BURLINGTON, Mass. & NEW YORK–(BUSINESS WIRE)–Butterfly Network, Inc. (NYSE: BFLY), a digital health company transforming care with portable, semiconductor-based ultrasound technology and intuitive software, today announced financial results for the third quarter ended September 30, 2024, and provided a business update.
Joseph DeVivo, Butterfly’s President, Chief Executive Officer and Chairman commented, “The Butterfly team is proud to report a fifth consecutive quarter in which we met or exceeded expectations. Our third quarter delivered growth of 33% versus 2023, while reducing cash use to a historic low. This success came from consistent, repeatable execution across all channels, driven by great products and a dedicated team. We’ve caught our stride and continue to gain momentum; with this, we are pleased to be giving improved guidance today on the top and bottom line.
DeVivo continued, “What’s more, while delivering strong results today, the Butterfly team has also kept our eye on the future. We remain fully committed to the strategic growth pillars we introduced at our March 2024 Investor Day. We look forward to sharing details of our operational and strategic highlights during today’s conference call, including announcing new developments in our Butterfly HomeCare services business, and an exciting opportunity to fully capitalize on our Powered by Butterfly™ chip licensing program.”
Recent Operational and Strategic Highlights:
- Butterfly’s Return-on-Investment Validation: Published a case study demonstrating that University of Rochester Medical Center’s system-wide deployment of Butterfly is enhancing patient care and financial performance. Additional research by Dr. Stephen Erickson at Jefferson Healthcare shows Butterfly devices pay for themselves quickly for individual practitioners, as well.
- Medical Education Progress: Announced Kansas City University as the first U.S. medical school to leverage Butterfly ScanLab™ as the foundation of its POCUS curriculum.
- International Market Expansion: Launched Butterfly iQ3 in Europe, and opened new markets in Indonesia, the Netherlands, and Belgium.
- Butterfly Veterinary Advancements: Announced data from Kansas State University with Beef Cattle Institute on chute-side management of bovine respiratory disease, confirming the value of Butterfly in creating a new decision-making process for cattle operations globally.
- Butterfly Garden Growth: Signed two new Butterfly Garden partners, bringing the portfolio to 17 companies. On October 28, 2024, HeartFocus by Deski announced the commercial launch of its AI-powered cardiac training app.
- Butterfly HomeCare Pilot Announcement: In the fourth quarter 2024, Butterfly HomeCare is set to begin a pilot for virtual chronic care management with a leading Medicare Advantage provider to improve heart failure outcomes through AI-powered imaging.
- Octiv™ Subsidiary Formation Announcement: as a next step to monetize the full value of Powered by Butterfly™, the Company plans to form Octiv – a wholly-owned subsidiary dedicated to bringing Butterfly’s proprietary chip to new sectors. With the creation of Octiv, the Company’s goal is to increase access to capital from new investors, while unlocking value for current Butterfly shareholders.
- European Union’s Restriction of Hazardous Substances (RoHS) Update: Butterfly leadership met with the officials responsible for the RoHS exemptions revision on September 11, 2024 in Brussels. During the discussion, Butterfly’s revocation was welcomed with significant support from the European Commission representatives. Subsequently, on October 23, 2024, Butterfly re-submitted its revocation request, providing additional information and details suggested by the European Commission.
Three Months Ended September 30, 2024 Financial Results
Revenue: Total revenue was $20.6 million, up 33% from $15.4 million in the third quarter of 2023. U.S. revenue was $13.1 million, up 27% from prior year, driven by the recently launched next-generation iQ3 probe’s higher selling price and increased enterprise software revenue. International revenue increased 36% year-over-year to $5.2 million, with new geographies contributing revenue. Other revenue contributed $2.3 million.
- Product revenue was $13.5 million, an increase of 55% versus the prior year period, driven by the 37% increase in units fulfilled year-over-year and the iQ3’s higher selling price.
- Software and other services revenue was up 5% year-over-year at $7.0 million. Software and other services mix was 34% of revenue and decreased by 9 percentage points versus the prior year due to the higher product revenue achieved this quarter. Enterprise as a percentage of software revenue increased 5 percentage points year-over-year.
Gross profit: Gross profit was $12.2 million versus $9.4 million in the prior year period, and adjusted gross profit was $12.3 million versus $9.4 million in the prior period. Gross margin decreased to 59.5% from 60.8% in the prior year period, and adjusted gross margin decreased to 60.0% from 60.8% in the prior year period. These decreases are primarily due to the higher cost to manufacture iQ3 including efficiencies in starting a new line and warranty expense; product mix, reflecting a higher proportion of product revenues; and higher amortization which reduced margin by approximately 90 basis points, largely offset by higher average selling prices.
Operating expenses: Operating expenses were $29.5 million, down 30% from $41.9 million in the prior year period, due to previously announced reductions in force, as well as non-payroll spending rationalization across all areas.
Total operating expenses excluding stock-based compensation and Other expense were $23.4 million, compared to $25.9 million in the third quarter of 2023, representing a decrease of 10%.
Net loss: Net loss was $16.9 million, compared to $27.4 million in the prior year period.
Adjusted EBITDA: Adjusted EBITDA loss was $8.4 million, compared to $12.5 million in the prior year period.
Adjusted EPS: Adjusted EPS was ($0.05), compared to ($0.07) in the prior year period.
Cash, cash equivalents, and restricted cash: Cash, cash equivalents, and restricted cash were $97.8 million as of September 30, 2024.
Guidance
Increased Revenue Guidance and improved Adjusted EBITDA guidance for the Fiscal Year 2024 to:
- Revenue guidance of $79 million to $81 million or over 20% growth
- Improved adjusted EBITDA guidance by $5 million to a loss of $42 million – $40 million
About Butterfly Network
Founded by Dr. Jonathan Rothberg in 2011, Butterfly Network is a digital health company with a mission to democratize medical imaging by making high-quality ultrasound affordable, easy-to-use, globally accessible, and intelligently connected, including for the 4.7 billion people around the world lacking access to ultrasound. Butterfly created the world’s first handheld single-probe, whole-body ultrasound system using semiconductor technology, Butterfly iQ. The company has continued to innovate, leveraging the benefits of Moore’s Law, to launch its second-generation Butterfly iQ+ in 2020, and third generation iQ3 in 2024 – each with increased processing power and performance enhancements. The disruptive technology has been recognized by TIME’s Best Inventions, Fast Company’s World Changing Ideas, CNBC Disruptor 50, and MedTech Breakthrough Awards, among other accolades. With its proprietary Ultrasound-on-Chip™ technology, intelligent software, and educational offerings, Butterfly is paving the way to mass adoption of ultrasound for earlier detection and remote management of health conditions around the world. Butterfly devices are commercially available to trained healthcare practitioners in areas including, but not limited to, parts of Africa, Asia, Australia, Europe, the Middle East, North America and South America; to learn more about available countries, visit: https://www.butterflynetwork.com/choose-your-country.
