Executive Summary / Key Takeaways

• Transformative AI-ECG Technology: HeartSciences is pioneering AI-enhanced ECGs (AI-ECG) to address a critical diagnostic gap in early heart disease detection, aiming to expand the clinical utility of a ubiquitous, low-cost test beyond traditional rhythm analysis.
• Dual Product Strategy: The company's MyoVista wavECG device and hardware-agnostic MyoVista Insights Cloud Platform offer flexible deployment, with the latter poised to become an "AI-ECG marketplace" for both proprietary and third-party algorithms.
• Key Regulatory & Commercial Momentum: Recent FDA Breakthrough Device designation for its aortic stenosis algorithm and the signing of the first MyoVista Insights platform customer signal crucial validation and initial commercial traction, despite ongoing FDA submission processes for core products.
• Significant Financial Headwinds & Funding Imperative: HeartSciences faces substantial financial challenges, including recurring losses and a going concern opinion, necessitating continuous capital raises to fund R&D, regulatory clearances, and commercial launch.
• Competitive Differentiation in a Crowded Market: While competing with large, established medical device players, HeartSciences aims to carve out a niche through its focus on early, low-cost, and accessible cardiac dysfunction detection, leveraging its proprietary algorithms and strategic partnerships.

The Unseen Heart: Revolutionizing Cardiac Screening with AI

Heart disease remains a silent killer, often progressing undetected until acute, costly events occur. Conventional electrocardiograms (ECGs), while ubiquitous and inexpensive, have historically offered limited sensitivity in identifying structural and ischemic heart conditions, primarily serving to diagnose rhythm abnormalities or acute coronary syndromes. This diagnostic gap at the front line of care presents a significant challenge for physicians and a substantial burden on healthcare systems, with cardiovascular disease costing the U.S. approximately $240 billion annually in 2018 and 2019. HeartSciences Inc. ($HSCS), formerly Heart Test Laboratories, Inc., is on a mission to bridge this gap by transforming the humble ECG into a powerful, AI-enhanced screening tool.

The company's core strategy revolves around applying innovative AI-based technology to ECGs, expanding their clinical capability to detect a broader range of heart conditions. This approach is embodied in two primary offerings: the MyoVista wavECG device and the MyoVista Insights Cloud Platform. The MyoVista wavECG is a resting 12-lead ECG that integrates HeartSciences' proprietary AI-ECG algorithm, designed to provide diagnostic information related to cardiac dysfunction, specifically impaired cardiac relaxation, alongside conventional ECG data. This is a crucial differentiator, as impaired cardiac relaxation is an early indicator of diastolic dysfunction, often preceding symptoms in almost all forms of heart disease. As noted in a Journal of American College of Cardiology editorial, these AI-driven advances represent "some of the most significant advances in electrocardiography since its inception."

The MyoVista Insights Cloud Platform is designed to be ECG hardware-agnostic, allowing clinical institutions to access AI-ECG algorithms without replacing existing ECG devices. This cloud-based system aims to become an "AI-ECG marketplace," hosting both internally developed and third-party algorithms. This strategy enhances clinical value, accelerates market entry, and reduces internal research and development costs. HeartSciences has secured a significant partnership with Icahn School of Medicine at Mount Sinai, licensing a range of AI cardiovascular algorithms, including one for low ejection fraction (systolic dysfunction) and another for aortic stenosis, which recently received FDA Breakthrough Device designation in June 2025. The low ejection fraction algorithm, developed using over 100,000 patient records, has demonstrated strong performance comparable to predicate devices.

Competitive Dynamics in a Transformative Market

The medical device industry is characterized by rapid technological advancements and intense competition. HeartSciences operates in a landscape dominated by large, established players like GE Healthcare Technologies, Inc. (GEHC), Koninklijke Philips N.V. (PHG), Baxter International, Inc. (BAX), and Nihon Kohden Corporation (NHNKY), all of whom have extensive brand recognition, financial resources, and global distribution networks. These incumbents are formidable, with GE Healthcare and Philips reporting revenue growth rates of approximately 15% and 7% respectively in recent periods, alongside robust gross margins (GE: 30-35%, Philips: 40-45%). Medtronic plc (MDT), another major player, commands a significant market share in cardiovascular devices and reported approximately 5% revenue growth with gross margins around 65%.

HeartSciences, with its current minimal revenue ($4K in FY2025) and negative profitability, is a nascent player. Its competitive advantage lies in its specialized focus on AI-ECG for early heart disease detection, particularly cardiac dysfunction, a niche where conventional ECGs are limited. The company's proprietary wavECG technology offers potentially greater diagnostic sensitivity in detecting early cardiac issues compared to standard ECGs. Its strategy emphasizes a lower upfront cost per unit and faster processing speeds, aiming to appeal to frontline healthcare settings like primary care, retail clinics, and concierge medicine, where expensive cardiac imaging is often overused.

However, HeartSciences faces significant competitive disadvantages due to its smaller scale and limited resources. Larger competitors can outspend HSCS on R&D, enabling faster innovation cycles and broader product portfolios that integrate with comprehensive healthcare ecosystems. While HSCS aims for a "razor-razorblade" revenue model for its device and recurring subscriptions for its cloud platform, the path to widespread adoption and reimbursement is challenging. The company's success hinges on its ability to demonstrate superior clinical efficacy and cost-effectiveness, securing favorable reimbursement codes, and overcoming the ingrained preferences for established brands. The recent American Medical Association (AMA) issuance of a temporary CPT Category III code for novel AI assistive algorithmic ECG risk assessment for cardiac dysfunction is a positive step towards potential reimbursement.

Financial Performance and Operational Trajectory

HeartSciences' financial performance reflects its development-stage nature and significant investment in R&D and regulatory processes. For the fiscal year ended April 30, 2025, the company reported minimal revenue of $4,000, a substantial 79% decrease from $19,000 in fiscal year 2024. This minimal revenue is primarily from establishing distributor relationships outside the U.S. during product development. Cost of sales also decreased by 67% to $2,000, resulting in an 85% decline in gross margin to $2,000.

Operating expenses, however, continued their upward trend. Research and development (R&D) expenses increased by 52% to $4.39 million in Fiscal 2025, up from $2.88 million in Fiscal 2024. This rise was primarily driven by consulting costs for the MyoVista Insights Cloud Platform development and increased headcount and professional services supporting the FDA submission process. Selling, general, and administrative (SG&A) expenses also rose by 15% to $3.97 million, largely due to increased legal, accounting, and professional fees related to the withdrawal of an S-1A registration statement in December 2024, and higher payroll costs.

The cumulative effect of these expenses, coupled with minimal revenue, led to a net loss of $8.77 million for Fiscal 2025, a 33% increase from the $6.61 million net loss in Fiscal 2024. As of April 30, 2025, HeartSciences had an accumulated deficit of $76.10 million and a working capital deficit of $1.50 million, with cash and cash equivalents standing at $1.10 million, down from $5.81 million a year prior. This financial position has led the independent registered public accounting firm to express substantial doubt about the company's ability to continue as a going concern.

Operationally, HeartSciences has achieved several notable milestones. The MyoVista Insights Platform was launched in May 2025 with an early adopter program, securing its first commercial customer, Westcliffe Health Innovations, in the United Kingdom. This marks a critical step towards validating its cloud-based strategy. The company has also completed patient recruitment and core lab work for its MyoVista wavECG FDA validation study. While the MyoVista wavECG was initially planned for a De Novo submission, the FDA's August 2023 clearance of a new Class II product code for cardiovascular machine learning-based notification software allowed HeartSciences to shift to the 510k pathway, with a submission planned for calendar 2025. However, recent updated guidelines from the American Society of Echocardiography in July 2025 regarding LVDD evaluation are currently being assessed for alignment before submission. The MyoVista Insights Cloud Platform and its low ejection fraction algorithm are targeted for FDA submission in the first half of calendar year 2026.

Funding the Future: A Continuous Capital Quest

HeartSciences' future hinges on its ability to secure additional funding. Management explicitly states that current resources are insufficient to fund operations for the next twelve months. The company has actively pursued various financing avenues. It has an Equity Line with Lincoln Park Capital Fund, LLC, with approximately $12.8 million available for issuance, having already received $2.2 million. An At-The-Market (ATM) Facility with Maxim Group LLC has approximately $0.8 million available, having generated $9.8 million in net proceeds. Subsequent to April 30, 2025, the company raised an additional $3.1 million in gross proceeds from a Series D Preferred Stock Offering.

Debt financing also plays a role, with the FRV Note extended to September 30, 2025, and a $2.51 million unsecured note from Streeterville Capital, LLC secured in September 2024. All company assets are subject to security interests, underscoring the high-risk nature of its current financial structure. The perception of going concern status could materially impact its ability to raise new capital and execute business objectives.

The company has also been diligent in managing its Nasdaq listing. After a reverse stock split in May 2024 successfully addressed a minimum bid price issue, HeartSciences received an extension until September 2025 to regain compliance with the minimum stockholders' equity requirement. These ongoing financial and compliance efforts are critical to maintaining its public listing and access to capital markets.

Conclusion

HeartSciences Inc. stands at a pivotal juncture, poised to disrupt the cardiac screening market with its innovative AI-ECG technology. The company's strategic focus on providing low-cost, front-line solutions for early heart disease detection, particularly through its MyoVista wavECG device and the versatile MyoVista Insights Cloud Platform, addresses a significant unmet clinical need. The recent FDA Breakthrough Device designation for its aortic stenosis algorithm and the initial commercial customer for its cloud platform are strong indicators of the technology's potential and the company's operational momentum.

However, the path forward is fraught with challenges. HeartSciences' financial health remains precarious, marked by recurring losses and a heavy reliance on external funding. The successful navigation of regulatory clearances, particularly for its core MyoVista wavECG device amidst evolving guidelines, and the ability to secure widespread physician acceptance and third-party reimbursement, will be paramount. While competing against well-resourced industry giants, HeartSciences' proprietary AI algorithms and strategic partnerships offer a differentiated value proposition. For investors, the narrative centers on the company's ability to translate its technological promise and early commercial validation into sustainable revenue growth and a clear path to profitability, ultimately transforming the landscape of cardiac care.