What happens to an iPhone after it is exchanged at an Apple Store?

I recently exchanged an iPhone after it was diagnosed with a defective battery. AppleCare took care of it and I was given a new iPhone to replace it. I'm just wondering what happens to these returned iPhones. Are they fixed and brought back out to the market for resale? Can anyone from Apple let me know?
Having been a victim of identity theft, I am concerned at the information (pictures, videos, financial info, passwords, etc.) that were previously stored there. I did an "Erase All Content and Settings" before returning it but I'm concerned that maybe someone can somehow restore all that information.
Thanks.

When it comes to deletion of all content, would you know if anyone can recover the data previously stored even though it is refurbished? The phone was generally in good condition (just needs a new battery).

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