Heartflow Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 14, 2026

Key Takeaways

  • Positive Sentiment: HeartFlow posted a strong Q1 with revenue of $52.6 million, up 41% year over year, driven by 67% global case growth and strong utilization across both legacy and newly added accounts.
  • Positive Sentiment: The company raised full-year 2026 guidance to $228 million-$232 million in revenue and increased Plaque-specific revenue outlook to $19 million-$21 million, citing momentum in FFRct and faster-than-expected Plaque adoption.
  • Positive Sentiment: Plaque Analysis appears to be ramping ahead of plan, with management saying account activation is ahead of schedule, coverage reached 75% of covered lives, and the installed base is expected to reach about 1,200 sites by year-end.
  • Positive Sentiment: Gross margin improved to 80.5% from 75.3% a year ago, and guidance was lifted to about 81%, supported by AI efficiencies, volume leverage, and a richer mix of higher-margin Plaque revenue.
  • Neutral Sentiment: HeartFlow highlighted major innovation and evidence milestones, including the launch of PCI Navigator, progress on autonomous processing, and a proprietary database now exceeding 200 million annotated CCTA images, while also planning new trials to expand its long-term market opportunity.
AI Generated. May Contain Errors.
Earnings Conference Call
Heartflow Q1 2026
00:00 / 00:00

There are 11 speakers on the call.

Speaker 6

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nick Laudico, Vice President, Investor Relations. Please go ahead.

Speaker 5

Good afternoon, everyone, welcome to the HeartFlow first quarter 2026 earnings conference call. Joining me today are John Farquhar, HeartFlow's President and Chief Executive Officer, and Vikram Verghese, our Chief Financial Officer. Today, we will walk you through our Q1 performance, share updates on our commercial momentum, innovation pipeline, and clinical programs, provide financial guidance. A live Q&A session will follow. The earnings release accompanying today's discussion is available on our investor relations website at ir.heartflow.com. During this call, we will refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP figures can be found in today's earnings release. I'd like to remind everyone that certain statements made on this call are forward-looking within the meaning of federal securities laws. These statements are based on management's current expectations and beliefs, involve risks and uncertainties, actual results may differ materially.

Speaker 5

Please note that both this live call and a digital replay will be available shortly after the call concludes. With that, I'll now turn the call over to John Farquhar, our CEO.

Speaker 1

Thank you for joining us. HeartFlow entered 2026 with the strongest momentum in our history. The first quarter demonstrated how quickly that momentum is translating into results. Our AI-powered platform, our deeply embedded commercial footprint, the world's largest database of annotated CCTA images, which is now over 200 million, combine to create an advantage that widens with every quarter. In the first quarter of 2026, revenue was $52.6 million, up 41% year-over-year on 67% global case growth. Four factors drove the quarter. First, FFRct utilization remains strong across the installed base. Second, the record class of new accounts that we added in 2025 is performing very well and ramping on schedule. Third, our Plaque launch is outperforming expectations. Lastly, the broader CCTA market continued to expand, supported by guidelines and strong reimbursement.

Speaker 1

We also reached a meaningful milestone this quarter. HeartFlow has now helped physicians manage care of more than 650,000 patients worldwide. This scale of real-world commercial experience is unmatched in our category, and we continue to extend our leadership position with each quarter. The strength of our first quarter performance gives us confidence to raise our full-year outlook. We now expect to deliver total revenue of $228 million-$232 million, representing 29%-32% year-over-year growth. We're also increasing our plaque-specific revenue outlook to $19 million-$21 million. Moving down to P&L, we're raising our non-GAAP gross margin guidance to approximately 81%. This is the high end of our prior range, driven by ongoing AI efficiencies, volume leverage, and a higher mix of high-margin plaque revenue.

Speaker 1

At the midpoint of our revenue guidance, this implies year-over-year non-GAAP gross profit growth of approximately 37%. Finally, we remain committed to our midterm non-GAAP gross margin target of 85%. Now, turning to our 3 strategic pillars: commercial adoption, innovation, and clinical evidence. I'll walk through each, starting first with commercial adoption. Within this pillar, there's 3 themes that played out in Q1. First, as expected, our FFRct business is healthy and performed well. Second, our emerging plaque business is accelerating ahead of expectations. Third, our platform strategy is taking hold. We're seeing it translate into deeper integration and increasing product utilization. Now, relative to FFRct, the performance of our core FFRct business remains remarkably strong, characterized by durable utilization across our established base of existing accounts as well as our new additions.

Speaker 1

Our cohort of legacy accounts is large and growing, delivering consistent, predictable volumes month-over-month. This is a result of our unique product differentiation. As the most accurate non-invasive test for CAD and the only product with lesion-specific FFRct values, our base business remains as strong as ever. Additionally, I'm very pleased with the performance of the accounts that we added into our installed base in 2025. This cohort of 340 accounts was the largest in HeartFlow's history and is ramping nicely in line with our expectations. Together, these factors reinforce my confidence in the long-term health and durability of our FFRct business. Now turning to plaque, I'm pleased to report that adoption is ahead of our initial expectations. Activation of new plaque accounts is ahead of schedule, and we're seeing strong early utilization trends.

Speaker 1

At a high level, the recently published ACC/AHA scientific statement on plaque, the increasing payer coverage, and the outstanding clinical and economic evidence that we shared at ACC in March all contribute to growing awareness and demand for our HeartFlow Plaque Analysis. Closer to the front lines, our recently expanded territory account manager sales force is trained, focused, and doing great work. These reps call directly on high-volume general cardiologists to raise awareness of our Plaque Analysis technology and clinical data as well as enable targeted medical education efforts. Everything we do in this regard underscores our proven accuracy and our clinical effectiveness and is an important step in the journey of driving widespread adoption of this new technology. The scale of our medical education efforts is significant. Over the last 12 months, we've held over 1,000 medical education events focused on Plaque Analysis, generating over 100,000 physician impressions.

Speaker 1

As our customers gain experience with Plaque and see firsthand the value it can deliver for their patients, we're highly confident in the early trends we've seen in Q1 and that they'll translate to even better results longer term. Given this confidence, we've raised our 2026 Plaque revenue guidance, and we now expect our Plaque installed base to reach approximately 1,200 sites by the end of the year. We see a clear path to pricing expansion beginning later this year with more meaningful upside in 2027. A couple comments on our HeartFlow platform, which we believe to be the most intelligent AI operating system in cardiovascular care and a very important component of our strategy. We're proud to be the only clinically validated AI platform to span the full continuum of care across coronary artery disease, from detection to diagnosis to management and treatment planning.

Speaker 1

Our platform is comprised of 4 tools: Roadmap, Plaque, FFRct, and now PCI Navigator, all powered by AI to independently provide precision and unique clinical insights and all working together as a unified solution. Now, I can't underscore this enough. Our customers are busy and operate in complex environments. In many cases, they're forced to make decisions and share information across settings of care and subspecialties. Simply stated, their job is hard. They do not want separate, discrete, ad hoc point solution. For true adoption, they demand what our platform uniquely delivers, a unified clinical solution that provides both precision and seamless coordination across the continuum of care. Further, our platform strengthens as it expands. With each new technology we introduce, the flywheel of adoption accelerates. This is happening right now with the launches of Plaque and PCI Navigator.

Speaker 1

Lastly, I'd be remiss if I didn't also mention that we integrate seamlessly into our customers' workflow, effectively becoming the operating system of record for CAD across their hospitals, clinics, and health systems. Turning to our second pillar, innovation. In April, we launched PCI Navigator, and the feedback from interventional cardiologists has exceeded our expectations. For the first time, ICs can walk into the cath lab with a fully informed procedural plan already in hand, a level of pre-procedural certainty that simply did not exist before. The tool runs on any computer and reduces procedural planning to minutes. We're executing a phased rollout through 2026 with broader introduction in 2027. Innovation doesn't just impact the top line. Our autonomous processing initiative, which we highlighted on our last earnings call, is progressing well and is on track.

Speaker 1

We entered the pilot phase in the first quarter and continue to expect a gradual rollout through the back half of 2026 and a multi-year impact beginning in 2027. The program underpins our midterm non-GAAP gross margin target of 85%. Finally, all of our innovation is enabled by our proprietary data set, an asset unmatched in our category. As of early May, we reached a defining milestone. This data set now exceeds over 200 million annotated CCTA images. It's large, diverse, and precisely annotated and serves as the foundation for everything we do with respect to innovation. We've spent over 10 years training algorithms, and it supports our leading accuracy and reproducibility. It also enables our consistent cadence of innovation, as evidenced by our track record of delivering at least 1 major launch each year.

Speaker 1

Clinical evidence is our third pillar, and it remains central to our leadership in this category. We've built what we believe to be the deepest and most rigorous evidence base in this space, with over 625 peer-reviewed publications and more than 200 clinical studies and trials. The breadth and depth of clinical validation, spanning accuracy, clinical utility, cost-effectiveness, and outcomes, shapes how we develop and commercialize our technologies and continues to strengthen the trust we've earned with the physicians we serve. Our leadership was on full display at the American College of Cardiology Annual Scientific Session this year. Our educational dinner was standing room only. Our mobile CCTA plus HeartFlow program, where physicians received a live personalized analysis, was oversubscribed.

Speaker 1

We view this level of engagement as part of the broader rising tide of interest in CCTA, with HeartFlow increasingly being at the center of the discussion. Building on our body of clinical evidence, our 5,000-patient NAVIGATE-PCI Registry is now ramping, with sites activating and enrollment building. This study will generate one of the first large-scale prospective data sets evaluating how an AI-driven pre-procedural planning tool influences PCI strategy and cath lab efficiency. It will extend our impact beyond diagnosis into treatment planning. Beyond symptomatic disease, we're now advancing into the asymptomatic population, which we view as the next frontier of this category. To lead this expansion, we remain on track to initiate 2 randomized controlled trials in the second half of 2026, 1 for patients with prior MI or PCIs. Another for patients with elevated calcium scores.

Speaker 1

A third RCT will focus on patients with prior plaque and will initiate in the first half of 2027. These studies are designed to expand our U.S. addressable market by approximately $6 billion, bringing our total addressable market to $11 billion over time. This clinical path not only builds on the depth of evidence for our platform, but it also puts us on a clear trajectory to begin accessing the incremental TAM before the end of the decade. In closing, the first quarter of 2026 translated our platform vision into financial results. FFRct and Plaque Analysis working together are driving sustained volume growth, deeper clinical integration, and more durable account-level adoption. Plaque remains early, but it's ramping ahead of our expectations.

Speaker 1

With PCI Navigator now in the market, HeartFlow spans the full continuum of coronary artery disease from diagnosis through treatment planning, positioning us as an indispensable partner to the cardiovascular service line. This performance supports our increased guidance and reinforces our confidence in the trajectory of the business. We remain focused on our mission to transform the detection, diagnosis, and management of coronary artery disease, and I'm grateful to the HeartFlow team for their continued dedications to the patients we serve and for all of their hard work. I'll now turn it over to Vikram to review our financial results and guidance.

Speaker 8

Thanks, Sean, and good afternoon, everyone. Unless otherwise noted, my remarks reference the quarter ended March 31, 2026. All financial metrics I refer to other than revenue will be non-GAAP, unless otherwise noted, and all growth rates will be year-over-year. Reconciliations to the comparable GAAP measure are in today's earnings release. Total revenue for the first quarter was $52.6 million, up 41%. U.S. revenue grew to $48.3 million, up 42%, inclusive of $3.2 million of Plaque revenue. OUS and other revenue grew to $4.3 million. Total global revenue cases for the quarter were 67,443, representing 67% growth, driven by continued strength in U.S. FFRct, strong contribution from accounts added in 2025, better than expected Plaque adoption, and continued expansion of the CCTA market.

Speaker 8

We continue to see strong utilization in the quarter at both existing and new accounts, consistent with historical ramp dynamics we have described previously. New accounts continue to take about a year to ramp to near full FFRct utilization, while existing accounts continue to demonstrate durable and consistent utilization patterns. As a reminder, FFRct is applicable in approximately 33% of CCTAs, which means maximum FFRct utilization in an account is approximately one-third of CCTA volume. We again saw particular volume strength in the clinic setting, which remains a rapidly growing and strategically important segment of the market, along with continued adoption of our volume-based rebate pricing structure. Finally, we continue to expand our install base at a rapid pace during the first quarter, driven by strong execution from our commercial organization and Plaque Analysis adoption that was ahead of expectations.

Speaker 8

As a reminder, we provide install base metrics on an annual basis only. Turning to gross margin, first quarter gross margin reached 80.5% compared to 75.3% in the first quarter of 2025. The year-over-year improvement reflects volume leverage, increased production efficiency, and continued progress in AI-enabled automation, supported by ongoing training on our proprietary CCTA image database. Operating expenses reflect disciplined investment behind our highest priority growth initiatives. First quarter SG&A expenses were $38.3 million, driven by targeted investments in our commercial team to further drive adoption of the HeartFlow platform. Research and development expenses were $19.5 million as we continue to fund the innovation cadence John described, along with the clinical evidence required to support new product adoption and expand our addressable markets.

Speaker 8

Non-GAAP operating expenses were 110% of revenue versus 116% a year ago. Non-GAAP operating loss was $15.5 million compared to $15 million last year, demonstrating improving operating leverage while we continue to invest for growth. Non-GAAP net loss was $13.3 million or a loss of $0.16 per share compared to a Non-GAAP net loss of $19.2 million or a loss of $3.11 per share in the first quarter of 2025. On a GAAP basis, net loss was $27.4 million or a loss of $0.32 per share. GAAP net loss includes a $7.5 million non-cash impairment charge associated with our facilities optimization and headquarters relocation to San Francisco.

Speaker 8

Weighted average basic and diluted shares outstanding were 85.6 million in the quarter. Turning to the balance sheet. We ended the quarter with $254.9 million in cash equivalents, and investments. We continue to have high confidence that we are well-capitalized to fund operations through profitability while continuing to invest in R&D and commercial expansion. Turning to our updated outlook for 2026. Given the momentum in our core business and acceleration in Plaque, we are raising our expectations for the full year. We now expect total revenue of $228 million-$232 million, representing 29%-32% growth. We're increasing our Plaque-specific revenue outlook to $19 million-$21 million. We continue to expect more material adoption in the second half of the year as clinicians gain clinical experience and broaden adoption.

Speaker 8

Based on our 1Q performance, we're also raising our full-year non-GAAP gross margin guidance to approximately 81%, up 400 basis points year-over-year. The drivers of our gross margin outlook include continued volume efficiencies, increased AI-enabled automation, and a higher mix of high-margin plaque revenue. The midpoint of our revenue guidance implies approximately 37% gross profit growth in 2026. Finally, as John mentioned, we have remained committed to our midterm non-GAAP gross margin target of 85%. This reflects our confidence in continued AI-enabled production efficiencies through our autonomous processing initiative, scaling plaque revenue, and sustained volume leverage as the platform grows. We also remain on track to achieve cash flow profitability within three years of our IPO. I would now like to turn it back to John for summary closing remarks.

Speaker 1

Thank you, Vikram, and thank you all for joining us today. We appreciate your continued interest and your support as we work to advance the HeartFlow AI platform as the new standard of care for detecting, diagnosing, managing, and treating coronary artery disease. We're excited about the start to 2026, and we continue to expect a milestone year. With that, I'll turn the call over to the operator for Q&A. Operator?

Speaker 6

Thank you. Our first question comes from the line of Robbie Marcus with J.P. Morgan.

Speaker 9

Hi, team. This is Alan on for Robbie. Just want to start off with plaque and the updated guide. You know, clearly you began the year with, you know, a much stronger than expected quarter. I think relative to our expectations, sort of came in, double what we had been forecasting on a revenue perspective. You raised the guide by, you know, roughly $4 million. It looks like you're not pulling forward all of the upside. You know, how much of that reflects, you know, maybe a little bit of, you know, a faster start, a pull forward into the first quarter relative to, you know, the rest of the year? What are you seeing in, you know, second quarter that supports the rest of the guidance?

Speaker 1

Yeah, sure. Thanks for the question. I'll give you some thoughts, and I'll let Vikram sort of speak to how that plays throughout the subsequent quarters. I would say, you know, from an adoption standpoint, the way we think about it, there's really three, you know, three drivers here, okay? The first is coverage, and we talked about this coming into the year, but we've made progress since then. As of the end of March, we're now at 75% total covered lives. That's a really good place to be, and we're happy with that. This is again, a function of us taking our DECIDE data, which is the largest prospective, you know, data set of its kind. We're taking that to payers to open and expand coverage. We still got work to do.

Speaker 1

There's a fairly long tail of payers. I feel good about the team's execution and where we're sitting from a coverage standpoint. You know, the second piece is we need to get Plaque into our installed base. You know, I mentioned in the prepared remarks, we're now upping our guide relative to installed base. I've got high confidence we'll be at about 1,200 by the end of the year. This is a function of just, again, really strong market demand. I'm in the fortunate position where I can see the funnel moving forward, and I think the funnel looks really good. I feel good on where we're taking Plaque relative to our installed base.

Speaker 1

You know, the third piece, probably the most important, is we need to get out with cardiologists, we need to help them understand how to use plaque with their patients. Far and away, probably the number 1 question I get is this technology is amazing. It's really, you know, really interesting, how do I actually use it with my patients? We lean very hard into medical education. We've got a great stable of physician partners that speak on our behalf. Since last year, we've done over 1,000 events, we continue to do that. I would say across all of these dimensions, everything's performing really well. I think that sort of underscores the confidence in raising our guide.

Speaker 1

Now I will say, you know, in spite of the optimism, we're still really early in the adoption cycle, you know. You think about the components of that, you know, first you need to get contracted with the account. You need to get the workflow up and running, you know, installed, et cetera. You've got to get confidence in the reimbursement. You know, accounts don't open the floodgates right away. They want to trust that payment is coming through, there's no denials, et cetera. Ultimately, physicians need to use it with their patients to help manage them medically. Those patients need to come back after a period of time.

Speaker 1

Hopefully show some improvement. We're working that through that adoption cycle right now. I'm really happy with the team's execution. I've got really, you know, my optimism on the future of PLAC is as strong as it's ever been. With that, I'll let Vikram kind of speak to kinda how this plays out throughout the rest of the guide.

Speaker 8

thanks, John. I'll start with comments on Q1. It was a strong quarter for us. We did north of $3 million in revenue, and that was really driven by better utilization as well as stronger new account additions. Pricing was in line with expectations. Keep in mind the category 1 CPT code for PLAC went live in early January, which supported the sequential step-up that we saw from 4Q to Q1. Relative to phasing of revenue, I wouldn't characterize this as a pull forward of any kind. It really shows sustained and strong momentum in the business. All of the metrics we track point to continued adoption momentum. Similar to our last guide, it's still early in the year, and this is a high conviction guide that sets us up well to outperform.

Speaker 8

Then finally, I do wanna reinforce, we continue to expect Plaque Analysis to be back half weighted, and that really reflects the adoption curve that John described.

Speaker 9

Thanks. Then I just had a quick follow-up on the spend side. You know, good to see gross margin ticking up to the higher end of the range supported by that strong PLAC number. You know, I think operating spend did come in a touch higher than we had been expecting. I think previously we had been looking to, you know, $223 million-$224 million in OpEx for the year based on the 1st quarter run rate. It looks like you're going to be coming in a step above that. What really drove that spend in the 1st quarter, and should we use that as the right run rate for SG&A and R&D for the rest of the year going forward?

Speaker 8

Thanks for the question there. You know, the first quarter OpEx, I would say, was increased sequentially, and that really was a reflection of the full quarter impact and investments were made in the fourth quarter. You know, we also made the conscious decision to front-load certain investments early in the year, particularly around medical education, given our expectations on PLAC, and the importance of supporting that effectively through the year. Importantly, I would say even with those investments, EBIT came in favorable to our expectations, you know, which reflects the continued discipline across the broader cost structure. Now to your question on 2026 OpEx.

Speaker 8

For the full year 2026, you know, we continue to expect OpEx as a percentage of revenue, which is an important metric we track to decline year-over-year. There's some puts and takes within the cost base. On the clinical front, we'll have some favorable sequencing of costs. DECIDE related spend would phase out. We'll see that'll create capacity for the investments we wanna make in the asymptomatic RCT. We're also absorbing some incremental legal spend, but that's partially offset by the savings from the sublease of the facility. Net-net, we expect OpEx to increase modestly on a sequential basis through 2026. Combined with the continued margin expansion, you know, that should drive a meaningfully narrower loss, operating loss versus 2025.

Speaker 8

All that being said, given the underlying drivers in the business, we continue to expect cash flow profitability, by that mid-2028 timeframe.

Speaker 6

Thank you. Our next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open.

Speaker 10

Hi, this is Samantha on for Matt. Thank you so much for taking our question. Could you talk a little bit more about how the distribution of Plaque accounts is trending across the installed base? You know, started at large center first and now going broad. Just a little bit more depth there.

Speaker 8

Yeah, sure. Thanks for the question. I think, you know, bottom line, I would say the distribution is fairly even across, you know, any cohort you wanna cut it. The biggest difference at this point that I see is more tilted towards our existing accounts, you know, being the first ones to get it, and then the new accounts are just now coming online. And, you know, the dynamic that drives that, just so you know, is these were all by and large contracts that were put in front of customers last year. As they move through the funnel, the first ones to go live are within our existing accounts.

Speaker 8

Now moving forward, I would say from, you know, Q2 and beyond, we'll see more and more new accounts come in that will have the full platform from the get-go. You know, at the end of the day, we go where the demand is. I'm not reading too much into it one way or another on sort of an existing versus new standpoint. I think your question was probably a little bit more towards the size of the cohorts, large, medium, and small. I see that spread pretty evenly at this point, and I wouldn't expect that dynamic to change. As I mentioned, we've got good visibility in the funnel and it looks pretty relative that way.

Speaker 8

Now we've still got, as I mentioned, we've got really good confidence that there's more accounts to go add. As we add more, as I mentioned, there'll be more new accounts coming in. That 1,200 kind of IB call for Plaque Analysis by the end of the year, that's a new one and we've got good confidence in that. I'd also just say relative to adding new accounts

Speaker 1

The total hunting ground, just as a reminder, is about 3,200. That's about 300 accounts more than there were last year. I think there's still a really good runway out there to continue to bring onto the franchise.

Speaker 10

Thank you.

Speaker 6

Thank you. Our next question comes from the line of John Young with Canaccord. Your line is now open.

Speaker 2

Hey, John Vikram. Thanks for taking the question tonight. Congratulations on the quarter. I just want to also touch on plaque, if I can. On ASPs, could you just speak, you know, add a little bit more additional color on plaque ASP expectations for this year? Generally, how long are existing contracts in terms of timing for ASP increases? Have you been able to take price? How should we think of the price point new accounts are being onboarded at relative to plaque reimbursement today? Thanks.

Speaker 8

Yeah. Yeah. Thanks for the question there, John. You know, I'd provide some commentary high level on how we look at pricing. Just by way of background, you know, many of our early plaque contracts were really structured with attractive pricing for principally two reasons. First, to accelerate account activation and really drive early adoption, and I think we're doing a great job there. The second, because reimbursement was more limited at that time. It was really principally Medicare reimbursement. It's also worth noting that within our contracts with our customers, we do have mechanisms for price increases to step up over time. You may recall in the March earnings call, we had already increased our plaque ASP expectations for 2026.

Speaker 8

Now, with the visibility we have, we continue to see upside to current consensus, with really more favorable pricing becoming visible, in 2027 and beyond.

Speaker 2

Okay. Great. Thanks. Just as a follow-up too, our survey work has been suggesting there's some strong unawareness in the clinical community still about plaque reimbursement. Do you see that as well, and are there any plans for education to overcome this hurdle? Thanks again for taking our questions.

Speaker 1

Yeah. I think you said you said you heard that in your survey. That doesn't surprise me. You know, depending on where you are in the market, I think that's fair that could be the case. I think in general, I would describe awareness of plaque as low. I mean, that's part of this kind of category creation effort under which we're undertaking. A large part of that is clinical education, as I mentioned, another part of that is, you know, the reimbursement that comes with it. You know, I mentioned this dynamic, you know, customers need to understand the Category 1. They need to understand the payment dynamic in their ZIP code.

Speaker 1

They need to trust that the payment is gonna come through after a submission, and there's not gonna be a denial, what have you. All of that is part and parcel of the work we do to help the develop the category. My expectation is that was probably the case earlier this quarter. It'll probably still be the case, you know, in future quarters, just to a lesser degree as we continue to do our work.

Speaker 2

Thank you.

Speaker 6

Thank you. Our next question comes from the line of Rick Wise with Stifel. Your line is now open.

Speaker 7

Good afternoon, John, and congratulations on a really another outstanding, if not brilliant quarter. In that spirit, you've given us you beat street numbers, you beat our numbers, and you raised by more than these. I feel slightly embarrassed, but not so embarrassed I'm not gonna ask. When I think back and look back over the last couple of years, you've been growing 40%, if you know, kind of character or better. The midpoint of the guide, the new guide is, I think I'm right in saying sort of, 30% or so.

Speaker 7

Maybe just help us think through in a little more detail, I'll call it your conservatism in light, not just the past performance, but the really impressive continued rollout of innovation, as you said, adding new accounts, expanding reimbursement, plaque moving faster. Maybe just help us put that in context going. It's clear that the even looking at the 2027, the outlook is extremely positive. Maybe just talk about how we should think about it and maybe where the drivers of upside could come from. Thank you.

Speaker 1

Yeah. Sure, Rick. Thanks, and thanks for the question. I think you're, you know, you're probably familiar with our guidance philosophy at this point, but, you know, when we give guidance, we want it to be a high conviction guidance. Okay? I would certainly characterize this one within the same light. I've got really high confidence in this raise. When I think about sort of the biggest drivers of it, you know, number one is our FFRct business continues to be strong and durable and predictable. You know, we talked about in 2025, we had the biggest year ever in terms of bringing on new accounts. We brought on 340 new accounts. Those accounts are really starting to pay off well. Okay?

Speaker 1

They are ramping on schedule, and I've got really high confidence that they'll get up to sort of that higher utilization range that we historically see. I feel good in that regard. You know, you mentioned plaque. You know, plaque is this sort of next layer of the cake, you know, growth, so to speak. Every metric we track internally is ahead of plan, okay? Doesn't mean we're where we wanna be, but I'm very, very pleased with it, you know? That's both relative to volumes, as well as new accounts coming through. You know, that underscores our, you know, the guide that Vikram mentioned, that underscores that 1,200 account install base by the end of the year.

Speaker 1

We're still really early, but I feel better now than I ever have relative to plaque. I should also say qualitatively, you know, when I'm out in the market with customers, the feedback is outstanding. It's just working through this kind of adoption cycle that we've discussed, and that's, you know, that's hard to rush. The last piece is just, you know, the wind at the sails of the overall CCTA category. You know, I think we like to say we're on the right side of history here as this structural shift from, you know, older modalities for non-invasive testing towards a CT first pathway. We think that's a multi-year tailwind, and that's certainly a component as well.

Speaker 1

From that standpoint, I've got, you know, I've got good confidence in this guide and, you know, relative to the guiding philosophy, Vikram, I don't know if you have anything to add on that.

Speaker 8

Yeah. Yeah. Thanks, John. I'll just reinforce from my perspective again, to what John said, this is a high conviction starting point that really preserves room for operational upside as the year unfolds. And relative to the FFRct business, you know, we meaningfully outperformed our expectations on both volumes and revenues in 1Q. Based on that performance and the visibility we have, we immediately increased our volume and growth assumptions versus the March guide. We also have a clear path here to further strengthen the growth outlook as the year progresses. Now, second, on plaque, you know, I would characterize this as a de-risked guide based on the early trends we're seeing in Q1.

Speaker 8

It's still early in the fiscal year, and we continue to believe plaque revenues will be back half weighted. You know, John talked about the conviction behind the 1,200 plaque counts by the year-end, and that's really supported by the funnel and the high visibility we have on the commercial front. Finally, we also did outperform expectations on new site additions, which we believe is a strong indicator of continued interest in the HeartFlow pathway. In sum, you know, I would characterize this guide as a durable base case, with really multiple paths to drive performance about the top end of the range.

Speaker 7

Yeah, it's exciting to hear. Just another topic I'm hoping you're gonna expand on a little bit is what I, what I sort of my reaction was the tsunami of annotated CCTA images you're accumulating and rapidly building now over 200 million. Back in January, I think you were talking about over 160 million. I don't know whether this number makes any sense, but it feels like you could be at, I don't know, 300 million by the end of this year or early next year. Regardless of that number, can you talk through the implications for HeartFlow, the multifaceted implications from this really rapid accumulation of these images relative to the speed of the platform, to the adoption, to the implications for your COGS, your margins?

Speaker 7

Maybe just any updated thinking and color and perspective there. Thank you so much.

Speaker 1

Yeah, sure. Thanks. Good question. We've passed the 200 million annotated image threshold, now we're just a bit, you know, north of that, and that's really a function of the model that we've put in place. For every CCTA that one of our customers does, that comes into our cloud. We annotate it. It's got precise annotations, and we can use that to drive innovation, both that drives, you know, customer-facing innovation with physicians and new clinical insights and gross margin expansion. We absolutely see this as a competitive advantage that is getting stronger each and every day. It really is the bedrock for all we do, you know, relative to innovation.

Speaker 1

We've talked about historically, we've got a very strong track record of putting at least 1, you know, 1 material new launch into the market every year. We've got se-tra-plaque tracking coming out next year. Obviously, this year we have PCI Navigator. Obviously, we've got more in the roadmap beyond that we'll share with you on future calls. I feel great with this as an asset, so to speak. More broadly, you know, we try to innovate across 3 vectors. We go deep, this is all about making our existing products better. Just last year when we launched our next generation plaque algorithm, that's a good example of that. That came from that same, you know, data set of annotated CCTA image. We innovate around breadth.

Speaker 1

You know, we expand the platform, we can do more. You know, a couple of years ago, we launched Roadmap. This year we're launching PCI Navigator. Next year we're launching Plaque Analysis, that's another example, real-world example of that. We, you know, we use the same data set for efficiency. A lot of that efficiency is expanding our gross margins. We talked about our autonomous processing initiative that's now underway. We continue to use that same data to do that. This is core to who we are as a company. It's core to our, you know, our engine that helps drive growth. I think, you know, as we've discussed, it's only getting stronger as, you know, as each quarter goes on.

Speaker 7

Thank you, John.

Speaker 6

Thank you. Our next question comes from the line of Larry Biegelsen with Wells Fargo.

Speaker 4

Hi, this is Nathaniel Trecaso back on for Larry. Can you talk about how accounts with Plaque Analysis are utilizing it? Is it broad across the addressable patient population or is it in specific patient cohorts?

Speaker 1

Yeah, sure. Thanks, Nathan. Good question. I think it's still early to tell. I think anecdotally we have a direction, but we don't know, you know, objectively at this point. I think, you know, most of our early users are using it in patients with more disease first. I think that's not surprising to hear that feedback. I think as they get confidence that folks, that patients that they have with a higher plaque burden come back with better adherence, better, you know, better outcomes and, you know, LDL lowering, et cetera, I think that will broaden over time. My only comment on that is I'd put an asterisk on it. That's an anecdotal kind of pulse of the market that's not based on any data.

Speaker 1

I'm sure there's instances where patients with lower plaque burden are using it, are getting it as well.

Speaker 4

Okay. Thanks for that. In terms of how plaque utilization is trending, you know, as we think about new accounts, how is it trending in the new accounts relative to how, you know, FFRCT trended on utilization when it was launched?

Speaker 1

I think, good question, and thanks for asking it. I think we're kind of talking about two different parts of history. I mean, when FFRCT was launched, that was pre-guidelines. That was on older, you know, an older base of CT capital that was in the market. The awareness was quite a bit lower. You know, this is a new world. You know, I think, you know, CT plus AI is much higher awareness right now. I don't know if we can kind of compare the utilization to the same degree. I will say we're very confident in FFRCT's ability to, in our understanding of ramping over time, FFRCT will go to the full extent of the range. We have not seen that yet in plaque. We're too early in the adoption curve.

Speaker 1

I think physicians need to use plaque, have patients come back, understand how it's helping them manage it. We're not at that point yet.

Speaker 6

Thank you. Our next question comes from the line of Kallum Titchmarsh with Morgan Stanley. Your line is now open.

Speaker 3

Great. Thanks for taking the question, guys. I'll be unoriginal and stick with plaque for 1. You described the upcoming DECIDE 1-year outcomes as a potential inflection point for plaque. Can you maybe just give us a sense of what specific endpoints or metrics you expect will resonate most with payers and physicians? Are you still on track for the readout in H2? Thanks a lot.

Speaker 1

Yeah, sure. We use, you know, DECIDE obviously in a lot of what we do relative to, you know, to educating the market. We use that with both, payers, to get the coverage, as well as more importantly with physicians to help them understand. The 90-day readout showed a 51% change in management, meaning when a physician have the Plaque Analysis, they change their management plan with patients and a 19-point reduction in LDL. Okay. The 1-year data that comes out later this year, we'll see each of those. Obviously, I don't know what they, what that will be yet. And we'll have about 13,000 patients in that readout. We certainly expect that will help with Plaque adoption.

Speaker 1

I think the most important thing that's gonna help with plaque adoption is this first round of patients that get it are gonna come back to see their cardiologists and, those outcomes will become very personal. I think as that cardiologist, and physician experiences that's when the flywheel, I think will just get stronger.

Speaker 3

Great. You know, now that the PCI Navigator's been in the market for about a month, again, realize it's early days, but any early observations on adoption patterns? You know, how many sites have activated it? You know, you seen any early sign of incremental FFRct pull through from kind of interventional cardiologists? I guess if not now, then when are you expecting that to take place? Thanks a lot.

Speaker 1

Yeah, sure. Navigator, you know, we're super excited about it. The feedback is really strong. There's lots and lots of interventional cardiologists asking for it, asking how they can get it, et cetera. We are gonna be like everything we do, we're gonna be very planful in the rollout. You know, what's most important is the cardiologists have a good experience with it, you know. We believe the ability to have a plan for a PCI before the patient, you know, before the physician is in the cath lab, is really important. Okay? This is gonna allow physicians to plan ahead. They can plan both relative to the complexity of the lesion as well as the approach that they're gonna take.

Speaker 1

They'll be able to hopefully select devices more intelligently. They can walk in with a clear procedural plan. You know, I've had an interventional cardiologist tell me recently the cath lab should be for executing the plan, not deciding the plan. That's exactly what happens with TAVR and mitral and left atrial appendage, and we think one day PCI will go there. So we're really excited about that. We think it makes our platform, our platform more, you know, stickier, more compelling. We're right now, we're targeting the largest PCI hospitals first. That's where, you know, given our strategy, that's where we're targeting. We'll roll through that, and we'll make sure that, you know, all initial experiences are strong.

Speaker 1

At this point, we're not disclosing any metrics more specifically for that, but I will say I'm very, I'm very excited about Navigator and what it does for our platform this year.

Speaker 6

Thank you. Our next question comes from the line of Brandon Vazquez with William Blair. Your line is now open.

Operator

Hey, everyone. Thanks for taking the question, and I'll echo congrats on a nice quarter here. John, maybe I'll start with a higher-level picture. You'd used this phrase that there was a flywheel effect going on as you start to see adoption of kind of all the different solutions within the portfolio here at HeartFlow. Maybe expand on that a little bit. What do you mean by you're seeing a flywheel effect? Where you know, what metrics give you excitement and optimism to come on the call and start talking about flywheel effects, and how does that build over time? What metrics do you think we'll see that in the model?

Speaker 1

Thanks, Brandon, for the question. I, you know, I link it back to, you know, to 2 things. One, the power of the platform, and then 2, the power of the database that I mentioned earlier on the call. You know, relative to the platform, you know, we believe the stronger the HeartFlow platform, the stronger the business, you know. We back everything we do with clinical data from detection to diagnosis to management and treatment. The more we expand our platform, and that's core to our strategy, the more we see, and we believe utilization and adoption will occur. This year, you know, introducing Plaque, introducing Navigator. This is obviously a big year for the platform.

Speaker 1

Next year, we'll have our Plaque Analysis out there. As I mentioned, we've got other ones down the road that we'll share. That provides stickiness. That provides utility. Everything we do across the platform is co-registered. You get concordance across all of it. Just wherever you are in the continuum of taking care of a patient with Coronary Artery Disease, we have our clinically backed AI technology to help you with that. Relative to the other data set that I mentioned, that gets bigger and bigger as well, right? For every patient we serve, for every account we open, we're adding more into our proprietary database.

Speaker 1

The more we have in our database, the more diverse it is, and the more we'll be able to develop, you know, new innovation along the lines of what I previously spoke about.

Operator

Got it. As a follow-up, maybe I'll ask two here, one, John, for you and one for Vikram. Part of this flywheel, John, is it fair to say, do you guys see in accounts that are adopting the entire portfolio, are they seeing higher utilization levels across the board? I think that's part of what I'm trying to understand a little bit too, is there a flywheel or a halo effect of the entire portfolio in the accounts?

Operator

Then Vikram, on that note, maybe talk to us a little bit about, I know you guys don't give specifics on the ASPs or the volumes, every quarter, but talk a little bit as you think about the increased guidance relative to what you had the prior guidance at, how much of that is coming from volume versus better than expected pricing. Thanks, guys.

Speaker 1

Yeah. Short answer right now, Brandon, it's too soon to tell. We anticipate, over time, when successful, certainly that to be the case. I think the more, the more components of the platform, the more value we're delivering. With that, you would expect, you know, stronger utilization. At this point, it's too soon to tell.

Speaker 8

Brandon, to your question, it's really driven by volumes. You know, we expect on the plaque side, ASPs to be in line with consensus in 2026. On FFRct, as we have talked about previously, you know, we do have the dynamic of two dynamics specifically, both of them are volume-enabling dynamics. First is our use of volume-based rebates. You know, this worked to our advantage in Q1. Our volume growth in Q1 approached 50%. As volumes come in ahead of plan, the ASPs obviously reflect that level of outperformance. Second is the mix shift, you know, to the clinic site of service, which carries with it lower ASPs, but is again fundamentally volume enabling.

Speaker 8

You know, against that backdrop of ASP shifts, we continue to drive towards profitable growth. Gross profit in Q1 increased about 10 points faster than revenue to about 51%. It was in fact higher than unit growth as well. You know, with respect to the guide, we assume these dynamics will continue through the balance of the year on FFRct.

Speaker 6

Thank you. I'm currently showing no further questions at this time. Thank you all for your participation. This does conclude today's conference. You may now disconnect.

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