HeartFlow (HTFL) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• VP of Investor Relations - Nicholas Laudico
• President and Chief Executive Officer - John Farquhar
• Chief Financial Officer - Vikram Verghese

TAKEAWAYS

• Revenue -- $72.9 million, representing 57.4% growth driven by accelerating adoption of the Plaque Analysis platform and durable domestic demand.
• U.S. Revenue -- $67.9 million, growing 60% as the company recorded its fastest domestic growth rate in 11 quarters.
• Global Revenue Cases -- 98,155, an 89.5% increase reflecting higher volumes across both FFRCT and Plaque Analysis services.
• Non-GAAP Gross Margin -- 83.8%, increasing 700 basis points due to volume leverage and AI-driven production efficiencies.
• Plaque Revenue -- $11.8 million in the third quarter, supported by expanding physician utilization across a wider share of coronary computed tomography angiography scans.
• Non-GAAP Operating Loss -- $5 million, narrowing by more than 50% compared to last year as top-line growth outpaced operational investment.
• Cash and Investments -- $253 million, which management stated provides sufficient capital to reach cash flow profitability while sustaining research and development.
• Full Year Revenue Guidance -- $262 million to $264 million, a $15 million increase at the midpoint from previous expectations representing 49% to 50% growth.
• Full Year Plaque Revenue Guidance -- $36 million to $37 million, reflecting increased confidence in the near-term and long-term growth trajectory of the product.
• Full Year Gross Margin Guidance -- 82.5%, representing a 550 basis point improvement over the prior fiscal year driven by high-margin revenue mix.
• Payer Coverage -- 82% of U.S. lives, increasing from 78% in the previous quarter as more payers added coverage for Plaque Analysis.
• New Account Activations -- Management expects to exceed 340 for the full year, surpassing the record cohort established during the previous fiscal year.
• Plaque Activated Accounts -- Approximately 1,300 expected by year-end, which CEO Farquhar noted is significantly ahead of the historical adoption timeline for FFRCT.
• Median Procedure Time -- Reduced 27% in the P4 study, demonstrating the efficiency gains achieved through CT-guided intervention planning compared to ultrasound-guided methods.
• Clinical Outcomes -- 34% reduction in major cardiovascular events at one year for patients managed with HeartFlow Plaque Analysis according to the DECIDE registry.
• Procedural Plan Changes -- 70% in real-world settings when using PCI Navigator, as clinicians incorporated anatomy, plaque, and physiology data into treatment decisions.
• Asymptomatic Market TAM -- $6 billion, representing a significant expansion of the company's total addressable market to approximately $11 billion.
• FFRCT Utilization -- Approximately 33% of an account's total CCTA volume, which the company identified as the mature utilization target for existing accounts.
• Non-GAAP Net Loss -- $2.7 million or $0.03 per share, representing a significant improvement from the loss of $13.2 million or $0.27 per share reported in the prior year.
• SG&A Expense (Non-GAAP) -- $39.3 million, driven by targeted investments in the commercial team to expand platform adoption.
• R&D Expense (Non-GAAP) -- $26.8 million, supporting the innovation pipeline and three randomized controlled trials targeting the high-risk asymptomatic population.

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RISKS

• Farquhar warned that the company anticipates steady utilization growth rather than rapid, "hockey stick" spikes, indicating a preference for predictable expansion over time.
• Verghese stated, "the contractual price increases are largely behind us in 2026. So we expect Plaque pricing in Q4 to be roughly flat sequentially," which limits pricing-driven growth for the final quarter of the year.

SUMMARY

HeartFlow, Inc. (NASDAQ:HTFL) reported accelerating revenue growth for the third consecutive quarter, primarily driven by the rapid adoption of its Plaque Analysis and durable demand for its core FFRCT platform. Management raised full year 2026 financial guidance across revenue and gross margin metrics while maintaining a disciplined approach to operating expenses. The company reported significant clinical progress through multiple registry readouts and randomized controlled trials that support the HeartFlow platform as an emerging standard of care for coronary artery disease. Management stated that the company remains on track to achieve cash flow profitability by the middle of 2028.

• The company announced a collaboration with Boston Scientific to advance CT-guided planning for percutaneous coronary intervention (PCI), which CEO Farquhar stated will "accelerate awareness of Navigator's clinical benefits with interventional cardiologists."
• Enrollment for the REFINE-CAC and REWRITE-CAD randomized controlled trials is expected to begin in the fourth quarter of 2026, targeting high-risk asymptomatic patient populations.
• Clinical data from the P4 study indicated that CT-guided planning matched the clinical outcomes of invasive ultrasound while reducing median procedure time and contrast usage.
• Management reported that its autonomous processing initiative, which piloted in the first quarter of 2026, has contributed to gross margin expansion through AI-driven production efficiencies.
• The company expects its total installed base of Plaque-activated accounts to reach 1,300 by the end of the year, up from approximately 500 at the beginning of 2026.
• CFO Verghese indicated that the company anticipates a pricing step-up for Plaque Analysis in the first quarter of 2027 based on contractually determined escalators.
• The DECIDE registry outcomes showed that patients managed with Plaque Analysis achieved their target lipid levels at a higher rate and had half the rate of heart attacks at one year.

INDUSTRY GLOSSARY

• CCTA: Coronary Computed Tomography Angiography, a specialized scan that produces detailed images of the heart's arterial network.
• FFRCT: Fractional Flow Reserve derived from CT, a non-invasive technology used to assess blood flow through coronary arteries.
• Plaque Analysis: Software that uses AI to provide detailed insights into the location, volume, and composition of plaque in heart arteries.
• PCI Navigator: An AI-driven tool used by interventional cardiologists to plan procedures before entering the catheterization laboratory.
• TAM: Total Addressable Market, representing the overall revenue opportunity available for a product or service.
• Stenosis: The narrowing or blockage of a coronary artery, often caused by the buildup of plaque.
• Cath Lab: A catheterization laboratory where minimally invasive tests and procedures are performed to diagnose and treat cardiovascular disease.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the HeartFlow, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] 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, VP of Investor Relations. Please go ahead.

Nicholas Laudico: Good afternoon, everyone, and welcome to the Heartflow Third 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 Q3 performance, share updates on our commercial momentum and clinical programs and 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, and actual results may differ materially. 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.

John Farquhar: Thank you for joining us. Q3 was another outstanding quarter for HeartFlow. The momentum we built in the first half accelerated into the second, and I couldn't be more pleased with the performance of the business. We continue to make excellent progress on our mission to advance the HeartFlow AI platform as the new standard of care for detecting, diagnosing, managing and treating coronary artery disease. For the third consecutive quarter, our year-over-year revenue growth accelerated, and we finished ahead of our expectations, a credit to our expanding category leadership, the power of our platform and a strong CCTA market. I again want to thank the HeartFlow team for their outstanding execution and dedication to the patients we serve.

Our results are a direct reflection of their work. In the third quarter, total revenue was $72.9 million, up 57% year-over-year, with U.S. revenue up 60%, our fastest U.S. growth in 11 quarters. Four factors drove the quarter. First, Plaque adoption continued to accelerate. Second, FFRCT utilization remained durable across our existing accounts. Third, new account additions were strong again and the 340 accounts we added in 2025, which was our largest cohort ever, continue to ramp as planned. And finally, the CCTA market continued to grow rapidly, driven by guidelines, reimbursement and physician demand. At only 11% penetrated of the noninvasive testing market, CCTA has a long runway ahead.

The strength of our performance through the first 9 months gives us the confidence to raise our full year outlook again. We're raising our total revenue outlook to $262 million to $264 million, up 49% to 50% year-over-year. We're raising our Plaque revenue outlook to $36 million to $37 million, and we now expect approximately 1,300 Plaque activate accounts by year-end. Moving down the P&L, we're raising our non-GAAP gross margin guidance to approximately 82.5%, driven by a greater mix of high-margin Plaque revenue, volume leverage and ongoing AI efficiencies. The midpoint of our revenue guidance implies non-GAAP gross profit growth of nearly 60% year-over-year, outpacing our revenue growth.

We remain confident in our midterm non-GAAP gross margin target of 85% -- our accelerating top line growth, expanding gross margins and disciplined operational investment gives us even greater confidence in achieving our midterm profitability goals. Let me share a few highlights from the quarter, starting with commercial adoption. First, our category-leading installed base continues to expand. We had another strong quarter of new account additions, and every new account expands the base from which we drive broader platform utilization. Given the strength of our funnel, we now expect new account activations in 2026 to exceed the 340 that we added in 2025. Now turning to Plaque.

We delivered another outstanding quarter with continued momentum across account activations, physician utilization and payer coverage. Account activations were strong, driven by the leverage of our installed base and high demand for our market-leading plaque analysis. Physician utilization is also expanding. Physicians are moving beyond FFRCT patients and using Plaque across a wider share of their CCTAs, which is exactly what we expected. Broader Plaque utilization is an important durable tailwind for the business. Payer coverage continues to increase with Plaque now covered for approximately 82% of U.S. lives. Shifting now to FFRCT. I'm pleased to share that physician demand and utilization remains strong and durable.

Our 2025 cohort continues to deliver and utilization from our 2026 cohort is strong through the first 9 months of the year. FFRCT remains a powerful driver of our business. It's backed by a wealth of clinical data, most notably 4 randomized controlled trials, uniquely differentiated with lesion-specific precision and prospectively validated against the invasive gold standard of FFR. Our clinical evidence and product differentiation give me high confidence FFRCT's strong performance will continue. Next, we also made good progress on further strengthening our platform with the continued rollout of PCI Navigator, our unique solution to enable preprocedural CT-guided PCI planning.

The Navigator is the first and only PCI planning tool built on prospectively validated FFRCT and Plaque, giving interventional cardiologists the anatomy, plaque and physiology they need to plan each procedure before entering the cath lab. In late October at TCT, in conjunction with the P4 RCT readout, we announced a collaboration with Boston Scientific to advance CT-guided PCI planning. We believe this is further validation of the CT-first plus HeartFlow pathway and will accelerate awareness of Navigator's clinical benefits with interventional cardiologists. I'm highly confident Navigator will embed HeartFlow even further into our accounts and help establish interventional cardiologists as powerful advocates for a CT plus HeartFlow pathway.

Our strong performance in Plaque and FFRCT also reflects the unique power of the HeartFlow AI platform. Caring for a patient with CAD requires coordination from the referring physician to the CT reader to the interventionalist. Our physicians coordinate across the care pathway, and they demand the same from their technology. Disjointed point solutions won't work at scale. Our AI platform does. It's a complete solution to detect, diagnose, manage and treat patients. On the front of our pathway, our road map analysis improves reading efficiency, reduces variability and is delivered automatically into our customers' workstation on every patient that receives a CCTA scan.

Because it's available on all scans, independent of stenosis or disease level, it serves as the launch path for our reimbursed plaque and FFRCT analyses, which in turn provide distinct complementary insights to diagnose and manage disease. And PCI Navigator now extends our AI precision into the cath lab, helping interventional cardiologists complete the care pathway with precision. From first scan to treatment planning, the HeartFlow AI platform provides a complete solution for CAD. Alongside our strong commercial momentum, our clinical evidence base continues to grow with important new data strengthening the case for HeartFlow as the new standard of care. Let me highlight 4 recent readouts.

First, at AHA in November, we presented our 1-year outcomes from a propensity matched analysis of our prospective DECIDE registry of more than 6,000 patients. Patients managed with HeartFlow Plaque Analysis had 34% fewer major CVD events and half the rate of heart attack at 1 year compared to those managed with CCTA alone. 50% of patients reached target LDL-C by 90 days compared to just 35% with CCTA alone, and these improvements were sustained through 1 year. The 1-year findings demonstrate that HeartFlow Plaque Analysis provides clinicians with the objective outcomes data needed to optimize preventative care earlier and with greater precision, while significantly reducing major CVD events and heart attacks compared to CCTA alone.

The DECIDE 1-year outcomes make HeartFlow Plaque Analysis the first and the only Plaque tool with prospective outcomes data, another important differentiator and tailwind for Plaque adoption. Also at TCT, the P4 study, the only randomized trial of CT-guided PCI planning was presented with the results published simultaneously in the New England Journal of Medicine. P4 compared CT-guided PCI planning enabled by HeartFlow with the gold standard IVUS-guided planning. P4 met its primary endpoint. CT-guided PCI matched gold standard IVUS on 1-year target vessel failure rate. CT guidance also cut median procedure time by 27%, used about 12% less contrast and more than doubled the use of advanced calcium modification tools like IVL.

Put simply, P4 showed CT-guided PCI planning can improve the efficiency and precision of PCI with no compromise on outcomes. We also released our Navigate PCI registry data at TCT, which measured in real-world U.S. settings how PCI procedures changed when PCI Navigator was provided as compared to standard planning. CTI-guided planning with Navigator changed the procedural plan in approximately 70% of patients. Importantly, anatomy, plaque and physiology each drove changes in the plan, and Navigator is the only tool that brings all 3 together. Together, both of these studies give PCI Navigator an unmatched clinical evidence base.

We believe these results further establish the CT first pathway and HeartFlow as a platform as an emerging standard of care, while setting the stage for Navigator's broader rollout in 2027. Lastly, our FFRCT evidence base got even stronger in the third quarter. FUSION, an independent Dutch government-funded randomized controlled trial read out at ESC in August and became the first randomized controlled trial supporting the use of FFRCT. Now turning to our future. As we've discussed previously, expanding into the high-risk asymptomatic market represents our third wave of growth, a roughly $6 billion opportunity, bringing our total U.S. TAM to approximately $11 billion.

We've designed 3 randomized controlled trials to generate the evidence needed to expand the use of Plaque across 3 high-risk asymptomatic populations. REFINE-CAC, our trial for patients with coronary artery calcium, a $3 billion opportunity and REWRITE-CAD, our trial for patients with prior MI or PCI, a $1 billion opportunity, are both expected to begin enrolling in the fourth quarter of 2026. Evolve Plaque, our serial Plaque study with Amgen in patients with known Plaque is a $2 billion opportunity, and it's expected to begin enrolling in the first quarter of 2027. The clinical goal is simple: identify and measure coronary disease earlier and give physicians the information they need to intervene before a cardiac event.

High-risk asymptomatic patients have substantial clinical needs and account for significant health care costs. We believe positive results on the trial's primary endpoint can support expanded coverage under the existing Plaque LCD. With 2 of the 3 trials about to enroll and the Amgen study expected to follow early in 2027, we're making strong progress towards this next wave of growth. It's also worth noting that expansion into the high-risk asymptomatic market is highly synergistic. It uses our existing Plaque technology, leverages our existing physician base and will be commercialized through our existing sales channel.

In closing, our third quarter results are another strong step forward in our journey to create a new standard of care and reinforce the power of our platform and ability to keep extending our leadership. We remain focused on our mission to transform the detection, diagnosis, management and treatment of coronary artery disease. The future is bright, and I'm grateful to the HeartFlow team for everything they do for our patients. I'll now turn it over to Vikram to walk through our financial results and guidance.

Vikram Verghese: Thanks John, and good afternoon, everyone. Unless otherwise noted, my remarks reference the quarter ended September 30, 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. Our third quarter results demonstrated the continued strength of the HeartFlow financial model. Total revenue was $72.9 million, up 57.4%. U.S. revenue grew to $67.9 million, up 60%, including $11.8 million of plaque revenue. OUS and other revenue increased to $4.9 million. Total global revenue cases for the quarter reached 98,155, up 89.5%.

Performance was broad-based with strong activations, durable FFRCT utilization, ramping Plaque utilization and continued expansion of the CCTA market. FFRCT utilization remained durable across our existing accounts, while new accounts continue to ramp in line with historical patterns we have described previously. New accounts continue to take about a year to ramp to near full FFRCT utilization. The relevant denominator for assessing FFRCT utilization is the eligible CCTA population. FFRCT is applicable to approximately 33% of CCTAs, establishing a mature utilization opportunity of roughly 1/3 of an account's total CCTA volume. Plaque volumes were strong during the quarter, driven by both new account activations and expanding utilization within accounts already live.

As clinicians gain experience with the product, we're seeing broader physician engagement and adoption across a larger share of eligible CCTAs. Plaque is applicable to approximately 60% of CCTAs, providing a substantially broader utilization opportunity within each account. While Plaque remains early in its adoption curve, the breadth and progression of utilization during the quarter increased our confidence in its near- and long-term growth trajectory. Finally, we expanded our installed base at a strong pace during the third quarter, driven by solid execution from our commercial organization. As a reminder, we provide installed base metrics on an annual basis only. Turning to gross margin. Third quarter gross margin reached 83.8% compared to 76.8% in the third quarter of 2025.

The year-over-year improvement reflects volume leverage, increased Plaque revenue and improved production efficiency enabled by AI-driven automation. Operating expenses reflect disciplined investment behind our highest priority growth initiatives. Third quarter SG&A expenses were $39.3 million, driven by targeted investments in our commercial team to further expand adoption of the HeartFlow platform. Research and development expenses were $26.8 million as we continue to fund our innovation pipeline and the clinical evidence required to support new product adoption and expand our addressable market. Total non-GAAP operating expenses were $66.1 million or 90.7% of revenue compared with 100.9% a year ago.

Non-GAAP operating loss narrowed by more than 50% to $5 million from $11.1 million last year as revenue growth continued to outpace investment. Non-GAAP net loss was $2.7 million or $0.03 per share compared to non-GAAP net loss of $13.2 million or $0.27 per share in the third quarter of 2025. On a GAAP basis, net loss was $11.5 million or $0.13 per share. Weighted average basic and diluted shares outstanding were 87.2 million in the quarter. Turning to the balance sheet. We ended the quarter with $253 million in cash, cash equivalents and investments. We remain highly confident that our balance sheet provides capital to fund operations through profitability while sustaining investment in R&D and commercial expansion.

Turning to our updated outlook for 2026. The strength of our third quarter performance and the momentum across both FFRCT and Plaque Analysis support a meaningful increase in our full year expectation. We now expect total revenue of $262 million to $264 million, representing 49% to 50% growth. This is a $15 million increase at the midpoint from our prior guidance of $246 million to $250 million. We're increasing our Plaque-specific revenue outlook to $36 million to $37 million. Based on our 3Q performance, we're also raising our full year non-GAAP gross margin guidance to approximately 82.5%, up 550 basis points year-over-year.

From an operating expense perspective, we expect full year non-GAAP operating expenses as a percentage of revenue to decline greater than 5 points year-over-year. We remain disciplined in allocating incremental investment towards initiatives with a direct line of sight to revenue growth, product innovation and addressable market expansion. The midpoint of our revenue guidance implies approximately 60% gross profit growth in 2026. Finally, we remain committed to our midterm non-GAAP gross margin target of 85%. Given our continued financial performance, we have increased confidence in achieving cash flow profitability by mid-2028. The third quarter strengthened each of the core elements of our financial model, durable revenue growth, expanding gross margins, increasing operating leverage and a well-capitalized balance sheet.

We're looking forward to finishing 2026 with substantial momentum and a clear path towards sustained profitable growth. I would now like to turn it back to John for summary closing remarks.

John Farquhar: Thanks, Vikram, and thank you all for joining us today. We appreciate your continued interest and support as we advance the HeartFlow AI platform toward becoming the new standard of care for detecting, diagnosing, managing and treating coronary artery disease. We're excited to finish 2026 strong. And with that, I'll turn the call over to the operator for Q&A.

Operator: [Operator Instructions] Our first question comes from Robbie Marcus with JPM.

Robert Marcus: Congrats on another great quarter here. Two for me. First, I wanted to ask the P4 data that you mentioned at TCT had a ton of positive reception in the room. I would love to hear just sort of coming out of the conference, what's been the impact from the publication presentation on your conversations and awareness, especially with clinicians and hospitals coming out of the conference? And then I have a follow-up.

John Farquhar: Yes, sure. Thanks, Robbie. Good to hear your voice. So listen, with P4, first thing I'll say, we really think the strength of our platform matters. And we've discussed this before, but CAD runs from the referring physician to the CT reader to the interventionalist. And within this context, we don't believe that singular point solutions will work. And they certainly won't work at scale, but well-designed platforms will. And that's what we think we have here. We offer the only platform that covers the full continuum of care. And Navigator extends this platform now into the cath lab. So that really makes us stronger.

So with P4 that came out as well as the NAVIGATE-PCI data, Navigator is now the first and only PCI planning tool backed by prospectively validated accuracy and RCT level data. And I was at TCT, if you attended the sessions, it was really clear that there's very high interest in the interventional cardiology community. So I think it's still a bit early to know what the ultimate takeaway will be, but coming out of TCT, really happy with the interest level. I should also say with that, our partnership with Boston Scientific will further extend our reach and we think drive additional demand for CT plus heart flow pathway. So we're really happy coming out of TCT.

Robert Marcus: There's a lot to ask on. But I want to talk on FFRCT and a great quarter and a big step-up from 2Q here. As you look at your accounts and you look at penetration, is it existing accounts using a lot more? Is it new accounts using a lot more than they used to? Is it across the board? Are there any areas where you're seeing better adoption? Because it's pretty impressive, especially just given the cadence of growth here throughout the year.

John Farquhar: Yes, sure. Well, listen, I mean, FFR continues to be a growth engine for us, right? And these are a lot of the same factors that we've discussed on prior quarter's call. We've had another outstanding quarter relative to adding new accounts. We see really strong utilization, both within new accounts and how they ramp as well as our existing accounts. So we feel really good across the board on what FFRCT is doing. And I think for the long term here, it's a very durable growth driver for us.

Operator: Our next question comes from Rick Wise with Stifel.

Unknown Analyst: This is actually John on for Rick today. I think I'll start off focus just sort of as we look ahead here, I mean, clearly, a strong quarter and revenue stepping up by more than the beat. But I just want to talk through any dynamics here. It does, I believe, imply a bit of a deceleration in the fourth quarter. Comp, I think, is a bit tougher. But just any kind of color on your expectations in the fourth quarter versus what you saw in the third?

Vikram Verghese: Yes. Thanks for the question, John. This is Vikram. Firstly, we feel very good about the momentum in both FFRCT and Plaque. FFRCT relative to Q4, our guide implies nearly 37% year-over-year volume growth. That's about 10 points above where consensus is at. So we're anticipating another strong quarter of demand. Despite the upside to volumes, we are not changing our ASP assumptions given the more recent trends that we saw in 2Q and 3Q. 3Q ASPs came in a touch ahead of expectations despite the sizable volume beat. On Plaque, we expect utilization to continue ramping. Pricing also contributed to revenue growth in both Q2 and Q3.

As we have stated previously, the contractual price increases are largely behind us in 2026. So we expect Plaque pricing in Q4 to be roughly flat sequentially. Across both businesses, we've also incorporated usual holiday seasonality in underlying CCTA volumes. Finally, I think it's worth mentioning, we're following the same approach to guidance as we've used throughout the year. We want to set a baseline that leaves sufficient room for outperformance.

Unknown Analyst: Great. That's super helpful. I also wanted to ask about the DECIDE data as well. I mean very interesting propensity match study. I mean there seems to be a signal from this that Plaque is influencing outcomes. It's influencing treatment decisions. I was just curious, I mean, what you're hearing from the physician community about the data and just beyond that, how it's sort of changing the conversations with doctors that might be unsure exactly how to use the Plaque data that they have today.

John Farquhar: Yes, sure. Thanks, John. So I think the team agrees with me. I think the DECIDE data is very positive for the business. I think it's yet another strong tailwind behind Plaque and adoption and what lies ahead. So the DECIDE registry is the largest prospective registry of its kind, over 22,000 patients. If you recall, a year ago, a little over a year ago at SCCT, the primary endpoint that we shared is that Plaque changes how physicians medically manage patients and management changed in over 50% of patients, okay? Then the next question is, well, okay, what does that mean?

And this year at AHA, we shared the 1-year data and that showed that Plaque leads to both better targeted lipid levels as well as better outcomes, right? So 50% of patients achieved their LDL goal by 90 days, and they sustained that through a year. And from an outcomes perspective, these patients had 34% fewer major CVD events at 1 year and 50 fewer MIs. So we're very pleased with this data. And again, like I mentioned, I think it's another tailwind. Now we need to pull this through the market via medical education. We're just on a couple of days out of AHA here.

But I think as the physicians become more aware of this, it's going to continue to drive winded our sales for Plaque adoption.

Operator: Our next question comes from Doug Schenkel with UBS.

Doug Schenkel: I wanted to start on something that you may tell me is not a great question because I may be thinking about things the wrong way. But in terms of attachment rates, I'm just wondering to what extent are physicians ordering Plaque alongside FFRCT versus stand-alone. Last quarter, you had said you are starting to see penetration of the full menu more broadly across your so-called installed base. So I'm just curious if you're seeing increasing adoption of both products within the same health systems? And what does that imply for revenue for the CCTA scan over time?

John Farquhar: Yes, sure. So thanks for the question. So First thing I'll say Plaque adoption is going very well. I think the momentum is strong and significant. So we feel great on that front. We track a number of metrics internally. All the metrics we track are encouraging. New account activations are really strong. We're now on track to bring on 1,300 Plaque accounts by the end of the year. Just as a frame of reference, it took us 8 years to get to 1,000 on FFRCT. We'll get to 1,300 on Plaque in 2. I think that speaks to the demand in the market. Coverage continues to expand. We're now at about 82% covered lives.

That's up from about 78% last quarter. So we feel good there. And both cohorts of customers, existing customers as well as new customers, we see utilization expanding in a very favorable way. But I think we're only scratching the surface. As a reminder, Plaque is covered in about 60% of all patients, okay? So in a perfect world, you could have a 60% utilization. We're nowhere near that. But what we do see is we see a steady ramp month-over-month, quarter-over-quarter. And so we're very pleased in that. I think we do see higher utilization in the same patients that are also eligible for FFRCT. That's when stenosis are between 40 and 70.

But we're also seeing really favorable utilization in kind of a lower disease burden cohort, call it, stenosis from 1 to 40 -- so both are looking very healthy. And I think as we just talked about, the 1-year data out on DECIDE, I think, is going to continue to help. The one thing I'll say is as bullish as I am on the flack picture, I just want to remind and say it again, I don't believe anything in this business is a hockey stick. I think we're going to continue to see steady utilization gains from here, but I wouldn't expect huge hockey stick type events moving forward.

Doug Schenkel: Okay. And if I could ask a related follow-up, I think it's related. On one hand, you're getting very close to EBITDA breakeven. You're doing that in spite of the fact that you're investing a lot in really advancing and improving the commercial platform. So as we think about 2027 and the opportunities ahead of you, the strong return on investment that you're seeing in a growing and more efficient commercial sales force, but balancing that with the march towards profitability, I mean, adjusted EBITDA loss narrowed to under $4 million this quarter.

How do we think -- maybe you can share how you're thinking about investment in channel investment in growth versus the march towards the other side of the EBITDA line.

Vikram Verghese: Yes. Thanks, Doug, for the question. I'll start with '27 framing. Again, it's early to talk about '27, but I can offer a few building blocks. We'll provide a more comprehensive outlook on our fourth quarter call. Now relative to operating expenses and our investment posture as we approach '27, given the momentum we're seeing in our business, we really feel good about delivering more operating leverage in 2027. We expect OpEx as a percentage of revenue will come down year-over-year versus '26 and EBIT losses will narrow as well.

We'll do this with -- while maintaining those growth-oriented investments that we've talked about, principally in R&D, whether to fund those new trials to expand the total addressable market or new products to expand the platform as well as in areas like sales and marketing. From a profitability standpoint, we're continuing to project cash flow profitability by middle of 2028. The track record of late has increased our confidence, the confidence levels tightened. And we've got sufficient cash on the balance sheet to get there.

Operator: Our next question comes from Brandon Vazquez with William Blair.

Brandon Vazquez: Congrats on a nice quarter here. I wanted to first focus on Q3. John and Vikram, you guys have used a lot of kind of inflection words accelerating records ahead of expectations in Q3. All of this came actually ahead of the robust data that you guys presented the past month or so. Can you guys just talk a little bit on Q3? Like what are the inflections and you guys are seeing within the base business that's kind of leading to these better-than-expected results?

John Farquhar: Yes, sure. Thanks, Brandon. I appreciate the question. So again, we're really happy with third quarter performance, and we saw strength across the entire business, right? I think Plaque continues to show really strong momentum in activations, utilizations, as I just spoke to, volumes. We're seeing physicians using it across a broader range, which we're pleased with. FFRCT, like I mentioned, a strong growth engine, new accounts coming on, utilization in both new and existing accounts, very strong. So we think that's as durable as ever. And the other element that we're really pleased with is our platform.

And I think that the market appreciates our platform, and I don't think our platform has ever been stronger than it is right now. We have a unique solution that provides value every step of the way. with road map on the front end, and now we've got PCI Navigator on the back end with P4 data behind it. And customers, as they scale their programs, really appreciate the completeness of this program. So we feel good in that regard. And the last thing I'll say is just the general CCTA market as a whole. We think that's healthy. It continues to grow at a good pace. And I think there's lots of nice multiyear tailwinds behind that.

Brandon Vazquez: Great. And then as my follow-up, maybe a quick one. Apologies if I missed this. Did you guys give an update on the number of covered lives in the United States on Plaque? And then also as a follow-up to that, you guys have talked about that many of the Plaque time-based contracts have already been renewed. Just give a sense of like what percentage of contracts are left to be renewed either through the rest of this year or as you go to 2027 to adjust the pricing on the Plaque side?

John Farquhar: Sure. Covered lives were 82% now. That's up from 78% last quarter.

Vikram Verghese: And then relative to pricing, my comments on price escalators were really confined to 2026. Most of those increases have already gone into effect. We've also communicated that the next big step-up will come in Q1 of next year, and those have been contractually determined. We're not breaking out publicly the percentage of contracts, but we do think there's upside to consensus flat ASPs at this point.

Operator: Our next question comes from Matthew O'Brien with Piper Sandler.

Unknown Analyst: It's Samantha on for Matt. Congrats on a great quarter. I start off, you discussed the 2025 account cohort kind of ramping as expected and that you've had strong additions so far in 2026. Have you observed any differences in the utilization ramp or revenue productivity of newer accounts compared with earlier cohorts, particularly as the platform now includes Plaque?

John Farquhar: Yes. What we see is when we bring a new account on a pretty predictable ramp to get it to a full utilization rate or close to full utilization rate. And we've spoken before that takes about a year. We're very pleased with the cohort that we brought on last year, that 340 accounts. And the accounts we're bringing on this year, we're really pleased with how they look. Now Plaque, I think, sits within that or a subset of that, and I spoke to sort of the utilization gains that we're seeing there, and I think they're all very positive.

Operator: Our next question comes from Larry Biegelsen with Wells Fargo.

Larry Biegelsen: Vikram, a follow-up to Doug's question earlier on '27. Just love any framing for the top line in '27. It looks like you expect to exit '26 at about 50% growth. You have a lot of positive new clinical data. Any color on how to think about sales revenue growth next year and the Plaque price in '27 or ASP, how much higher than consensus? And I had a follow-up.

Vikram Verghese: Yes. Sure thing Larry. I'll start by saying, again, we'll provide a more formal view on '27 in our 4Q call. That said, across both FFRCT and Plaque, we believe the underlying momentum of the business is strong and the setup into '27 is attractive. On FFRCT, we continue to see several durable growth drivers. Existing account utilization patterns are strong. We're on track for our strongest onboard year ever in '26, and those accounts continue to ramp predictably over time. We have substantial runway to expand at the RCT through new account onboarding. We're still just a bit shy of the 50% market -- 50% metric into the account market.

And then we continue to expect year-over-year pricing trends will moderate beginning in '27. On Plaque, we expect to be meaningfully most scaled as we enter '27, much more -- much larger portion of the IB should be Plaque-enabled. As a reminder, we started '26 with about close to 500 accounts. We're going to start '27 with 1,300 accounts. And utilization we expect will continue to expand to a broader range of patients. And we think that the side 1-year data should give us a nice lift. And to answer your question on pricing, we do anticipate pricing upside in Q1, a little north of 10% versus consensus where consensus is today.

Larry Biegelsen: That's helpful. John, I'd love kind of an update on the state of the union on CT adoption and CCTA adoption and how you're thinking about photon-counting CT. What are you seeing just in terms of new CCTA centers? And how -- what are you seeing at centers that are adopting photon counting CT with regard to CCTA adoption and how it's impacting HeartFlow?

John Farquhar: Yes, sure, Larry. So I think the CCTA market and the growth within it is strong and durable. I think it's grown kind of consistently in this 20% neighborhood. I don't see any reason for that to change materially. But there's lots of nice tailwinds into it. guidelines, which we've talked about, reimbursement is strong, particularly in the hospital setting. There was an 11% increase in the payment going into '27, Plaque coming online. So those are all positives. Ultimately, we look very closely at CCTA as a penetration of the total noninvasive testing market, and that there's a lot of room to grow there. It's only about 11% penetrated.

And then we talked about previously our high-risk asymptomatic entry and our plan there. That's going to bring more CCTAs into the category. So we think there's some good tailwinds there. You mentioned specifically around photon. I think photon is another reason to really like the CCTA market and everything that goes into it. And some of the earliest adopters and biggest adopters of CCTA programs are the first ones in line to bring photon counting CTs into their franchise. So we're seeing that. And again, I think it's another positive.

Operator: Our next question comes from John Young with Canaccord.

Unknown Analyst: Actually, it's Bill on. So I was wondering just as you look at the ramp of new accounts, when you bring the new accounts on today, are they onboarding both FFRCT and Plaque? Or do you still stage those? And then you gave us some direction at least of robust new account growth in the FFRCT. I think last year, you did 340. It sounds like you should be materially above that 340 this year. Just any commentary on that.

John Farquhar: Yes, I'll let Vikram speak to the guide on the new account adds. But the short answer is on when we bring on a new account, Bill, yes, we bring on both Plaque and FFRCT at the same time.

Vikram Verghese: Yes. And relative to IB, we do see upside to the 340 number that we did last year. We provide installed base metrics on an annual basis only, but the trends are positive and the funnel is healthy as well.

Unknown Analyst: And then if I could just ask on gross margin. It's increasing quickly. You referenced the kind of shift to AI to getting better throughput and more efficiencies. How should we think about full implementation in that? And when does that kind of fully reach into the gross margin for you?

Vikram Verghese: Yes. So we've explained our gross margin architecture, Bill, before. We've got 3 levers there. We've got Plaque volumes. We've got volume leverage and then the third component of AI-driven efficiencies and the autonomous spot processing initiatives that we talked about. With respect to 2027, I expect Plaque revenues and our autonomous processing initiative to pay dividends next year. But there's some puts and takes. We'll continue to invest in analyst capacity and also grow our customer success teams. So that's going to be an offset. But that being said, I do feel a high degree of conviction that we're on this path to 85% gross margins in that 2028 time frame.

And then I'll ask John for comments on autonomous processing.

John Farquhar: Yes, sure. So just to comment on that. I mean we announced this or discussed it on an earlier call. We started with our autonomous processing initiative early this year. Q1 was really a pilot. And we wanted to be really thoughtful as we roll that out, but it's really delivered well. So some of the gains that you're seeing now in the gross margin expansion are a result of that. So from that standpoint, we're very pleased with the initiative.

Operator: [Operator Instructions] Our next question comes from David Rescott with Baird.

David Rescott: Congrats on the results here. John, I wanted to ask a little bit more on Plaque Analysis. I think you mentioned that -- or we know that 60% of CCTAs are eligible for Plaque Analysis, and it sounds like there's maybe been some varying levels of adoption there, but all across the board moving higher through the year. So I'm wondering if maybe you could unpack that a little bit more and help us understand what the difference maybe is or if there's any quantification you have and maybe the percent of the new accounts that are toward the upper end of that utilization range versus the lower end of that utilization range?

Just trying to get a sense for what that repeat customer looks like, what some of those higher utilization accounts look like versus those that are still maybe earlier on in the ramping phases.

John Farquhar: Yes. I think the easiest way to think about it is the most likely utilization you're going to see with a new Plaque user is that overlap with FFRCT. That really the stenosis range between 40% and 70%, okay? And there's room to kind of grow within that 40% to 70% range in and of itself. As that physician becomes more comfortable using Plaque gets patients coming back with better outcomes, then what we see is they tend to go down into more mild stenosis range anywhere from 1% to 40% stenosis and grow their utilization there. So I think initially, it's kind of as expected. The FFRCT range is kind of the beachhead. That's where you land the ship.

And then over time, as outcomes come back and they get more comfortable with it, it expands from there.

David Rescott: Okay. And then maybe on these -- the 3 high-risk asymptomatic clinical trials you have. I think we now have some more details on the size, the design, the endpoints and the time lines for each of those. And wondering if maybe you could provide some more color now that we've got some more insight into that, where you think just given the size of those opportunities, the timing of those opportunities, where or when or maybe stack ranking even, what the bigger opportunities in that bucket is and what we should kind of look forward to on that front as those data points start to read out?

John Farquhar: Yes, sure. So just, again, the 3 subpopulations for high-risk asymptomatic, these are patients with prior calcium, patients with higher Plaque and then patients with a prior MI or PCI, right? And in total, that's a $6 billion TAM, and that's on top of the $5 billion TAM that we're already penetrating. So as we enter these markets, it's a path that we know well. And it's really very analogous to the playbook, the same playbook we used with FFRCT and Plaque in the symptomatic world, right? We generate clinical evidence. We work with payers to expand coverage. And then we work with physicians and we help educate physicians to expand adoption, right? And so we like that playbook.

We also like the fact that we see these entry into these markets is really synergistic and really efficient, right? We're going to use the same HeartFlow platform. We're going to use a call on our same call points. These are general cardiology call points. And these general cardiologists are already taking care of these patients. And then we're going to run it all through our existing installed base. So we don't have to build a new channel. So we feel good on that front. From a timing standpoint, we're going to expect to begin reporting out data by the end of 2028, and we'll enter these markets before the end of the decade. So we're looking forward to it.

And obviously, as we continue to make progress, we'll share updates.

Operator: Thank you. This concludes the question-and-answer session and today's conference call. Thank you for participating. You may now disconnect.

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