Delivers on Multiple Growth
Initiatives
- Announced 5-Year Co-Development Agreement with Forest Neurotech
for Next-generation Brain Computer Interfaces
- Launched Butterfly Garden, an Artificial Intelligence
Marketplace with New Applications for Butterfly Users
- Introduced Two Ultrasound Education Offerings at ACEP23 to
Boost Awareness and Adoption
- Completed Previously Announced Costs Reductions While Investing
in Growth
- Submitted iQ3 for FDA approval
Butterfly Network, Inc. (NYSE: BFLY) (“Butterfly” or the
“Company”), a digital health company transforming care with
handheld, whole-body ultrasound and intuitive software, today
announced financial results for the quarter ended September 30,
2023, and provided a business update.
Joe DeVivo, Butterfly’s Chairman and CEO said, “Butterfly had a
productive third quarter as we executed on our strategic plan and
near-term initiatives while reducing losses and investing in
growth. The completion of our reorganization and the investments we
have made in our Company will enable us to accelerate our return to
growth while further fortifying our position as the leading
point-of-care ultrasound company.”
DeVivo continued, “Since the end of the second quarter, we have
made a number of exciting announcements on partnerships and growth
initiatives. Our recently announced partnership with Forest
Neurotech validates our Butterfly Garden and provides an example of
the potential of Butterfly’s disruptive technology through new
applications and adjacent markets. That announcement built on top
of the August launch of our Butterfly Garden, an ecosystem that
will help to drive ultrasound AI to everyone by creating an easy
pathway for third parties to develop new AI tools with our
platform. And finally, we made substantial progress on our
education priority by announcing the Butterfly Certified program
and ScanLab to help accelerate adoption and give a clear roadmap of
success to our customers.
“We are excited by these and other soon-to-come announcements
and partnerships that will continue to demonstrate our ability to
use our powerful products and advanced software to improve results
and expand the use cases for our technology.”
Recent Operational Highlights
- Forest Neurotech Agreement: On October 24, 2023,
Butterfly announced that it had entered into a five-year
co-development agreement with Forest Neurotech. The agreement
includes up to $20 million to be paid to Butterfly for annual
licensing, chip purchases, services, and milestone payments.
Additional revenue is anticipated for every unit sold upon
commercialization.
- Ultrasound Education Offerings: On October 9, 2023, the
Company announced the addition of two new ultrasound education
offerings that will complete its full suite of education products.
- Butterfly Certified™, a complete set of virtual and
in-person POCUS courses designed to meet local training or
privileging requirements, delivered in partnership with the Global
Ultrasound Institute.
- ScanLab™, an AI-powered educational application for
ultrasound scanning practice.
- Butterfly Garden Launch: On August 2, 2023, Butterfly
announced the launch of Butterfly Garden, an AI marketplace where
new applications will be hosted for Butterfly users to discover and
purchase the latest AI capabilities from developers building custom
applications.
- Completed Reorganization: Completed a cost reduction and
reorganization that will allow the Company to further extend its
cash and reinvest in its direct sales team while allowing Butterfly
to conservatively extend its cash to 2026.
Three Months Ended September 30, 2023 Financial
Results
Revenue: Total revenue was $15.4 million, down from $19.6
million in the third quarter of 2022. U.S. revenue was $10.4
million, down 15% from prior year, driven by lower probe sales
largely as a result of a large deployment to the University of
Rochester Medical Center in the prior year, which was partially
offset by higher subscription revenue and higher average selling
prices. International sales declined 36% year-over-year to $3.8
million due to the one-time Gates Foundation agreement as well as
several initial orders from distributors as we entered new markets
that occurred in the prior year.
- Product revenue was $8.8 million, a decrease of 34% versus the
prior year period, driven by the two large deployments in the prior
year and lower volume spread across all sales channels.
- Software and other services revenue was $6.7 million, an
increase of 3% over the prior year period. Enterprise software grew
by 50% versus the prior year while individual licenses were flat
and service revenue was down. Software and services mix was 43% of
revenue and increased by approximately 10.3% versus prior year due
to a higher installed base of product with the accompanying
subscription software, renewals on the existing base of software
users, and software implementations completed during the
quarter.
Gross profit: Gross profit was $9.4 million versus $11.0
million in the prior year period. Total gross margin increased to
60.8% from 56.0% in the prior year period. This increase was
primarily due to a higher average selling price, in addition to
product mix, reflecting a higher proportion of subscription
revenues. Also contributing to the increased margin was higher
manufacturing productivity and other efficiencies. Offsetting these
benefits was higher amortization which reduced margin by
approximately 280 basis points.
Operating expenses: Operating expenses were $41.9
million, down 26.4% from $57.0 million in the prior year period,
due to previously announced reductions in force, as well as
non-payroll spend rationalization across all areas.
- Total operating expenses excluding stock-based compensation and
Other expense were $25.9 million, compared to $44.7 million in the
third quarter of 2022, representing a decrease of 42.1%.
Net loss: Net loss was $27.4 million, compared to $54.7
million in the prior year period.
Adjusted EBITDA: Adjusted EBITDA loss was $12.5 million,
compared to $31.8 million in the prior year period.
Cash, cash equivalents, and restricted cash: Cash, cash
equivalents, and restricted cash were $154.3 million as of
September 30, 2023.
Guidance
The following guidance is based on current market conditions,
the Company’s existing run-rate, resources and product offerings
assuming no large one-time deals occur for the remainder of the
year.
For the Fiscal Year 2023:
- Reiterating revenue of at least $64 million.
- Improved Adjusted EBITDA loss to $75 - 70 million, a $5 million
improvement.
A reconciliation of net loss to adjusted EBITDA for the three
and nine months ended September 30, 2023, and 2022 is provided in
the financial schedules that are part of this press release. An
explanation of these non-GAAP financial measures is also included
below under the heading “Non-GAAP Financial Measures.”
Conference Call
A conference call to review the third quarter 2023 financial
results and provide a business update is scheduled for November 2,
2023, at 4:30 pm Eastern Time. Interested parties may access the
conference call by dialing +1 (833) 470-1428 (U.S.) or a global
dial-in number and referencing Access Code: 606901. Additionally, a
link to a live webcast of the call will be available in the
Investors section of Butterfly's website.
About Butterfly Network, Inc.
Founded by Dr. Jonathan Rothberg in 2011 and listed on the New
York Stock Exchange through a business combination with Longview
Acquisition Corp., Butterfly created the world's first handheld,
single probe, whole-body ultrasound system using semiconductor
technology, the Butterfly iQ+. Butterfly's mission is to
democratize medical imaging and contribute to the aspiration of
global health equity, 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. Through its proprietary Ultrasound-on-Chip™
technology, Butterfly is paving the way for earlier detection and
remote management of health conditions around the world. The
Butterfly iQ+ can be purchased online today by healthcare
practitioners in the United States, Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, the
Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden,
Switzerland, and the United Kingdom.
Butterfly iQ+ is a prescription device intended for trained
healthcare professionals only.
Non-GAAP Financial Measures
In addition to providing financial measures based on generally
accepted accounting principles in the United States of America
(“GAAP”), the Company provides additional financial measures that
are not prepared in accordance with GAAP (“non-GAAP”). The non-GAAP
financial measure included in this press release is adjusted
EBITDA. The Company presents non-GAAP financial measures in order
to assist readers of its condensed consolidated financial
statements in understanding the core operating results that its
management uses to evaluate the business and for financial planning
purposes. The Company’s non-GAAP financial measures provide an
additional tool for investors to use in comparing our financial
performance over multiple periods.
Adjusted EBITDA is a key performance measure that the Company’s
management uses to assess our operating performance. These non-GAAP
measures facilitate internal comparisons of the Company’s operating
performance on a more consistent basis. The Company uses these
performance measures for business planning purposes and
forecasting. The Company believes that adjusted EBITDA enhances an
investor’s understanding of the Company’s financial performance as
it is useful in assessing its operating performance from
period-to-period by excluding certain items that the Company
believes are not representative of its core business.
Adjusted EBITDA may not be comparable to similarly titled
measures of other companies because they may not calculate these
measures in the same manner. Adjusted EBITDA is not prepared in
accordance with GAAP and should not be considered in isolation of,
or as an alternative to, measures prepared in accordance with GAAP.
When evaluating the Company’s performance, you should consider
adjusted EBITDA alongside other financial performance measures
prepared in accordance with GAAP, including net loss.
The non-GAAP financial measures do not replace the presentation
of the Company’s GAAP financial results and should only be used as
a supplement to, not as a substitute for, the Company’s financial
results presented in accordance with GAAP. In this press release,
the Company has provided a reconciliation of adjusted EBITDA to net
loss, the most directly comparable GAAP financial measure. A
reconciliation of adjusted EBITDA to corresponding GAAP measures is
not available on a forward-looking basis because the Company is
unable to predict with reasonable certainty the non-cash component
of employee compensation expense, changes in its working capital
needs, variances in its supply chain, the impact of earnings or
charges resulting from matters the Company considers not to be
reflective, on a recurring basis, of its ongoing operations, and
other such items without unreasonable effort. These items are
uncertain, depend on various factors, and could be material to the
Company’s results computed in accordance with GAAP. Management
strongly encourages investors to review the Company’s financial
statements and publicly filed reports in their entirety and not to
rely on any single financial measure.
Forward Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. The Company’s
actual results may differ from its expectations, estimates, and
projections and, consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar
expressions (or the negative versions of such words or expressions)
are intended to identify such forward-looking statements. These
forward-looking statements include, without limitation, the
Company’s expectations with respect to financial results, future
performance, commercialization and plans to deploy our products and
services, development of products and services, and the size and
potential growth of current or future markets for its products and
services. Forward-looking statements are based on the Company’s
current beliefs and assumptions and on information currently
available to the Company. These forward-looking statements involve
significant known and unknown risks and uncertainties and other
factors that could cause the actual results to differ materially
from those discussed in the forward-looking statements. Most of
these factors are outside the Company’s control and are difficult
to predict. Factors that may cause such differences include, but
are not limited to: the Company’s ability to grow and manage growth
effectively; the success, cost, and timing of the Company’s product
and service development activities; the potential attributes and
benefits of the Company’s products and services; the degree to
which our products and services are accepted by healthcare
practitioners and patients for their approved uses; the Company’s
ability to obtain and maintain regulatory approval for its
products, and any related restrictions and limitations of any
approved product; the Company’s ability to identify, in-license, or
acquire additional technology; the Company’s ability to maintain
its existing license, manufacturing, supply, and distribution
agreements; the Company’s ability to compete with other companies
currently marketing or engaged in the development of products and
services that the Company is currently marketing or developing;
changes in applicable laws or regulations; the size and growth
potential of the markets for the Company’s products and services,
and its ability to serve those markets, either alone or in
partnership with others; the pricing of the Company’s products and
services, and reimbursement for medical procedures conducted using
its products and services; the Company’s estimates regarding
expenses, revenue, capital requirements, and needs for additional
financing; the Company’s financial performance; the Company’s
ability to raise financing in the future; and other risks and
uncertainties indicated from time to time in the Company’s most
recent Annual Report on Form 10-K, as amended, or in subsequent
filings that it makes with the Securities and Exchange Commission.
The Company cautions that the foregoing list of factors is not
exclusive. The Company cautions you not to place undue reliance
upon any forward-looking statements, which speak only as of the
date of this press release. The Company does not undertake or
accept any obligation or undertake to release publicly any updates
or revisions to any forward-looking statements to reflect any
change in the Company’s expectations or any change in events,
conditions, or circumstances on which any such statement is
based.
BUTTERFLY NETWORK, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Revenue:
Product
$
8,753
$
13,164
$
29,874
$
37,607
Software and other services
6,668
6,454
19,510
16,800
Total revenue
15,421
19,618
49,384
54,407
Cost of revenue:
Product
3,929
6,534
13,765
19,481
Software and other services
2,110
2,095
6,226
5,022
Total cost of revenue
6,039
8,629
19,991
24,503
Gross profit
9,382
10,989
29,393
29,904
Operating expenses:
Research and development
12,130
22,040
44,409
68,883
Sales and marketing
9,012
15,481
28,776
47,121
General and administrative
11,560
16,603
37,239
54,080
Other
9,243
2,897
17,848
3,838
Total operating expenses
41,945
57,021
128,272
173,922
Loss from operations
(32,563
)
(46,032
)
(98,879
)
(144,018
)
Interest income
1,903
1,304
5,714
1,574
Interest expense
—
(2
)
—
(2
)
Change in fair value of warrant
liabilities
3,511
(9,087
)
3,924
8,881
Other income (expense), net
(217
)
(898
)
(256
)
(1,387
)
Loss before provision for income
taxes
(27,366
)
(54,715
)
(89,497
)
(134,952
)
Provision for income taxes
2
27
82
68
Net loss and comprehensive loss
$
(27,368
)
$
(54,742
)
$
(89,579
)
$
(135,020
)
Net loss per common share attributable to
Class A and B common stockholders, basic and diluted
$
(0.13
)
$
(0.27
)
$
(0.44
)
$
(0.68
)
Weighted-average shares used to compute
net loss per share attributable to Class A and B common
stockholders, basic and diluted
206,740,234
200,172,683
204,749,108
199,528,394
BUTTERFLY NETWORK, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, except share and
per share amounts) (Unaudited)
September 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
150,006
$
162,561
Marketable securities
—
75,250
Accounts receivable, net
13,646
14,685
Inventories
94,016
59,970
Current portion of vendor advances
2,728
35,182
Prepaid expenses and other current
assets
8,189
9,489
Total current assets
268,585
357,137
Property and equipment, net
26,362
31,331
Non-current portion of vendor advances
16,808
—
Operating lease assets
16,016
21,567
Other non-current assets
6,451
7,535
Total assets
$
334,222
$
417,570
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
8,097
$
7,211
Deferred revenue, current
15,117
15,856
Accrued purchase commitments, current
212
2,146
Accrued expenses and other current
liabilities
21,933
26,116
Total current liabilities
45,359
51,329
Deferred revenue, non-current
5,273
4,957
Warrant liabilities
1,446
5,370
Operating lease liabilities
23,409
29,966
Other non-current liabilities
1,316
588
Total liabilities
76,803
92,210
Commitments and contingencies
Stockholders’ equity:
Class A common stock $.0001 par value;
600,000,000 shares authorized at September 30, 2023 and December
31, 2022; 180,633,155 and 174,459,956 shares issued and outstanding
at September 30, 2023 and December 31, 2022, respectively
18
17
Class B common stock $.0001 par value;
27,000,000 shares authorized at September 30, 2023 and December 31,
2022; 26,426,937 shares issued and outstanding at September 30,
2023 and December 31, 2022
3
3
Additional paid-in capital
942,915
921,278
Accumulated deficit
(685,517
)
(595,938
)
Total stockholders’ equity
257,419
325,360
Total liabilities and stockholders’
equity
$
334,222
$
417,570
BUTTERFLY NETWORK, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Nine months ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(89,579
)
$
(135,020
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation, amortization, and
impairments
8,332
4,066
Stock-based compensation expense
20,924
27,428
Change in fair value of warrant
liabilities
(3,924
)
(8,881
)
Gain on lease termination
(214
)
—
Other
(478
)
750
Changes in operating assets and
liabilities:
Accounts receivable
711
(39
)
Inventories
(34,046
)
(21,421
)
Prepaid expenses and other assets
2,354
(498
)
Vendor advances
15,646
9,555
Accounts payable
1,092
(3,121
)
Deferred revenue
(423
)
971
Accrued purchase commitments
(1,934
)
(15,578
)
Change in operating lease assets and
liabilities
(671
)
1,772
Accrued expenses and other liabilities
(3,509
)
(240
)
Net cash used in operating
activities
(85,719
)
(140,256
)
Cash flows from investing activities:
Purchases of marketable securities
(297
)
(75,118
)
Sales of marketable securities
76,484
—
Purchases of property and equipment,
including capitalized software
(3,271
)
(16,180
)
Sales of property and equipment
10
—
Net cash provided by (used in)
investing activities
72,926
(91,298
)
Cash flows from financing activities:
Proceeds from exercise of stock options
and warrants
228
2,844
Other financing activities
—
(100
)
Net cash provided by financing
activities
228
2,744
Net decrease in cash, cash equivalents,
and restricted cash
(12,565
)
(228,810
)
Cash, cash equivalents, and restricted
cash, beginning of period
166,828
426,841
Cash, cash equivalents, and restricted
cash, end of period
$
154,263
$
198,031
BUTTERFLY NETWORK, INC. GROSS PROFIT
AND GROSS MARGIN (In thousands) (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Revenue
$
15,421
$
19,618
$
49,384
$
54,407
Cost of revenue
6,039
8,629
19,991
24,503
Gross profit
$
9,382
$
10,989
$
29,393
$
29,904
Gross margin
60.8
%
56.0
%
59.5
%
55.0
%
Depreciation and amortization
$
1,448
$
1,019
$
4,127
$
2,122
% of revenue
9.4
%
5.2
%
8.4
%
3.9
%
BUTTERFLY NETWORK, INC. ADJUSTED
EBITDA (In thousands) (Unaudited)
Three months ended September
30,
Nine months ended September
30,
Included on the condensed consolidated
statements of operations and comprehensive loss as:
2023
2022
2023
2022
Net loss
Net loss
$
(27,368)
$
(54,742)
$
(89,579)
$
(135,020)
Interest income
Interest income
(1,903)
(1,304)
(5,714)
(1,574)
Interest expense
Interest expense
—
2
—
2
Change in fair value of warrant
liabilities
Change in fair value of warrant
liabilities
(3,511)
9,087
(3,924)
(8,881)
Other expense (income), net
Other income (expense), net
217
898
256
1,387
Provision for income taxes
Provision for income taxes
2
27
82
68
Stock-based compensation
R&D, S&M, and G&A
6,815
9,413
20,924
27,428
Depreciation and amortization
Cost of revenue, R&D, S&M, and
G&A
4,027
1,875
8,332
4,066
Other
Other
9,243
2,897
17,848
3,838
Adjusted EBITDA
$
(12,478)
$
(31,847)
$
(51,775)
$
(108,686)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102569217/en/
Investors Heather Getz Chief Financial & Operations
Officer hgetz@butterflynetinc.com Neal Nagarajan Sloane &
Company (301) 273-5662 nnagarajan@sloanepr.com
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