Cardiac AI specialist Heartflow went public last week, and the IPO was a watershed moment for the imaging AI segment. The question is whether Heartflow is blazing a path to be followed by other AI developers or if the company is a shooting star that’s more likely to be admired from afar than emulated.
First the details: Heartflow went public August 8, raising $317M by issuing 16.7M shares at $19 each – and finishing up 50% for the day.
- The IPO beat analyst expectations, which originally estimated gross proceeds of $215M, and put the company’s market capitalization at $2.5B – well within the mid-cap stock category.
So what’s so special about this IPO? Heartflow’s flagship product is FFRCT Analysis, which uses AI-based software to calculate fractional flow reserve – a measure of heart health – from coronary CT angiography scans.
- This eliminates the need for an invasive pressure-wire catheter to be threaded into the heart.
Heartflow got an early start in the FFR-CT segment by nabbing FDA clearance for Heartflow FFRCT Analysis in 2014, and since then has been the single most successful AI company in winning reimbursement from both CMS and private payors.
- In fact, a 2023 analysis of AI reimbursement found that FFRCT Analysis was the top AI product by number of submitted CPT claims, at 67.3k claims – over 4X more than the next product on the list.
That’s created a revenue stream for Heartflow that clearly bucks the myth that clinicians aren’t getting paid for AI.
- And in an IPO filing with the SEC, Heartflow revealed how reimbursement is driving revenue growth, which was up 44% in 2024 over 2023 ($125.8M vs. $87.2M, respectively).
But it’s not all sunshine and rainbows at the Mountain View, California company, which posted significant net losses for both 2024 and 2023 ($96.4M and $95.7M).
- As a public company, Heartflow may have a shorter leash in getting to profitability had it remained privately held.
But the bigger picture is what Heartflow’s IPO means for the imaging AI segment as a whole.
- It’s easily the biggest IPO by a pure-play imaging IT vendor in years, and dispels the conventional wisdom that investors are shying away from the sector.
The Takeaway
Heartflow’s IPO shows that in spite of clinical AI’s shortcomings (slow adoption, sluggish reimbursement, etc.), it’s still generating significant investor interest. The company’s focus on achieving both clinical and financial milestones (i.e. reimbursement) should be an example for other AI developers.
