iRhythm Technologies (NASDAQ:IRTC) and Electromed (NYSE:ELMD) Critical Review

Electromed (NYSE:ELMD) and iRhythm Technologies (NASDAQ:IRTC) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Insider and Institutional Ownership

40.8% of Electromed shares are owned by institutional investors. 12.7% of Electromed shares are owned by insiders. Comparatively, 0.7% of iRhythm Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Electromed and iRhythm Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Electromed	0	0	0	0	N/A
iRhythm Technologies	0	1	9	0	2.90

iRhythm Technologies has a consensus price target of $113.90, indicating a potential upside of 50.50%. Given iRhythm Technologies’ higher possible upside, analysts plainly believe iRhythm Technologies is more favorable than Electromed.

Profitability

This table compares Electromed and iRhythm Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Electromed	9.41%	12.44%	10.72%
iRhythm Technologies	-24.50%	-84.14%	-19.29%

Volatility and Risk

Electromed has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500. Comparatively, iRhythm Technologies has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Valuation and Earnings

This table compares Electromed and iRhythm Technologies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Electromed	$54.72 million	3.68	$5.15 million	$0.50	46.48
iRhythm Technologies	$492.68 million	4.80	-$123.41 million	($4.27)	-17.72

Electromed has higher earnings, but lower revenue than iRhythm Technologies. iRhythm Technologies is trading at a lower price-to-earnings ratio than Electromed, indicating that it is currently the more affordable of the two stocks.

Summary

Electromed beats iRhythm Technologies on 8 of the 13 factors compared between the two stocks.

About Electromed

Electromed, Inc. develops, manufactures, markets, and sells airway clearance therapy and related products that apply high frequency chest wall oscillation (HFCWO) therapy in pulmonary care for patients of various ages in the United States and internationally. The company offers SmartVest airway clearance system for patients with compromised pulmonary functions, including bronchiectasis and cystic fibrosis, as well as neuromuscular conditions, such as cerebral palsy and amyotrophic lateral sclerosis; SmartVest SQL System; SmartVest Clearway System that consists of an inflatable therapy garment, a programmable air pulse generator, and a patented single-hose that delivers air pulses from the generator to the garment to create oscillatory pressure on the chest wall; and SmartVest Connect, a wireless technology that allows data connection between physicians and patients to track therapy performance and collaborate in treatment decisions. It also provides single patient use SmartVest and SmartVest Wrap products for health care providers in the acute care setting. The company offers its products to hospitals, home health care centers, pulmonary rehabilitation centers, cystic fibrosis centers, neuromuscular clinics, and other clinics through distributors. It markets its products to physicians, health care providers, and directly to patients. Electromed, Inc. was incorporated in 1992 and is headquartered in New Prague, Minnesota.

About iRhythm Technologies

iRhythm Technologies, Inc., a digital healthcare company, engages in the design, development, and commercialization of device-based technology to provide ambulatory cardiac monitoring services to diagnose arrhythmias in the United States. It offers Zio services, an ambulatory monitoring solution, including long-term and short-term continuous monitoring and mobile cardiac telemetry monitoring services. The company also provides the Zio Monitor System, a prescription-only, remote electrocardiogram (ECG) monitoring system that consists of a patch ECG monitor that records the electric signal from the heart continuously for up to 14 days and the Zio ECG Utilization Software System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS System; the Zio XT System is the previous generation of the Zio Monitor System and is a prescription-only, remote ECG monitoring system that consists of the Zio XT patch that records the electric signal from the heart continuously for up to 14 days; and the Zio AT system, a prescription-only, remote ECG monitoring system that similarly consists of the Zio AT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, but which also incorporates the Zio AT wireless gateway that provides connectivity between the Zio AT patch and the ZEUS System during the patient wear period. It has a development collaboration agreement with Verily Life Sciences LLC and Verity Ireland Limited to develop various next-generation atrial fibrillation screening, detection, or monitoring products. The company was incorporated in 2006 and is headquartered in San Francisco, California.