HTFL 10-K & 10-Q changes, risk factors and insider trading

We provide software and artificial intelligence (“AI”) designed to deliver a more accurate and clinically effective non-invasive solution for diagnosing and managing coronary artery disease (“CAD”), a leading cause of death worldwide. As of MarchJune 31,30, 2026, our Heartflow Platform has been used to assess CAD in more than 650,000750,000 patients, including 219,000 in 2025 alone. We believe that we are the most widely adopted AI-powered test for CAD. Our novel platform leverages AI and advanced computational fluid dynamics to create a personalized 3D model of a patient’s heart from a single coronary computed tomography angiography (“CCTA”), a specialized type of scan that provides detailed images of the heart’s arteries. Our Heartflow Platform delivers actionable insights on blood flow, stenosis, plaque volume and plaque composition thereby overcoming the limitations of traditional non-invasive imaging tests which rely on indirect measures of coronary disease and lead to higher false negative and false positive rates as demonstrated by our PRECISE trial. We believe the differentiated accuracy and clinical utility of our Heartflow Platform, along with its ability to enhance workflows, will continue to support our growth and advance the “CCTA + Heartflow” pathway as the definitive standard for the non-invasive diagnosis and management of CAD.

We have experienced considerable revenue growth since we began commercializing the Heartflow Platform in 2015, driven primarily by growth in our account base and increasing test volumes at accounts in our installed base. For the three months ended MarchJune 31,30, 2026 and 2025, we recognized revenue of $52.6$64.1 million and $37.2$43.4 million, respectively, and for the six months ended June 30, 2026 and 2025, we recognized revenue of $116.7 million and $80.6 million, respectively. Substantially all of our revenue is generated on a “pay-per-click” basis each time a physician chooses to review either our Heartflow FFRCT Analysis, Heartflow Plaque Analysis, or both, and we recognize usage-driven fee revenue upon delivery of the requested analysis to the physician. Heartflow FFRCT Analysis has served as our commercial foundation, representing 98%substantially all of our total cumulative revenue asto-date. Beginning in the fourth quarter of March 31, 2026. In the second half of 2023,2025, we initiatedincreased limitedour market educationcommercialization efforts for Heartflow Plaque Analysis,Analysis ourin secondanticipation commercialof product,expanded and we expect to broaden our market education efforts as payorreimbursement coverage forunder HeartflowCPT Plaquecode Analysis75577, increases.which became effective on January 1, 2026. Heartflow Plaque Analysis is currently covered by five of the seven Medicare Administrative Contractors (“MACs”) with the remaining MACs providing coverage on a case-by-case basis and by a majority of commercial payors. Our Heartflow RoadMap Analysis is generally provided as a workflow efficiency tool to drive customer retention and loyalty and is not a stand-alone product.

Prior to our initial public offering (“IPO”), we primarily funded our operations with proceeds from sales of shares of our redeemable convertible preferred stock, common stock and convertible promissory notes, borrowings under our term loans and revenue received from our customers. As of MarchJune 31,30, 2026, we had $254.9$246.8 million in cash, cash equivalents and investments.

On August 11, 2025, we completed our IPO, in which we issued and sold 19,166,667 shares of our common stock, which includesincluded an additional 2,500,000 shares of common stock purchased by the underwriters pursuant to their option to purchase additional shares, at a price to the public of $19.00 per share. The cash proceeds from our IPO were approximately $332.4 million, net of underwriting discounts and commissions and offering costs of $31.8 million.

We have incurred significant operating losses and negative cash flows since our inception, and we expect to continue to incur losses as we grow and transitioncontinue transitioning to now operating as a public company. Our net loss for the three months ended MarchJune 31,30, 2026 and 2025 was $27.4$15.7 million and $32.3$9.2 million, respectively, and $43.1 million and $41.5 million for the six months ended June 30, 2026 and 2025, respectively.

•Seasonality we experience throughout the year, in particular during the second half of the year, including due to staff availability, vacations, weather and other macro economicmacroeconomic events.

Substantially all of our revenue comprises usage-driven fees from accounts who order either our Heartflow FFRCT Analysis or our Heartflow Plaque Analysis, or both. We recognize usage-driven fee revenue upon delivery of the requested analysis to the physician. Key factors that drive our revenue include revenue case growth from our installed base andbase, the success of our sales force in expanding adoption of the Heartflow Platform to new accounts and expanding the utilization of our system by accounts in our installed base. We consider an account that has our Heartflow solution deployed with the ability to send us CCTA images for processing as being part of our installed base. New accounts generally take 12 months to reach steady state FFRCT revenue case volumes. New accounts typically ramp to FFRCT utilization close to full patient applicability in the first year and remain at this level consistently. Our Heartflow FFRCT Analysis is indicated for patients with stenosis levels between 40% and 90%, and we believe approximately 33% of patients have this level of stenosis. We have also recently increased the number of accounts activated for Heartflow Plaque Analysis. Our Heartflow Plaque Analysis is applicable to approximately 60% of CCTAs, providing a substantially broader eligible utilization opportunity at each account. Plaque utilization is in the early stages of ramping, driven by both new account activations and expanding use within accounts already activated. We believe that Plaque Analysis utilization of eligible CCTAs will grow over time as physicians adopt it for a broader range of patients. Our Heartflow Plaque Analysis is indicated for patients with stenosis levels between 1% and 69%, and we believe approximately 60% of patients have this level of stenosis. Revenue cases generated from clinic or office-based accounts typically carry a lower pricing than hospital-based accounts. We expect the percentage of our revenue cases generated from clinic or office-based accounts to continue to increase over time. The percentage of our U.S. revenue cases attributable to office and clinic-based accounts was 36% and 30% for the three months ended March 31, 2026 and 2025, respectively.

While a single customer may include multiple accounts, no single customer accounted for 10% or more of our revenue during the three and six months ended MarchJune 31,30, 2026 and 2025. However, the decision-making function for some of these accounts is concentrated in a relatively small number of customers, such that the loss of one customer could result in a disproportionate loss across our accounts. As we expand the adoption of the Heartflow Platform, we expect a majority of new accounts to come from new customers, decreasing our customer concentration risk.

We calculate gross margin as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, primarily by our production team costs, the timing of hiring new production team members and training them to full productivity, the timing of our acquisition of new customers and the related capitalization of contract fulfillment costs, and the pricing and commercialization of Heartflow Plaque Analysis and other new products. Although,Although we expect our gross margin to fluctuate from period to period, based upon the factors described above, we believe our gross margin will increase over the long term as we leverage the AI-based nature of our software platform to automate an increasing number of the manual components of our production team’s process, thereby lowering the cost of revenue per analysis. We also expect increased revenues from our Heartflow Plaque Analysis to positively impact our gross margin, as it runs on the same CCTA scan as Heartflow FFRCT Analysis. In the short term, we expect modulations in our gross margin as we hire and train additional personnel in our production team to support our increasing patient case volume. These expenses are offset by the varying levels of support provided by the production team in our clinical trials and research and development, which are allocated as research and development expense, and the capitalization of contract fulfillment costs.

Research and development expenses are incurred in connection with the advancement of the Heartflow Platform with the goal to introduce products, features and improvements aimed at increasing the value proposition for our customers by expanding its applicability to additional disease states and patient populations. Research and development expenses consist primarily of engineering, product development, consulting services, clinical studies to develop and support our products, regulatory activities, medical affairs, and other costs associated with products and technologies that are in development. Research and development expenses consist of personnel and related expenses, including stock-based compensation costs, clinical trials, third-party consulting costs, the portion of the costs incurred by our production team to support clinical trials and research and development efforts, and allocated overhead, including facilities expenses, equipment and depreciation. Our research and development team is comprised of PhD research scientists with expertise in AI-based algorithms and medical imaging, alongside software engineers skilled in cloud architecture, AI algorithms, machine and deep learning and 3D visualization, as well as product managers and designers who ensure optimal customer experience and design. We record research and development expenses in the periods in which they are incurred. We expect our research and development expenses to increase as we conduct clinical studies for expanded indications for use or to expand the addressable market populations for our products and to hire additional personnel to develop new product offerings and product enhancements. For example, in the second half of 2026, we expect to begin enrollment in three randomized clinical trials focused on high-risk asymptomatic sub populationssubpopulations to expand the addressable market for our products.

Comparison of Three Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025:

Revenue increased $15.4$36.1 million, or 41%,45%, to $52.6$116.7 million during the threesix months ended MarchJune 31,30, 2026, compared to $37.2$80.6 million during the threesix months ended MarchJune 31,30, 2025. The increase in revenue was primarily attributable to a 67%71% increase in revenue case volume, partially offset by a reduction in average sales price due to a higher percentage of revenue cases generated from clinic and office-based accounts and an increase in volume rebates. Revenue case volume for the six months ended June 30, 2026, benefited from the continued commercialization and account adoption of Heartflow Plaque Analysis. This growth was driven in part by expanded reimbursement coverage under CPT code 75577, which became effective on January 1, 2026.

Cost of revenue increased $1.1$1.4 million, or 13%,7%, to $10.4$21.3 million during the threesix months ended MarchJune 31,30, 2026, compared to $9.3$19.9 million during the threesix months ended MarchJune 31,30, 2025. This increase was primarily attributable to an increase of $2.0$2.1 million in personnel and related expenses, $0.3$0.7 million in third-party hosting fees, $0.2and $0.4 million in royalties, andpartially offset by a decrease of $0.1 million in computer hardware expenses,expenses partially offset byand a net increase of $1.5$1.7 million in capitalized and amortized contract fulfillment costs. Personnel and related expenses included $0.3 million and $0.1 million of stock-based compensation costs during each of the threesix months ended MarchJune 31,30, 2026 and 2025.2025, respectively. Gross margin for the threesix months ended MarchJune 31,30, 2026 increased to 80%82% as compared to 75% for the threesix months ended MarchJune 31,30, 2025. The gross margin increase during the threesix months ended MarchJune 31,30, 2026 was primarily attributable to our increase in revenue case volumevolume. We also benefited from the continued commercialization of Heartflow Plaque Analysis and improvedfrom ongoing improvements in production team productivity driven by AI efficiency initiatives, partially offset by our continued investment in the hiring and training of additional personnel in our production team to support our increasing revenue case volume. Although we expect to continue to invest in the hiring and training of additional personnel in our production team, we expect our gross margin will continue to increase over the long term.

Research and development expenses increased $7.7$18.9 million, or 55%,65%, to $21.6$47.9 million during the threesix months ended MarchJune 31,30, 2026, compared to $13.9$29.0 million during the threesix months ended MarchJune 31,30, 2025. The increase in research and development expenses was primarily attributable to an increase of $6.1$14.7 million in personnel and related expenses directly associated with an increase in headcount, $0.8$1.5 million in consulting and professional fees, $0.3$1.1 million in allocated overhead, $0.6 million in third-party hosting fees, $0.4 million in software-related costs, $0.2 million in allocated production team costs to support clinical trials and research and development efforts, $0.2 million in software-related costs and $0.2 million in third-party hosting fees, partially offset by a decrease of $0.2$0.1 million in clinical trial expenses and a net increase of $0.2 million of capitalized internal-use software costs.expenses. Personnel and related expenses included $2.1$4.9 million and $0.5$0.9 million of stock-based compensation costs during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Selling, general and administrative expenses increased $11.1$24.4 million, or 35%,39%, to $42.6$87.4 million during the threesix months ended MarchJune 31,30, 2026, compared to $31.5$63.0 million during the threesix months ended MarchJune 31,30, 2025. The increase in selling, general and administrative expenses was primarily attributable to an increase of $8.4$17.2 million in personnel and related expenses directly associated with an increase in headcount, $0.7$3.8 million in professional fees, including legal, audit and consulting fees, $0.7$1.5 million in computer hardware and software-related costs, $0.7$0.9 million in travel expensesexpenses, and $0.4$0.9 million in advertising and other promotional expenses, and $0.5 million in net amortization of capitalized acquisition and commissions costs, partially offset by a decrease of $0.4$0.9 million in direct and allocated overhead.facilities and IT overhead costs. Personnel and related expenses included $4.3$9.3 million and $1.9$3.7 million of stock-based compensation costs for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Asset impairment charge consists of a non-cash impairment charge related to the right-of-use asset and leasehold improvements for our Mountain View, California facility. In March 2026, we entered into a sublease agreement with a third-party subtenant to sublease this facility. We evaluated the associated right-of-use asset and leasehold improvements for impairment as the substantially lower sublease income indicated that the carrying amount of such assets may not be recoverable. We compared the carrying value of the impacted assets to the fair value to determine the impairment amount and recognized an asset impairment charge of $7.5 million during the three months endedin March 31, 2026.

Interest income (expense), net increased to income of $2.5$4.8 million during the threesix months ended MarchJune 31,30, 2026, compared to an expense of $4.6$10.5 million during the threesix months ended MarchJune 31,30, 2025. This change was mainly attributable to the repayment in full of our 2024 Term Loan in August 2025 and the conversion of our 2025 Convertible Notes to common stock upon our IPO in August 2025.

Other expense, net decreasedincreased to an expense of $0.4 million during the six months ended June 30, 2026, compared to income of $0.3 million during the threesix months ended MarchJune 31,30, 2026,2025. comparedThe to an expense of $10.3 million during the threesix months ended MarchJune 31, 2025. The three months ended March 31,30, 2025 included a $1.6$2.5 million charge from the remeasurement and recognition of the change in fair value related to our common stock warrant liability andoffset by a $9.0$2.5 million chargebenefit from the remeasurement and recognition of the change in fair value related to our derivative liability.

Provision for income taxes was $23,000$45,000 for the threesix months ended MarchJune 31,30, 2026, compared to $0$59,000 for the threesix months ended MarchJune 31,30, 2025, which was related to our foreign taxes.

As of MarchJune 31,30, 2026, we had $254.9$246.8 million in cash, cash equivalents and investments and an accumulated deficit of $1.1 billion. Prior to our IPO, we primarily funded our operations with proceeds from sales of shares of our redeemable convertible preferred stock, common stock and convertible promissory notes, borrowings under our term loans and revenue received from our customers, which we expect to continue to be our primary source of future liquidity.

Net cash used in operating activities during the threesix months ended MarchJune 31,30, 2026 was $30.1$38.7 million, attributable to a net loss of $27.4$43.1 million and a net change in operating assets and liabilities of $18.3$20.8 million, partially offset by non-cash charges of $15.6$25.2 million. The non-cash charges primarily consisted of an asset impairment charge of $7.5 million, $6.6$14.5 million in stock-based compensation expense, $1.4$2.6 million of depreciation and amortization, $1.0$2.1 million of amortization of right-of-use asset and $0.8$1.4 million amortizationaccretion of discounts on investments. The increase in net operating assets was primarily due to an increase of $6.2$13.4 million in accounts receivable, a $3.9$4.6 million increase in prepaid expenses and other current assets, a $1.6$1.5 million increase in other non-current assets, and an increase of $1.7 million in accounts payable, partially offset by a $7.4$0.9 million decrease in accrued expenses and other current liabilitiesliabilities, and a $1.0$2.1 million decrease in operating lease liabilities.

Net cash used in operating activities during the threesix months ended MarchJune 31,30, 2025 was $13.2$40.5 million, attributable to a net loss of $32.3$41.5 million and a net change in operating assets and liabilities of $2.5$12.6 million, partially offset by non-cash charges of $16.7$13.7 million. The non-cash charges primarily consisted of $2.5$4.7 million in stock-based compensation expense, $9.0$2.5 million of change in fair value of derivative liability, $1.6$2.5 million of change in fair value of common stock warrant,warrant $1.4liability, $2.8 million of depreciation and amortization, $0.7$1.5 million of amortization of right-of-use asset, $0.5$1.1 million of non-cash interest chargescharges, and $1.0$3.8 million of amortization of debt discount and debt issuance costs.costs and $0.2 million change in allowance for credit losses. The increase in net operating assets was primarily due to an increase of $3.6$4.9 million in accounts receivable, a $0.4$2.4 million increase in prepaid expenses and other current assets, a $0.3$1.9 million increase in other non-current assets, a $9.3$1.4 million increasedecrease in accounts payable, a $0.3 million decrease in accrued expenses and other current liabilities, a $1.6 million decrease in accounts payable and a $0.9$1.8 million decrease in operating lease liabilities.

Net cash provided by (used in) investing activities

Net cash usedprovided inby investing activities for the threesix months ended MarchJune 31,30, 2026 was $1.4$19.8 million, which consisted of $29.5$45.3 million in purchases of investments and $1.9$3.8 million in purchases of property and equipment, offset by $30.0$68.9 million in maturities of investments.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2025 was $1.1$1.9 million consisting of purchases of property and equipment.

Net cash provided by financing activities during the threesix months ended MarchJune 31,30, 2026 was $6.2$8.2 million, which consisted primarily of proceeds from the exercise of stock options and purchases under our employee stock purchase plan.

Net cash provided by financing activities during the threesix months ended MarchJune 31,30, 2025 consistedwas $71.1 million, consisting primarily of $73.9$72.8 million in net proceeds from the issuance of our 2025 Convertible Notes,Notes $0.6and $1.4 million in proceeds from the exercise of stock options, offset by $0.5$1.1 million in exit and prepayment penalty fees related to our 2024 Term Loan and $1.0$2.0 million in payments of deferred IPO offering costs.

Our contractual commitments will have an impact on our future liquidity. Our material commitments include future payments on non-cancellable facility leases and the sublease of our Mountain View, California facility lease and our royalty obligations for exclusive technology licensing agreements as disclosed in NoteNotes 26 and 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, and our royalty obligations for exclusive technology licensing agreements.10-Q. There have been no other material changes to our contractual obligations from those described in our Annual Report on Form 10-K filed with the SEC on March 18, 2026.

See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information about our significant accounting policies and estimates used in the preparation of our condensed consolidated financial statements. There have been no significant and material changes in our critical accounting policies during the three and six months ended MarchJune 31,30, 2026, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2025 included in our Annual Report on Form 10-K filed with the SEC on March 18, 2026.

We will remain an emergingEmerging growth company status continues until the earliest of: (i) December 31, 2030; (ii) the last day of the fiscal year in which wethe havecompany has total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which wethe arecompany is deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of ourits common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which wethe havecompany issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. As of June 30, 2026, the end of our second fiscal quarter, the market value of our common stock held by non-affiliates exceeded $700.0 million and, as a result, we expect to qualify as a “large accelerated filer” as of the end of our fiscal year ended December 31, 2026 and will no longer be an “emerging growth company” at such time.