Form 4: HealthCor Funds Plan Major Heartflow Stock Conversion

HealthCor Partners entities plan to convert significant preferred stock and convertible notes into Heartflow common stock by August 2025.

Summary

• HealthCor Partners Management LP and related entities, including HealthCor Partners Fund, L.P., HealthCor Partners Fund II, L.P., and HCPCIV 1, LLC, reported planned conversions of preferred stock and convertible notes into common stock of Heartflow, Inc. [HTFL].
• The transactions are scheduled for August 11, 2025, and are being made pursuant to a Rule 10b5-1(c) plan.
• A total of 6,697,556 shares of common stock are expected to be acquired indirectly by these entities through the conversions.
• Specifically, HealthCor Partners Fund, L.P. will acquire 1,248,939 shares of common stock from Series C Preferred conversion.
• HealthCor Partners Fund II, L.P. will acquire 833,075 shares of common stock from Series C and D Preferred conversions.
• HCPCIV 1, LLC will acquire 4,615,542 shares of common stock from Series D, E, F, F-1 Preferred conversions and Convertible Promissory Note conversion.
• The conversions of preferred stock (Series C, D, E, F, F-1) and convertible promissory notes are based on terms established immediately prior to Heartflow's initial public offering (IPO).

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. It reports a planned, non-discretionary conversion of existing holdings into common stock, which is a standard event for early investors post-IPO. It doesn't indicate new investment or divestment, but rather a restructuring of existing equity.

Positives

• The planned conversion of preferred stock and convertible notes into common stock simplifies Heartflow's capital structure by reducing the number of outstanding security types.
• The transaction, executed under a Rule 10b5-1(c) plan, indicates a pre-arranged and systematic approach to managing insider holdings, which can reduce concerns about opportunistic trading.
• The conversion increases the public float of common stock, potentially enhancing liquidity for Heartflow shares in the future.

Negatives

• The transaction date of August 11, 2025, is in the future, meaning the actual impact on the market and the reporting persons' holdings is not immediate.
• The filing does not provide the specific conversion prices for all preferred stock series, only the conversion ratios to common stock, making a precise valuation of the converted shares at the time of the IPO less transparent without additional data.

Risks

• Market conditions between the filing date and the transaction date of August 11, 2025, could significantly impact the value of the common stock received upon conversion.
• The disclaimers of beneficial ownership by various general partners and managing members, while standard, highlight the complex ownership structure which may require careful analysis for investors.

Future Outlook

The filing indicates a planned future conversion of significant preferred equity and debt instruments into common stock by a major shareholder, which will occur on August 11, 2025. This action, structured under a Rule 10b5-1 plan, suggests a strategic move to consolidate ownership into common equity, likely in anticipation of future market activity or as part of a long-term investment strategy following Heartflow's initial public offering.

Management Comments

• HealthCor Partners L.P. and HealthCor Partners GP, LLC disclaim beneficial ownership of shares held by HealthCor Partners Fund, L.P. except to the extent of any pecuniary interest therein.
• HealthCor Partners II L.P. and HealthCor Partners GP, LLC disclaim beneficial ownership of shares held by HealthCor Partners Fund II, L.P. except to the extent of any pecuniary interest therein.
• HCP2LP and HCPGP disclaim beneficial ownership of shares held by HCPCIV 1, LLC except to the extent of any pecuniary interest therein.
• HealthCor Partners Management, L.P. disclaims beneficial ownership of shares held by HCP Fund, HCPH Fund, and HCPCIV except to the extent of any pecuniary interest therein, while affirming its investment management role with voting and investment discretion.

Industry Context

This Form 4 filing reflects a common post-IPO event where early investors, often holding preferred stock or convertible notes, convert their holdings into common equity. Such conversions simplify a company's capital structure and can increase the tradable float of its common stock. The use of a Rule 10b5-1 plan for a future transaction is a standard practice for insiders to manage their stock sales or conversions in a pre-arranged, compliant manner, mitigating concerns about insider trading.

Comparison to Industry Standards

• NA

Related Party Transactions

• HealthCor Partners Management LP is the investment manager for HealthCor Partners Fund, L.P., HealthCor Partners Fund II, L.P. (referred to as HCPH Fund in footnote 9, likely a typo for HCPII Fund), and HCPCIV 1, LLC, and has voting and investment discretion over their securities.
• Various HealthCor entities (HealthCor Partners L.P., HealthCor Partners GP, LLC, HealthCor Partners II L.P.) are general partners or managing members of the funds and LLCs directly holding the securities, establishing a clear related-party structure.

Stakeholder Impact

• Shareholders: The conversion will increase the number of common shares beneficially owned by a significant 10% owner, potentially impacting market perception of insider alignment and future trading liquidity.
• Company: Simplifies the capital structure by reducing the number of preferred stock series and convertible notes outstanding, which can be viewed positively by investors.

Next Steps

• The planned conversion of preferred stock and convertible notes into common stock is scheduled to occur on August 11, 2025.
• Following the conversion, the reporting persons will beneficially own common stock, which may be subject to future trading activities in accordance with SEC regulations and any lock-up agreements.

Key Dates

Keywords

Heartflow Inc, HTFL, HealthCor Partners, Form 4, Beneficial Ownership, Stock Conversion, Preferred Stock, Convertible Notes, Rule 10b5-1, Insider Trading, Capital Structure