Morning, everyone. Suraj Kalia, Senior Medical Device Analyst at Oppenheimer. Pleased to have here, CEO Robert Eno and CFO Timothy Cruickshank of HeartBeam. Gentlemen, always a pleasure to engage with you all. Love to have you all share the story, and I'll reserve us five minutes towards the end for some Q&A.
Perfect. Thanks so much, Suraj. Appreciate the opportunity to be here and talk about HeartBeam. Here are our standard disclaimers, including the fact that we're making forward-looking statements. Just wanted to start with the history of the company and really why we're here. The founder of the company and inventor of the technology, Branislav Vajdic, was actually the co-inventor of flash memory when he was at Intel early in his career. When he finished his career at Intel, he was inspired to start HeartBeam based on his personal experience. When he was growing up in Europe, his father was a prominent physician. Despite that, one day his father had a heavy lunch, thought he had indigestion, and unfortunately died a couple of hours later of a heart attack.
Branislav set out to make a 12-lead ECG, which is really the standard for heart attack detection, at home available to patients, and he found there was really nothing like that. Heart attacks happen at home, but 12-lead ECGs are really trapped in the hospital. As he looked into it, he realized that this is a major problem, and his father's experience really was not unique at all. Heart attacks and cardiovascular disease is the number 1 cause of death. As you see there on the right-hand side, once a patient reaches the hospital, the system has been optimized. Patients will get a 12-lead ECG within 10 minutes of arriving at the hospital. If it's positive, the cath lab will be activated for the patient to go and have the artery opened. Over decades, the left-hand side has not changed at all.
Patients delay an average of 3-4 hours before taking action, just like Branislav's father. Either they're in denial or they're uncertain about their symptoms, or maybe the barrier of going to call 911 and to go to the hospital is too much. Every 30-minute delay increases the one-year mortality by 7.5% and also increases the risk of heart failure by almost 9%. Heart failure is an incredibly costly and really difficult complication. There's really no solution that exists today to reduce this pre-hospital delay. This is what HeartBeam is doing, bringing a clinical-grade 12-lead ECG into the home. HeartBeam, as you see here, we got our FDA clearance, our second FDA clearance in December. It's the first-ever cable-free synthesized 12-lead ECG platform to deliver clinical-grade insights in real-time whenever a patient has symptoms.
I'll just show a quick video that I'll talk through on how a patient would use the device. Here's a patient sitting down with the device, and there's a smartphone application. The patient fires up the application, it connects to the device via Bluetooth. They then start a recording. They can do a routine recording, but in this case, they have symptoms. They follow the on-screen instructions, opening up the two electrodes in the back. We have a standard position, three fingers below the collarbone and right over the heart. What they're doing is placing two fingers on these finger electrodes and the other two fingers on the electrodes on the chest. You can see the green dots. They're giving feedback on a good electrode skin contact.
I'll talk in a minute about how the device works, but it's collecting the 3D signals during those 30 seconds. The patient then enters their symptoms, and that's tied to an on-demand cardiology service and the US-based cardiologist that we've connected with that will then look at the signals and get back to the patient within just a few minutes. The patient can view the ECG and send that to their physicians as well. That's all it is. It takes about a minute from start to finish to do a 12-lead ECG at home. One of the things I want to emphasize is we have clearance for this first system, but really, this is a platform that we believe can affect positively tens of millions of patients across multiple segments.
At the top here, our core technology, which our IP is based around, is the collection of the heart's electrical signals in three dimensions. Up and down, left and right, and then into the body. With that core 3D signal collection technology, we can implement that on two different form factors. One you just saw, the HeartBeam System, which is FDA-cleared for at-home use whenever the patient has symptoms. We've just unveiled a working prototype that we're in clinical studies with of a second form factor, an on-demand 12-lead patch, which directly works in the $2 billion segment of ambulatory cardiac monitoring. I'll talk a little bit about that in a minute. These two form factors can enable anything that a 12-lead ECG can do. Arrhythmia, in the future, heart attack detection, and personalized AI algorithms.
Just really briefly, this is the science behind it. On the left-hand side, there's something called vectorcardiography, which was an alternative to 12-lead ECG 70, 80 years ago, that was very well accepted, and it collects the heart's electrical signals, as I mentioned, in those three axes: vertical, horizontal, and then sagittal into the body. What we did is figured out how to miniaturize that into a small form factor, and the IP is built around that. In particular, a proprietary resistive network that is able to do the third dimension. So two fingers create the horizontal, two chest electrodes, the vertical axis, and this proprietary resistive network into the body. The other thing we've done is come up with a way to personalize the transformation from these 3D signals into a familiar 12-lead ECG for physicians to read. We think this is a massive opportunity.
We think we can get this in the hands easily of 50 million patients, but we're doing it in a stepwise manner. We'll talk about our market entry strategy. We're talking first about the 5 million patients that today in the US are paying, we call it structured direct pay healthcare. They're paying for a membership-based health service. 1.5 million of those, very conservatively, are those who are currently in concierge and preventive cardiology practices. That's our first market. We can expand into the broader group that includes direct primary care like One Medical and then, telehealth like Hims, etc.
Beyond that 5 million, there's 20 million patients who have coronary artery disease and are at risk of having a heart attack, including 8 million people in the US who are living today with having a prior heart attack and at high risk for having a second one. We can get out with some of our other technologies out to 50 million plus patients who are at risk, and that includes the AI algorithms and the form factor on the patch. The HeartBeam system itself is FDA cleared, and we're ready to launch. As I mentioned, we have the two FDA clearances, December 2024 on the system as a whole, and this past December on the algorithm that creates the 12-lead from our native 3D signals. We're now starting our market entry, and we're doing this very strategically.
I'll just spend a couple of minutes defining our strategy. As I mentioned, we're starting with what we think is the ideal entry point, concierge and preventive cardiology. 1.5 million Americans or more are paying out of pocket for concierge medicine. They're paying an average of $3,000-$10,000 a year, with some premium practices costing $50,000 a year or more. Our pricing is expected to be between $500-$1,000 per year per patient. Importantly, it's an ongoing subscription, so a recurring revenue model. The right-hand side shows some evidence of demand from market research. Among high net worth individuals, 80% said they're likely to purchase. We gave them either a premium tier or a basic tier. 92% preferred the premium tier.
On the bottom left there, one of the things that's fascinating is that high net worth individuals who are currently members of concierge practices were willing to pay more than two times what others who are not members of concierge practices were. It shows the willingness to pay within this segment. Then about three-quarters of concierge physicians said they would recommend it to their patients. One of the things we're doing is taking advantage of this really exciting dynamic that, in a sense, turns its initial market into a sales channel. Patients in concierge medicine, they want the latest clinical innovations and technology, but they also really trust their physician recommendations. These physicians in concierge practices are, very many of them are tech-forward early adopters.
As concierge medicine is becoming more crowded from a physician perspective, they really want to differentiate their practice and see something like this as a way of doing it, and they also want to enhance the relationships with patients. This becomes kind of a flywheel for adoption. We can sell to the practice, and they want to get it to go deep out into their patients. Within the 1.5 million patients in concierge and preventive cardiology, our initial kind of tip of the spear is about 10% of that, 150,000 patients that are in executive health or cardiology-focused practices. These are really interesting segments. They're predominantly physician-owned, anywhere from 400-4,000 patients, and they're concentrated in some of these key markets, and many of them are expanding geographically as well.
We think we can achieve break even within just this tip of the spear segment, and then we go to the broader concierge market, which includes some major practices before we expand beyond that, to the larger segment. Over this year and next year, we've got a very clear plan to start to grow. The first half of this year, since we just received our FDA clearance, is all about validating our premium value proposition and refining our systems and processes. We're going to sign the key accounts and in the second half of the year, prove deep adoption into these anchor accounts, and then also establish the funnel that's going to drive the 2027 revenue. Then 2027 is all about scaling revenue.
What we believe is that we can scale efficiently without needing a large sales force, given that dynamic I mentioned. We sell to the practice and then work with the practice to enroll deeply into their practice, into their patients. We also don't think we need DTC marketing spend and can fulfill inbound patient demand through these practices. We believe this is a high-margin subscription business, 70%+ margins on the recurring revenue, 3- to 5-month payback for the initial upfront cost. We think we can get to cash flow break even at only 30,000 patients or so. We recently announced the first commercial partnership with ClearCardio. Perfect example of the type of practices we want to partner with. They're a really leading and growing preventive cardiology practice that sees us as a key part of their growth.
You see on the right-hand side, the plan is to sign other leading practices like that, work with them, partner closely, drive deep patient adoption engagement, and use that to capture experiences and proof points, testimonials, white papers that are gonna unleash the next wave of practices for adoption. Commercial launch is really key for us this year, but it's really only the beginning. There's three other initiatives we've talked about, heart attack detection, our patch, and AI, that have huge ability to grow, potential value, and I'll talk about those briefly next. I've talked about heart attack detection. There's 20 million high-risk patients in the United States, and again, the problem is that patients can't recognize their heart attack symptoms at home.
The 12-lead ECG is the gold standard. It's only in the hospitals, and this 3-4-hour patient delay leads to increased death and costly complications. We already have two proof-of-concept studies showing that the HeartBeam ECG is similar in diagnostic capabilities for heart attacks to a standard 12-lead ECG. Importantly, this is the same device we have clearance with. It's just an indication expansion. How we're doing that indication expansion is through clinical studies. We recently announced we've started a pilot study in Europe called ALIGN-ACS that should be completely enrolled by the third quarter of this year. We have a second study starting in Asia in the second quarter, and we're hoping to have and expecting to have by the end of the year alignment with FDA on the design of our pivotal study.
We believe both studies, the ALIGN-ACS and ALIGN-ACS II, are quick-enrolling studies because patients will enroll in the emergency room when they're showing up with chest pain, and they'll get both a HeartBeam ECG and a standard 12-lead, and we'll compare those to the discharge diagnosis. That's the HeartBeam card talking about the initial launch and then into heart attack detection. This is one of the things we're really excited about. We've been working behind the scenes for quite some time on this product, which is an on-demand 12-lead patch. This is. We're talking about the current ambulatory cardiac monitoring market, which includes the iRhythm Zio patch. It includes the mobile cardiac telemetry segment.
These are devices of one to three leads that are worn by patients for two weeks up to a month, captures every heartbeat and is meant to be able to tell if the patient has arrhythmias. We're taking our technology to that segment. Our product will work exactly like those where it's a continuous one lead, but once the patient has symptoms or if our algorithms detect something, the patient places two fingers on the front of the device, and it converts it into an on-demand twelve-lead ECG. It leverages the existing clinical workflow. It leverages the existing reimbursement in this $2 billion revenue market. I just want to quickly show this. We have market research demonstrating that this would drive major market share shifts.
86% of physicians would switch a portion of their patients if a 12-lead patch were available, and they'd switch 61% of patients, meaning that 50% of the market could move with this technology. On the right-hand side, we believe it'll actually expand the market. 64% of physicians said they would increase their patch utilization by an average of 45%, so it could grow the whole market by a third because it has the ability to catch things like ischemia as well as arrhythmia. That's our patch. The last thing I wanna talk about is our potential with AI. Very excited about this. One of the real proven use cases for AI and deep learning in particular is on 12-lead ECGs. There are dozens of clinically proven algorithms that exist today that are predictive in screening in nature.
They can tell a patient they may have hidden structural heart issues or at high risk of developing heart failure, atrial fibrillation, and more. Those are unfortunately stuck in the hospital as they require a standard 12-lead ECG. We wanna bring those algorithms out to patients and run them every time they're doing a HeartBeam ECG at home. Also we can, over time, gather longitudinal data that we believe will make those algorithms even better. This is gonna extend us beyond symptom-driven diagnosis into prediction and screening and open up new markets. Just recently, we announced a partnership with Mount Sinai. We have a strong internal AI team led by Lance Myers, who was the former head of AI for Verily.
We're combining forces with Mount Sinai, which has incredible AI expertise, but also has an incredible amount of annotated ECG data to help us build models. We're gonna start with a model on heart attack detection, which will help our MI effort, but also look at screening and predictive algorithms. The perspective from Mount Sinai is we're really the only game in town, to use their words, to bring their algorithms out to patients. We're really excited about partnering with them. I just wanna touch on what we're doing this year to build long-term value. It's a busy slide, so I won't go through all of it. Along these four key initiatives, we've already achieved some big milestones, and we have more to come for the year. On the 12-lead patch, it's all...
Sorry, the 12-lead card, it's all about a limited launch. We got FDA clearance in December. We hired a chief commercial officer. We've signed ClearCardio. As I mentioned, it's all about validating our premium positioning, signing more accounts, and then demonstrating traction through the remainder of this year. For heart attack detection, we started the pilot study, do a second one next quarter, and get into the pivotal study design with FDA. For the patch, we've completed development of the working prototype of the patch. We're in clinical studies right now. Our plan on that, we could bring that to market or sales, but we're also having partnership discussions with the major patch players because we think there's a possibility that a partnership could help us expand this more quickly to reach more patients. Finally, in artificial intelligence, we've signed the collaboration with Mount Sinai.
We're working on developing and implementing models going forward. Now I wanna pass it over to Tim to briefly go through our financials.
Great. Thanks, Rob. Leading up to 2026, we've been in a pre-commercial environment, so it's been all about having a highly capital-efficient operating model, doing a lot with as few resources as we can, and we've been focused on financial, strong financial discipline as we advance all the key milestones that Rob just walked us through. We just recently reported our numbers for the full year ended December 31, 2025. We had a net loss of $21 million or $0.62 per basic and diluted share, which was directly in line with expectations. Really importantly, inside of that number, a meaningful portion of our expenditure is non-cash expenses, primarily related to stock-based compensation. The results, net cash used in operating activities, was less than $14 million for the entirety of the year, and it was just $2.9 million for the fourth quarter.
That represents the 3% decrease year-over-year in annual figures, and then a 30% decrease when you compare the same quarter Q4 last year to Q4 of 2025. For us, it's been all about carefully pacing investments to support both this commercial readiness and our commercial launch, as well as the continued development of our R&D pipeline. As we look out into 2026, we continue to prove that we've got the capabilities in terms of having access to capital as we fund the organization and the incremental investment this year to accomplish the goals that Rob just walked you through in terms of the milestones is just an incremental $3-$5 million, depending on the speed at which we go.
We're talking operating cash outflows expected for this year of $17-$19 million before we start factoring in cash receipts from customers. As we embark on this pivotal year in 2026 with our limited commercial launch, as well as taking a number of our R&D initiatives further, it will be all about maintaining that capital efficiency and starting this limited commercial launch and showing our commercial chops. Thanks, Rob.
Thanks, Tim. Just to summarize before turning it over to Suraj and some questions, we're obviously very excited about the opportunity. This is true platform technology. Our IP is all around the way to take this vectorcardiography concept and capture the heart's electrical signals in three dimensions and then synthesize the 12-lead ECG. We believe this is the only way to get a 12-lead ECG in such a small form factor, and we believe we're able to serve 50 million or more patients across multiple applications. We're significantly de-risked. The strong IP I mentioned, over 20 patents and the clinical evidence, and having the two FDA clearances, we have the first-ever FDA-cleared cable-free synthesized 12-lead ECG that patients can use anytime and anywhere.
We're implementing on our limited commercial launch right now, and we believe we have a cost-effective expansion strategy that's gonna allow us to get to cash flow positive in this initial segment without needing a huge sales force. As I mentioned, in addition to the launch of the card within arrhythmia, our limited launch, we have three major opportunities that we're working on. One is heart attack detection with 20 million patients at risk, including 8 million with a prior heart attack, and we're advancing clinical validation of that. We have strong proof-of-concept data and have a pilot study underway, and that'll turn into an indication expansion to allow for marketing for heart attack detection.
We also touched on the patch, as you see there on the right-hand side, the 12-lead on-demand patch, which we think is best in class and disruptive to the market segment. That's $2 billion revenue that has its own existing reimbursement. Long-term working with Mount Sinai, partnering to bring not just detection algorithms like heart attack detection, but also screening and predictive algorithms from the hospital into our device. With that, I'll turn it back to Suraj if you have any questions.
Rob, Tim, appreciate you guys. It's a pretty active space, you know, with a lot of players jumping in and I think so your approach is very intriguing, especially in the home setting. Rob, let me start out. You know, obviously, your concierge services, you've articulated it for some time. Maybe if I could drill down a bit, if you could define what you consider low-hanging fruit within this sub-segment, you know, of high-end concierge services.
Absolutely. Yeah. There's really two archetypes that we talk about. A lot of the concierge services are PCP-based, but there's a subset that are cardiology-focused practices. Those are the ones that tend to say, "We love this technology. We want all of our patients to get it." They can drive deeper adoption. The other segment is the high-end executive health group, and they're the ones that the dynamic that we hear is these patients are paying a lot. The main benefit they get is the cardiologist's phone number to call anytime. They really want important technology to go along with that. It's the executive health kind of high-end segment as well as the cardiology-driven segment.
The reason that we're focusing on those, they're both groups that we believe from discussions with them want to drive deep into the practice so we can show that the model of many patients from the practice getting this and the benefits of that to the patients in the practice are gonna allow us to get the proof points to scale beyond that.
Got it. Fair enough. Rob, how do you? You know, one of the things that is intriguing is when you talk about subscription, right? There can be over time, there can be some level of desensitization. What do I mean by that? Let's say you have an event, and you're like, "Wow, this thing is great," right? You seek care, and let's say everything is fine. The question is, what is the incentive for the patient to come back and resubscribe next year? By the same token, if nothing happens, let's say in the first year or the second year or whatever, right? You know inertia sets in. How do you all intend to tackle inertia of this so-called desensitization?
Yeah. That's such a great question. It's something we're spending a lot of time on, and you're right. One of the threats is that patients over time may not re-up, and the big part of this is the subscription revenue. We're building. We're just trying to define as a whole ecosystem, and really the vision is to get this. We believe that patients will subscribe for the simple reason of peace of mind to carry a 12-lead ECG with them. What we wanna turn it into is adding features that enable them to keep going back. What do I mean by that? That includes some of these wellness AI algorithms, so cardiac age and VO2 max, and we have a series of others. Because they're wellness, we believe we can bring those into the product without having to go through FDA clearance. They're wellness algorithms.
We also are building community features, things like physician ask me anythings and other ways of driving in engagement. We also believe that even without AI, there is ability to track intervals over time. There's gonna be an incentive as we work with the physicians to track any changes as patients are doing longitudinal ECGs that can be early detection for things. All of those, and we have other features that we think could help to drive patients that they wanna keep using it month after month, week after week.
Got it. Fair enough. You know, your patch is very intriguing, right? For obvious reasons, just given the competitive environment in the patch land with iRhythm and BioTelemetry and everyone and their brother. Rob, help us understand how you all intend to create a clinical differentiation with existing patches on the market. I understand the 12-lead part of it, whereas others are single lead. For a common patient, you know, they wouldn't really understand the. From an approval perspective or regulatory perspective, and then a market perspective, how do you create that distinction?
Absolutely. Yeah. Even within the arrhythmia space, having a 12-lead, the physicians tell us there's benefits to that, being able to get more subtle types of arrhythmias, being able to localize where the arrhythmia is. We think that there's some advantages. The way I see this is, unlike the card where we're building a market, the patch, the physician, it would take care of the same reimbursement. All things being equal, would you want the incremental benefit of having 12-lead? Beyond with the arrhythmia use case, you know, the biggest one is, adding in the ability to detect ischemia.
Right now the way we think about it is patients don't go to their cardiologist say, "I'm having arrhythmia, I'm having ischemia." They go saying, "Something feels weird about my heart," and they can't really characterize that. Part of the reason that we showed that this could expand the market is physicians are telling us, "If we had a 12-lead, we might catch some of those things that patients are describing, and a one-lead can't tell it's ischemia, but a 12-lead can, so we could use this upfront." There's a number of use cases when we have the ischemia element of it that really grow that market.
Rob, do you envision any competition from hospitals? You know, you mentioned Mount Sinai. Like, I mean, not Mount Sinai, but Columbia, for example, and Mayo. They're developing their own proprietary algorithms that, you know, when we do physician dinner events, they regularly bring up their homegrown platforms. Do you envision any, you know, stress in this, you know, in terms of your approach, and how do you basically spread it out?
Yeah
Rather universally?
Yeah. When we think about Mount Sinai, you know, we've been close to them for a while. Vivek Reddy is on our medical advisory board. Joshua L. Lampert has been helping us with clinical studies. They've really seen that while there's really incredible algorithms that many, many hospitals and companies are developing with 12 leads, those are really done when the patient is in the hospital. What Mount Sinai really saw and wanted to pursue this is, we see this as a way to bring these algorithms to the patient. They believe, and we believe that you need to have a 12-lead ECG with the patient to do that, so you're not losing things as you're going down to, say, a single lead ECG. We believe that we could work with Mount Sinai.
Certainly could be a platform for other algorithms. Our key is we have this 12-lead through the novel approach to be done at home, that we can bring those algorithms that are amazing in the hospital out to the home. We believe that's our competitive differentiation.
Fair enough. Tim, if I could in the last couple of minutes that we have remaining. For the patch pump development timeline, Tim, are there some intrinsic technical hurdles that basically create a fixed development timeline? Or let's say tomorrow if you had $200 million, you could bring it to market in a few months, right? Compress the timeline. How should we think about specifically for the patch for the patch device?
Yeah, it's really interesting and, you know, you have to look at some of the big strategic players as part of that decision-making process as well. We're going full speed ahead in terms of getting things ready to bring to market ourselves, but we're gonna be really interested to, you know, to talk to these partners to see if there's a way to collaborate to bring timelines in even further. I think, what's amazing is we have the working prototype now, and so it's ready to go, and now it's the clinical and regulatory pathway, and we've already got a few clinical studies underway. I think, yeah, if we had all the money in the world, could we accelerate things? Definitely.
I think the stage that we've gotten it to already puts us on a pretty clear path over the next year and a half or so to get this to market.
Perfect. Gentlemen, we are up on time. Always a pleasure to connect with you guys and learn more about your progress. You know, hope to stay in touch and look forward to your commercial launch for the device shortly. Thank you so much for taking the time.
Thank you so much, Suraj.
Thank you, Suraj.