Welcome to Jefferies 2023 Global Healthcare Conference. I'm Nausica from Jefferies, and it's my pleasure to introduce you to Joe, CEO of Butterfly Network, and Heather, CFO and COO. Just a reminder, this will be a 20-minute presentation, followed by 5 minutes of Q&A. I'll hand over to you.
Okay. Well, thank you so much. We really appreciate Jefferies giving us the opportunity to present at the conference, and we're very excited to present Butterfly to you today. Butterfly is a fascinating company, a company with incredible technology. For those of you who do not know Butterfly, we make handheld ultrasound devices. We do so with semiconductor technology that allows for it to be delivered and for clinicians to use it at the point of care. They can use it in the hospital, but they can use it in ambulances. They can use it on the battlefield. They could use it in clinics. They could use it anywhere by bringing it with them, plugging it into their iPhone, and being able to do very simple imaging.
Butterfly is a public company, so forward-looking statements, beware. To get to our first slide, for those of you who've been following Butterfly, I just wanna set the stage as to where we are. The company SPACed in 2020, and then for the last four years, Butterfly has been growing very nicely at about 20% a year. But also had some very large aspirations, aspirations for growth even faster, and when you see the market size, you'll see why. But there's also a lot of work to do in adoption and education, and I'll let you know where we are in those efforts. But in the context, the company grew very quickly and also grew an expense structure very quickly.
So 2023 has been a transition year. The prior CEO, in 2022, and the board decided to separate, and the company had about the first half a year of 2023 without a CEO. At the same time, the company had taken a massive amount of cost out of the business. We've made it much more efficient, much more lean, much more focused on where we think our real growth opportunities are. So we've taken about $170 million of operating cost out to make ourselves lean and to allow our cash to last us into 2026.
So we're excited that we have a runway, that we're not fundraising or doing anything during this type of economic environment, that we are being better shepherds of capital, but we're still investing in growth, and we're investing heavily in some exciting areas that I'll show you in a moment. We also have strength in our management team, and we've launched some important initiatives, one being Butterfly Garden. We had an announcement today that a new company came into our garden, which is kind of like our AI marketplace, where companies using an SDK can have access to over 100,000 current Butterfly users around the world, and those users will now have new AI software to access, and so we'll talk about that in a bit.
As well as we made progress in the quarter by announcing a new initiative called Butterfly Garden. Well, Butterfly Garden or Butterfly, Powered by Butterfly, and what Powered by Butterfly is, is us allowing our proprietary technology to be used by partners in non-competitive spaces, especially our semiconductor technology, and we just signed a deal with Forest Neurotech to do brain imaging with our semiconductor processor. So we'll talk about that in a little bit as well. But for those of you who don't know Butterfly, to set the stage, ultrasound is a very analog imaging modality. It has a transducer, battery power, and crystals, and those crystals are very much like a fixed lens on a camera, where energy is directed through those crystals.
What Butterfly has created is a very novel semiconductor chip that allows for the beam and for sound waves to be delivered through a MEMS technology. And what's special about it is if you're gonna scan a certain part of the body and there's a certain level of frequency, you can select the organ, the frequency then is pre-tuned, and you need one probe to do all kinds of ultrasound imaging that you would need multiple probes for all the analog companies. So that chip is powerful. That chip allows for lower cost. That chip allows for people who are at the point of care and don't know what they're diagnosing yet, to have one device that can be used for all the different use cases, and I'll show you a little later why that entire chip is so powerful.
Piezoelectric crystals is an older technology. They have very high and very good image quality with the amount of energy that passes through it, but there are limitations before you have a significant thermal signature of how much energy you can put through those crystals. Interestingly, some of the higher-end ultrasound carts that are in hospitals are liquid-cooled in order to reduce and carry that heat away because they can't get past that limitation. But you have to have multiple probes. It's expensive. Those crystals are fragile. If you drop them, they have to be replaced at a relatively high cost, and when you have a cart in the system, obviously, those carts are not as accessible.
Our vision is to have one device per clinician, one device per nurse, and t o be able to have these devices exactly at the time that someone needs their care delivered, and Butterfly is that product. So historically, the way Butterfly's revenue model is, we sell a probe. Now, on average, we've been selling our probes for roughly $2,500 per hardware probe. And then we sell a software subscription to our cloud and the ability to use our applications with our probe. And so, the probes and the software are the greatest sources of revenue. And then, of course, we have enterprise software for hospitals to manage their imaging, and then we have professional services. So we do deployment and all different types of services that help our customers use our product. As I mentioned, this quarter, we've launched two more revenue generating items.
One, a brand-new Butterfly Certified Education Program that'll—'cause there, there is a bit of a Butterfly paradox. We're providing low-cost ultrasound at $2,500 to clinicians around the world who didn't use ultrasound before, so training is an issue. It's almost like getting a $20,000 helicopter, and you get it delivered to your driveway, you're all excited, you get 10 ft up in the air, and you realize you can't fly a helicopter. Well, training is a massive opportunity for ultrasound, and it's happening. 60% of medical schools in the United States now are training their students in ultrasound. So the next generation of clinicians are all gonna have this and know how to use ultrasound as well as they can use a stethoscope.
Now, also, Butterfly Garden, as I just mentioned, is a new ecosystem we've launched, and today a new company has just come into that ecosystem. Over the last 90 days, we have now 10 partners who are using the linkage that we have to bring their software into our garden and for them to be able to then have access to our user base. So very excited about that. And we also announced in the quarter something called Powered by Butterfly, which is someone using our semiconductor MEMS chip for a different application, and we signed this deal with Forest Neurotech, who, like Elon Musk's Neuralink company, is putting our chip into an implant at the crown of the skull to scan the brain of abnormalities before they deliver therapy. So we're thoroughly excited that Butterfly investors are a part of that upside opportunity, and we're very excited to partner with Forest.
So for our business, there are multiple locations that we are targeting for the development of ultrasound. So the first, of course, is in acute care hospitals. We want doctors to have, and nurses to have, everyone have a probe and be able to do diagnoses when they see fit. Outpatient clinics where carts are expensive, and they don't have access to that ultrasound, and then also in the home, and I'll talk to you a little bit later about home. But we believe that imaging in the home, helping people image there, is a way for significant growth and great opportunities. So our vision historically has been that ultrasound will be the stethoscope of the future.
If we look at how many physicians are out there, there's 1 million physicians in the U.S., about 9 million physicians worldwide. So by our ASP, you know, the TAM for the doctor market is upwards of $20 billion alone. But we believe, based upon new tools, that not only we can educate those clinicians to all use our product, but we also believe we can train nurses. And we train nurses by using advanced AI tools like some of the ones that are joining the Garden and also some of the ones that we develop ourselves, 'cause if an untrained ultrasonographer but a healthcare professional or an untrained healthcare professional who wishes to get into ultrasound, it could be made easier with these advanced AI tools.
And so that opens us up to, in the U.S., another 4 million nurses and another 27 million nurses worldwide, and that's been manifest and actually done with the largest deployment of ultrasound ever done in the world in Kenya last year, where we trained 500 midwives in order to do a bunch of fetal ultrasound indications that are helping people in Africa every single day now. So we know it can be done. And then lastly, I'll, I'll, I'll talk about this later on in my talk here, but we actually believe with the technology we have in semiconductors, we can bring ultrasound into the home. We can help manage chronic care patients and not just be one per doctor, not just be one per nurse, but potentially one per patient. So currently, we have our, our hardware technology.
Today, we have a bunch of different software operating, operating systems. We have AI imaging modes, workflow, to help hospitals manage workflow, we have our, our education, we have our proficiency management, and everything operates on a cloud. You know, very similar to a Tesla, when everyone uses our, our device, it's completely networked. We're pushing data into the device, we're pulling data out, it's learning, it's becoming smarter, and it's, it's very, very modern. As new tools come out, it's updated, and it's not, just a device in the hospital.
So in order to tackle training, we have Butterfly Academy today that has, 100 different videos that show people how to image and what type of organ and where, and we have testing modalities that will then help test their proficiency, so they can learn virtually. We're launching a new AI tool I'll show you in a moment called ScanLab, which we'll launch in January. That's a virtual tool. That's an AI-driven tool that'll help students image. And then we've now launched in-person courses, so people can actually get certified by Butterfly to be able to do individual use cases. What you see on this slide is ScanLab. ScanLab is an AI tool that allows you to be trained with an individual app that you would put on your tablet. On the left, you would first pick your use case, whether it's a pulmonary use case, a cardiac use case, there's about 14 or 16 different articulations.
Once you choose it, it then will show you on the left side, "Hey, you know, go into the second intercostal space and contort it in this manner." And then on the right side of the image, it shows you what you will see. Once you plug your Butterfly in, then the image that you're getting from your device shows up on the right side, and not only does that image show up on the right side, but it has AI-driven anatomical labels. It'll tell you what is the left ventricle, what's the right ventricle, which is the mitral valve versus the aortic valve? It demystifies ultrasound, and as people can practice and learn with this tool, it helps them correlate actual anatomy with the images that they're seeing, which is a massive, this is a massive need in the marketplace.
So how do we get to nurses? We get to nurses by advanced AI tools, so we do have a 3D bladder volume. If someone scans their bladder, it'll come up and tell you exactly what that bladder volume is, with an AI tool we have. And we had another one approved by the FDA this past summer, which is a B-line tool, where a healthy lung, and I'll show you an image of a healthy lung in a moment, has horizontal lines that are called A-lines, and when the lung interestingly starts filling with fluid, there's a vertical artifact that occurs, and our AI tool counts the amount of those vertical, those vertical artifacts.
'Cause the more there are, the sicker the patient is, and pulmonary wetness is a pre-indicator for congestive heart failure and, of course, pneumonia. What's fascinating is that sometimes you have to look at analogs. We are a digital company that is focusing in an analog space, and if you, if some of you are old enough to remember when a digital camera came on the market, that digital camera came on, there was a 1-MP picture, and it showed a very grainy picture, but it was cool because you didn't need to develop film. But I can't get rid of my film camera because that picture's not good enough. Then later in late 1990s, they got to 3 MP, then 5 MP, then in the early 2000, 7-MP images. It's as good as film.
The moment digital is as good as film, or the moment digital is as good as analog, analog loses, and that's happening in our market now. You can see that digital photography overtook film just in a way that I'll hope to present to this market, that digital imaging and ultrasound will overtake analog imaging just as well. We now are launching next year, beginning of next year, our third generation probe. Our third generation probe benefits from the same thing that all other digital benefits from, which is Moore's Law. Moore's Law is every two years, they'll double the amount of transistors in a chip, and that's held true for the last 60 years.
So what's happening now is our next generation is twice the power of our second generation probe, and this probe is as good or better than any handheld probe in the market. So those lines are gonna cross, and the industry is gonna change forever. So I'll just show you. So iQ+ is our second generation probe. iQ3 is our third generation probe. You can see the clarity of artifact. You can see the what an increased processor can do. It's faster, and actually, it's so powerful, it's like running 24,000 4K movies simultaneously, is how much data is running through our processor now, and our fourth generation is in development. This, as I told you before, I'd show you some healthy A-lines. Well, here is a bunch of A-lines.
It's actually, it's unfortunate 'cause this is a little dimmed on the screen, but if you see it on the... The A-lines are horizontal lines, and our iQ3 on the right is in comparison to GE's best handheld probe, their Vscan. And then if you look at a four-quadrant between GE on the left and our Butterfly iQ3 on the right, they're at a minimum equivalent. It's in the eyes of the beholder, but we actually believe the iQ3 is now better. While we're the market leader in units for point-of-care ultrasound, GE, of course, globally is the ultrasound leader, and we believe we're now better than them.
Interestingly, there are other semiconductors coming out, but they're using piezo crystals inside it, which have, again, the heat deficit that we talked about and the initial, launch of those products, we don't believe are meet up to not only our current product, but most certainly not the new product all the way to the right. So what's gonna change? We talked about digital cameras. We talked about how digital photography took over film, but how many people in the audience today have a digital camera in their pocket? What's the digital camera you're using? You're using this, right? Why? 'Cause a processor can make it smaller and smaller and more powerful and smaller and more powerful.
So those digital cameras that disrupted film are now gonna also be disrupted because we are able, instead of just putting a chip into a handheld ultrasound, we're gonna put a chip into a device the size of this device in my hand that can be wearable. That now we can send patients home and a doctor remotely can take an image of their heart, of their lung, of their kidney, of their liver. Because we have the ability of directing our beam. If you can imagine a flashlight, that light comes straight out at a zero-degree angle. We have the ability of moving that light all the way through a spectrum, and so you can place a device on the body, and we can scan it just like Star Trek. So Butterfly is not just a handheld ultrasound company, we're a company that's gonna completely revolutionize imaging.
We're gonna overtake all of the analog imaging companies in ultrasound, and we're going to continue to grow at a very significant clip. That is why we are able to not only address the doctor market, which is directly with a handheld probe, the nursing market with all the AI tools, and especially the Butterfly Garden, that'll bring a lot of wonderful tools into the Butterfly environment, but now into patients, which if we can now do patients in their homes and be able to allow that, you know, everything in healthcare worldwide is about managing patients remotely. Everything is about taking them out of higher costs of care and getting into a lower cost in care environment, and an environment where patients are much more comfortable. And so, we think it's a great time.
It's been a rough time for existing investors, most certainly, but it's a great time to get in now because we have a couple of years' worth of cash. We're gonna have a great 2024, a lot of awesome products coming down the pipe. So with that, I'll thank you, and we have about four minutes for questions. Yes, sir?
Two questions. One, when you use the probes in the hospital, normally put this grease on people, that spreads across to get a better image. Are you using that with these, or is this— When we talk about patient using itself, part of that, the first thing you use that conductive gel?
Yes, 100%. You need the conductive gel to be able to create the imaging interface, and so anyone that uses our probe would use gel with it.
Secondly, there's a service component to this. You think of those sort of cardiac recorders that you per patient, right?
Mm-hmm.
And the great thing about that, I think patients agree on, what's normal and what's not, what's changed and hasn't changed. I presume it would be possible to get a regular individual, be able to have the prior, that they have life, get people's prior images, and someone something's changed, something different. That adds a new service revenue.
Right.
Is that something that y'all are considering, or is that for...?
Yes. So at our upcoming Analyst Day in the beginning of 2024, we'll be communicating what our first wearable use case is, and that specifically, we'll talk about what that model is. But sure, as you can envision in the future, imagine you had a device that you would tell the patient where to place it. Yes, they would have to put gel on, but that's all they would have to do because they would then do the scanning by itself. So we'll be talking about all the use cases, but Butterfly iQ will be changing imaging forever. Yes, sir.
What's your actual execution strategy to bring this into the clinic? Let's say I go to a hospital for the annual checkup, what do they have to change in existing equipment and software and training of the people, and how big of a variable do you think that's going to be?
So the question is, what is our execution strategy to bring it in the hospital and deal with the logistics? So we're increasing our sales force. We've mentioned that we are growing our sales force this year, and we're increasing our service model. But also, we've launched an enterprise software that allows for imaging to be captured. Interestingly, hospitals about 35% of the ultrasound images they capture actually get into their electronic health record. It's something where doctors usually just pick it up, they look, and then put it down, and now that's not recorded, it's not in the file, and for those who care about reimbursement in the U.S., they're not getting paid for it.
So we have an enterprise software platform that works with all the ultrasound company images, that can aggregate all that data and make sure it gets in the record. So first of all, it's about how do you become a part of their standard workflow? Second, what's happening is as hospitals now are gonna reorder their next cart and spend $30,000, $40,000 for that cart, they're gonna start thinking twice. So instead of ordering that next cart and having five carts in the hospital, maybe they have four carts in the hospital, but now they buy 20 or 30 Butterflies that they can give to their doctors so they can have them when they need them, and that's where we think the higher quality of care is gonna be.
But we have, you know, we've deployed over 100,000 of these units around the world. We have a great deployment team, a great e-commerce team, and a great clinical team. So we're very confident we're gonna be able to penetrate the market. So thank you for the question. We have another minute. Any other questions? Awesome. Look, well, thank you so much for your interest, and go Butterfly. Thank you.