Recent numerical studies have shown that head loss across the electromagnetic borehole flowmeter (EBF) during the borehole flowmeter test (BFT) redistributes drawdown in the vicinity of the pumping well and discharge to the well sections above and below the EBF, which may lead to considerable errors in estimates of layer hydraulic conductivity K_r,i when using the conventional interpretation. In this manuscript we develop the hydraulic interpretation of EBF test, which considers head loss across the EBF. The hydraulic interpretation is based on the derived analytical solutions for head distribution in the vicinity of the pumping well and for volumetric flux to the well sections above and below the EBF for the case of a confined homogeneous aquifer. Using Stokes’ stream function, the derived streamline distribution demonstrates that streamlines near the well are no longer horizontal – an assumption inherent in conventional methods for analysis. The conventional interpretation underestimates K_r,i in the lower 86% of the aquifer and overestimates K_r,i in the upper sections. In the ideal case of a homogeneous aquifer, the hydraulic approach can be applied to an existing profile of K_r,i’, estimated from the conventional interpretation, to resolve it to the true aquifer K_r. The hydraulic approach is applied to a profile of K_r,i’ from an EBF field data set from a highly heterogeneous aquifer and then compared to a profile of K_r,i from an independent hydraulic technique, the multi-level slug test (MLST). Both conventional and hydraulic interpretations of the BFT indicate the aquifer is highly heterogeneous. The hydraulic approach may have limited applicability to field BFT data due to the constraint of aquifer homogeneity, but it can provide detailed insight into the redistribution of flux near the borehole during the BFT and lead to objective guidance for proper application of the EBF.