Follow-up to Merchavia: CardiacSense after the valuation reset, real recovery or still just an option?
CardiacSense moved from rounds at $125 million and $42 million to a new round at about $20 million, so for Merchavia it is no longer a real diversification leg but a much narrower option. Still, fresh capital, burn reduction, and the engineering collaboration show this is not a full write-off, but a live asset that still needs to prove commercialization.
The main Merchavia article made a simple point: CDX improved the quality of the portfolio, but the parent-company cash problem remained, which means not every private asset in the portfolio carries the same value for Merchavia shareholders. This follow-up isolates CardiacSense because this is where 2025 delivered a sharp reset, and where a holding that once looked like a meaningful diversification leg turned into a much smaller option.
The bad news is obvious. CardiacSense moved from a $125 million pre-money round in late 2021 and early 2022, to a $42 million reference point in 2024, and then to a new 2025 round at about $20 million. The impact on Merchavia is clear: the carrying value of its holding fell from ILS 4.96 million at the end of 2024 to ILS 1.471 million at the end of 2025, a drop of about 70%. The less intuitive part is that this does not look like a blind write-off of a dead asset. The reset sits on top of a real financing round, fresh money, cost cuts, and a secondary commercialization path through an engineering collaboration. So the right question now is not whether CardiacSense looks “cheap” versus its old story. The right question is whether, after the reset, there is still a live asset with a recovery path, or just an option being financed one round at a time.
What Actually Reset
The number that organizes the whole story is the round valuation. CardiacSense raised at a $125 million pre-money fully diluted valuation in late 2021 and early 2022. In March 2024, a financing was converted at a $42 million valuation. Then came the 2025 round, Preferred B shares at about a $20 million valuation. This is no longer normal market volatility. It is a full repricing of the story.
But there is a point a reader could easily miss. The valuation decline did not only shrink Merchavia’s carrying value. It also changed the nature of the value that remains. In the year-end valuation, Merchavia’s CardiacSense position is worth only $461 thousand. Of that, $350 thousand is attributed to Preferred B, only $91 thousand to ordinary shares, and $20 thousand to Preferred A. In other words, about 76% of the remaining value sits in the fresh, senior layer, not in the legacy equity story.
That matters. If CardiacSense once looked like a straightforward mark-up story on older shares, that is no longer true. Most of what is still left to Merchavia is tied to the latest round, in a layer with liquidation priority, and valued through actual round economics plus an OPM framework. Put differently, the legacy holding was heavily impaired, and what remains now depends more on the structure of the new round than on the glory of prior rounds. That matters even more because Merchavia owns only around 4% on a fully diluted basis, so even a good recovery at CardiacSense would not translate one-for-one into accessible value at the listed parent.
Why This Is Still Not Zero
If this were only a down round, the story would end there. But the local evidence does not point to an abandoned company. Quite the opposite. By February 2026, the 2025 round had already reached about $7.4 million, including roughly $2.5 million in convertible form. Merchavia itself added $350 thousand, and controlling-interest holders and related insiders also participated. A private market willing to put in that amount after such a severe reset does not prove success, but it does show CardiacSense is not simply waiting for a write-off.
The second live signal is operational. Through 2025, CardiacSense adjusted its cost structure, reduced headcount, and lowered burn in order to extend runway. That is not a glamorous headline, but at this stage of a MedTech company it can be the difference between a live option and a good technology that hits a funding wall too early.
The third signal is more interesting because it goes beyond the core device story. In October 2025, CardiacSense signed an engineering collaboration agreement with a leading European semiconductor company. According to the annual report, the agreement covers engineering services, chip integration, validation, and regulatory readiness for medical-grade wearables. The services are expected to run in stages through June 2026, for total consideration of up to about $2 million, subject to milestones. This is still not a large OEM contract, and it does not mean the smartwatch has found broad end-market adoption. But it does show two things: CardiacSense has engineering capability that an outside player is willing to pay for, and it has a partial commercialization bridge that does not rely only on selling the watch as a standalone end product.
The investor presentation sharpens the same direction. It frames CardiacSense as moving from R&D toward global commercial scale, highlights a strategic next-generation chip collaboration, and sets two clear 2026 focal points: launching CardiacSense Watch v13 and advancing the FDA 510(k) process for cuffless blood-pressure monitoring. That still needs discipline in interpretation. It is management framing, not market proof. But it is consistent with the annual report and the valuation report: the company is trying to expand from a single device into a broader hardware, algorithm, and OEM-style platform.
The Live Signals Versus What Is Still Missing
| What already exists | Why it is still not enough to call this a real recovery |
|---|---|
| The 2025 round at about a $20 million valuation, which had reached about $7.4 million by February 2026 | The round proves life, but it also confirms how deep the reset was relative to prior years |
| Headcount reduction and lower burn | There is still no evidence of broad recurring commercial revenue from the core product |
| An engineering collaboration with a European semiconductor company, worth up to about $2 million and tied to milestones | This is an interesting bridge to revenue and a real industrial signal, but not proof of broad watch demand or a long-duration commercial agreement |
| A real regulatory base, with CE and several FDA clearances already in place for heart-rate and SpO2 indications | The category with the biggest upside, cuffless blood pressure, is still unfinished, and the annual report itself notes a 2026 FDA draft guidance that may affect the required clinical proof burden |
That is exactly why the right read today is an option after a harsh repricing, not a full recovery. There is financing. There is a product. There is a partial regulatory base. There is even an engineering partnership that may generate receipts. But there is still no clear evidence of scaled commercialization, no proof that the next round will happen on better terms, and the company itself says funding still relies mainly on shareholders and existing investors.
What Will Decide Whether This Really Comes Back To Life
The first test is revenue quality, not just the existence of revenue. If by June 2026 the engineering collaboration produces actual receipts, gets extended, or leads to a broader product path, that will be a meaningful signal that the technology is not just interesting but also integrable into an industrial stack. If the agreement stays one-off and limited, it may help near-term cash, but it will say less about the core thesis.
The second test is regulatory and commercial. CardiacSense already has a certain regulatory base, but the biggest upside engine in the current narrative is still cuffless blood pressure. This is exactly where the filings insert a warning. In 2026, the FDA published draft guidance for the clinical performance assessment of cuffless blood-pressure devices, and the company says that could affect the relevant regulatory requirements. So anyone leaning on the “global leadership” narrative in cuffless BP needs to remember that the hard part is not only development. It is also clinical proof and regulatory execution.
The third test is financial. The latest round keeps the company alive, but it does not solve the quality-of-valuation question. If the next round comes again at the same valuation, or below it, it will be difficult to argue that a real recovery has taken place even if operations keep moving forward. If, on the other hand, CardiacSense gets through 2026 with progress on Watch v13, regulatory movement in blood pressure, milestone delivery under the engineering collaboration, and no further reset in pricing, then the language can shift from financed survival toward recovery.
Conclusion
After 2025, CardiacSense is no longer the same diversification leg that Merchavia could place next to CDX. The reset was too sharp, and Merchavia’s holding has been pushed back into option territory. But it is not an empty option. Fresh capital, the Preferred B structure, cost reductions, the engineering collaboration, and the development of Watch v13, SOM, and cuffless blood pressure show there is still an active company here trying to move from a single product toward a broader platform.
So the updated thesis needs to be sharper: CardiacSense is not a proven recovery, but a live option after a severe repricing. For Merchavia, that is enough to say the asset did not go to zero. It is still not enough to restore the role it once had in the diversification story. What will decide the next read is less the presentation deck and more three harder things: real receipts from the engineering collaboration, credible regulatory progress in cuffless blood pressure, and the next financing round. If those three line up, CardiacSense can become a meaningful asset again. If not, it will remain exactly what it is today, an interesting option, but still only an option.
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