Commitments and Contingencies

6 Months Ended

Jun. 30, 2025

Royalty Commitments

The Company has entered into various exclusive technology licensing agreements and other software

licensing agreements. The terms of the agreements require the Company to make annual royalty

payments in fixed amounts as well as certain milestone and revenue-based payments. The revenue-

based royalty percentage is in the low single digits, subject to reductions and offsets in certain

circumstances with a minimum royalty commitment of $50,000 annually. Future minimum royalty

commitments due under the terms of these exclusive agreements as of June 30, 2025 are as follows (in

thousands):


		June 30,
		2025
Minimum Royalty Commitments:
2025 .................................................................................................................................................		$—
2026 .................................................................................................................................................		50
2027 .................................................................................................................................................		50
2028 .................................................................................................................................................		50
2029 .................................................................................................................................................		50
Thereafter ........................................................................................................................................		50
Total minimum royalty commitments ...........................................................................................		$250

The Company incurred royalty expense of $460,000 and $414,000 for the three months ended June 30,

2025 and 2024, respectively, and $874,000 and $750,000 for the six months ended June 30, 2025 and

2024, respectively.

Purchase Commitments

Open purchase commitments consist of agreements to purchase goods and services that are entered into

in the ordinary course of business. These amounts were not recorded as liabilities on the condensed

consolidated balance sheets as of June 30, 2025 and December 31, 2024 as the Company had not yet

received the related goods or services. As of June 30, 2025, the Company had estimated open purchase

commitments for goods and services of $4.0 million over the next three years.

Contingencies

The Company is not involved in any pending legal proceedings that it believes could have a material

adverse effect on its financial condition, results of operations or cash flows. The Company may pursue or

be subject to litigation and other legal actions from time to time arising in the ordinary course of business,

including intellectual property, products liability, breach of contract, commercial, employment, and other

similar claims which could have an adverse impact on its reputation, business and financial condition and

divert the attention of its management from the operation of its business. The Company discloses

information regarding each material claim where the likelihood of a loss contingency is probable or

reasonable possible and accrues a liability for such matters when it is probable that future expenditures

will be made, and such expenditures can be reasonably estimated. There were no contingent liabilities

requiring accrual or disclosures as of June 30, 2025 and December 31, 2024.

Indemnifications

The Company provides general indemnifications to management and the members of the Company’s

board of directors (the “Board of Directors”) when they act, in good faith, in the best interest of the

Company. The Company is unable to develop an estimate of the maximum potential amount of future

payments that could potentially result from any hypothetical future claim, but expects the risk of having to

make any payments under these general business indemnifications to be remote. The Company also

maintains insurance coverage that would generally enable the Company to recover a portion of any future

amounts paid.

Heartflow, Inc. 10-Q