Butterfly Network, Inc. (BFLY) | Investment Case

1. Company Snapshot

1.a. Company Description

Butterfly Network, Inc., a digital health company, develops, manufactures, and commercializes ultrasound imaging solutions in the United States and internationally.It offers Butterfly iQ, a handheld and single-probe whole body ultrasound system; Butterfly iQ+, a point-of-care ultrasound imaging device that connects with a smartphone, tablet, and hospital computer system; and Butterfly Blueprint, a system-wide ultrasound platform with Compass software that integrates into a healthcare system's clinical and administrative infrastructure.The company also provides Butterfly system, which includes probes, and related accessories and software subscriptions, to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and eCommerce channel.

In addition, it offers cloud-based software solutions to healthcare systems, teleguidance, in-app educational tutorials, and formal education programs through its Butterfly Academy software, as well as clinical support and services.Butterfly Network, Inc.was incorporated in 2011 and is headquartered in Guilford, Connecticut.

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1.b. Last Insights on BFLY

The recent stock performance of Butterfly Network, Inc. is being driven by several negative factors. The company reported a loss of $0.08 per share in Q4, which beat expectations but still indicates a decline in profitability. Additionally, the company's revenue growth is being impacted by increased competition in the point-of-care ultrasound market. Furthermore, the recent study on the impact of POCUS in hospital care, while positive, may not have a significant near-term impact on the company's stock price. The absence of any notable share buyback activity also contributes to the negative sentiment.

1.c. Company Highlights

Last Price	3.12
Change Percentage	0.65%
Open	3.08
Previous Close	3.1
Market Cap ( Millions)	787
Volume	603343
Year High	4.98
Year Low	1.32
M A 50	2.46
M A 200	2.22

FCF Yield	-3.51%
Dividend Yield	0.00%
ROE	-37.80%
Debt / Equity	9.03%
Net Debt / EBIDTA	156.61%
Price To Book	3.83
Price Earnings Ratio	-9.78
Price To FCF	-28.45
Price To sales	8.85
EV / EBITDA	-8.18

2. Butterfly Network's Q3 2025 Earnings: A Closer Look at Financials and Growth Prospects

Butterfly Network reported a revenue of $21.5 million for the third quarter of 2025, representing a 5% year-over-year growth driven by higher average selling prices and increased volume in both the US and international markets. However, the company reported a gross margin of -17.5%, largely impacted by a non-cash write-off of excess inventory amounting to $17.4 million. Excluding this one-time charge, the adjusted gross margin stood at 63.9%. The adjusted EBITDA loss was $8.1 million, with a normalized cash burn of $3.9 million. The company's cash and cash equivalents were $148 million. Butterfly reaffirmed its full-year revenue guidance of $91 million to $95 million and narrowed its adjusted EBITDA loss guidance to $32 million to $35 million. The actual EPS came out at '-0.13', missing estimates at '-0.07'.

Publication Date: Nov -29

                                    📋 Highlights
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<li><b>Revenue Growth::
                                                Q3 2025 revenue reached $21.5 million, reflecting 5% YoY growth driven by higher US and international volumes and average selling prices.
Gross Margin Impact::
                                                Gross margin was -17.5% due to a $17.4 million non-cash inventory write-off, but adjusted gross margin improved to 63.9%.
Financial Guidance::
                                                Adjusted EBITDA loss narrowed to $8.1 million (Q3) with full-year guidance tightened to a $32–$35 million loss, while cash reserves stood at $148 million.
Product Innovation::
                                                Launched HeartFocus AI app and Apollo AI chip (20x processing power) for P5.1, set to debut in H2 2026, enhancing edge AI capabilities and image quality.
Strategic Milestones::
                                                Completed RoHS EU submission, achieved ISO 27001 certification, and advanced POCUS CARE trial, with anticipated revenue growth in 2026 from delayed deals and JAMA study validation.

                                

Financial Performance and Guidance

The company's financial performance was mixed, with revenue growth being a positive note amidst a challenging gross margin due to inventory write-offs. The adjusted EBITDA loss was in line with expectations as the company continues to invest in its growth pillars, including innovation, education, and expansion into new markets. The reaffirmed revenue guidance and tightened adjusted EBITDA loss guidance indicate a stable outlook for the full year.

Operational Highlights and Future Prospects

Butterfly Network made significant progress on its AI strategy, including the launch of HeartFocus, an AI-powered app on the Butterfly Garden platform, and a milestone in the POCUS CARE trial. The company also strengthened its security posture with various international certifications, including ISO 27001. With the upcoming launch of its new form factor, P5.1, in the second half of next year, Butterfly expects to drive momentum in 2026. P5.1 is anticipated to surpass other handheld ultrasound devices in performance, featuring a new chip design, Apollo AI, which will enable fast ultrasound processing and local AI capability.

Valuation and Growth Expectations

Analysts estimate next year's revenue growth at 15.9%. Given the current valuation metrics, with a P/S Ratio of 8.85 and an EV/EBITDA of -8.18, the market is pricing in significant growth expectations. The ROE of -37.8% and ROIC of -36.28% reflect the company's current investment phase. As Butterfly continues to innovate and expand its market presence, its progress on AI capabilities and new product launches will be critical in driving future growth and potentially justifying current valuations.

3. NewsRoom

TEM vs. BFLY: Which Stock Offers Greater Upside Amid Health Tech Boom?

Nov -24

Source: zacks.com

BFLY Stock Down Despite Launching Compass AI to Drive POCUS Programs

Nov -18

Source: zacks.com

Butterfly Network Launches Compass AI to Power the Next Generation of POCUS Program Management

Nov -17

Source: businesswire.com

Butterfly Network, Inc. $BFLY Holdings Lifted by Acadian Asset Management LLC

Nov -14

Source: defenseworld.net

Butterfly Network, Inc. (BFLY) Q3 2025 Earnings Call Transcript

Oct -31

Source: seekingalpha.com

BFLY's Q3 Earnings Miss Estimates, Revenues Surpass, Stock Climbs

Oct -31

Source: zacks.com

BFLY Q3 Earnings Preview: Strategic Progress Likely to Support Growth

Oct -22

Source: zacks.com

Butterfly Network to Report Third Quarter 2025 Financial Results on October 31, 2025

Oct -17

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.41%)

6. Segments

Devices and Accessories

Expected Growth: 10.4%

Butterfly Network, Inc.'s 10.4% growth in Devices and Accessories is driven by increasing adoption of handheld ultrasound devices, expansion into new markets, and growing demand for AI-powered medical imaging solutions. Additionally, strategic partnerships and investments in research and development are contributing to the company's rapid growth.

Software and Other Services

Expected Growth: 10.43%

Butterfly Network's 10.43% growth in Software and Other Services is driven by increasing adoption of its handheld ultrasound device, Butterfly iQ, in hospitals and clinics, as well as growing demand for its cloud-based software and AI-powered analytics. Expansion into new markets, strategic partnerships, and investments in sales and marketing also contribute to this growth.

7. Detailed Products

Butterfly iQ

A handheld, single-probe whole-body ultrasound system that provides high-quality images and enables whole-body imaging.

Butterfly Blueprint

A software platform that enables clinicians to access and manage ultrasound images and data, and collaborate with colleagues.

Butterfly OnCall

A tele-ultrasound platform that enables remote consultations and real-time image sharing between clinicians.

Butterfly Education

A comprehensive educational platform that provides ultrasound training and resources for clinicians.

8. Butterfly Network, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Butterfly Network, Inc. operates in the medical device industry, which has a moderate threat of substitutes. While there are alternative medical imaging technologies available, Butterfly's handheld ultrasound device offers a unique value proposition that differentiates it from competitors.

Bargaining Power Of Customers

Butterfly Network, Inc.'s customers are primarily healthcare professionals and hospitals, who have limited bargaining power due to the specialized nature of the company's products and services.

Bargaining Power Of Suppliers

Butterfly Network, Inc. relies on a few key suppliers for its components and manufacturing services. While the company has some bargaining power due to its growing scale, suppliers still have some negotiating power due to the specialized nature of the components.

Threat Of New Entrants

The medical device industry has a high barrier to entry due to regulatory requirements and the need for significant R&D investments. However, new entrants can still disrupt the market with innovative technologies, posing a threat to Butterfly Network, Inc.'s market share.

Intensity Of Rivalry

The medical device industry is moderately competitive, with several established players competing for market share. Butterfly Network, Inc. faces competition from traditional ultrasound manufacturers, as well as new entrants with innovative technologies.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	10.21%
Debt Cost	3.95%
Equity Weight	89.79%
Equity Cost	14.49%
WACC	13.41%
Leverage	11.37%

11. Quality Control: Butterfly Network, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

BioSig Technologies

A-Score: 4.9/10

Value: 8.0

Growth: 6.9

Quality: 4.8

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

1-Year Total Return ->

Nevro

A-Score: 4.7/10

Value: 9.2

Growth: 4.7

Quality: 4.3

Yield: 0.0

Momentum: 7.5

Volatility: 2.3

1-Year Total Return ->

Butterfly Network

A-Score: 3.8/10

Value: 7.0

Growth: 4.6

Quality: 4.0

Yield: 0.0

Momentum: 6.0

Volatility: 1.0

1-Year Total Return ->

NeuroOne Medical Technologies

A-Score: 3.7/10

Value: 6.8

Growth: 6.1

Quality: 4.2

Yield: 0.0

Momentum: 4.0

Volatility: 1.3

1-Year Total Return ->

Biomerica

A-Score: 3.6/10

Value: 8.2

Growth: 2.8

Quality: 3.5

Yield: 0.0

Momentum: 6.5

Volatility: 0.7

1-Year Total Return ->

Accelerate Diagnostics

A-Score: 3.5/10

Value: 10.0

Growth: 5.6

Quality: 5.0

Yield: 0.0

Momentum: 0.0

Volatility: 0.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

40.98%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

13.41%

Butterfly Network, Inc. - US1241551027

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BFLY

1.c. Company Highlights

Weak Momentum

Medium Volatility

Fairly Valued

Earnings Beats

Revenues Beats

Stable Momentum

Average Quality

Strong Momentum

Revenues Miss

More Volatile

Average Growth

Earnings Miss

2. Butterfly Network's Q3 2025 Earnings: A Closer Look at Financials and Growth Prospects

Financial Performance and Guidance

Operational Highlights and Future Prospects

Valuation and Growth Expectations

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.41%)

6. Segments

Devices and Accessories

Expected Growth: 10.4%

Software and Other Services

Expected Growth: 10.43%

7. Detailed Products

Butterfly iQ

Butterfly Blueprint

Butterfly OnCall

Butterfly Education

8. Butterfly Network, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Butterfly Network, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.11$

Current Price

3.12$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA