Heartflow, Inc.

Good day, and thank you for standing by. Welcome to the HeartFlow third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nick Ledeckio, Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to the HeartFlow Third Quarter 2025 Earnings Conference Call. Joining me today are John Farquhar, HeartFlow's President and Chief Executive Officer, and Vikram Verghese, our Chief Financial Officer. John and Vikram will provide prepared remarks and then open the line for Q&A. 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 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 security laws. These statements are based on management's current expectations and beliefs, involve risks and uncertainties, and actual results may differ materially. Important factors that could cause such differences are detailed in our earnings release today, as well as in our filings with the SEC. 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.

Thanks, Nick, and good afternoon, everyone, and thank you all for joining us. We're very pleased to host our first earnings call as a public company following our August IPO, which generated approximately $332 million in net proceeds. On behalf of the entire HeartFlow team, I want to extend my sincere gratitude to the investors who supported the offering and who share our conviction in the company's mission and long-term opportunity. The third quarter of 2025 was an outstanding one for HeartFlow. Total revenue reached 46.3 million, representing a 41% year-over-year growth rate, driven by strong adoption of the HeartFlow AI platform. Global revenue cases grew 48% year-over-year and 7% sequentially, driven by consistent platform utilization, the continued expansion of our commercial footprint, and strong overall market growth. Given this performance and the visibility we have into the remainder of the year, we're initiating full-year 2025 revenue guidance in the range of $173 million to $173.5 million, representing approximately 37.5% to 38% growth. For those newer to the story, HeartFlow is an artificial intelligence company transforming the detection, diagnosis, and management of coronary artery disease, also known as CAD. which is the world's leading cause of death. CAD occurs when the arteries supplying blood to the heart muscle narrow. Full blockage can cause a heart attack. And unfortunately, a heart attack happens every 40 seconds in this country. And half of these occur with no prior diagnosis. Our AI software platform enables physicians to see the actual disease itself and precisely quantify and measure it, helping physicians find disease earlier and diagnose it more accurately. Our platform is the most widely adopted AI solution for CAD management on the market today. And we're leading the charge to create a new standard of care. To date, we've served more than 500,000 patients worldwide. We're endorsed by both the ACC and AHA medical guidelines. We've been peer reviewed in over 600 clinical publications. And our AI algorithms are powered by the world's largest coronary imaging data set of over 110 million annotated images. To put the magnitude of the problem we're solving in context, each year in the US alone, roughly 8.6 million Americans see their physicians with symptoms of coronary artery disease. This can be chest pain, dizziness, fatigue, or shortness of breath. Most of these patients are still evaluated using traditional stress-based imaging tests that have been around since the 1990s. These tests merely infer the presence of disease through surrogate markers, and unlike our technology, they do not measure the actual disease itself. The result of this is poor accuracy, and it's well documented. Up to 30% of patients with treatable CAD are sent home undiagnosed, while up to 50% of patients sent to the cath lab ultimately don't require an intervention. The impact of this inaccuracy is severe. Unnecessary death and human suffering, inefficient and inconsistent delivery of care, and unnecessary costs to say the least. All of this represents a massive opportunity for HeartFlow to redefine this paradigm by creating a new standard of care. Using a single cardiac CT scan or a CCTA, we apply our AI to create a personalized 3D model of each patient's coronary anatomy and precisely measure the actual disease down to the cubic millimeter. This breakthrough positions HeartFlow as the leader of a large and expanded opportunity. In the U.S. alone, we address a total addressable market of $5 billion, and that market remains deeply underpenetrated. And despite our emerging scale, we're still in the very early innings, and we have a long runway ahead of us to support sustained and durable growth. Now turning to our technology platform. we have four fully integrated products that together represent the most comprehensive AI-powered platform on the market. Our platform spans the full continuum of coronary artery disease, from detection to diagnosis to management, and ultimately to treatment planning. So whether you're a radiologist detecting and diagnosing disease, a general cardiologist medically managing a patient, or an interventional cardiologist planning treatment for the cath lab, Our platform provides physicians the power of AI in their decision-making and clinically validated insights with the click of a mouse. There's four integrated products to our platform. First, our roadmap analysis. You can think of this as a GPS for a patient's coronary tree. Our AI identifies and color codes troubled areas of disease, quickly informing the radiologist on where to focus. This workflow tool improves the speed at which a radiologist can read a CCTA by 25% and has been shown to improve intra-reader consistency by over 40%. It's a great example of how we're using AI to bring speed and standardization into everyday clinical workflow. Next, our plaque analysis. It's well understood in the clinical community that both the amount of plaque as well as the type of plaque are important predictors of future heart attacks. Our plaque analysis quantifies the total plaque burden and type down to the cubic millimeter with 95% agreement versus IVUS, the invasive gold standard. Knowing this information informs physicians on how to best medically manage their patients. So instead of using broad-based tools like family history, population-based risk scores, or surrogate markers like LDL, we provide precise, clinically validated measurements to physicians. so they in turn can develop personalized medical management plans for their patients. Third, our heart flow FFRCT analysis. While knowing the plaque burden and type relative to medical management is a game changer, it isn't enough when it comes to deciding if an intervention is needed. To accurately make this decision, the physicians need to understand the degree to which the blood flow is impacted across the precise location of the disease. Our FFRCT analysis does just that. We use AI and computational fluid dynamics to measure the blood flow non-invasively with lesion-level precision. It's validated for accuracy against the invasive gold standard of FFR, and our large randomized control trial, the PRECISE-RCT, proved better diagnostic accuracy and better cath lab efficiency against the standard of care. And lastly, our PCI navigator tool. We introduced this at TCT last month to great excitement amongst the interventional cardiology community, and we plan to commercially launch it in 2026. This is an AI-driven planning tool that integrates anatomy, plaque, and physiology, all aligned to optimize potential stem placement. Together, these four fully integrated products represent the most comprehensive AI-powered platform on the market. We're the only company with offerings that span the full CAD continuum. from detection to diagnosis to management, and now to treatment planning. Now turning to our core strategic pillars and our third quarter execution. We have three core strategic pillars. First, driving commercial adoption. Second, advancing our innovation pipeline. And third, extending our clinical leadership. With respect to driving commercial adoption, we've made great progress in the third quarter. We continue to focus our efforts on expanding our installed base of accounts. As a reminder, we target a total account opportunity of about 2,900 U.S. accounts that are currently actively operating coronary CTA programs. This target account pool is growing at about 10% annually. In Q3, we continue to add new accounts into our installed base rapidly through strong efforts from our Territory Sales Managers, or TSM's, which are a dedicated arm of our sales team that focus solely on onboarding new accounts, and we expect to continue to make rapid progress moving forward. Now, once a new account is added into our installed base, a separate arm of our sales team, Territory Account Managers, or PAMs, focus directly on the referring cardiology community. They increase awareness of our technology, and they help educate physicians on the value of the HeartFlow AI platform. Currently, we're expanding our TAM sales force and making great progress with the goal of doubling this team by year-end 2025, which is going to further extend our reach into this important segment. Both of these efforts, expanding our install base and educating the referral community, will pay even greater dividends as we scale our plaque analysis, which we expect to be a major growth driver for us. Now, recently, we've had several notable achievements relative to plaque. On the coding front, CMS announced that the plaque analysis will transition to a Category 1 CPT code on January 1, 2026. This is a major milestone that formally assigns RVUs and, for the first time, enables physician payment in the clinic setting. CMS also finalized a national Medicare payment rate of $1,026 for the clinic setting and proposed to continue the hospital rate at $950. From a coverage perspective, UnitedHealthcare and Cigna recently made policy updates covering heart flow plaque analysis for patients with acute or stable chest pain across all lines of businesses. This brings coverage of heart flow plaque to 57% of U.S. covered lives as of October 1, 2025. Now, as a reminder, we're not forecasting material plaque adoption until we receive 70% of all covered lives. And this is the same coverage inflection point that unlocked broad adoption for our FFRCT analysis. Now to our second core pillar, which is advancing the innovation pipeline. Our unmatched data set of more than 110 million CCT images and our embedded infrastructure that enables bidirectional data sharing with our customers gives us a unique ability to iterate, validate, and deploy new technology rapidly. In Q3, we demonstrated this. We received FDA 510K clearance for our next generation plaque analysis and began the full commercial launch. By retraining algorithms on thousands of new CCTA scans, we achieved a 21% improvement in plaque detection performance versus the first generation model. We also expanded our nomogram to 273,000 patients. This is nine times larger than any other plaque quantification study. In addition to this, we also expanded our platform to interventional cardiology. In TCT 2025, we unveiled our new PCI Navigator tool, which is our CT-guided PCI planning tool, and the feedback from leading interventional cardiologists was overwhelmingly positive. Physicians recognize how CT-guided PCI can improve both efficiency and safety by enabling pre-procedural planning where it traditionally has not existed before. and we're excited to bring them this innovation. Because of its clinical value, PCI Navigator will strengthen our relationships with key customers and further extend our AI technology across the full continuum of CAD care. Our third pillar is extending HeartFlow's clinical leadership. Clinical evidence is the foundation of trust in cardiology. It determines how physicians practice, how payers reimburse, and how quickly new standards of care take hold. This is why we continue to invest deeply in building the data that shapes guidelines, secures reimbursement, and accelerates adoption. Our DECIDE registry is a clear example of this. It's the largest prospective study of its kind, enrolling about 22,000 patients across more than 30 US sites. In July, DECIDE met its primary endpoint, showing that more than half of physicians changed their management decisions after reviewing heart flow plaque analysis compared with CCTA alone. Notably, 30% of patients with no calcified plaque also had management changes, demonstrating the technology's clinical sensitivity. This data is now being used actively in discussions with commercial payers, as well as in our medical education efforts. For PCI Navigator, which I just spoke of, new data continues to validate its potential. The planned calcium study, which was presented at TCT, showed that using the CCTA plus heart flow pathway changed calcium modification strategy in more than half of evaluated lesions. This demonstrates how CT-guided PCI planning can bring new precision to interventional cardiology. In the first half of 2026, we plan to launch the Navigate PCI registry. This is a real-world study that will enroll about 2,500 patients across 30 U.S. sites and will measure how PCI Navigator affects physician competence, procedural planning, and patient outcomes. Now longer term, beyond symptomatic patients, we see a major opportunity to redefine the standard of care for those at risk but without symptoms. Roughly 200 million individuals globally stand to benefit from earlier image-based detection rather than reliance on population-based risk scores alone. Capitalizing on this opportunity aligns perfectly with both our mission as a company, as well as our core competencies. And we look forward to sharing more details of this strategy in future discussions. To close, we're very encouraged by the strength and consistency of our third quarter performance. It reflects the continued momentum of our strategy and the great commitment of our team. We're seeing broad adoption of the Heartflow platform, sustained progress across our innovation pipeline, and growing clinical validation that reinforces our leadership position. Our focus remains clear. Execute with discipline, put patients first in all we do, and continue advancing the field toward a new standard of care for coronary disease. We believe this focus positions us exceptionally well for long-term growth and further impact. With that, I'll hand the call over to Vikram Verghese, our CFO, to review the financial results and outlook.

Thanks, Sean, and good afternoon, everyone. Unless otherwise noted, my remarks reference the quarter ended September 30th, 2025. 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 on our IR website. Total revenue was $46.3 million, up 41%. U.S. revenue grew 42% to $42.5 million. OUS and other revenue grew 24% to $3.8 million. Total global revenue cases were 51,805, representing 48% growth, driven by continued strength in our U.S. FFRCT business. We continue to see strong utilization at both existing and new accounts in line with historical trends. We saw particular volume strength in the clinic setting, a rapidly growing segment of the market. We also expanded our install base at a rapid pace, adding new accounts above expectations. Third quarter growth margin was 76.8% compared to 75.9% in the third quarter of 2024. The year-over-year margin improvement primarily reflects volume leverage and continued gains in production efficiency. Operating expenses reflect disciplined growth investments. Third quarter SG&A expenses were $30.3 million up 15%, driven by investments in headcount to drive further adoption of the hot flow platform. Research and development expenses were $16.3 million, up 44%, driven by investments in technology to advance the hot flow platform and in clinical research to expand our evidence base. Operating expenses were 101% of revenue versus 114% a year ago, demonstrating improving operating leverage while we continue to invest for growth. Operating loss was $11.1 million compared to $12.6 million last year. Non-GAAP net loss was $13.2 million or 27 cents per share compared to non-GAAP net loss of $16.2 million or $2.90 per share in the third quarter of 2024. On a GAAP basis, net loss was $50.9 million, or $1.04 per share, versus $19.1 million, or $3.43 per share, last year. The GAAP results include a $32.1 million non-cash charge from the remeasurement of our common stock warrant liability, driven by higher share price during the quarter. As of October 2025, the warrant holder net exercised all warrants, As a result, we expect to record a final non-cash warrant revaluation charge of approximately $9.3 million in Q4-25. Q4 will be the last quarter with any warrant remeasurement impact. Third quarter gap net loss results also include a $4.8 million non-cash benefit from remeasurement of our derivative liability, which terminated upon conversion of our convertible notes at the IPO. and a $6.4 million loss on debt extinguishment related to the prepayment of our term loan in August 2025. Weighted average basic and diluted shares outstanding were 49.1 million in the quarter. Given the mid-quarter IPO, the weighted average understates the post-IPO share base. For modeling go-forward EPS, period end basic and diluted shares were 83.5 million. Turning to the balance sheet, we ended Q3 with $291.2 million in cash and equivalents. This reflects approximately $332.3 million of net IPO proceeds and our subsequent debt actions, mandatory repayment of $55 million, and full prepayment of the remaining $60.1 million term loan, both completed in Q3. With zero debt and a strengthened cash position, we believe we are well capitalized to fund operations through profitability while continuing to invest in R&D and commercial expansion, consistent with our offering disclosures. Now turning to 2025 financial guidance. We're initiating total revenue guidance for the full year 2025 to be in the range of $173 million to $173.5 million, representing 37.5% to 38% growth. This outlook reflects durable adoption of the CCTA plus heart flow pathway and our recent commercial outperformance. This quarter's results reinforce our confidence that gross margins can reach 80% or higher and that we're 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.

Thank you, Vikram, and thank you all for joining us today. We deeply appreciate your continued interest and support as we work to advance the HeartFlow AI platform toward becoming the new standard of care for detecting, understanding, and managing coronary artery disease. We're excited about the progress we're making, and we look forward to updating you on our continued momentum in the quarters ahead. With that, I'll turn the call over to the operator for Q&A. Operator?

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Robbie Marcus from J.P. Morgan.

Oh, good afternoon. Thanks for taking the questions and congrats on a great first quarter out of the gate here. Two for me, maybe first, their quarter came in far above expectations. You started the guide above where the street was for the year and more than the beat. Walk through sort of what you're seeing in accounts, the level of interest in FFRCT, and sort of how you're winning in the field. What's driving the great results?

Yeah, sure. Sure. Thanks, Robbie. Good question. You know, first thing I'll say is, you know, the confidence in raising that we have is really driven by three things. I'll speak to that first. If you think about the FFRCT business, that's our core business. We view this as extremely durable. And as I look at it, it's executing really well on two fronts, okay? One front is You know, we need to grow our installed base. So that's out there. We're hunting for new accounts. We're bringing new accounts into the family. And then the other side of that is then we go out into the referring community. We raise awareness of the new pathway. And both of those then translate to these different cohorts, which I think is where you're going with your question, where our existing sites are performing really, really strongly. as are our newest sites. We're bringing them in. We're bringing as many as we need to. They're ramping really well. So that's kind of the fundamental driver of the confidence. Now, on top of that, I've got visibility to the funnel. So I can see kind of down the road a bit. And I feel very good about where we are. And given that, I've got confidence in, you know, the moving forward trajectory there. And then I think the last piece as kind of the underlying foundation behind all this is just the strength of the overall category or the underlying category, you know, category being coronary CCTA. You know, we know historically that's grown in kind of low 20% range. I'm not seeing anything now that would make me think it's anything south of that. You know, and I think with the reimbursement that came on, the increased reimbursement that came on in 2025, you know, with PLAC coming on in the future, I think coronary CTA is a very durable trend moving forward as well.

Great. Maybe a quick follow-up. Everyone's very excited. I'm sure you are about the plaque launch next year once you hit more complete coverage. You're almost there as of the beginning of fourth quarter. How should people think about the launch of PLAC? What will it take to roll out? How easy is the adoption? And are there barriers that you're working to reduce ahead of it? Thanks a lot.

Yeah, good question. So first thing I'll say is I'm extremely excited about PLAC. And I really believe this is going to be the next wave of growth for this business. There's really three pillars that we're working on. And I'm happy with the progress we're making on all three. You know, first is we've got a secure reimbursement coding, payment, and coverage. The second is we need to build compelling evidence, clinical evidence. And then the third is we have to take that clinical evidence and go into the market to do the real market development work through educating physicians on the value of the tool. And I would say across all three, we're making really good progress. I can tell you qualitatively, when I speak with customers at conferences and when I'm on the road, there's very, very high interest. So I feel good there. And then similarly, I mentioned kind of the funnel that I have visibility to. So I feel good about kind of the out timeline there. Now, that being said, I got to also sort of answer the question relative on when we think this is going to hit in a material way. And there's two pieces of that. One, we've made great progress on coverage so far. As of October 1st, we have 57% total covered lives. United and Cigna most recently came on. We don't believe, I don't believe we're going to see material adoption until that number gets north of 70%. Okay, and the reason I think that is we lived this journey through FFRCT and we didn't see a real inflection until FFRCT coverage was north of 70. The second element here that I think is equally important as we think about this is the market development physician education piece of it. The number one question I get from customers when I'm out is how do I use it? Okay, and it's a little nuanced and it's different than the education journey we went on with FFRCT where there was a established invasive measure of FFR that already existed in the market. So once we proved accuracy against that, the adoption followed. This, there's real teaching. And we're leaning into our DECIDE data in all the efforts that we make to our medical education. And those two really need to work hand in glove before we think the market's going to really accelerate here. All that said, I would not advise any material adoption until the tail end of 26. Thanks a lot.

Thank you. One moment for our next question. Our next question comes from the line of Patrick Wood from Morgan Stanley.

Beautiful. Thanks so much for taking the question, guys. You know, I'm going to keep it to one just for the sake of expediency. But, you know, TCT, I saw you guys at the conference that, you know, the room is pretty packed. And interest in the navigator side sounded very high. How are you thinking about how that fits into the broader portfolio and strategically how that's going to position you to penetrate accounts faster and lock those customers in? How are you seeing that fit in to the broad offering from HeartFlow and its strategy? Thanks.

Yeah, good. Thanks, Patrick. Appreciate the question. So what I'll say, I mean, when you think about our innovation strategy, an important piece of that is we want to add new clinical insights into the platforms. and Navigator is a great example of us doing that. We're the only company with an end-to-end platform from detection to diagnosis to management, and now with Navigator to treatment planning, and we believe in the power of the platform. And what this allows us to do is this gives interventional cardiologists, which are an important stakeholder, as everyone knows, in hospitals and health systems, this gives interventional cardiologists information that they normally don't have until the patient's already on the table in the cath lab. And it allows them to plan a procedure before the procedure's actually going on. And this is very analogous to how they're already used to planning with other procedures like left atrial appendage, TAVR, mitral tricuspid, et cetera. So from that standpoint, interventional cardiologists, and certainly I was at TCT as well, a lot of interest there. And we think it strengthens the platform and helps engage a very important stakeholder and interventional cardiologist. So we're excited for that, and that'll be an important part of our 2026 launch plan. Love it. Thanks, Tom.

Thank you. One moment for our next question. Our next question comes from the line of Matthew O'Brien from Piper Sandler.

Afternoon. Thanks for taking the questions. Maybe for starters, John, just talk a little bit about the Q4 implied guidance. Just, you know, at the midpoint, it doesn't really, you know, signal any kind of sequential improvement. And so, you know, that's not what we saw last year. Is there anything specifically you're trying to call out, or is this just kind of part of your guidance philosophy to try to take a measured approach to things?

Hey, Matt. This is Vikram. Good to hear you. First off, I'll reinforce what John had said. We're really pleased with how the quarter came together. It was comprehensively strong. The install base expanded meaningfully, and utilization did come in higher at both new and existing sites. Additionally, the sales team is firing on all cylinders. As we think about 4Q, just given the better than expected 3Q, the sequential comps do get a bit tougher. And second, our guidance philosophy here is really anchored on a high conviction forecast, which we believe provides a reasonable baseline from which we can over-deliver. So we felt it was important to embed a measure of conservatism in our estimates, and that's what's really reflected in the guide here.

Okay, makes sense. And then, you know, I think, John, you were kind of touching on this a little bit, but there's just a number of different components that are going to drive your growth going forward, and I know not to expect plaque until the back half of next year, but the different components, how do we think about, you know, how those can trend between new centers, utilization, et cetera, over the next 12 months? And I'm sorry to sneak this one in, but Vikram, the Gross margin and EBITDA was way better than expected. Are those durable improvements, or are there any one-timers that maybe affected those positively? Thanks so much.

Matt, I'll take that first, then Vikram can come back. So, I mean, I think there's a number of growth drivers. You know, to answer your question up front, I think they're all durable, and one of these is emerging, and that's plaque. I'll talk you through each. So, the first I mentioned, you know, the category in and of itself, the coronary CCTA category, you know, has historically had a very healthy clip, you know, low 20%. I think we've got every reason to believe that's going to continue on the backs of new guidelines, on the backs of improved reimbursement. We know in the market more and more physicians are raising their hands, wanting to learn how to become a CCTA reader. So I feel really good on that front, and I don't think capacity is going to hold us back on that, okay? The second is our existing cohorts of accounts. And we've got a large cohort of existing accounts. And in any given year, about 75% of our volume growth comes from existing accounts. And we've got a good track record and a good visibility that we have internally that we can count on really good, consistent adoption from these accounts once we're in them. So I feel good, and that's on our FFRCT business. So I feel good in that regard, and I think that's, again, stable and durable. The next kind of component of the equation, so to speak, is install base growth. And this is how do we go and find new accounts, bring them into our family, and then grow them so one day they obviously become existing accounts. And there's a pool of a large pool by which we can go hunt for, so to speak. There's 2,900 accounts out there. That 2,900 adds about 300 every year. We have a long track record with our TSM, our Territory Sales Management, arm of the sales force of being able to bring them on board. And we feel really good, and as Vikram mentioned, we've had some good overperformance in that regard on the ability to go convert. And things like, incidentally, things like Navigator, that helps support that action. And then lastly, plaque. And I talked about that. But plaque, once it's material, I think absolutely is going to be a very strong and very important wave of growth for us. And just as a reminder, this is going to go into the same installed base through the same bidirectional data pipes. It's the same interface, so the same user interface. It's literally a button that's going to go right next to our FFRCT button. So there's huge synergies there. Now, again, as I mentioned, very pleased with the progress we're making, but I don't want to call anything material until the tail end of 26.

Yeah, and on gross margins, the short answer is we do think they're durable. These margins can move around sequentially. but a lot of the benefits that we saw will persist into 4Q. Just stepping back on gross margins, there are really three principal drivers there. We've got higher case volumes, second is the automation of our algorithm, and third is the emergence of plaque revenues. In 3Q specifically, plaque revenues were not material, so the beat was really driven by higher volumes as well as the automation of the algorithm, which is Again, speaking to the AI flywheel that we talked about before. Looking at 4Q, assuming the midpoint of our revenue guide, we expect gross margins to be similar to what we saw in 3Q. And finally, on your question on EBITDA, we will see an uptick in OPEX given the headcount we're filling in the field as well as incremental R&D expenses and the revenue and gross margins we've already guided to.

Thank you. One moment for our next question.

Our next question comes from the line of Rick Wise from Stifel.

Good afternoon, everybody. Hi, John. Hi, Vikram. I was hoping, John, you'd expand on your comments about your expansion, actually, of the TAM Salesforce. It's going to double by, I think, by the end of this year, you said, if I heard you correctly. Talk about how quickly that expansion turns into productivity and revenue. Does it have an immediate positive impact? Is it something that happens over six, nine months, which is sort of what I would assume? And what are your plans or thinking beyond that do we see? Do you expect further expansion? Is that going to be a major aspect of the growth engine?

Yeah, hi, Rick. Good question. Nice to hear your voice. So we're making good progress as we talked about. We're doubling the size of the sales force. We're on track to do that by year end as we've set out to do. Just as a reminder, this team effectively didn't exist four years ago, so we've gone from nothing to where we are now to then doubling that. Moving forward, we'll evaluate probably second half of next year on the need to continue to expand. I don't have an answer to that right now, but I certainly don't want to take anything off the table. This role in our sales force is a really important one, but it is different. This is not a traditional MedTech role. It's much more of a pharma-type model. They play a really important role in the referring community. So they engage with referring cardiologists. And a lot of what they're doing now is around educating. So we've got the side data out there on plaque. We're helping to coordinate medical education events. We're helping to facilitate questions getting answered. So that's a real focus on that team right now. I'll let Vikram speak to the productivity.

Yeah, so relative to that, again, to reinforce what John said, this is a strategic investment on our part, especially with CLAC coming down the pike. You know, I would caution against using any kind of transactional sales metrics, you know, based on territory counts and revenue per territory, as is the case with MedTech. This is much more focused on referrer activation, increasing market awareness, the kind of activity you see typically in pharma. So we're continuing to be excited. We are excited about this expansion. We think it's a longer-term tailwind. The trends are encouraging, but it's much more of a market development investment we're making.

Yeah. And maybe last for me, I want to reflect a little further on The plaque opportunity, I hope I'm not misremembering that you've launched the product in a limited number of sites. I don't know if I'm saying it correctly, but basically for clinical trials, but beta settings, that's my impression anyway. And as you say, reimbursement is key for a broader launch. But I was hoping you'd talk about the early experience. in this limited number of sites, what you've learned about the utility, the utilization, and how it's informing your thinking as you get ready for a broader launch with more abundant reimbursement in hand.

Yeah, sure, Rick. So yeah, you're correct in remembering that we've launched through our Decide sites And we have experience in that regard, primarily, you know, product performance and usability. And, of course, we're capturing the data that's appropriate for the registry. You know, I think we're learning what we were kind of what we were expected to learn going in. I mean, there hasn't been a huge surprise. I mean, the number one question is how do I use this? and being really good to help educate physicians. And this isn't necessarily always a HeartFlow team educating. This is peer-to-peer via other physicians, and we use a lot of our Decide physicians in that regard. So that's the number one question. And then it's an evergreen need, so to speak, but workflow matters. I mean, everything we know has got to fit in the workflow. They've got to have confidence. in reimbursement being there. We've talked previously, this is a diagnostic pathway. Pathways get turned on. Patients do not get cherry picked based on their coverage and then sent down. That's not how it works at scale. So we assumed that was the case going in with plaque and we've certainly validated that since then. And that's really why I'm guiding to tail end of 26 on this. I think it's going to take that long to both educate the market and then get to a coverage threshold that's material enough that a health system will actually turn on that pathway.

Gotcha. Thank you for that, and great to see the excellent quarter. Thank you. Thanks, Rick.

Thank you. One moment for our next question. Our next question comes from the line of William Plovonick from Canaccord Genuity.

Great, thanks. Good evening and thanks for taking my question. A couple here, baton cleanup. You know, you guys raised a lot more money at a light higher price on your IPO, very successful. And, you know, what is this done in terms of changing your go-to-market strategy or your timelines with the extra capital?

Yeah, thanks for the question, Bill. You know, overall, I'd say we are still committed to the plan we had outlined at the roadshow. What the IPO did provide us is a tremendous amount of operating flexibility to invest opportunistically down the P&L. We're highly confident this capital provides us enough cushion to ultimately get the company to profitability while allowing us to continue investing. And our OPEX philosophy is is really anchored in those strategic themes that John had talked about in his prepared remarks, driving commercial adoption, advancing the technology platform, and ultimately leading with clinical evidence. So overall, the plan stays the same, allows us flexibility to invest opportunistically, and we remain confident in getting this company to profitability within three years of IPO.

Okay. And then just You know, we've seen a lot of data come out recently, and you've highlighted it through some PR. We've been in a lot of the medical meetings. But is there anything that you'd call out that you think moves the needle on adoption in any of the certain patient populations? And same question, kind of anything in the next six months that, you know, maybe this is better than expected, or it's different, or it just really opens anything up, or like you said, gets payers going. Anything that came out that can really move the needle that we should focus on?

Yeah, I mean, thanks, Bill. Good question. Again, good to hear your voice. You know, first thing I'll say on clinical, I mean, we have a long history of investing in clinical data. We really believe it's the currency of the realm, and you need to have high-quality clinical data in order to move the needle, you know, as you say. We've invested, you know, we've got over 600 peer-reviewed publications That number continues to grow, and we're going to keep that commitment moving forward. You'll see focused investments to increase more clinical in our plaque analysis. We'll have new clinical insights. I think what we're doing with the Navigator study is an example of that. And then ultimately, we'll expand into new indications. I think most recently at AHA, I can point to the data that we presented there and again this you can put this in the bucket of helping to educate the market on on plaque but we presented our heart flow plaque staging data and this is from the UK it's our fish and chips data set it was a late breaking session full house very well attended you know and this showed you know some pretty important insights you know staging plaque meaning breaking down plaque into the component cohorts is really important And we believe there's a paradigm shift that's underway in managing coronary artery disease, very analogous to how oncology went through with cancers. I mean, not all cancers carry the same risk and therefore warrant the same treatment. The same holds true for coronary artery disease. So our plaque staging data, this is 8,000 patients with a three-year follow-up. This is the largest plaque staging data to date, the largest plaque staging data that exists. And it showed... you know, heart flow plaque helps predict risk of heart attack and death. You know, there's four stages. The extensive stage, so call it stage four or the extensive, that shows there's a five times increase with someone with no plaque. You know, and so what this does is this informs a physician, you know, that patient deserves pretty aggressive medical therapy. So gone are the days of peanut butter therapy. We can do it much more precisely and personalized now with this data. Now, how market moving that is, you know, in a given month versus two or three years, you know, change takes time. And as I mentioned, you need to get it out there and, you know, we'll get it out there and educate on it. But that's a really important one on our plaque journey.

And then if I could sneak one more in, you have had a lot of new surprising dust. I mean, a lot of product iterations kind of come out since the IPO. I mean, you guys really done a good job there. You know, anything that we should kind of hone in on, you know, are these, you know, quality of data improvements? Is it workflow improvements? I mean, what are you really solving with some of these new products? And thanks for taking my questions.

Yeah. Well, listen, I mean, our goal and our plan is to have a really strong pipeline of innovation that we can continually and predictably, you know, bring to our physician partners. You know, Vikram talked about, you know, use of IPO proceeds. This is certainly one of them, okay? And, you know, we've got work being done relative to new products. We have work being done relative to improving automation. This is our AI-aided automation that expands gross margins. We've got work being done relative to workflow efficiency. You know, you can never work efficiently enough if you run a health system. And everything we do will correspondably have clinical data that backs it. So that's another use of our investments. So we'll share the news of the new products as they come, but those are kind of the buckets that we expand in. And again, we've got this proprietary data set. We've got over 110 million annotated images, CT images, and we use that. We use that for our second generation plaque analysis that we discussed. We use that in a large extent to our navigator tool that we just talked about. And so we keep leaning into that, and we're going to take the proceeds from the IPO and hopefully be an innovation machine moving forward.

Thank you. This concludes today's conference call.

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