Episode Details

Heartflow (HTFL) Q2 2026 — Q2 2026 (quarter ended June 30; 8-K accepted 4:02pm ET Aug 13, after the close, so Friday Aug 14 is the reaction): revenue $64.1M up 47.6% and 13.1% above consensus, non-GAAP loss $0.07 vs a $0.13 bar, full-year guidance raised to $246M-$250M. The stock closed Aug 14 at $42.08, up 35.70% on 9.91M shares - 9.0x its average volume. Heartflow beat revenue by 13%, printed an 83.0% gross margin and raised full-year guidance by $18M. The stock gapped 35.7%. But subtract the $116.7M already booked in H1 from that raised guide and the second half implies just +1.6% sequential growth per quarter - one day after the company printed +21.9%. THE CALL: AVOID (3/5, MODERATE - GREAT BUSINESS, FULLY PRICED) — base-case value ~$31.20 vs ~$42.08 today. KEY METRICS: - CALL: AVOID, 3/5. Fair value $31.20 vs the $42.08 close on Aug 14, about 26% lower. Bear $9.29, base $26.89, bull $50.06, weighted 15/55/30. The Street is Buy - 5 buy, 1 hold, 0 sell across 6 firms - with a $42.83 average target that is only 2% above the tape. Conviction is 3 not 4 because our own bull case is $50.06, and the business is genuinely excellent. - THE QUARTER (3 months ended Jun 30, 2026): revenue $64.082M, up 47.6%, against a $56.635M consensus - a 13.1% beat. GAAP net loss $15.743M or $0.18/share; non-GAAP net loss $5.767M or $0.07/share against a $0.13 bar. The $9.976M bridge is $7.912M of stock compensation plus $2.064M of litigation expense. Adjusted EBITDA negative $6.7M vs negative $10.1M. US revenue $59.6M, up 51%. - THE ANGLE - WHAT THE RAISED GUIDE ACTUALLY SAYS: H1 revenue was $116.669M. Full-year guidance is $246M-$250M, up from $228M-$232M. So H2 must be $129.3M-$133.3M. Solved as two equal sequential steps off the $64.082M just printed, that is +0.6% to +2.7% per quarter, or +1.6% at the midpoint - implying Q3 near $65.1M and Q4 near $66.2M. Sequential growth ran +6.6%, +6.2%, +7.0%, then +21.9%. - WHAT THE MARKET REPRICED: enterprise value went from $2,442M to $3,402M, up 39.3%, while the full-year revenue midpoint went from $230M to $248M, up only 7.8%. The forward revenue multiple went 10.6x to 13.7x, up 29.2%. Decomposed, 77% of the move was multiple and 23% was the estimate change. On the $212.1M of revenue actually booked over four quarters the enterprise trades at 16.0x. - THE UNIT ECONOMICS ARE REAL: gross margin 83.0% from 75.5%. Cost of revenue rose just 2.3% on revenue that rose 47.6%, so incremental gross margin was 98.8%. Non-GAAP operating margin improved 14.0 points, negative 26.4% to negative 12.4%. Break-even needs about $73.6M of quarterly revenue at frozen opex, 15% above this quarter. Cash and investments $246.8M with zero debt - roughly 4.2 years of runway. - THE RISKS: in October 2025 Heartflow and certain employees received civil investigative demands from the DOJ under the federal Anti-Kickback Statute and Civil False Claims Act, aimed at its arrangements with providers and its sales and marketing. There are 11.7M potentially dilutive securities, 13.5% of the 86.7M shares. Three Form 144s covering 365,560 shares worth $15.3M were filed on Aug 14, the reaction day. What to watch: UP: a September quarter clearing $65.1M with the full-year range raised a third time, proving the June step was a slope; or the DOJ civil investigative demand closing without action. DOWN: September landing on the guide, an adverse finding on provider arrangements, or the 11.7M dilutive overhang converting into the move. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.