Good afternoon. We're moving into the afternoon sessions in the medical devices track here at the 45th Annual TD Cowen Healthcare Conference. I'm Josh Jennings from the medical devices team, and it's fantastic to have an executive from the Butterfly Network management team, Heather Getz, Chief Financial Officer. Butterfly has been in the midst of a transformation, and you've played a big part in that role and in your role, and a lot of things on tap for 2025. Looking forward to hearing the presentations. I'll hand it over to you, Heather. Thanks.
Great. Thanks, Jojo. Can you hear me? How's that? Great. Okay. Thank you. Good afternoon, everyone. As Josh mentioned, I am Heather Getz. I'm the Chief Financial and Operations Officer at Butterfly Network. I am going to give you today's presentation. Just a quick note, forward-looking statements, all the stuff that we need to put up there from a legal perspective. If you're not familiar with Butterfly Network, we are a healthcare company that is driving a digital revolution in the handheld medical imaging space with our proprietary ultrasound-on-a-chip technology. The digital journey we're on is an exciting one, and it is an exponential growth opportunity and will enable us to bring digital capabilities to the lowest cost and most accessible medical imaging modality, ultrasound.
Our vision is that every doctor and nurse in the world will have access to a personal Butterfly device and to bring wearable ultrasound to patients who need more frequent and real-time ultrasound care. Butterfly's powerful digital ecosystem will increase the access to care, help lower costs, and empower all people to understand the care that they need earlier. While we are known for our full-body ultrasound-on-a-chip technology, we did not stop with the device. We are building a full ultrasound ecosystem with hardware, software, and education on a seamless platform that will empower true connected care everywhere and anywhere. As I'll describe in a moment, we had a strong 2024, and this sets us up for continued growth in 2025 and beyond, expanding in hospitals and new markets like home care.
The key areas that we are going to focus on in 2025 are growing hospital and enterprise adoption, expanding into home care, advancing AI and next-gen chip technology, as well as licensing our ultrasound-on-a-chip technology for novel uses in non-competitive markets. As I mentioned, 2024 was a standout year for Butterfly. We had full-year revenue of $82.1 million, and that's 25% growth year- over- year, and record quarterly revenue at $22.4 million in Q4. We also closed a successful fundraise at the end of January with the help of our friends at TD Cowen, totaling $81.7 million. A major driver of our 2024 success was the launch of our iQ3 next-generation device. It is our third-generation device. Since its debut a year ago, we've seen significant uptake, not just in the U.S., but also when we launched in the international markets later in the year.
Its impact was further validated by us winning the Best Medical Technology Award at the Pre-Galien Awards, one of the most prestigious awards in healthcare. Beyond innovation, we've also focused on sustainability. Unlike traditional piezoelectric devices, our device does not contain excess lead. We're actually working with the European Commission to have an outdated restriction on hazardous substance exemption revoked so that our competitors cannot use that to continue to commercialize lead-based devices in Europe. Stay tuned, more on that. While our core business has continued to grow, we're also expanding into new areas with Octave and a subsidiary that will commercialize our chip-based technology in non-competitive markets and home care, which I'll share more about at the end of this presentation. Okay, what makes this different?
Historically, ultrasound has been dominated by bulky cart-based systems and handhelds that are just an extension of those cart-based systems. They use 60-year-old analog crystal-based technology. Butterfly, on the other hand, is leading a digital revolution in ultrasound. It is being led with our proprietary ultrasound-on-a-chip technology. Just as capabilities that once only existed on supercomputers and are now accessible with an iPhone, Butterfly is transforming, miniaturizing, and mobilizing ultrasound. Our chip enables whole-body scanning, delivering multiple arrays on a single device, which you can see up there to your right, that are with traditional ultrasound, you need multiple probes to deliver the same arrays. On top of that, we are continuously enhancing imaging with advanced software capabilities to make it easier to acquire and interpret images.
History has shown that when digital technology matches or exceeds analog in quality, capabilities, and convenience, much like digital cameras replacing film, digital wins, and Butterfly is winning. The market that we currently operate in is the handheld ultrasound system over here to your left. That is where we currently sit. It is a good place to be, obviously, as you can see. It has a strong CAGR over the next five years. What's more, as our imaging and calculations get more and more sophisticated, we'll be able to move upstream, and our handheld will be able to deliver capabilities similar to mid-range, low-mid-range, and eventually high-end carts. Users around the world will be able to freely practice their craft anywhere they want without being tethered to a hospital, a room, or a cart with our technology.
In the future, hospital workflows will change to reduce cost, make quicker diagnoses, and deliver better care. It's truly inevitable. What's unique about Butterfly is that not only can we move upstream to take advantage of the existing market, but we are creating new markets outside of the existing space. How do we achieve this? If you take a look at our chip, our core technology has enabled our iQ3 to be the tremendous success that it is today. Since our first commercial product in 2018, we've been rapidly innovating imaging and processing power, which you can see across the screen here. Our P4.3 chip is what powers our iQ3 column, and it's where we are today. It doubled the processing power of prior generations of our chips and achieved best-in-class imaging quality, unlocking new digital tools, and has been a major leap forward.
We're not stopping there. We'll move beyond to iQ4, which is our P5 chip, and we'll double the mechanical index and enhance processing power. This will allow us to achieve tissue harmonic imaging, matching the sensitivity that's found in low and mid-range carts. In other words, we're going to be able to put a hospital-grade ultrasound in your pocket. See for yourself how our imaging has progressed. The iQ column is where we are today with the iQ3, and the P5 is our next generation that will come out with tissue harmonics. When our leading image scientist, Carl Teal, which people in the industry know him well, first started at Butterfly years ago, he said that when we can achieve equivalence to a cart, we know that we have succeeded. That's what we're doing here.
On the right is the Mindray M8 cart, which is a well-known mid-range cart that's used in the hospital. To the left is our next-gen chip, Butterfly P5. As you can see, the clarity in the walls of the heart, as well as that shadow in the chamber, that's the blood swirling. We actually have created an image where we can see the blood. We have clear imaging on the walls as well as in the rest of the anatomy. As we forge ahead, momentum's in our favor. Professional societies are creating and enforcing POCUS guidelines in and out of the hospital. The major medical schools are using and training their students on POCUS. Now residents are coming out of medical schools, being fully trained, and are entering the workforce.
On top of that, the macro healthcare environment is in need of innovative and cost-effective solutions for care delivery. Butterfly is well-positioned to answer that call and support this care transformation. Clinical evidence for POCUS and for Butterfly specifically is mounting. In 2023 alone, there were 1,600 studies that were released on POCUS, and many of them specific to Butterfly. Sorry about that. Specifically, URMC, which was our flagship enterprise account, released a study last year after two years into a multi-year deployment showing that when you scaled Butterfly, when you did a system-wide deployment that is aimed at improving patient care, streamlining workflows, and optimizing revenue capture, the results are pretty tremendous. In less than two years, the ultrasound charge capture increased by 116%. They saw clinical care improvements in efficiency and also saw earlier diagnosis and reduced visits.
There's also halo effects of using our device in other areas like reduced capital expenditures where it could replace things like vascular access and bladder scanners. We also had a study, preliminary results of a study done by Rutgers that showed that when hospitals use Butterfly within their care treatment, that the reductions in length of stay by up to 50% and cost reductions in treating patients with congestive heart failure. More information is forthcoming this year on this study, as well as if you care to look at our website, you can find some more information out there on both of these. Powered by our roadmap of technological innovation and commercial approach that leverages the compelling clinical evidence, some of which I just showed you, we're poised to penetrate deeper into the existing market, which I showed you before.
Then simultaneously, we're building services and technology that will allow us to tap into a larger market, such as home and long-term care facilities to your right. This will improve chronic care management for patients and bring the device to the hands of the caregiver outside and drive the TAM expansion. Butterfly today has captured market share in POCUS, as we've talked about, bottoms up, right? We offer the solution for doctors across all specialties in any care setting, and that's well-known and recognized. Individual clinicians buy Butterfly because it's versatile, it's affordable, and they know it's a better way to practice medicine, so they want to carry the device in their pocket when they're delivering care. Why this matters is it allows Butterfly to have two entry points into the hospital.
What is unique is that we have a grounds-up individual purchased by clinicians who then bring the devices into the hospital settings as well. This leads to hospital administrators hearing that their workforce prefers the use of Butterfly and is using it in their system. We then can help the hospital administrators track the devices that are actually already in their system by enabling our holistic ultrasound solution. All of the data is then aggregated in the cloud. It captures the clinical insights, seamless integration into EMR, and their PAC system, which captures the imaging. We are helping to bridge the gap between those individual physicians who are bringing the devices into the hospital and their affiliated health system to ensure that the full value of imaging is captured. In doing so, we believe we will be able to further penetrate the hospital system.
Bottoms up, grassroots from the individual demand, and then also top-down traditional approach through the hospital administration is how we're going to market. Some more about our software that surrounds our ecosystem. Our fully integrated Compass system starts the encounter at the point of care and connects into the existing hospital infrastructure and the image archival, the electronic health records. It also works with most third-party ultrasound devices, which makes it the tool of choice for end-to-end ultrasound management. The Butterfly Cloud is the backbone of this system and manages billions of images. Our users upload more than 20,000 images a day. Layered on top of this, we've also introduced Butterfly Garden, which is our AI partnership ecosystem that allows third parties to deploy new AI applications onto our device and our Butterfly platform.
This will allow users to access more and more tools over time, making scanning easier and also allows them to access our AI at the same time. Most POCUS devices are really just one step removed from the old cart workflow in the hospital. Butterfly is much, much more with its cloud and ecosystem. To summarize our core POCUS opportunity, we are leading a complete ultrasound solution of hardware, software, and services, each contributing revenue streams currently. We will further accelerate the adoption by offering educational AI-based tools applications, such as our Scanlab, to all members to support competency and confidence in using our technology. We will also grow by using our Butterfly Garden, bringing new users, more AI tools, and confidence in using ultrasound. If we look outside of our core business, at our 2024 Investor Day, we introduced the idea of Butterfly Home Care.
Butterfly Home Care is a service business that leverages our hardware, education, and AI to make diagnostic imaging easy, cost-effective, and available to every patient right where they are. Since the introduction last year, we initiated a pilot for virtual chronic care management with a leading Medicare Advantage provider, where we trained nurse practitioners to assess CHF patients who were discharged from the hospital with congestive heart failure by using AI-guided lung ultrasound in their facilities. Our goal was to ensure that they received appropriate follow-up coming out of the hospital and identify any early signs of worsening heart failure to stop patients from having to be readmitted. Through the pilot, they've already detected a number of conditions like pneumonia, pleural effusion, and other complications, which have allowed them to intervene at the point of care and deliver that care based on the existing protocols.
The early results are really promising. There have been no readmissions of these patients and timely interventions that have occurred. I can't stress how important these findings are and will be to Butterfly. We're teaching nurses who have not been classically trained in the use of ultrasound outside of the hospital to do lung ultrasound using AI to assess patients right where they are. They're not being sent back to the hospital. They're being evaluated and treated in the skilled nursing facility. In addition to this, we also had a successful pilot with a PACE organization. It's called Program of All-Inclusive Care for the Elderly. It's a Medicaid program where we help to identify undiagnosed conditions like CHF, and it supports risk scoring for reimbursement if you're familiar with that.
This was to demonstrate how Butterfly services can identify conditions in previously undiagnosed patients versus the pilot in the nursing home, which was evaluating patients so that they were not readmitted. This is not just about the immediate business opportunity ahead of us. It really represents the power of Butterfly. Butterfly has made ultrasound accessible, high-quality, and mobile at a low cost. Now we are proving that all healthcare professionals can use it to help patients where they are and efficiently and effectively at scale. As this program evolves from pilot to a new care delivery model, we expect to see new AI apps that are introduced from partners, which will help further empower caregivers with low-cost tools and deliver the care on the go. This is only possible because of the evolving digital landscape that is driven by Butterfly.
Lastly, outside of our core business is a subsidiary that we introduced called Octave. Octave is unlocking the value of our ultrasound-on-a-chip technology outside of our core market. Over the past decade, we've made significant investments in developing the world's most advanced versatile ultrasound-on-a-chip, and it is protected by over 600 patents and backed by TSMC's cutting-edge manufacturing. They're our partner. Octave aims to power at putting the chip in non-competitive technologies, not dissimilar to Intel Inside for computing or NVIDIA on GPUs. We envision a future where the Butterfly chip powers a full range of medical and non-medical innovations. The program is already gaining traction within Butterfly, and we've signed five partners in areas like neuroscience, surgical robotics, liver disease, and generative AI. Stay tuned for more information on those partnerships as they continue to contribute in 2025.
To summarize, we had really strong results in 2024, and we look forward to growth in 2025 and beyond. We have been delivering against our plan that we introduced and will continue to do so by going deeper and wider within the traditional ultrasound market. We will expand the market by going where traditional ultrasound cannot go with new users and applications, and we are differentiating ourselves with the continued development of ultrasound-on-a-chip technology. As we see it, Butterfly is the only true mobile solution. It is a single probe, personal imaging device for every doctor, nurse, and qualified patient in the world. It is powered by a plethora of new AI tools, cloud connectivity, processing, seamless integration into hospital systems and workflows.
Butterfly allows for this connectivity while working completely independent of the traditional care setting in the hospital and can go into the remote places of the world. We will go anywhere a doctor, nurse, or patient dares to go. We are building shareholder value through multiple diverse revenue streams and expect to generate market-leading growth while maintaining our fiscal discipline by balancing the investment with a return. To reiterate, Butterfly is not just a POCUS company. We are a highly differentiated platform with rapid growth and innovation. All of the objectives that I've laid forth here will help us capitalize on this tremendous market opportunity. I guess I can turn it to Josh for questions. Thank you for being here and spending time with Butterfly.
Thanks, Heather. That was a fantastic download, and you've got an incredible pipeline and a huge opportunity in front of you and your team. I was hoping just to better understand, just looking at the one slide where you describe the development and the evolution of the semiconductor chip technology, maybe just help investors understand the engineering team and the prowess that it has, because that's an impressive accomplishment to get to iQ3 to begin with, but then to push it out and ultimately to get to P5 and then X within just a couple of years. Maybe just help investors understand their background, the prowess, and how confident you are that you guys will get to P5 and X.
Yeah. As I mentioned, it's a combination. It's a combination of people who understand the technology from a traditional semiconductor chip perspective, but then also how to bring what we call the MEMS technology into the chip. It's a core group of people who have been with us, many of them since the beginning. The Co-Founder, Nevada Sanchez, is still with the company. I like to call him, he's the big brain behind the chip, and he has furthered that development through the partnership with TSMC. One of the things that has made us so successful is having someone like TSMC to support us in the manufacturing process, because it's not the same as a traditional semiconductor chip. It is a highly specialized manufacturing process.
On top of that, we have people like Carl Teal, who again is very well known in the industry and has supported the advancement of the AI around the imaging and has been a tremendous asset to Butterfly. They are supported by a team of people who have that expertise.
Excellent. Just on the relationship with the Taiwanese semiconductor manufacturing company, I mean, one of the advantages that we've seen historically was during the pandemic and then following the supply chain crisis, particularly for semiconductor chips, Butterfly was not exposed to that because of the exclusive agreement. Maybe just help us think about how that agreement, the tail of it, and just any capacity constraints. My assumption, I think the answer is no, there aren't any because of this agreement. Maybe just walk us through how solid that agreement is and just build on your last answer in terms of why that's so impactful to the path forward for Butterfly.
Yeah, so there's a couple of things. One, we have a tremendous relationship with them, as I mentioned, that we, as we're developing, so the P5, for example, as we're developing that chip and bringing it to manufacturing, we're working hand in hand with them in the development. We have that ongoing R&D relationship. We also, obviously, they manufacture our chips. There's plenty of capacity. We have plenty of inventory, both of the iQ+ device, what I like to call our workhorse, and the iQ3 next-g en device as well. We've also, from a risk mitigation perspective, put some of that inventory in the United States so that we won't have any issues in accessing it if there's any international turmoil, so to speak.
Great. Just on the, I think we were fortunate enough to have Nevada join us at our Cowen Future Health Conference last fall. He helped us kind of understand how well Butterfly is positioned in terms of developing its AI algorithms because of the Butterfly Cloud, 20,000 images uploaded per day. Maybe just help us, give us more clarity on why that's such a big advantage relative to the rest of the handheld ultrasound competitors that are out there.
Yeah, for a couple of reasons. One, our cloud connectivity and ecosystem is unmatched by any of our competitors. The cloud, by being able to, one, utilize the images that are out there to build our AI, we obviously have access to that real-time through our cloud. The other thing that it allows for is the hospital systems or the doctors to access their information from anywhere. Lastly, what it allows for is us to push out updates and enhancements to our devices on the software no matter where the device is. Whereas the traditional systems, you have to go in and physically download the software, we can push out those advancements to our customers to be able to utilize. The combination of all those things is what makes it a real competitive advantage and also allows for our device to be the true mobile solution.
I think we've seen Moore's Law in effect with the image quality improvements and the processing power of P4.1 within iQ3. Just looking at the images that you showed that were powered by P5, super impressive, maybe even better than the cart-based system image that you compared it to. As P5 continues in its development, is it possible that that image quality that you showed today gets even better before you launch the next gen or iQ4?
So.
It might be a hard question to answer. Sorry.
Yeah. We do not necessarily have to launch a new device to use a new chip. Right? In the past, we have actually, even with iQ+ , had some chip enhancements that we incorporated into that device. We would put out a new device in the event that we believe that a better form factor could be utilized, and if the imaging or the processing power is of a significant difference to the existing device. We could do iterative. Right now, I do not feel like we need to.
Yeah.
Excellent. I think we've seen the red light flash here, so we're going to end here. Heather, thank you so much for.
Thanks, Josh.
Joining us this year again, and looking forward to tracking Butterfly's progress throughout this year.
Thank you. Thank you, everyone.