Heartflow, Inc. Common Stock (HTFL) Earnings

Management highlights

### Overall Q2 Performance - Revenue growth accelerated for the second consecutive quarter, reaching 48% year-over-year (the fastest growth in eight quarters), beating internal expectations driven by expanding category leadership, strong underlying CCTA market growth, and team execution. - Non-GAAP gross margin reached 83.3% in Q2 2026, up 770 basis points year-over-year, driven by AI-enabled efficiency gains, volume leverage, and a higher mix of high-margin PLAC revenue. - Non-GAAP operating loss narrowed to $7.9 million from $11.5 million year-over-year, and non-GAAP net loss fell by approximately two-thirds to $5.8 million, reflecting improving operating leverage. - Ended Q2 with $246.8 million in cash, cash equivalents, and investments, enough to fund operations through profitability while sustaining planned R&D and commercial investment. ### Commercial Adoption - Installed base of accounts grew rapidly, with high win rates for new business strengthening category leadership. - PLAC performance was well ahead of plan, with faster activations and stronger physician utilization than forecast. HeartFlow was selected as the exclusive plaque provider for the NIH-funded PRE-EM study (1,500 younger asymptomatic patients), reflecting clinical community confidence in the technology's market-leading accuracy and reproducibility. - FFRCT utilization remained durable across existing accounts, with the 340-account 2025 new account cohort ramping in line with expectations and early 2026 new account utilization trends showing early encouragement. FFRCT is the only lesion-specific product with published prospective validation against the invasive gold standard for CAD diagnosis, aligned with updated SCCT/ACC clinical guidelines. - The broader HeartFlow AI platform (covering FFRCT, PLAC, Roadmap, PCI Navigator) deepens clinical relationships and creates a durable strategic advantage. ### Innovation Pipeline - Launched HeartFlow Plaque Staging at the July SCCT annual meeting, a clinically validated risk stratification tool validated in over 23,000 patients with up to 16 years of follow-up. Management expects it to drive PLAC adoption tailwinds in H2 2026 and 2027. - PCI Navigator, launched earlier in 2026, is gaining early traction and remains on track for a broader market rollout in 2027. It provides interventional cardiologists with pre-procedural lesion-specific FFRCT and plaque data to improve procedure planning, and strengthens HeartFlow's position in new accounts by building interventional cardiology advocacy for a CT-first diagnostic pathway. - Plaque Tracker, which measures plaque changes over time via serial CTA scans, remains on track for a 2027 launch. - The Autonomous Processing Initiative, a core driver of the mid-term 85% gross margin target, is progressing well and on schedule for a broader 2027 rollout. Both new products leverage HeartFlow's proprietary dataset of over 200 million annotated CCTA images. ### Clinical Evidence - HeartFlow maintains an unmatched evidence base with over 625 peer-reviewed publications and 200+ clinical studies. Eight new datasets covering more than 36,000 patients were presented at SCCT 2026, validating PLAC accuracy, reproducibility, and clinical utility. - Key new findings include: 1) Blinded prospective data published in JACC demonstrated minimal variability in repeat PLAC scans, confirming that measured plaque changes over time reflect true disease changes; 2) A 12,000-patient registry analysis found PLAC staging reclassified 50% of patients with a zero calcium score into higher risk categories by detecting non-calcified plaque that calcium scoring misses. ### Addressable Market Expansion - HeartFlow's next major growth opportunity is expanding PLAC into the high-risk asymptomatic CAD market, which increases U.S. total addressable market by ~$6 billion to ~$11 billion. Three small randomized controlled trials (RCTs) targeting distinct high-risk asymptomatic subpopulations will be initiated over the next three quarters to build the required clinical evidence for reimbursement: 1) Patients with coronary artery calcium ($3 billion TAM, enrollment Q4 2026); 2) Patients with prior MI or PCI ($1 billion TAM, enrollment Q4 2026); 3) Patients with prior plaque assessment ($2 billion TAM, enrollment Q1 2027). Management expects to launch reimbursed PLAC for asymptomatic patients before the end of the 2020s.

Guidance

- Total full-year 2026 revenue guidance was raised to $246 million to $250 million, representing 40% to 42% year-over-year growth (an upward revision from prior guidance). - Full-year 2026 PLAC revenue guidance was raised to $29 million to $31 million, and full-year PLAC activated account guidance was raised to approximately 1,250 (both upward revisions). - Full-year 2026 non-GAAP gross margin guidance was raised to approximately 82% (up 500 basis points year-over-year, an upward revision), driven by volume efficiencies, AI-enabled automation, and a higher contribution from high-margin PLAC. The mid-term non-GAAP gross margin target of 85% remains unchanged. - Full-year 2026 non-GAAP operating expenses as a percentage of revenue are expected to decline year-over-year, with disciplined investment prioritizing revenue-generating initiatives, product innovation, and TAM expansion. The midpoint of revenue guidance implies ~50% year-over-year gross profit growth in 2026. - The company maintains its prior target of achieving cash flow profitability by mid-2028, consistent with the original three-year post-IPO timeline.

Segment performance

For Q2 2026, HeartFlow reported total revenue of $64.1 million, representing 48% year-over-year growth. 1. U.S. FFRCT Segment: U.S. revenue totaled $51.8 million, accounting for 80.8% of total Q2 revenue. Performance exceeded expectations, with strong, durable utilization across existing installed accounts and steady on-schedule ramp-up of new accounts added in 2025 and early 2026. FFRCT is applicable to ~33% of all CCTA volumes, representing the mature utilization opportunity per installed account. 2. PLAC (Plaque Analysis) Segment: Q2 PLAC revenue was $7.8 million, making up 12.2% of total Q2 revenue. Results significantly outperformed internal expectations, with accelerating new account activations and faster-than-forecast physician utilization ramp-up. PLAC is applicable to ~60% of all CCTA volumes, providing a broader eligible utilization opportunity than FFRCT within each installed account. 3. Outside U.S. (OUS) and Other: OUS and other revenue totaled $4.5 million, accounting for 7% of total Q2 revenue.

Risks & headwinds

- Forward-looking statements (including guidance, market expansion plans, and profitability targets) are subject to inherent risks and uncertainties, and actual results may differ materially from current expectations. - Ongoing intellectual property litigation is ongoing, with a multi-year timeline expected for resolution. While management is confident in its legal position, the outcome of the litigation cannot be guaranteed. - A Department of Justice civil investigation (CID) is also ongoing, with a multi-year timeline, and no material update was provided on the call. Management notes the matter is not distracting from operations and the company is fully cooperating with the process. - Plaque adoption is still in the early stages, and the pace of physician utilization ramp-up may differ from current expectations even with strong early trends. - The new CMS MedTech as a service reimbursement framework is a multi-year process (expected to take effect in 2029), and the ultimate impact of the new framework on HeartFlow's reimbursement and revenue is uncertain.

Analyst Q&A

• Q: What specific factors are driving HeartFlow's stronger-than-expected PLAC adoption, and how is the company outperforming competitors in the plaque space? /

  A: Management reports that new PLAC activations and physician ordering volumes are well ahead of internal plan, with coverage already reaching ~78% of eligible patients ahead of schedule. On track to reach 1,250 activated PLAC accounts by end-2026, a milestone that took FFRCT eight years to achieve. Management attributes the strong performance to the company's differentiated, independently validated accuracy and reproducibility, which aligns with new ACC clinical standards for quantitative plaque analysis, leading customers to choose HeartFlow over competing offerings.

• Q: What is HeartFlow's view on the new CMS MedTech as a service reimbursement proposal, and how might it impact the company's current CPT code-based reimbursement? /

  A: Management notes the new framework is consistent with CMS's long-stated direction, and the 2027 near-term proposal is positive for HeartFlow: FFRCT and PLAC reimbursement remain stable, while CCTA reimbursement increases nearly 12%, strengthening the economics of the HeartFlow pathway. Longer term, the new AI-specific framework is viewed as constructive, as it acknowledges AI services are distinct from traditional medical devices and aligns with HeartFlow's value proposition of improving clinical outcomes; management looks forward to collaborating with CMS on the multiyear process expected to conclude around 2029.

• Q: Management raised full-year guidance but did not assume a large sequential step-up in PLAC revenue in H2 2026 despite strong Q2 momentum. Is this conservatism, or are there pricing headwinds to note? /

  A: The guidance structure reflects the company's long-standing philosophy of setting a high-conviction baseline that leaves room to outperform. Guidance assumes steady sequential growth from Q2's strong base, underpinned by continued ramp from existing accounts, contributions from Q2's record new onboarding cohort, and expanding PLAC utilization. Normal CCTA market seasonality in the second half has also been incorporated into guidance, with no hidden pricing changes assumed for the remainder of 2026.

• Q: Can you update on operating leverage and the role of AI efficiency in driving margin expansion going into 2027? /

  A: Q2 results demonstrated strong operating leverage: revenue grew 12% sequentially while SG&A declined, leading to a roughly 50% quarter-over-quarter reduction in operating loss. The company is reinvesting top-line outperformance in a disciplined way, with the largest increases going to R&D for pipeline products and clinical trials for asymptomatic market expansion. Full-year 2026 non-GAAP operating expenses as a percentage of revenue are expected to improve at least 5 percentage points year-over-year, with meaningful EBIT improvement. The Autonomous Processing AI initiative, which reduces manual labor to expand margins, is on track to be the main driver of the 85% mid-term gross margin target and will be a primary margin driver starting in 2027.

• Q: What is the commercial model for PCI Navigator, and do you plan to charge for the product long-term? /

  A: PCI Navigator is currently not offered as a separate paid product, and there is no current plan to pursue separate reimbursement for it. Management's current strategy is to offer Navigator as a platform differentiator to build advocacy among interventional cardiologists, who are key influencers for the broader CT-first HeartFlow pathway within health systems. The rollout is being phased in 2026 to avoid distracting from PLAC adoption, starting with high-volume PCI hospitals, and early feedback has been very positive. A broader rollout is planned for 2027.