1. Butterfly Network

“We are very encouraged by the broad demand for our solutions across a wide range of customers. Our offerings, footprint and partnerships continue to expand every day.” — CEO Dr. Todd Fruchterman

a. Results

Analysts expected Butterfly to generate $14.5 million in sales for the quarter. It posted $16.5 million thus beating expectations by 13.7%.

Year over year (YoY) product revenue growth faced a tougher Q2 2020 comp due to a sales pull-forward in the comparable period last year. This was because of Butterfly’s pandemic-specific use cases.

b. Profitability

Note that first quarter 2021 net income margin of (5.6%) was boosted by $54 million from a change in fair value of warrant liabilities. Without it, net income margin last quarter would have been (441%).

Similarly, in this quarter net income margin of (17.5%) was boosted by $33.5 million from a change in fair value of warrant liabilities. Without it, net income margin this quarter would have been (160%).

Overall cost of revenue shrank by 29% year over year to complement the 39.8% rise in sales. This is due to Butterfly moving from development-stage to commercial-stage manufacturing.

c. Annual Guidance

d. Business Highlights

CEO Dr. Todd Fruchterman

Future software upgrades are planned to:

Improve imaging quality further
Add more specific use-cases
Integrate more diagnostic-aid tools.

Butterfly is now present in over 100 medical schools across the globe. The Lewis Katz School of Medicine at Temple purchased an iQ+ for all of its first-year medical students and gifted the device to them at the white coat ceremony.

“Our goal is to solidify Butterfly from the beginning to ensure our practitioners of the future have the ability to make more informed clinical decisions, regardless of specialty or care setting.” — Fruchterman

It signed its “largest distributor relationship to date” with Chindex in Hong Kong. This “solidified a substantial multi-year commercial commitment for the Hong Kong region.”

The Texas Tech School of Veterinary Medicine became the first vet-school to deploy the iQ+ college-wide.

“We believe Butterfly is well-positioned to disrupt and advance veterinary medicine. We see this as an attractive market for growth beyond our core human efforts.” — Fruchterman

Butterfly licensed a new OB/GYN solution that was delivered with a seamless software upgrade to the iQ+. Butterfly’s ultrasound on a chip approach ensures it can upgrade its hardware with new software features without actually having to build new hardware. The upgrade comes with the following features:

Enhanced imaging quality
Gestational age calculation (single most important variable for determining infant mortality)
Audible fetal heart zone (in the USA and Canada so far)

ESC Heart Failure (part of the Journal of the European Society of Cardiology) recently published an interesting Butterfly iQ+ study. It was determined that patients with no medical training could be taught to “self-perform a lung ultrasound exam” after an iQ+ training session with the image then being remotely interpreted by medical professionals. Remote monitoring unlocks more fluid, real-time care. Note that any self-scanning capabilities must receive proper regulatory clearance before use.

The company has a secure supply of semiconductors but Butterfly is impacted by lead-time increases just like everyone else. It does not anticipate any difficulty fulfilling near-term deliveries.