning letter issued on May 25, 2023, stated that the findings “may be symptomatic of serious problems in your firm’s manufacturing and quality management systems” and called on the company to “investigate and determine the causes of any violations and take prompt actions to address any violations and bring the products into compliance.”
According to PoliScio Analytics’ competitive-intelligence database FOIAengine, which tracks FOIA requests in as close to real-time as their availability allows, the day after CEO Blackford’s earnings call, financial firm Wells Fargo (1) and law firm Kelley Drye & Warren, LLP (2) submitted a total of three FOIA requests to the FDA seeking information about the July FDA inspection reports. By the end of August, 12 additional FOIA requests, for a total of 15, had been submitted by law firm Bernstein Litowitz Berger & Grossmann and financial firms Deerfield Management, Point72 Asset Management (2), Citigroup, ExodusPoint (2), Millenium Management (2), Truist Securities, and Rock Springs Capital.
All requests sought copies of the Form 483 reports resulting from the FDA inspections. A few went further. ExodusPoint requested “copies of all publicly providable communication between iRhythm Technologies and FDA from January 1, 2023, through present.” Point72 Asset Management requested “related documents” for the investigations. And Bernstein Litowitz Berger & Grossmann requested “inspectional observations” and “any communications between iRhythm and the FDA relating to the above Form 483s.”
This wasn’t the first time FOIA requests presaged market volatility for iRhythm. According to FOIAengine, iRhythm was the subject of 12 FOIA requests in June 2023, under similar circumstances.
FOIAengine access now is available for all professional members of Investigative Reporters and Editors, a non-profit organization dedicated to improving the quality of journalism. IRE is the world’s oldest and largest association of investigative journalists. Following the federal government’s shutdown of FOIAonline.gov last year, FOIAengine is the only source for the most comprehensive, fully searchable archive of FOIA requests across dozens of federal departments and agencies. FOIAengine has more robust functionality and searching capabilities, and standardizes data from different agencies to make it easier to work with. PoliScio Analytics is proud to be partnering with IRE to provide this valuable content to investigative reporters worldwide.
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Next: The latest FOIA requests to the SEC, FTC, and FDA.
Randy E. Miller, co-creator of FOIAengine, is a Washington lawyer, publisher, and former government official. He has developed several online information products and was a partner at Hogan Lovells, where he founded the firm’s Brussels office and represented clients on international regulatory matters. Miller also has served as a White House trade lawyer, Senior Legal Adviser to the U.S. Mission to the World Trade Organization, policy director to Senator Bob Dole, and adjunct professor at Georgetown University. He is a graduate of Yale and Georgetown Law. FOIAengine is a product of PoliScio Analytics (PoliScio.com), a venture specializing in U.S. political and governmental research, co-founded by Miller and Washington journalist John A. Jenkins. Learn more about FOIAengine here. Sign up here to become a trial user of FOIAengine.
Write to Randy E. Miller at randy@poliscio.com.