Heartflow, Inc. (HTFL) September 2026 Conference Transcript

Okay. All right. Welcome back. I'm Larry Beigelson, the medical device analyst at Wells Fargo, and it's my pleasure to host this fireside chat with the management team from HeartFlow. With us, we have John Farquhar, the CEO, Vikram Verghese, CFO. Hardest names to pronounce, by the way. You got it right. You got it right? Okay. Campbell Rogers, Chief Medical Officer. That one's easy. I think John is going to start with a couple slides, and then we'll go into Q&A.

So thanks, Larry. It's a pleasure to be here. And you did pronounce my name correctly, so thank you for that. I've heard much worse. Right, Vikram? Okay, so I'll give you a quick overview, and then we'll go into the Q&A here with Larry. And obviously with me are Vikram, our CFO and Campbell, our CMO. And both Campbell and Vikram will share in this discussion. So just to ground everybody, for those that aren't totally familiar with HeartFlow, we're an AI company, we use AI to diagnose coronary artery disease, and we're focused solely on coronary artery disease. We've been around, the company was founded in 2010, and we just IPO'd about a year and a half ago. Our current focus right now is the symptomatic market, okay? And the symptomatic market's about a $5 billion TAM, and we've had good commercial adoption through this, but we still have a tremendous amount of upside relative to penetration just in this TAM in and of itself. We've got a couple very attractive growth drivers that I'll speak to. One is plaque, and this is plaque for the symptomatic patients, and I'll talk about that. And that growth wave is underway, so to speak. But then on the near horizon here, and Campbell will speak to the clinical plan on this, we have a very attractive adjacent TAM of $6 billion, and that's high-risk asymptomatic patients. So you'll hear themes of this as we discuss, and I presume we'll get some questions as well. I won't get into the financials. I think everybody's probably familiar with that. The one thing I'll say that is core to our story is this theme of data. Okay, and this is both clinical data that we really believe is the currency of the realm in working with cardiologists. We have over 625 peer-reviewed publications, thanks in large part to all the work that Campbell's done over the years. And then the other kind of data we have is the data that we use to train our AI algorithm. And we have a proprietary database of over 200 million annotated CT images. We use this data to improve our current algorithms as well as to create new ones. So both of those are really important components of the story here. To ground everybody, so put your brain back in the symptomatic world for a minute, to ground everybody on the problem that we're trying to solve. Right now, if you're a patient and you have chest pain, dizziness, shortness of breath, some type of a symptom, ultimately you find your way to a cardiologist, and that cardiologist diagnoses you not by looking at the actual disease, but instead off of symptoms and surrogates. And that's the standard of care, and the standard of care has poor outcomes, as illustrated by half of all heart attacks who are surprised. And that's well understood. Very high false positive rate, over 55% of patients end up in the cath lab for an intervention that they don't need. And then similarly, 30% of patients are told they're okay, only to go home and have an event. So there's a real problem here, and there's a real opportunity to create a new standard of care. and we at HeartFlow think we play an important role in creating this, okay? In the tail end, just at the end of 2021, here in the US, CCTA, so coronary CTA, was put in the guidelines as a level 1A test ahead of all other alternatives. HeartFlow was put in as level two, okay? And this isn't just in the US, this is around the world in Europe, UK, and Japan as well. So the clinical data that substantiates this as better medicine is well understood and we're working to change behavior patterns and practice patterns to change this standard of care and the company's had good success up to now but we have a lot of road still to pave here. This slide illustrates our platform. We have a holistic AI platform that's end-to-end regardless of where the physician needs us on the continuum. We have a tool that we provide for all CCTAs to help CT readers read it more efficiently and with less variability. We have separately reimbursed FFRCT and plaque products that are separate reimbursements for our customers, separate revenue streams for us. We've just integrated our staging platform that allows physicians to manage patients with plaque relative to their risk level. And then we're launching, in the process of launching, what we call a navigator tool that's intended to bring the best of both worlds from both plaque and FFRCT into the cath lab for interventional cardiologists. Everything we do is backed by clinical evidence. We believe in the power of prospective clinical evidence, and the truth, ultimately, we believe will differentiate ourselves, us more than anything else out there. We integrate seamlessly into electronic medical record systems and PAC systems, and we like to do everything we can to make our physicians' lives as easy as possible. So, again, just relative to the addressable markets, in the near term, we've got this $5 billion US TAM comprised of about $3 billion for FFRCT, $2 billion for PLAC, and we're lightly penetrated. So there's a lot of headroom here to continue to grow and drive a new standard of care. And then I'll talk about our plans for asymptomatic here in a moment. Plaque, as I mentioned, in the symptomatic world, this is our current growth driver. There's been a number of catalysts in 2026, a couple or one still to come. At the start of 2021, we had a Category 1 code take effect. THAT WAS QUITE IMPORTANT TO US. JUST LAST JULY, AS I MENTIONED, WE LAUNCHED OUR PLAQUE STAGING TOOL INTO OUR PLATFORM. AND THEN IN NOVEMBER, WE HAVE OUR ONE-YEAR DATA FROM OUR DECIDE TRIAL THAT'S READING OUT. AND THAT'S GOING TO SHOW BOTH CHANGE IN LDL AS WELL AS OUTCOMES AS MEASURED BY CV AND MACE. SO THAT'S AN IMPORTANT END POINT TO GET OUT IN THE MARKET. You can see kind of the commercial metrics. We started the year with only About 500 plaque and about 500 accounts. We're going to end the year North of 1200 so really good adoption there We're guiding to a midpoint of about 30 million and plaque revenue this year. This is Exponential growth relative to what we did last year. We only did about a million and a half Last year and commercial coverage is coming online really nicely we've got a still one big payer left out in front of us in Anthem and a long tail of regional payers but we're very pleased with where we are relative to commercial coverage and again that's helping drive adoption as well plaque we believe again in the power of prospective evidence we have that proving our accuracy we have that proving our our reproducibility we have our DECIDE registry, which is 23,000 prospective patients in a prospective registry. That's reading out the one-year outcomes, again, reading out at the end of this year. These are the 90-day endpoints. So we're continuing to educate the market on how to use PLAC. One important element of this, again, is our staging system. This is a staging system of 23,000 patients followed up to 16 years you can see how the risk curves spread by stage and this what this does is this is intended to enable physicians to put a more precise risk profile on their individual patients so they can manage them better okay so this is early in the market but we're seeing really good feedback on this okay now with that we've got a great plaque product in the market we've got a great FFR CT product in the market but up to now we haven't done enough to take that technology and put it in the hand of interventional cardiologists interventional cardiologists obviously are an important stakeholder in the health system ecosystem and we want every one of them to pound the table saying I want a CT plus heart flow for every patient that comes to my cath lab so that's part of the strategic rationale behind our navigator product And I'll let Campbell sort of speak, and we've got a quick animation in here to show you, and he'll speak to the value of that.

Great. Thanks, John. So just as John said, to reiterate, coronary intervention is one of the very few areas of medical treatment for which there is no pre-planning today across the entire waterfront of medicine. And we believe that this navigator tool provides for the first time pre-procedure information that allows interventional cardiologists to go into the procedure knowing what they're going to do, knowing what equipment they're going to need, knowing what complexities might arise during the procedure. Really important on the left-hand side is there are two kind of foundational building blocks to this product. One is lesion-specific fractional flow reserve, which John mentioned. It's unique in the market in its ability to tell an interventionalist exactly where in somebody's coronary tree, exactly where the drop in pressure is that may benefit from a stent. And that's become kind of a standard tool for deciding when and where and if to put stents in. So we provide that information. And what Navigator does is it takes that and displays it, and you'll see this animation in one second, in a way that interventional cardiologists can digest, Even though they may not be trained to read CT, which is its own kind of training pathway, etc., they get the information and they can use it. So this is the first and only PCI planning tool. And just as John said, the FFR component for non-invasive testing we see as the most highly validated non-invasive test because of the clinical data John mentioned and becoming standard of care. this we expect quite quickly will become standard of care in the cath lab people going in to do interventions and we expect the interventional cardiologist will be will feel compelled to say to their imaging colleagues i need the ffr and i need navigator before i'm going to do a pci in your patient so please ensure that that's available to me when the time comes final piece in terms of the clinical evidence, as John mentioned, following the same playbook, we are developing clinical evidence. In fact, one of the most important pieces on the lower right of the slide is called the P4 study, which we sponsored, will be the kind of hallmark first late-breaking trial at the TCT meetings in a couple of months' time. So quite a lot of focus on this as an area in the interventional world writ large. So if you go to the next slide, John, this is now, and if you click on this is the user interface if the user clicks on it as you see happening here clicks on the navigator button what you see appear is this interface and just very quickly you'll see images on the left of the coronary arteries the color map is the fractional flow reserve the flow that's being reduced and where it turns yellow or red is where the stent needs to be placed the when it clicks off and on the yellow and blue are the plaque itself where is their calcium for example which can pose particular problems to interventional cardiologists and for which there are tools now to help manage calcium during a procedure and this has been shown to be very useful in deciding where do i use such tools do i need them in this patient but maybe not that patient etc finally there are measurements being made which you may be able to see on the screen based on what's happening on the right hand side where is the ffr drop that's where the stent needs to go? How long does the stent need to be? How big does the stent need to be? All things which will help inventory planning, anticipation of how long a procedure will take, etc. So all this factors into efficiency in the lab, better outcomes for patients because the material is available, and a better experience, very importantly, for the interventional cardiologist, him or herself, in terms of being able to serve the patient in an efficient and effective way.

Yeah, awesome. And I should say we've launched Navigator in a very limited fashion this fiscal year. And that was really by design. We wanted to make sure that the team stayed laser focused on driving plaque adoption, which they have and are doing. But going into 2027, we'll have more capacity. And we certainly look forward to bringing this to more of our customers. Just a note on sort of the commercial model here at HeartFlow. we currently have about 300 frontline FTEs okay and those fall in roughly three different camps the first in the middle of the slide are our territory sales managers so we talk about this go-to-market model where we go to accounts that are already up up and running doing a coronary CTA program and we sell heart flow into them that's the role of our corner of our territory sales managers. These are the same folks that as plaque gets adopted, they're selling plaque into those same accounts, okay? That's an important arm of the team. Historically, they've been laser focused on the imaging physician. That's kind of point of call number one. As we launch Navigator, the interventional cardiologist will also become an interface for them, okay? Once an account is up and running we've got a second team out in the referring community and these are our territory account managers this is a team for those of us that were sort of a part of the IPO journey we talked about expanding this team in preparation for plaque demand they're out there educating general cardiologists on how plaque can help them better better medically manage their patients helping general cardiologists understand that a CT plus heart flow pathway is available and if they have interest where should they refer into so that's a very important arm there and then the third piece is our customer success organization customer success is forward deployed into our customer into our accounts as we go live they help implement our technology they work through any workflow issues that might have and they integrate into their EMR and PAC system so another really important part of the commercial model. We like to say if you've seen one integration, you've seen one. Every one is a little bit customized. And so this team has a lot of local knowledge on how to kind of take our platform and meet the customer where they need us to be. We're growing across all three fronts here. And again, this is in anticipation of strong demand that we want to stay in front of for 2027. So shifting gears here, we just talked about the symptomatic world. We've been very consistent in heart flow strategy. We want to treat the highest patients with the greatest risk first. We did this in the symptomatic world with our FFRCT technology. We're currently doing it with plaque. As we move upwards, we don't want to walk past the next patient set. And there's three subpopulations here of high risk asymptomatic patients. The first is patients with a prior MI or PCI. That's about a billion dollar TAM. The second is patients with prior plaque. And the third is patients with prior calcium. All of these subpopulations are already sitting in the healthcare system. And we believe with the right clinical data, we can go to payers and expand the current coverage to apply to these populations. So we're going to initiate three separate randomized controlled trials over the next couple quarters that we believe can open up these markets before 2030. And I'll let Campbell speak a little bit more to the RCTs that we have planned.

Sure. You want to go to the next slide? Great. So there are three, as John mentioned, they correspond to those three subsets of this high-risk asymptomatic market overall. The first you see on the left is refined CAC. That is in patients who have documented coronary calcium through a calcium score or through a chest CT done for other reasons. The value proposition here, of course, is that it demonstrated that calcium, while a marker of disease, is insufficient granularity as to the risk a patient may have. The study will enroll beginning, we'll show the timelines on the next slide, enroll patients with calcium scores between 1 and 299 in a randomized way, and everything over 300 and over will be in a registry. The randomization will be in half of the patients. We will show them their plaque results and show it to their physicians in a way that will help manage care. And in the other half, they will undergo a CT and that will be blinded. The primary endpoint is, does the decision-making change in the physician's part over the first several months of the study? Really importantly, these patients will be followed out for a year and a half looking at two things. Does their lipid management, their cholesterol become better managed? Is their LDL lower if they have the plaque? And second, does their plaque itself change? They will be re-CT'd after 18 months to look for an interval change in plaque. So that's the first. The second is, as John mentioned, patients who had plaque identified before and now they're asymptomatic, yet you know they have plaque. You know they're at high risk. And this is a study looking very specifically at will aggressive LDL lowering with PCSK9 inhibition modify plaque over again the same 18-month period. And then finally, on the right fascinating study is rewrite CAD. The third of these populations is people who've had a prior stent put in or have had a heart attack and yes they're asymptomatic but you know they have coronary disease and they are known to be at very high risk and our thesis is showing them their plaque showing their physicians their plaque even though they already had a stent put in will compel better lipid management better adherence by patients lower LDLs and better plaque healing over again the same 18-month window so three very similar studies, acute changes, also looking at longer term outcomes. So then the timelines you see here, the first two, the post-MI study, post-PCI study rewrite will begin later this year. The same for the calcium score study later this year and the serial plaque study sometime in the very first part of 2027. The primary endpoints for the first two are decision making at 90 days and then you see the later time point of changes in plaque and changes in ldl the serial plaque study because we're specifically studying and management we are imposing which is pcsk9 inhibition only has that later time point when the second imaging procedure is done 18 months out yeah perfect so again the large uh you know large adjacent tam that we really think we've got a good chance and a good strategy to get into around 28, 29 timeframe.

One of the reasons we really like this strategy is it's a play or a playbook that we've executed before. If you think about what we did with FFRCT, establishing coding, payment and coverage, driving a stalled base adoption, putting the clinical data behind it. We did that with FFRCT and we sort of learned how. We're doing that same playbook now for symptomatic plaque, and the similarities between that and what Campbell mentioned, entering in this high-risk asymptomatic, make a ton of sense. So it's a very practical way, in my mind, to get into a pretty attractive TAM in short order. The other reason we really like this is this leveraged our existing technology. So this is our plaque technology that we already have. It's the same algorithm. It's the same call points. All these same customers that we're already engaging with, we're going to sell them through them. They're already managing these patients. They're under their care. And of course, it's our same commercial infrastructure So we really like this as a solid way To expand to ultimately give it give us an 11 billion Dollar TAM up from the five that we're in right now Okay Lastly we reported Q2 results just a couple weeks ago. Let's Vikram speak to the financials.

Yeah real quick pleased with our results in Q2 we reported revenue north of 64 million which represented 48% year-over-year growth we've had this consistent track record of revenue growth over the last few years we paired that with consistent gross margin expansion as well about 30 points of gross margin expansion over the last five years we've talked about the architecture of our gross margin expansion it's really driven by the autonomous processing initiative plaque which is highly margin accretive as well as economies of scale as we're able to scale revenues and spread those fixed costs and cost of revenue over a larger volume basis of note you know we on OPEX we we're disciplined but growth oriented continuing to invest in sales and marketing as well as R&D but we're continuing to keep track of OPEX as a percentage of revenue as well as narrow EBIT losses year-over-year we're well capitalized we've got close to 250 million on the balance sheet sufficient to fund the P&L as well as get the company to profitability in that mid 2028 timeframe that's it all right thank you thank you all right great great overview thanks for the update I think some of the information on the asymptomatic trust was new so a couple questions here John you know maybe at a high level you have two multi-billion dollar

opportunities FFR CT and plaque FFR CT is clearly larger today but plaque is growing faster so if we fast forward five years how do you see the split between the two yeah so thank you for the question and thanks again for for having us I think you know midterm I think plaque's gonna be a bigger business than FFR CT and I think that'll be a true statement just within the symptomatic market and I think when you add in asymptomatic it's even or of magnitude larger. The rationale for that is the patient applicability. So FFRCT is paid for and covered for about 33 percent of the population. So that's if any stenosis is between 40 percent and 90 percent, it's covered. Plaque, on the other hand, is any visible plaque up until a 60 percent stenosis. So it's a larger patient pool. We're nowhere near that utilization yet, but the trends that we've seen so far this year give us reason to believe we can get there over time and as such I think it'll be an even bigger business.

What does that assume for ASPs because right now FFR, CT, the ASP is much higher than PLAC.

Yeah I can comment on that. A PLAC pricing strategy is unfolding the way it was planned. We entered the market with attractive pricing given reimbursement was principally Medicare. Now with expanding coverage we're able to command better pricing so in Q2 you did see that step up in ASPs which was reflected in our financials ASPs we expect to stay relatively stable for the rest of the year and then there's another step up in those contractual agreements we have with our customers in early Q1 2027 okay and we're assuming the same ASP for plaque and the high-risk asymptomatic as well got it uh john you've had a lot of early success in plaque uh you mentioned anthem is the one holdout yeah um what's the status uh short answer is we don't know it's hard to call as you can imagine uh commercial player players play their cards pretty close to the um pretty close to their vest

in addition to anthem there's a long kind of tale of smaller regional payers that being said i'm very pleased with where we are relative to total covered lives i think closing q2 we're at 78 which was well north of what we had forecast at this point so Anthem will come I don't know when and I think when it does it'll help I don't think it'll be sort of a hockey stick catalyst by any means but I think it'll further help adoption and what does it get you covered live from from what to what I think Anthem is worth about nine points eight points right yeah it's us to the mid 80s on a covered lives basis so Campbell maybe two-part question on asymptomatic so the studies here you know they don't there's no hard outcomes

data so what gives you the confidence that these three studies are going to be strong enough the outcomes for payer coverage sure yeah no these are we're going down this pathway of these are diagnostic application it's not a screening study diagnostic application in people who have coronary disease so So we have high confidence that we can expand the current coverage determinations from Medicare and from commercial payers that currently cover PLAC and they cover CTA with this evidence. It's the same playbook, Larry, that we've used with FFR and with early PLAC where there also weren't outcomes at the time of gathering many of these coverage wins, yet we had clear evidence for it impacts physician decision making and it impacts I would call secondary markers really good markers for example LDL lowering so we're confident these will be sufficient for those for these markets and the second part you're taking a very different approach from your main competitor but that's doing you know a large outcomes trial why is this the right approach yeah I'll tell you from a clinical standpoint and then obviously John and Vikram can comment from the business standpoint. From my standpoint, these are incredibly high-need, high-risk individuals who are asymptomatic, and it's a very large market. I'm going to be real. It's a very large market. In John's phrase, we're not walking by it. These are populations where we are highly confident. We can design trials that we will win.

They're extremely capital efficient compared to outcomes trials, such as may be needed for other applications and we've done it before and this is just the same playbook high risk yet asymptomatic really big markets so we're confident we can execute things I think it's higher it's higher probability it's it's closer in relative to timing and it's straight out of our current capabilities you know when you go out into the screening world and start talking you know GPs and what have you PCPs that's a whole nother world out there those are longer that's a bigger investment and it's much longer time Vikram so let's talk about the guidance

for 26 you know the second half guide implies roughly 1 million dollar incremental per quarter from here I'm doing the math right now given the ramp and plaque why would revenue only increase by you know a million a quarter yeah the the underpinning assumptions haven't really changed from the August earnings call you have to start the starting points always the underlying CCTA market Q2 tends to be seasonally the strongest quarter in the year the incremental CCTA units in the Q3 and Q4 are more modest that's reflected in the FFR CT guide it reflects normal yearly seasonal phasing we've incorporated that into the guide plaque is different plaque is still early in the adoption game utilizations continuing to ramp and as such we're continuing to project incremental plaque revenue to close out the year and then finally you know this is consistent with our guidance philosophy establishing a high conviction baseline that leaves room for our performance that's helpful I know investors were impressed with the gross margin in Q2 the guidance doesn't assume much of an improvement in the second half what why is that and what's the you outlook for the gross margin. We're very pleased with our Q2 performance. Came in about three points ahead of expectations. 75% of that beat was driven by better revenue performance. For the rest of the year, we've anchored on that 82% number, given there's puts and takes, higher plaque revenues, continued automation of the algorithm. The offsets are we are continuing to hire in production ahead of demand in 2027. As well as beefing up the customer success team that John talked about They're integral to ensuring seamless integration with our customers. So puts and takes we feel good about the 82% guide If you do see higher plaque revenue that should flow through to the gross profit line But longer term the more recent trends have reinforced conviction around the 85% midterm target and no one is going to escape my 2027 questions. So including you guys So again, I'll stick with Vikram streets modeling 24% year-over-year for revenue You know 40% I think is about the midpoint for the guidance this year What are some of the puts and takes to consider thing, you know, obviously we'll provide a more comprehensive view at a future earnings call But the setups highly attractive as as we enter 27 across both FFR CT on plaque John touched on some of the catalysts that we expect in 27 this continued new onboard opportunity there's 3300 accounts we're about 45% penetrated the beginning of 25 so no more room to hunt we expect a full year contribution from navigator out in the marketplace Campbell alluded to the positive reception from the customer base so that's that's that's a good tailwind for us the very predictable utilization ramp that we expect from the these sites we onboard in 26 will pay dividends in 27 and finally on ASPs we do expect that moderation in ASP shifts on FFR CT in 27 moving to plaque you know the 1250 sites that we've guided to this year they'll ramp in utilization heading into next year to decide one-year outcomes which we'll share at a conference in Q4 that'll be a catalyst more coverage gains as we as we work through the commercial pair list that's not that's another catalyst and finally you know we do expect that price uplift that I spoke about on plaque in early early Q1 that's So, John, when does international become more of a priority for the company?

No time in the near term. You know, right now, when we sit around and we allocate capital, you know, every quarter or so, it's hard to not allocate it in the U.S. It doesn't mean there's not patients that can benefit from our technology. CT adoption is actually quite high in a lot of these markets. But to do that well, you really need to build a local team with local expertise. And there's such a need here in the U.S., probably 90 cents on every dollar is coming back here.

One last one on CCTA. I think penetration is called about 11 percent in the U.S. on non-invasive coronary artery disease tests. The higher it goes, the better it is for you. Is there anything? Why is it only 11? and is there anything you can do to move the needle?

So it's roughly 11%, and that's been growing pretty consistently around 20% a year, just the number of scans coming through every quarter. We play a role in helping develop that. And in some of our best customers that we've been with for, you know, six, seven, eight years now, we see their penetration relative to the standard of care closer to 40%, 45%, which gives us reason to believe when we partner with programs and help them grow we can really shift that standard of care but we haven't been everywhere for that long so that takes time to get there the other thing to know is there's a lots of constituents involved in driving ccta penetration this is a diagnostic pathway it's not like you're just putting a new innovation on the inventory on the shelf and swapping it out for the old one and you're going to see you know quick adoption overnight so there's a lots of pieces that need to fall into place we feel like a lot of the macro factors are still in our favor and will be for the long term most notably guidelines guidelines is level 1a ahead of all other choices okay and over time guidelines win it just takes time okay and I wouldn't we've talked about some of this in our one-on-ones There's nothing in the future, despite all the positive wind at CCTA's sales, that would lead me to guide towards a hockey stick on CCTA growth. I think it's very consistently going to grow, but I don't think there'll be an exponential growth.

And you're a new enough public company that I can ask you this question. What's most underappreciated about hard flow?

Well, I think the TAM expansion, which is one of the reasons we wanted to highlight it these last couple days. I mean, to think about all the success we've had in this $5 billion TAM, and we're still only, you know, less than 5% penetrated. And now we've got a $6 billion TAM sitting on our doorstep that we believe we can execute and monetize before 2030, I'm not sure has been appreciated yet. And I think as we continue to talk about it and get the trials rolling, hopefully that can be better understood and appreciated.

All right, well, thank you for being here.