Heartflow (HTFL) Q3 2026 earnings review
Heartflow's U.S. sales speed up, and its operating loss shrinks
Heartflow, which uses artificial intelligence to turn heart scans into 3D models of clogged arteries, grew faster while cutting its operating loss. Revenue rose 57% from a year ago to $73 million—above what the company's own prior plan pointed to—as U.S. hospitals ordered more of its core blood-flow test and its newer plaque-measurement tool. Chief executive John Farquhar raised the full-year revenue outlook for a third time, though by our math the new target leaves fourth-quarter sales nearly unchanged from the third quarter.
| Total revenue | $72.9M +57% from a year ago |
|---|---|
| U.S. revenue | $67.9M +60% from a year ago |
| Gross margin, excluding one-offs | 83.8% +7.0 percentage points from a year ago |
| Full-year revenue outlook | Raised $15M middle of the range: 49% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because faster sales growth is now flowing through to gross profit and narrower operating losses. Gross margin excluding one-offs reached 83.8% on automated scan processing and plaque test volume, while operating expenses excluding one-offs dropped to 91% of revenue. One caution: GAAP operating losses remain nearly three times higher than the adjusted figure because employee stock pay nearly doubled and patent-litigation bills are excluded.
The question now is whether rising test counts are masking a drop in the average price Heartflow collects per scan. Either plaque tests are adding high-margin revenue per patient scan, or volume rebates and lower-priced clinic orders are pulling down average prices by about 15%. The case-volume table in the third-quarter filing will settle it.
🐂 Bull Case
U.S. Sales Speed Up as Plaque Gains Traction
Heartflow makes artificial-intelligence software that turns heart scans into 3D models to diagnose clogged arteries. It sells two tools: FFR CT, its core test that measures how blockages affect blood flow, and Heartflow Plaque Analysis, a newer tool that measures plaque buildup inside artery walls. Chief executive John Farquhar said "activations of Heartflow Plaque Analysis are ramping ahead of plan, with utilization broadening across a wider share of applicable CCTAs" (coronary CT angiograms, or non-invasive heart scans).
Revenue jumped 57.4% from a year ago to $72.9 million, speeding up from 47.6% growth in the second quarter and 41.3% in the first. U.S. sales rose 60% to $67.9 million, which Farquhar called the "fastest pace in 11 quarters", and the diagnostics company raised its full-year sales plan by $15 million at the middle of the range.
That acceleration matters because Plaque runs on the same heart scan a hospital already uploads for the blood-flow test, so existing hospital customers are ordering more tests per scan while the core blood-flow business stays durable.
What to watch: standalone Plaque revenue in the quarterly filing or conference call. A figure above $10 million for the third quarter would confirm the newer test is ahead of its second-half run rate.
Automation and Plaque Mix Lift Gross Margin
Heartflow aims to reach an 85% gross margin excluding one-offs over the medium term by automating how its staff process heart scans and by selling more Plaque tests. Because a Plaque order analyses a scan the system has already processed, each extra order carries high gross profit.
In the third quarter, the cost of making and delivering its analyses fell by 7.1 percentage points of revenue from a year ago, to 16.4%. That lifted gross margin excluding one-offs by 7.0 percentage points to 83.8%, and GAAP gross margin to 83.6%. The medical-software maker credited higher test volume, more U.S. Plaque cases, and "improved production team productivity driven by AI efficiency initiatives, partially offset by the hiring and training of production team personnel".
This matters because the margin climbed 0.5 percentage points from the second quarter even while the team hired new production staff, prompting management to raise its full-year margin target to 82.5%.
What to watch: fourth-quarter gross margin excluding one-offs against the 81.9% implied by the full-year outlook. Another reading above 83% would show that automation and Plaque mix outweigh new production hiring.
Operating Losses Narrow as Sales Outrun Overhead
Heartflow has targeted cash-flow breakeven by mid-2028 while funding new clinical trials to expand its market into patients without chest-pain symptoms. Reaching that goal requires revenue to grow much faster than operating expenses.
Operating expenses excluding one-offs dropped to 91% of revenue in the third quarter, down 10.2 percentage points from 101% a year ago and 96% last quarter. Selling, general and administrative costs (sales and overhead) excluding one-offs fell 11.6 percentage points of revenue to 54.0%, while research and development rose 1.4 percentage points to 36.7% due to "increased investments in technology and clinical research". Operating loss excluding one-offs more than halved from a year ago to $5.0 million, and the Adjusted EBITDA loss shrank to $3.6 million from $9.8 million.
What to watch: fourth-quarter research and development spending as the first two asymptomatic clinical trials begin enrolling patients. Keeping total operating expenses excluding one-offs below 95% of revenue during trial enrollment would keep the 2028 breakeven path intact.
🐻 Bear Case
Rising Stock Pay and Legal Costs Weigh on GAAP
Farquhar said the company has increased confidence in its path to profitability, pointing to an operating loss excluding one-offs of just $5.0 million. Since last quarter, however, Heartflow excludes patent-litigation costs—alongside employee stock-based compensation—from its preferred profit numbers, as it sues rival AI plaque vendor Cleerly over six patents.
- GAAP operating loss: $13.8 million, nearly three times the $5.0 million loss excluding one-offs
- Stock-based compensation: $7.6 million (10.4% of revenue), up 91% from $4.0 million a year ago
- Excluded litigation expenses: $1.3 million in the third quarter and $3.7 million over nine months
- GAAP net loss: $11.5 million, compared with $17.2 million a year ago by our math after stripping out $33.7 million of one-off warrant, derivative and debt-payoff charges
This gap matters because legal bills for patent disputes are real cash outflows, and stock grants rose diluted share count to 87.2 million. While operating expenses excluding one-offs fell by 10.2 percentage points of revenue from a year ago, GAAP operating expenses fell by a smaller 6.5 percentage points, to 103% of revenue.
What to watch: quarterly litigation expenses and stock-based compensation as a share of revenue in the fourth quarter. If those two items stay near 12% of sales, GAAP profitability will lag well behind the company's adjusted targets.
The New Outlook Still Leaves Flat Fourth-Quarter Sales
Heartflow has raised its 2026 revenue plan three times since the start of the year, lifting the middle of the range from $220 million to $230 million, then $248 million, and now $263 million. In the third quarter, revenue of $72.9 million beat the $65.7 million quarterly run rate implied by the prior full-year plan by 11% by our math.
Even after the latest $15 million increase, the $262–264 million full-year target leaves $72.5–74.5 million for the fourth quarter by our math. At the $73.5 million middle of the range, fourth-quarter sales would rise less than 1% from the third quarter, after jumping 13.7% sequentially in Q3, and year-over-year growth would slow from 57.4% to 49.6%. The 82.5% full-year margin target also points to an 81.9% gross margin in Q4 by our math, down 1.9 percentage points from Q3.
What to watch: fourth-quarter revenue against the $74.5 million top end of the implied range. A result only inside the range would mean second-half hospital seasonality or pricing pressure slowed the sequential ramp.
Risks this quarter didn't answer
Several standing business and regulatory concerns depend on disclosures that live in the quarterly filing or conference call rather than the earnings release.
- Average price per case: fell about 15% from a year ago in the first half on volume rebates and clinic mix; the quarterly filing's case-volume table will show the Q3 price trend.
- Plaque revenue and activated accounts: not broken out in the release; prepared remarks and the annual installed-base update at year-end will show how close activations are to the 1,250-account goal.
- Department of Justice investigation: no update in the release on the civil investigative demand into provider contracts and sales practices; the filing's legal footnote will carry any change.
- Medicare AI payment rules: no update on the proposed hospital payment framework expected later this decade.
👓 Other Themes
Heart-Scan Demand Expands Heartflow's Image Database
Hospitals are ordering more non-invasive heart scans under medical guidelines for chest pain, and Farquhar noted that "The CCTA market continues to grow rapidly and remains significantly underpenetrated". That clinical shift helped Heartflow manage 50,000 more patients in the third quarter to pass 800,000 worldwide, while its database of annotated heart-scan images grew by 50 million from the second quarter to over 250 million across more than 1,800 institutions.
💲 Other KPIs
Cash, cash equivalents and marketable investments rose by $6.2 million from the second quarter, reversing two straight quarters of cash burn after ending 2025 at $280.2 million. With term debt paid off after last year's initial public offering, the cash pile earned $2.3 million in interest income during the quarter while interest expense was just $5 thousand.
Accounts receivable—bills sent to hospitals and insurers that have not yet been paid—rose 12.7% from the second quarter, slightly slower than the 13.7% sequential rise in revenue. Over the first nine months of 2026, receivables have climbed 64.2% from $29.3 million at year-end 2025 as U.S. test volume expanded.
Sales outside the United States grew 29% from a year ago, rebounding from 12% growth in the second quarter and sitting close to the 34% pace recorded in the first quarter. International sales made up 6.7% of total revenue as U.S. adoption grew twice as fast.
🔮 Guidance
Raised. The middle of the full-year plan moved up $15 million to $263 million, or 49.4% growth from 2025. By our math, that leaves $73.5 million for the fourth quarter—up 49.6% from a year ago, but slowing from 57.4% growth in Q3. It is the third raise this year following increases of $10 million in Q1 and $18 million in Q2.
Raised. Heartflow lifted its full-year gross margin target by half a percentage point after the first nine months reached 82.7%. By our math, an 82.5% full-year margin at the middle of the revenue range leaves 81.9% for the fourth quarter, down 1.9 percentage points from Q3 as production hiring continues. This is the third raise from an initial 80–81% range.
❓ Key Questions
How much did Plaque contribute to Q3 sales and volume?
The earnings release did not break out standalone Plaque revenue or total revenue cases. Without those figures from the call or quarterly filing, investors cannot tell how much of the 60% U.S. sales jump came from Plaque versus core blood-flow tests.
Did average revenue per case keep falling 15%?
In the first half of 2026, revenue per case dropped about 15% from a year ago because of volume rebates and more tests coming from clinics rather than hospitals. The Q3 filing's case count will show whether pricing stabilised as volume grew.
Why does the Q4 outlook imply under 1% sequential growth?
After sales rose 13.7% from the second quarter to $72.9 million, the raised full-year outlook implies just $73.5 million at the middle of the range for Q4. Management did not say whether that pause reflects holiday scan seasonality or caution.
Has the Department of Justice inquiry changed rebating practices?
The release gave no update on the October 2025 federal investigation into provider arrangements and sales practices, while excluded patent-litigation costs reached $3.7 million year to date. Any constraint on volume rebates or introductory pricing could affect hospital contracting.