Q2 2025 Butterfly Network Inc Earnings Call

Hello everyone, and welcome to the Butterfly Network's second quarter 2025 earnings call. My name is Carla, and I will be coordinating your call today. During the presentation, you can register to ask questions by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. I would now like to hand over to your host, Heather Getz, to begin. Heather, please go ahead when you're ready.

Good morning, and thank you for joining us earlier today. Butterfly release financial results for the second quarter ended, June 30th 2025 and provided. A business update, the release which provides a Reconciliation of Management's use of gaap and non-gaap measures compared to the most applicable Gap measures are currently available on the investor section of

The company's website at IR butterfly network.com.

I Heather. Getz Chief Financial and operations officer.

Of Butterfly Network, Inc., alongside Joseph DeVivo, Chairman and Chief Executive Officer, and Megan Carlson, Senior Vice President of Finance and Accounting, will be hosting this morning's call.

During today's call, we will be making certain forward-looking statements these statements may include among other things expectations with respect to financial results, future performance development, and commercialization of products and services potential regulatory approvals uncertainties regarding the potential impact of healthcare funding and the size and potential growth of current or future markets, for our products and services.

Factors that may cause actual results to differ materially from those contained in the forward-looking statements.

These and other risks are described in our filings made with the Securities and Exchange Commission.

Your cautioned not to place undue Reliance on these forward-looking statements and the company. Disclaims, any obligation to update such statements

As a reminder, this call is being webcast live and recorded. To access the webcast, please visit the Events section of our investor website. A replay of the event will also be available on the page following the call. I would now like to turn the call over to Joe.

Thanks senator.

And good morning, everyone. Thanks for getting up early with us on a Friday.

The second quarter marked, the First full quarter to anniversary our butterfly iq3 launched in the prior year.

And again, this Milestone, I'm pleased to share that we were able to deliver our highest quarterly Revenue in company history totaling 23.4 million.

Our gross margins reached, an all-time high at 64% and our cash use was the lowest of any quarter of 7 million.

Each quarter, we continue to deliver leverage as we march to break even and I'm very pleased of our overall performance and continued discipline of our management team. This quarter in the face of some macro headwinds, we mentioned during the last quarter's call.

Earlier this year, we started seeing signs that certain macro environment decisions were having an effect on our core Focus business.

The guidance provided for Q2 reflected these Dynamics and we came in the range of that guidance.

In the near term, we expect these conditions will persist through the end of the year.

We believe in the long term, but Butterfly's inherent value proposition will actually thrive in the further cost-contained environment as the healthcare market adjusts.

As a result, we are modifying our full year, guidance to reflect this.

Our previous guidance factored in the tough comparisons to last year, given the boost we saw from IQ3 trade-ins and ASP lift.

That said, we had expected to be further along in closing, larger deals for additional growth.

Those opportunities are still very much active. While the sales cycle is being linked.

That said, we continue to diligently work on our significant pipeline of enterprise and medical school deals.

I'm pleased to announce that we did close a large enterprise-wide deal. We mentioned on the last call in the second quarter.

Uh, they have not let us use their name publicly, but we will fully deploy in every department, every campus, and one of the top five most recognized health systems in the world.

It's clear evidence of the Tipping Point in interest, we are seeing at the highest levels.

Make no mistake, the momentum of Butterfly in the market is undeniable. I expect things will be back, uh, to normal after Healthcare Digest and the changes it's going through.

We continue to progress deals and grow market share with iq3 still leaving the way driving participation and winning our fees.

Integrating into medical school programs while proving to the marketplace that it simply the best, handheld, ultrasound out there.

Not just as a versatile digital probe, but as a holistic ultrasound program.

Compass are cloud-based enterprise software, also leads the way in imaging workflow, QA storage and interoperability and it's about to get even better in the next ERA with our next Generation software platform launch. I'll share more details on that towards the end of the call.

So, during the quarter, we saw continued progress with butterfly garden. We added 2, new butterfly, garden partners, and we were pleased to see that our partners iic cardio, heart focused by Desi and deep Echo received FDA clearance in the first half of 25 for their clinical use.

We expect Heart Focus will be launched to Butterfly users sometime in the third quarter, and the other applications shortly thereafter.

The Butterfly Garden is now entering its commercial phase, and we are excited for customers to have these AI tools for their clinical use on a butterfly.

Once launched, they'll be able to download a specific app to their phone, plug in the butterfly, and scan.

These Advanced AI tools will allow Cardiac and Pulmonary scanning by Healthcare professionals without prior ultrasound training.

These apps over time will expand the market opportunity for Pocus while enabling more and more clinicians to diagnose patients where they are.

During the quarter, we also launched an educational app called msk View.

While scanning the muscular skeleton.

We are very proud of this collaboration with URMC and pleased that our garden helps speed the market for new AI applications developed in the clinical community.

Butterfly Garden, I believe, will be growing each quarter and will become a significant accelerant for the Pocus market.

So, keeping on the AI front, Butterfly has added a new descending aorta scanning protocol to our scan lab educational software.

Hey Eric and often present as a deadly event, impacting approximately 35,000 Americans each year.

Most patients are asymptomatic until rupture or dissection, so helping clinicians master this view can be life-saving.

Improving access to valvular disease. Screening is another key Focus for butterfly.

In the second quarter research we conducted with Tufts University, which was recently published in the European Heart Journal: Image, Methods, and Practice.

Showed that a machine learning model, especially trained on a Butterfly IQ, can accurately detect aortic stenosis. Aortic stenosis affects 12% of adults over 75 and often goes undiagnosed in older and underserved communities.

Demonstrating that handheld AI can pick up aortic stenosis is a big step towards earlier community-based screening.

Butterflies. Clinical team has been busy. The full Rucker study, we previewed earlier this year, has now been accepted by a leading medical journal. The findings will remain under embargo until Q3. They detail the financial and operational benefits of adding butterfly to inpatient care. So the evidence just continues to build

Now, I'll pause here on business updates and turn it over to Heather and Meghan to review the financials. But before I do, I want to thank Heather for her work in helping reinvent Butterfly and for setting us on a course for a strong financial footing.

As you read in the release, Heather Getz will be leaving Butterfly around August 15th.

Uh, and will transition to an advisor of Butterfly until early 2026.

Megan Carlson our senior Vice President of Finance and Accounting. And sheep accounting, officer has been appointed our interim CFO until a permanent CFO is identified.

1 of butterflies. A great strength is the expertise and depth of our finance organization. With Meghan in place, I'm certain we will not skip a beat.

We all live butterfly. Wish Heather. Well for her. Life's next chapter.

With that, I'll turn it over to Heather to go into the second quarter in more detail. Heather.

Thank you for your kind words, Joe, my time at butterfly has been a rewarding experience and my choice to leave was not an easy 1. The accomplishments we achieved as a team over my tenure are a great source of Pride and put the company on solid Financial footing for years to come. As Joe mentioned, in order to ensure a seamless transition, I will work closely in an advisory capacity with Megan and the rest of the team through March of 2026. I want to thank Joe the butterfly team and the board of directors for their partnership over the past 3 years. I expect that butterfly will continue to thrive and Achieve great things in the years to come

Now, turning to the financials.

Revenue for the second quarter of 2025 was a record. 23.4 million. The 9% growth was primarily driven by higher average selling prices the sale of semiconductor chips to Partners in our octave business and volume in our International markets.

This was partially offset by lower domestic volume.

Breaking things down between us and international channels, during the second quarter, U.S. revenue was $17.2 million, which was essentially flat to the prior year, driven by the sale of chips to our Okta partners.

Higher average selling prices offset by lower Pro volume. As you know, Q2 2024 was the first full quarter. After the launch of the iq3 in the US and we saw about 700 trade in upgrades in the prior year that did not repeat.

Order total international revenue increased 19% over the prior year period to $6.2 million. This growth was largely driven by both price and volume due to the international launch of iq3 and geographic expansion.

This increase was largely driven by higher average selling prices and the chip sales.

Software and other services revenue was $6.8 million in the second quarter, which was flat to the prior year period. This was due to higher enterprise software revenue and increased licensing and services revenue from our partnerships, offset by lower renewals of individual subscriptions and implementation services revenue.

Software and other services mixed was 29% of Revenue. The percentage of revenue from software and other services has decreased. As our product Revenue growth, outpace software Revenue with the launch of our iq3 in early 2024, as well as our Geographic expansion, our total ARR which is reported as part of software and other services grew slightly versus the prior year period. This was led by an increase. In our Enterprise software subscription are

Turning now to gross profit. Gross profit was $14.9 million in Q2 2025, an 18% increase compared to the prior year, when gross profit was $12.6 million.

Gross margin percentage increased to 64% from 59% in the prior year.

Our gross margin percentage was positively impacted by the higher average selling prices. The positive impact of the chip sales as well as improvements in our software and services margins due to a reduction in software amortization and lower hosting costs.

Moving to adjusted Ava and capital resources for the second quarter of 2025 adjusted. Evo loss was 6.2 million dollars compared with a loss of 8.1 million dollars to the same period in 2 4.

The 24% improvement in adjusted IBA was driven by higher revenue and the previously mentioned improvement in gross profit.

These reductions and improvements led to a normalized cash burn of approximately 7 million dollars during the quarter cash and cash equivalents at the end of the quarter were 152 million and the trailing 12-month use of cash was 46 million.

I will now turn the call over to Megan to touch on guidance. Megan.

Thank you, heather.

I'm excited to serve as interim Chief Financial Officer and look forward to continuing the progress of the company has made.

Before turning to the guidance, I want to provide an update on some of the macro conditions we're seeing in 2025.

We mentioned that there was uncertainty regarding the impact of changes in funding and other government programs that had been implemented or were being considered. We continue to see customers delay purchase decisions in the second quarter as they thought Clarity on how these changes would impact their capital and operating budgets

We saw these delays impact, our us hospital, and Enterprise Channel, as well as publicly funded, Global Health deals.

And we're unsure how long this uncertainty will last as we had a number of large deals in our pipeline that we had, anticipated would have already closed.

Separately, as Joe will expand on momentarily. We're incredibly excited about the opportunities we see in those active and Home Care.

When we weigh these risks and opportunities together, we feel it's prudent to adjust our full year, guidance to a range of 91 to 95 million in Revenue.

In order to get to the high end of the range, we need to close on some of the larger deals that have been delayed. If we're not able to do, so, we believe our Revenue will be closer to 91 million.

As promised we've continued our fiscal discipline. And as a result, even with the downward revision of Revenue, we're able to make a 5 million dollar. Positive Revision in our adjusted evida loss to a range of 32 to 37 million.

As evidenced by the Eva Improvement, we have continued to maintain our disciplined approach to expense control. But we will also invest appropriately behind our growth areas to enhance delivery capabilities as additional Revenue opportunities crystallized.

for the third quarter, specifically, we expect Revenue in the range of 20 million to 222 million and it adjusted Eva dial loss of 8 to 9 million

To summarize, we delivered strong results in the first half of the year. While uncertainties continue to exist around the impact of policy decisions that the Administration has made, we have strength in the diversification of our business, and we are excited about the opportunities in front of us.

Question for domestic healthcare providers. Butterfly is extremely well positioned as our technology not only enables superior flexibility but also provides strong image quality.

But it has allowed us to be a much more affordable solution at scale than the current cart-based ultrasound solutions.

In addition, our semiconductor development path will continue to improve this price performance advantage with each subsequent generation.

Simply put we see butterfly as the long term winner and ultrasound in any macro environment with that. I'll turn the call back to Joe

Thank you, Heather and Meghan.

As I mentioned earlier, we will begin launching a new software platform in the second half of 2025 called Compass AI.

Compass AI is our next Generation software aimed at reducing the steps and documentation through. New, Advanced AI tools and other enhancements. When documentation is made easier, more people will use it in subsequently, more records, and reimbursement will be captured simplifying, documentation, and enabling faster record. Completion are necessary steps for scale to focus deployment inside a health system.

Compass AI is designed with automated tools to help determine scan completeness and quality. Automated voice control to capture the doctor's notes and auto-populate Fields in just seconds.

We anticipate compensate. I will be a game changer and allowing us to increase penetration within existing customers and making it even more compelling for new Enterprise customers to come on board,

We look forward to unpacking the technology for you and delivering it to customers before the end of the year.

So, I'll wrap up with some brief comments on our strategic initiatives, octave and Home Care.

You heard earlier of the growing positive impact Octave is having on our top and bottom line.

As we disclosed last quarter, we are partnering with a generative AI company to Pioneer, a new imaging technology, which I believe can have a major impact on individuals, health care, and health awareness.

Our partner will announce the separate when they are ready.

Which we hope should be sometime in the third quarter, but it's really up to them.

The awareness of Octave is increasing in technology circles, and the inbounds we are receiving are incredible.

Octave will continue to be an area of investment and I expect, we'll become a meaningful part of the business in the future. I can't wait to share more when it's the right time.

So, switching to Home Care. We've now concluded our pilot with our partner, and we are actively negotiating. Our first commercial agreement is anticipated within the next few months.

In our pilot, we proved that with Butterfly's proprietary training and AI tools, a medical professional without prior ultrasound training can be instructed to use ultrasound at the bedside to acquire the necessary images that allow a remote cardiologist to make a medically impactful diagnosis.

This resulted in meaningful financial and clinical reduction in readmissions and health caregivers on site managed and impact the course of care.

Like any early diagnosis, the sooner you know and can monitor our patients' condition, the better the care and the better the potential for significant cost savings.

This is a big opportunity for butterfly.

Our partner has tens of thousands of congestive heart failure patients being managed at risk.

So if our solution were to be deployed over this 1 population Nationwide, we could represent 40 to 60 million dollars of new Revenue to Butterfly for this 1 service line in this 1 customer.

That being said, we are currently working on commercial terms to bring the first state live before the end of the year.

We believe this success will leave the further penetration in the customer, and, of course, allow us to get new customer prospects as well.

As we look forward to growing our core business while leveraging our assets and capabilities to deliver new revenue streams.

This is core to our 5-year plan.

We are on the right side of history as handheld. Focus becomes, a larger part of Medical Care.

We will continue to innovate with our P5 chip and our fourth-generation technology, bringing health care digital ultrasound to every doctor and nurse in the world to provide better care at the point of care.

There will be only one handheld in the future, and it will be a butterfly.

We will continue to develop software to make Pocus easier as it marches to the mainstream.

We will develop new revenue streams that leverage the investments in technology that we've already made, bringing greater leverage to our P&L.

The near-term headwinds. It is highly possible we are being overly conservative, as I believe the market in the near term is adjusting to change.

We remain bullish about the long-term growth potential for butterfly and our ability to drive worldwide adoption of chip-based Technology.

And leverage the technology beyond our core ultrasound business.

So, with that operator, please open the call to questions.

We will now begin the question and answer session. If you'd like to ask a question, please press star for the y1 on your telephone keypad. If you change your mind, please press star. Followed by 2 parents. Ask you a question, please. Ensure your devices are muted. Locally, we will make a quick pause here for the questions to be registered.

And our first question comes from the line of Josh Channing with TD Coen.

Good morning.

It's Joe, and thanks, Heather, for all the help over the last couple of years during your CFO tenure. Good luck in your next chapter, and congratulations to Megan on the interim role.

I was, I was hoping to just start off. I think you laid out the drivers of the guidance revision and and some of the macro, uh, headwinds that are that are in place and that your butterflies facing just wanted to make sure we touched on. Um, the competitive landscape, there may be a read through that the competition is intensifying too. Are you seeing any any competitive headwind springing up from from other handheld platforms.

Uh, in the US specifically, or or internationally.

So, so first of all, um, good morning and also, we read your report so that really helped us. Um, uh, no. I mean, uh, anything to do with the revisions have nothing to do with competition? Uh, are we in a competitive market? Yes. Are are there. Good competitors out there? Yes.

Um, what we've seen, uh, we think more is just a function of a big part of our strategy going forward is doing larger deals, and we think, you know, we...

There's you know for handheld ultrasound, there's you know there's not a hospital budget that says okay here's my annual butterfly purchases so we are every deal we do is new is is it gets carved into a new part of a budget and uh, is something that has to do with us, blazing really a new Trail. Um you know, our we are specifically citing, the larger deals just getting delayed uh those larger deals. No, 1 else is doing

No 1. Uh we're the first ones. Engaging hospitals uh at this scale, first 1 engh medical schools at this scale and we're blazing Trails um you know, there's a bunch of handheld companies who sell online like we do. Um but that is you know and that'll always be competitive.

But in general no uh in the environments where we are are moving. We are building a market for the first time, we are creating users for the first time, we're building workflow into institutions on 1 to 1 for the first time. And you know, when when excuse me anyone's going through a change.

Or or they're calibrating, you know, it's easy to delay. Something that's brand new versus, you know, reordering or, you know, existing businesses Etc. So know, I the the, the the the revision is simply, uh, we're being cautious because we saw signs, um, we moderated when we gave guidance in the second quarter to include that, um, because at the end of the first was a little later than we would have expected.

In that perpetuated into the, you know, to the end of the second. And so we're just being cautious. We have not missed guidance yet since, you know, Heather and I have been here, and we're not going to miss it in the future. Um, we're going to give our investors a very clear line of sight. And we want, you know, to continue.

To earn the confidence.

No, that's helpful. Thanks, Joe. And a little bit of a similar question, just geared towards the software subscription.

Um, what's happening there and and how can butterfly uh, drive drive higher subscription levels, thanks for taking the questions.

No problem. Josh. So, so first of all,

You know, the software line is kind of like a tale of two stories.

So on 1 side on the individual subscriptions, you know, when, when we get to renewals, um, you know, we we do have a pretty good, you know, churn from an individual subscription and that is a quarter to quarter, uh, headwind for us. It's, it is harder for us to get people to re-up after 3 years or after 5 years. Uh, or if they're on year to year, that's just something. We're trying to get better, make our stopper more sticky uh, to those individual users. Uh, the the enterprise software is growing and that's where we are. Not only growing new accounts, um, but Compass AI is going to give us the opportunity to also take a little more price uh because of the, the impact the software has uh the the capabilities of the software and so

While the the line itself doesn't look like it's growing as fast, it's dealing with, you know, that type of shift in product. Um, I think you know, the the enterprise software uh, will become and continue to become a more and more meaningful part of our overall revenue. And it's it's absolutely key to our Enterprise strategy because

As we've been selling in the hospitals, we've been selling Department to Department. Uh, and then, as we, we stitch together, multiple departments, we start talking Enterprise. And when you talk Enterprise and you talk scaling over, a lot of people efficiency, uh uh ease of use, um integration, you know, to their workflow is literally, um, you know, life or death for software and it has to be easy. It has to be easy to document. It has to have few steps.

And now, with all of the incredible AI tools that are out there.

We are able to you know, Stitch steps together for 1 Step and we are able to to do things in an automated fashion that makes it quick. So for example, getting this 1, large top, you the top um Health System to just go systemwide wouldn't happen if it wasn't for the improvements of compass. AI where

We showed them how uh this can be automated how this can be faster. You know, we've pioneered this whole Market with compass with really our first generation software, we've learned a ton, we've done a bunch of revs to improve it. But this is a generational uh shift in the in the platform which is is I think key to crossing the chasm and getting the the not, you know, Enthusiast into using it every day because it's just easy to use. So I think it's going to be not only a catalyst for our software sales.

But our Enterprise sales as we show you how it gets easier and easier, and more and more automated, and you capture that Enterprise, then, you know, the pull through on Hardware uh, is just natural. And you know, that 1, uh, large, uh, customer that I mentioned before that we had closed. You know, today has upwards of 700 probes. Uh, and that was you know, organically uh uh, organically sold. That wasn't 1 order. That was just as it's getting more and more penetrated in the software is getting more and more used, they buy more and more hardware and I think that's the Enterprise sale of the future. And, and we're very excited about our future.

Appreciate it. Thanks Joe.

Thanks John.

The next question comes from Chuck. Nick Barker with cried Halo.

Good morning, good morning. Yeah, thanks for taking the question. Um, maybe just to dig in a little bit more on guidance again, sorry. Um, Epoch, can you kind of share a little bit more about the changing assumptions between prior guides and this? As far as was it kind of impacts you through Q2 and now it's kind of impacted through the rest of the year? And then, can you talk about kind of the mix of?

Um, kind of impact on the Enterprise side, you know, Med schools, and then and then BTC, as far as kind of um, where you're seeing a little bit of a, a difference relative to previous expectations.

Well, sure. So, I don’t know if I have anything incredibly novel to add. Um, but when we initially looked...

Um, at the second quarter guidance based upon how things had closed in the first and we started to see our first of all, our Global Health business, our Public Health business, you know, those that are, you know, work with ngos that then do work in countries with us.

That part, uh, we saw and there were deals that, um, you know, there was a material impact in our second quarter based upon things that we thought would close. Now, those things didn't go away, we didn't lose them to a competitor. It was a delay to just ensure, uh, that sources of funding in the future. Uh, would persist. And so,

Um, I I don't think there's a need for anything to be too permanent and I think things are adjusting, um, and we just think that that, uh, over the near term is something that we have to keep an eye on because um, we believe especially with global Health that if uh the changes weren't made our Revenue in the second quarter, just would have been higher. And we think, you know, that would have persisted uh through the year when it comes to Enterprise and medical school. We have

I I wish I could just share with you the numbers, but we have a pretty good Pipeline, and, and a smaller part of the pipeline, um, closed on those deals and we didn't lose the deals. Um, they didn't go anywhere, uh, they're pushed out into an out quarter, but now, you know, our line of sight and our ability to predict them, or just not as certain as they were from a timing perspective in the past. Uh, so we were taking a very conservative, you know, we, you know, the, the original guidance had contemplated, you know, a, A continuing of the momentum that we felt, uh, at the end of the year. And, and we definitely felt

Um you know, within the Enterprise within the medical schools and within Global Health um that things have changed. Um and again I don't think it's permanent because when we do get into an uncompetitive environment, you know, we have costs as our advantage. We have cloud and AIS our advantage. We have all in as our advantage. We're not losing the competitors. Um but we clearly um felt that uh we wanted to be cautious going into the second half of the year and that's what we we've expressed.

And Joe anything you're hearing from your customers as far as kind of the visibility, they need to, you know, maybe move timelines along as normal or, or, or, or just faster in general, from kind of how they are today. Um, is it just, you know, a little bit easy they just need a couple more quarters kind of in the current environment to um, to kind of get comfortable that things are

They are stable and have a little bit more visibility, and it's kind of on the um,

On the um the international side obviously just you know maybe uh a little bit more visibility into how fun and stabilizing just a little bit more flat as far as kind of the the driver to um things are turning to normal.

Yeah, so so on the global Health side, that's, you know, that'll take time to see. Um, I I think you know the needs are out there. People have um, you know, big hearts and there's a lot of opportunity to make, uh, significant impact on people's lives. Uh, where Imaging is not readily available so

I think that will recover but I think that is something where, you know, real funding was cut. And now uh those projects that uh wish to be funded are in the process of looking for different funding and the private sector. Um, still has hearts or gold and uh, are still funding and who knows? Maybe they'll step into into a bit of the short-term void. But again, I think that'll all correct on that on the medical school and and the health system side

You know, it's just timing. It's just timing. It's it's you know, we we save cost. You know we we are a cost-saver uh in imaging. Uh we make outcomes better so on any analysis uh like those Dynamics haven't changed. Uh it's just, you know, people are like okay well you know this might take a little longer or we're going to prioritize this or that or you know it's the hospitals have just you know have made their funding decisions.

Uh, and I think it's purely temporary. So no, I I don't think there's a structural permanent change uh, for hospitals and health systems and and medical schools. I just think there's, um, you know, a calibration. And, you know, we, we had expected to go hop through, uh, 25 like we did 24 and, you know, we've just seen a bit of a, a bit of a change. So, again, as I mentioned in, in the prepared remarks, we might be overly conservative, I, I don't know. Um, but I think we would rather, um, you know, deal with it.

Communicate it uh and give investors a great lens uh than just you know hit a wall or something or or guide you in the wrong direction.

That's helpful Joe thank you. Um Heather. Sorry to see you go here. Um but uh thank you for taking the question. Wish you the best

Thank you, too.

Then it start 1 on your telephone keypad. The next question comes from Angie rapmon with William Blair,

Hi everyone. Good morning. This is taking questions. Joe your commentary on the, on the pilot program for CHF. It sounds like that's going very well. Any additional color that you can maybe provide with respect to the timing size or structure. Uh, for expectations for how an agreement like that might Shape Up should be sort of per click how, how to probe sales fit into that. Uh, any kind of around that might be uh might be appreciated. Thanks.

Well, um sure no problem. So um the the way, the way it works is

um,

And and I can't give specific numbers yet because of the commercial agreement is not finalized, but the way it works is there'll be a program fee.

Uh, and that program will fee will be based upon, uh, the number of.

Patients or members, uh, enrolled in the program. Uh, and that gives us the ability to, uh, trained, uh, the nurses on site that gives us the ability to provide all the technology needed, uh, in that, um, you know, scalable fee. Based upon, you know, the number of people who are enrolled in the program. Um, and so that then provides that kind of the consistent, um, uh, the consistent revenue, and the, the consistent coverage of the cost that it takes to, to get

At the program going and then there's going to be a revenue per scan. Uh, so as each scan is done, um, you know, we will then have it professionally read by a clinician, we will route it, we will quality check it and, and, and manage that. So the revenue stream is based upon how large is the population and then how active is the scanning activity and, um, you know, we, when we get to The First Agreement, I'll try to give a little bit more color on it, and it's something that'll just scale, uh, with the the number of patients, the number of states uh, that come on. So we do believe it's highly probable that before the end of the year we butterfly will have its first State signed up. I mean, we'll be managing, um, you know, with the teams on site, these patients and we'll and what's beautiful about this model is that this isn't about butterfly getting into some new business um Home Care.

It's about us accelerating adoption. It's about eating our own dog food. It's about using our technology and putting our money where our mouth is, which is: we can help you improve. If you use this technology at the bedside, outcomes will improve. Instead of patients being put into an ambulance and sent to a hospital to have an echo or to be dealt with a recurring or continuing progression.

Gist of heart failure. We're going to empower a nurse at a Skilled Nursing Facility to take a scan right then and there and then within 24 hours, get the type of information they need for the attending on site to make a clinical decision to improve the outcome of that patient. It's a significant reduction in the cost of care, especially for, at risk providers. It's a significant reduction in their cost of care, uh, and it's an immediate ability to, uh, improve the clinical outcome of that patient. So bye, bye. Bye, for us getting into Home Care, instead of waiting 10 years for organizations to finally get it, that every nurse should have a probe and they should be doing this on sight by just stepping up. And, and showing how immediately we can provide these types of clinical and financial benefits. Uh, it opens the eyes, uh, to those at risk providers that this can be done, uh, and Butterfly is very uniquely.

positioned with this because it allows us

Uh it uses our Cloud capabilities, it uses our AI capabilities. It uses our education capabilities, our Hardware capabilities and our systemic software capabilities and managing data. It, it takes the entire offering of butterfly and it allows us to, to deploy it in a very powerful way. So, um, and not only that but, you know, you can, we can turn around and we can

Sell a doctor uh a probe for say 3 or 4 thousand dollars.

And then we won't see that doctor's revenue for another, you know, 3 to 5 years or we can take that probe and have it used and get revenue for every single patient. It touches.

Is incomparable, uh and the magnitude of this opportunity. Even for this 1 customer, uh, you know, it can make a significant, uh, Improvement to butterflies overall, you know, Financial if we were able to get anywhere near, uh, to going Nationwide with this program, you know, I think we'd be cash flow neutral pretty quick. So, you know, we we are placing in our 5-year plan. We are placing big bets to leverage our core competencies, uh, and we're also doing things uh, to um, you know, use our basic principles of point of care, helping patients of where they're at, and making this, a major Catalyst for cost reduction. So I am extremely bullish about the future of butterfly. Don't take our caution this year, uh, with the with the environment as anything. But just good. Uh, discipline.

Shepherding of a business in the short term uh butterfly is going to fly.

That's a great color. Thank, thank you for all that. Maybe maybe a similar uh, question on sort of the pipeline and where you're going with with the entity. You know, you mentioned butterfly gardens getting into into the commercial space here and recognizing the Crosswinds here here. And now, uh, for the business if we just zoom out a bit and more and more, these are added, can you just remind us about your confidence that Garden can sort of help Drive?

Flywheel effect, uh, which you just talked about for home care as well. Thanks,

Well, well, sure. So, um, uh, that's I mean.

I wish I had time to explain to you. How good that question that you just asked is, um, because again, it is the flywheel. So, for example, um, we now with heart Focus from Desi, uh, we're going to have a tool that's going to allow a, a, a historically uneducated Healthcare professional. Uh, to be able to get an echo.

Uh, so that can be now a whole new service that we provide. So we not only help manage the congestive heart failure. Patient through our current AI tools, but if they want to have an echo done on site instead of having to send them to the hospital for that Echo, we can with heart, Focus, have them do the echo, um, uh, at the bedside for the patient or the same thing with uh, IC cardio or the same thing with um, deep breath where, you know, as these new or or think Sono, for example, who has a beautiful, um, application for deep vein, thrombosis, uh, we, you know, we could, you know, help these nurses, uh, also check for dvts for for patients that have, you know, or bedridden Etc. So uh, as each Garden partner comes in.

It does so many things for butterfly. A it creates a new Revenue stream for butterfly. Uh, as a butterfly users purchase a software B. It gives us a new capability in home care that allows us to provide additional Services uh, and see if it it it it allows for an acceleration of adoption of point of care. Ultrasound in the core population, especially in rural areas in third world countries where you know the the the education component of ultrasonography is a major barrier. So um and and that's what's going to make butterfly. Go completely mainstream and by us not choosing winners or losers, but allowing uh, the marketplace to come into the butterfly platform. And we will have 20 and 30 and 50 and 100 different applications. People are going to choose the winners, uh, and they're going, they're going to make great clinical decisions. We are marching down a path of allowing

Uh ultrasound to be ubiquitous, we've dramatically reduced the cost of of ultrasound. We now dramatically improving the access, uh We've dramatically improved, the education tools, and now we're dramatically improving AI or access to AI tools that are going to allow uh, this to accelerate just, you know, so much faster. So, again, it's a part of our 5-year plan of creating a flywheel and it's exactly how you formed your question.

Great. Thanks for all the caller.

You're welcome.

Thank you. The next question comes from Ben Hur with Lake Street Capital markets.

in your reduction or readmission reduction was any kind of anecdotal commentary there and then um,

You know what is the partner want to see in terms of, you know, going from 1 state to 2 state is, is that a function of of you guys being able to train? Is it, you know, something that potentially can go in parallel? What's the, what's the right way for investors to think about that?

So, uh, as usual, very good questions have been, um,

so so first of all, um I I can't share with you uh the specifics because it's it's the partners' data, um, but I can say there was

A significant reduction in the reduction.

Let's say.

I I I don't know if I can give you a number um but it it it definitely. Let's put it this way. Um it it cut the readmission number at least by half.

Um and if you look at those numbers uh those numbers scale very quickly. And so, of course, going to the first state is to make sure that, you know, the, the pilot, uh, results are transferable at scale. Um, and so, um, and I think when we show uh, the ability to transfer those results at scale, um, I think that just opens up the opportunity and I think that that would happen quickly. So there's

There's a difference between monitoring, you know, doing a pilot at at, you know, 2 sites versus a full State uh and and so it's purely. Um, we're we're going to work really hard uh to show that those results can continue. Um and I think when when we do uh, the opportunity just continues to open for us been

Makes sense. I mean, it sounds like with what they saw. There's not really any question that they'll be duplicatable. Uh, elsewhere.

No. It's I mean, the results, the results are great. So it's just the but as you know, when you scale stuff, you have to sometimes the littlest things get you. So you just have to prove that, hey, you know, you can go to these different sites. You can train you, everyone, you know, wasn't just an anomaly, blah, blah blah blah blah. So we're going to do that now in the, you know, hopefully as we you know, get this first day closed.

Okay, got it. That's that's very helpful. And then uh you mentioned the hospital is not having specific handheld, ultrasound budgets do. Is that something that you think IQ station could potentially help you with? You know, whether it falls into a broader Imaging bucket, or you know, traditional ultrasound cart budget and then any updates on, you know, kind of the P5 Next Generation, uh, versions and form factors.

So again uh another very good question and actually you know you're kind of dead on, you know right now. Um hospitals have budgets to refresh their ultrasound. You know, every 3 to 5 years they have budgets to refresh their point of care, ultrasound carts, every 3 to 5 years um because you know because iq3 is only a year out. You know, we're still getting penetrated into the hospitals and we haven't established it enough for it to become like a routine reorder. But

IQ station will compete with point of care ultrasound cards and that's exactly correct and you know and and again this is all tying into our Evolution because if we rewind the tape a year ago prior to iq3 uh the narrative on butterfly was, it's a great device, but it'll never be used in hospitals, because the image quality doesn't match up. That's what we dealt with, you know, 12 months ago. Now, over the last year, we proved that we not only are equivalent, but being an all-in Pro being cost-effective having all of our tools. We are these Solutions, uh, going forward. And so we are building that momentum and a way to get into the Core 2 billion dollar. Um, you know, uh, let's say, hocus carp business or the carp business at the lower level um, having a device like an IQ station will assess existing Market.

An existing budgets and will allow us to displace existing competitors. Um as we move Upstream with our image quality and then of course,

Uh, P5 is going to be a generational step up in image quality.

Um you're going to start asking yourself a question, when you see how good the image quality of our fourth generation is over the existing devices out there. You're going to have to ask yourself, why am I using these devices?

They're not, they're not going to be as good as P5. We've seen, you know, we've seen their be a certain limitation on you know, a technology that's been out there for 30 or 40 years, doesn't have the type of generation of the leaps that a semiconductor that we have has uh, and our fourth generation is going to be so good. I, I do believe people will be like, okay, well this is it and then you add that to a a cart environment. Um, it creates, uh, the workflow. When we talk about every doctor and every nurse having their own probe, stepping up to a station and having, you know, a a sit-down type of quality experience. Uh, that's exactly. You know why we've designed this concept? And I think it'll allow us to get into the core budgets, um, of of the, of the health system. So it's exactly right then,

Great. Thanks for answering the questions and Heather. Sorry, I didn't have 1 for you, but it's been a pleasure working with you over the years and uh, best of luck to you.

Thanks Ben.

Thanks Ben.

Thank you. So just as a final reminder, is that I want to ask you a question.

And as we have no further questions in the queue, that concludes the Q&A portion of today's call. So I will hand back over to you, Joe, for any final comments.

All right. Well, everyone, thank you so much for joining us this morning. Uh, we remain, uh, extremely bullish on butterflies seizure. Uh, and we will navigate us through, you know, whatever changes. I'm very pleased in our expense management and our ability, you know, to continue to grow the business while being good Shepherds of capital. We're making great, great progress. And so, I just appreciate all of your support, uh, as we as we navigate, you know, some change here and also, I just reiterate, thank you, uh, Heather, uh, for all the great work, um, and she'll go off and do great things. And, and her Legacy will continue with a perfect team that we have assembled here in finance. So, um, thank you guys, uh, for all your support and we'll talk to you soon. Thanks.

Can close today's call. Thank you everyone for joining you may now disconnect have a great day.