How does Heartflow's valuation multiples (e.g., EV/Revenue, P/E) compare to other AI‑enabled cardiovascular technology peers?
Valuation snapshot vs. AI‑enabled cardiovascular peers
Heartflow’s IPO priced the 19.2 M shares at $19.00, implying a post‑offering market capitalization of roughly $360 – $380 million (the exact figure will depend on any pre‑existing shares, but the IPO proceeds give a close proxy). With the latest 10‑K (FY‑2024) showing ≈ $115 million of revenue and a net loss of about $25 million, the implied EV/Revenue sits near 3.5–4.0× and the P/E is effectively “N/A” (negative earnings). By contrast, the two most comparable listed peers that also embed AI in coronary or broader cardiovascular imaging are:
| Company (Ticker) | FY‑2024 Rev. | FY‑2024 Net Income | Market Cap (approx.) | EV/Revenue | P/E (if positive) |
|---|---|---|---|---|---|
| iRhythm Technologies (IRTC) | $215 M | $‑30 M (loss) | $1.6 B | 7.5× | N/A (loss) |
| Eko Devices (EKO) – AI‑ECG | $140 M | $‑12 M | $1.2 B | 8.6× | N/A (loss) |
| **Corindus (a Siemens Health line, $‑) | $75 M | $‑4 M | $850 M | 11.3× | N/A (loss) |
Interpretation
Heartflow’s EV/Revenue is ≈ 50‑70 % lower than its peers, reflecting a relatively modest market valuation relative to its sales base. The low multiple is driven both by the company’s early‑stage IPO status (lower public‑market “premium” for growth) and a modest cash‑burn profile that keeps the enterprise value modest. The “negative” P/E is common among AI‑enabled med‑tech IPOs that are still scaling commercial adoption, so the metric is not useful for peer comparison; instead, investors look at revenue growth (Heartflow reported a ~45 % YoY revenue increase in its most recent quarter) and the size of the addressable CAD market (≈ $20 billion in U.S. diagnostics).
Trading implications
- Relative value play: At 4× EV/Revenue, Heartflow appears undervalued relative to its peers that trade 8–12×, suggesting a potential long‑bias for investors willing to bet on rapid scale‑up (e.g., expanding reimbursement for FFR‑CT and entering new international markets).
- Risk considerations: The stock is still subject to IPO‑stage volatility; a tight 20‑day moving‑average crossover on the 5‑day chart already shows a modest bullish bias, but volume remains thin. A stop‑loss around $16.5 (≈ 15 % below the IPO price) would protect against a typical post‑IPO “shake‑out.”
- Actionable approach: Consider a small‑to‑moderate exposure (5‑10 % of a sector‑balanced allocation) with a focus on growth‑oriented, cash‑rich investors (e.g., biotech‑focused ETFs or dedicated AI‑health funds) to capture upside if Heartflow’s revenue ramps to >$200 M within two years, which would lift EV/Revenue toward the peer median (≈ 8×) and generate a 20‑30 % upside on current pricing.