Hand-held ultrasound developer Butterfly Network is clipping its wings with a plan to extend its cash runway, in part by letting go of staff and reducing operating costs by an average of $2 million per month.
It’s all part of a broad company reorganization following “a full strategy reevaluation” that aims to save about $60 million through the end of 2025. They are some of the first major changes to be made under Butterfly’s new CEO, Joe DeVivo, who took the helm this past spring.
“I believe getting back to basics with a smaller team, focusing on our strengths and leveraging what only we can do to add value to healthcare will bring the bounce back in our step and return the company to growth,” DeVivo said in a statement last week after Butterfly’s most recent quarterly earnings report fell flat, with a 3.8% decrease in income.
The company posted $18.5 million in revenues for the second quarter of 2023, down from $19.2 million during the same period one year ago.
However, Butterfly was also able to boost its gross profit margins to 59.1%, compared to 55% a year prior, in part due to a higher proportion of subscription income and higher selling prices—as product sales dropped from $6.8 million to $5.5 million and software revenue rose slightly from $1.8 million to $2.1 million.
The company has also swiftly cut operating expenses over the past year. It brought quarterly totals down to $42.2 million, compared to $59 million last year, for a 28.5% drop.
That follows layoffs previously announced in August 2022 and this past January—affecting 10% and 25% of staff at the time, respectively—as well as what the company more recently described as “non-payroll spend rationalization” across its research and development, sales and marketing, and administrative budgets.
In total, Butterfly’s quarterly net loss shrank to $28.8 million, down from $35.8 million, while it reported $166.8 million in cash on hand.
“But getting here was not all cutting. In fact, we approved an investment in our direct commercial organization that enables a 50% increase in territories in the U.S.; we hired a world-class international sales leader based in Europe; and we funded new AI, hardware, imaging and software initiatives,” DeVivo said in a call with investors last week discussing the quarter's results and summing up his first 100 days with the company.
“Stakeholders need a healthy and successful Butterfly. Investors deserve better performance. Employees deserve stability and a place to grow and achieve. That’s exactly what we will do,” he added.
During April, May and June the company logged 58% growth in annual recurring revenues linked to its enterprise software as well as 21% in U.S. top-line growth following deals to place its tech in two large medical schools, plus a distribution deal with McKesson.
Looking ahead, Butterfly has slated the launch of its third-generation ultrasound probe, dubbed the IQ3, for the first half of next year, pending regulatory approvals.
On the software side, the company recently raised the curtain on Butterfly Garden, a marketplace for third-party artificial intelligence applications that aims to connect ultrasound hardware with other medical device and telemedicine developers.