Heartflow pumps up valuation on US$316.7m Nasdaq IPO
Heartflow pumped momentum into the US new issues market with a US$316.7m Nasdaq IPO that ended up 50% larger than the original proceeds target.
JP Morgan, Morgan Stanley, Piper Sandler, Stifel and Canaccord Genuity priced 16.66m shares late on Thursday at US$19, above an already revised US$17–$18 range from the US$15–$17 price talk on a deal originally sized at 12.5m shares.
Even after one upsize and two price hikes, the banks finished 20 times oversubscribed with strong demand from long-only and healthcare dedicated investors, bankers involved in the offering told IFR.
The banks allocated the shares tightly with 85% of available shares placed among 25 investors and 60% going to the top 10. Allocations were steered to long only and healthcare dedicated investors, with half of investors who placed orders receiving no shares.
The medtech, whose software employs artificial intelligence to detect cardiovascular disease, is the latest in a string of medical technology companies to go public in the US.
The IPO values Heartflow at a US$1.7bn market cap, making it much larger than the sub-US$500m valuations of previous medtech IPOs from Carlsmed and Shoulder Innovations achieved on their IPOs in July. Carlsmed is down 19% since then, with Shoulder down 18.9%.
"Heartflow offers greater scale (than Carlsmed and Shoulder) with four times the revenue and a much larger market opportunity in cardiovascular disease," said one banker working on the deal.
Heartflow expects to grow revenue by 38%–40% in the second quarter to US$42.9m–$43m, based on preliminary unaudited results. That is offset by a 22%–25% increase in operating costs to US$46.4m–$47.5m.
The offering provided Heartflow about US$330m of cash, including US$98.3m it raised in March from the sale of a pre-IPO convertible bond that will convert at US$15.20. Fidelity Investments led the pre-IPO CB offering as a new investor.
After repaying US$50m of other debt, Heartflow is using the remaining proceeds to hire salespeople and launch new products.
The Heartflow Platform uses proprietary AI software it developed over the past 10 years and is now in its sixth version.
There are currently three products with a fourth on the way.
RoadMap Analysis is a workstation that allows doctors to visualise a patient's coronary arteries. RoadMap provides a readout of data from two other products, Heartflow Plaque Analysis (which measures coronary plaque) and Heartflow FFRct Analysis (which measures blood flow).
A fourth product called Heartflow PCI Planner for vascular surgery is expected to launch in 2026.