Butterfly Network reports first quarter 2024 financial results

Butterfly Network, Inc. announced financial results for the first quarter ended March 31, 2024, and provided a business update.

Joseph DeVivo, Butterfly’s Chairman and CEO said, “We achieved our strongest first quarter in Butterfly’s history with all channels contributing. Our business returned to growth with a 22% increase in probe volume following the successful commercial launch of our third-generation handheld system, Butterfly iQ3™, which was available for only half of the quarter in the US market. Revenue increased 14% over last year’s first quarter while we improved our execution and increased efficiency across our operations, leading to a reduction in our quarterly use of cash by half. These results came on the heels of us over-achieving our fourth quarter 2023 expectations. We are so encouraged by our first quarter results that we are confidently increasing our guidance for 2024.

DeVivo continued, “Building on this progress, we recently received EU MDR certification, which will enable Butterfly to roll-out a number of advanced features on our Butterfly iQ+™ in the European market, as we continue to progress towards launching the iQ3 in Canada and Europe in 2024. Our success is also supported by the launch of our new AI-powered educational application ScanLab™, which complements Butterfly’s full suite of educational products and helps drive adoption, further fueling growth. And finally, Butterfly Garden, our partnership ecosystem enabling third-party AI development on our platform, recognized the first successful commercialization of a product developed using our technology.

“We had a number of positive announcements, a successful product launch, and reached important milestones this quarter. Our work strengthened our position as the leading point-of-care ultrasound company, and we look forward to building on our strong start throughout 2024.”

Three months ended March 31, 2024 financial results
Revenue: Total revenue was $17.7 million, up from $15.5 million in the first quarter of 2023. U.S. revenue was $12.2 million, up 19% from prior year, driven by the launch of iQ3, higher probe sales and higher average selling prices. International sales increased 14% year-over-year to $4.2 million, primarily due to higher probe volume partially offset by lower average selling prices due to a higher mix of sales to distributors. Other revenue contributed $1.3 million.

• Product revenue was $11.3 million, an increase of 28% versus the prior year period, driven by the 22% increase in units fulfilled year-over-year.
• Software and other services revenue was down 4% year-over-year at $6.4 million. Software and services mix was 36% of revenue and decreased by 7 percentage points versus prior year due to the higher product revenue achieved this quarter.

Gross profit: Gross profit was $10.3 million versus gross profit of $9.1 million in the prior year period. Gross margin decreased to 58.2% from 58.7% in the prior year period, primarily due to product mix, reflecting a higher proportion of product revenues, and higher amortization which reduced margin by approximately 170 basis points, partially offset by higher average selling prices.

Operating expenses: Operating expenses were $32.9 million, down 25% from $44.1 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 $26.0 million, compared to $33.5 million in the first quarter of 2023, representing a decrease of 22%.

Net loss: Net loss was $21.8 million, compared to $33.5 million in the prior year period.

Adjusted EBITDA: Adjusted EBITDA loss was $13.2 million, compared to $22.3 million in the prior year period.

Adjusted EPS: Adjusted EPS was ($0.07), compared to ($0.11) in the prior year period.

Cash, cash equivalents, and restricted cash: Cash, cash equivalents, and restricted cash were $116.8 million as of March 31, 2024.

Guidance
Increased guidance for the fiscal year 2024 to:

• $75 million to $80 million or approximately 15-20% Revenue growth
• Adjusted EBITDA loss of $55 million – $50 million

NYSE listing standards
On April 26, 2024, we received a notification letter from the New York Stock Exchange (the “NYSE”) advising us that because the average closing price of the Company’s common stock was less than $1.00 over a consecutive 30 trading-day period, we are not in compliance the NYSE listing standards. The Company’s common stock will continue to be listed and traded on the NYSE, subject to our compliance with other NYSE continued listing standards.

Butterfly has a period of six months following the receipt of the notification to regain compliance with the minimum price criteria. The Company plans to regain compliance through a recovery in the stock price and, if the stock price does not recover within the applicable cure period, through a reverse stock split. The Delisting Notice does not affect the ongoing business operations of the Company or its reporting requirements with the Securities and Exchange Commission.
MB Bureau