Butterfly Network, Inc. (NYSE:BFLY) Soars 14% in Q1 2024 as iQ3 Launch Drives Growth

Published on September 24, 2024 | Ticker: BFLY

Butterfly Network, Inc. (NYSE:BFLY), a leading digital health company transforming care with its innovative handheld ultrasound technology, has reported a strong start to 2024 with a 14% year-over-year increase in revenue for the first quarter. The company's recent launch of the iQ3 probe, along with continued momentum in its software and services offerings, have positioned Butterfly for sustained growth in the coming years.

Business Overview

Butterfly Network is revolutionizing the healthcare industry with its proprietary Ultrasound-on-Chip™ technology, which enables the acquisition of imaging information from an affordable, powerful device that fits in a healthcare professional's pocket. The company's solution combines cloud-connected software and hardware technology that is easily accessed through a mobile app, making medical imaging more accessible than ever before.

The company's flagship products, Butterfly iQ+ and the newly launched iQ3, are ultrasound devices that can perform whole-body imaging in a single handheld probe using semiconductor technology. Butterfly's software offerings, including its SaaS subscriptions and product support and maintenance, are designed to seamlessly integrate with the clinical workflow and provide healthcare professionals with a comprehensive solution.

Financials

In the first quarter of 2024, Butterfly Network reported revenue of $17.7 million, a 14% increase compared to the same period in the prior year. This growth was driven by a 22% increase in probe volumes, as well as higher average selling prices, particularly with the launch of the iQ3 probe.

The company's product revenue increased by 28% year-over-year, reaching $11.3 million, while software and other services revenue declined slightly to $6.4 million. The decrease in software and other services revenue was primarily due to lower individual subscription renewals, which were largely offset by a higher installed base of subscription enterprise software and renewals on the existing base of software users.

Gross profit for the quarter was $10.2 million, a 12% increase compared to the prior year period. Gross margin remained relatively flat at 58%, with the slight decrease driven by higher software amortization and a lower proportion of higher-margin software and other services revenue, partially offset by higher average selling prices.

The company's adjusted EBITDA loss for the first quarter of 2024 was $13.2 million, a significant improvement from the $22.3 million loss in the same period of 2023. This improvement was driven by higher revenue, cost reductions, and increased efficiencies, which led to lower payroll, consulting, and other outside services expenses.

Geographical Performance

Butterfly Network's revenue growth was seen across both its domestic and international markets. In the United States, the company generated $12.2 million in total sales, a 19% increase compared to the prior year period. This was driven by higher probe volumes, average selling prices, and slightly higher revenue from software and subscriptions.

Internationally, the company's revenue increased by 14% to $4.2 million, primarily due to higher probe volumes, partially offset by lower average selling prices as a result of a higher mix of sales to distributors and lower individual software sales.

Operational Highlights

The launch of the iQ3 probe was a significant milestone for Butterfly Network in the first quarter of 2024. The company sold over 1,200 iQ3 units, with approximately half being new customers and the other half existing users upgrading from the previous generation. The iQ3 has been well-received across various clinical specialties, with cardiologists, emergency room physicians, and critical care providers particularly drawn to the device's enhanced image quality and capabilities.

Butterfly Network also made progress in its medical education initiatives, with the launch of ScanLab in the first quarter. ScanLab is an AI-guided practice tool that has been incorporated into the curriculum of multiple medical schools, further strengthening the company's position in this important market.

Additionally, the company continued to expand its Butterfly Garden program, adding four new partners in the first quarter. This program, which licenses Butterfly's technology to third-party developers, is expected to generate meaningful revenue for the company over the next five years.

Guidance and Outlook

Buoyed by the strong performance in the first quarter and the successful launch of the iQ3, Butterfly Network has increased its full-year 2024 revenue guidance to a range of $75 million to $80 million, representing growth of approximately 15% to 20%. The company also expects its adjusted EBITDA loss for the full year to be in the range of $55 million to $50 million.

For the second quarter of 2024, the company anticipates revenue growth of around 10%, with revenue reaching approximately $20 million. The adjusted EBITDA loss for the second quarter is expected to be in the range of $12 million to $13 million.

Butterfly Network's management team has also outlined plans to further extend the company's cash runway, which is currently expected to last into 2026. This includes exploring non-dilutive financing options, such as grants and licensing deals, to provide maximum flexibility and a pathway to profitability.

Risks and Challenges

While Butterfly Network has demonstrated strong momentum in the first quarter of 2024, the company faces several risks and challenges that investors should be aware of. These include the highly competitive nature of the ultrasound imaging device market, the company's ability to maintain its technological edge, and the potential for regulatory hurdles or changes in reimbursement policies.

Additionally, the company's reliance on a limited number of large customers and the potential for supply chain disruptions could impact its financial performance. Investors should also be mindful of the company's ongoing litigation and legal matters, which could result in unexpected expenses or liabilities.

Conclusion

Butterfly Network's strong start to 2024, driven by the successful launch of the iQ3 probe and continued growth in its software and services offerings, has positioned the company for sustained success in the coming years. The company's focus on innovation, medical education, and strategic partnerships, combined with its efforts to optimize costs and extend its cash runway, make it an intriguing investment opportunity in the digital health space. As Butterfly Network continues to execute on its growth strategy, investors should closely monitor the company's progress and its ability to navigate the challenges that lie ahead.

HeartBeam, Inc. (NASDAQ:BEAT): Revolutionizing Cardiac Care with Groundbreaking Vector-Based Technology

HeartBeam, Inc. (NASDAQ:BEAT) is a medical technology company that is at the forefront of transforming cardiac care through the power of personalized insights. The company's innovative approach, centered around its proprietary and patented Vector Electrocardiography (VECG) technology, aims to deliver a new standard in ambulatory cardiac monitoring solutions.

Mobix Labs, Inc. (MOBX): Pioneering Advanced Connectivity Solutions for the Future

Business Overview and History Mobix Labs, Inc. (MOBX) is a leading provider of innovative wireless and connectivity solutions, catering to a diverse range of industries, including consumer, commercial, industrial, automotive, medical, aerospace, and defense. Founded in 2015 and headquartered in Irvine, California, Mobix Labs has rapidly emerged as a formidable player in the advanced connectivity market, driven by its commitment to technological excellence, strategic acquisitions, and a relentless pursuit of growth.

Quanterix (QTRX): Navigating the Precision Diagnostics Frontier

Quanterix Corporation, a life sciences company based in Billerica, Massachusetts, has been at the forefront of developing next-generation, ultra-sensitive digital immunoassay platforms that are revolutionizing the world of biomarker detection. With a strong focus on advancing life sciences research and diagnostics, Quanterix's proprietary Simoa technology has enabled its customers to reliably detect protein biomarkers at unprecedented low concentrations, opening up new frontiers in disease detection, monitoring, and prevention.

Biotricity Inc. (BTCY): Revolutionizing Healthcare with Remote Monitoring Solutions

Biotricity Inc. (BTCY) is a pioneering Technology-as-a-Service (TaaS) company that is redefining the healthcare industry with its cutting-edge remote monitoring and diagnostic solutions. The company's mission is to innovate and create transformative healthcare products while ensuring financial discipline, driving margin and revenue growth to deliver value creation for its investors.

Butterfly Network, Inc. (BFLY): A Digital Health Pioneer Transforming Medical Imaging

Butterfly Network, Inc. (BFLY) is a pioneering digital health company that is revolutionizing the medical imaging industry with its innovative, semiconductor-based ultrasound technology and intuitive software solutions. Founded in 2011, Butterfly has emerged as a leading force in the point-of-care ultrasound (POCUS) market, leveraging its proprietary Ultrasound-on-Chip technology to deliver affordable, high-quality imaging capabilities that are redefining the way healthcare professionals approach patient care.