Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $19.2 million, a 16% increase compared to Q2 2021, marking the highest quarterly revenue to date [13][38] - Product revenue was $13.4 million, a 3% increase year-over-year, driven by higher average selling prices and volume in veterinary and international markets [39] - Subscription revenue reached $5.8 million, growing approximately 66% over the prior year, with a subscription mix of 30% of total revenue, up 9 percentage points from Q2 2021 [41] - Adjusted gross profit was $11.2 million, compared to $8.3 million in the prior year, with an adjusted gross profit margin of 58.5%, up from 50.2% in Q2 2021 [43][44] - Adjusted EBITDA loss was $37.8 million, compared to a loss of $28.5 million in the same period last year [46] - Cash and cash equivalents as of June 30 were $311 million, with plans to reduce cash expenses by approximately $3 million per month [47][48] Business Line Data and Key Metrics Changes - The company is focusing on four strategic pillars: hospitals and health systems, international markets, home-based care, and veterinary medicine [15][19][26][33] - Growth in hospitals and health systems was supported by software sales and deeper penetration with existing customers [19] - Internationally, partnerships with Zebra Medical and others have expanded Butterfly's reach in markets like South Africa, Israel, and the Middle East [21][22] - Home-based care initiatives are underway, with Butterfly being used for various assessments, including bladder scanning and heart failure [26][31] Market Data and Key Metrics Changes - The company is seeing traction in both developed and developing markets, with significant partnerships and deployments in regions like Sub-Saharan Africa and the U.K. [24][23] - The veterinary market is expanding, with partnerships established with Petco and Texas Tech University School of Veterinary Medicine [33][34] Company Strategy and Development Direction - Butterfly is shifting the paradigm of care by integrating ultrasound into clinical workflows, aiming to become as ubiquitous as the stethoscope [9][10] - The company is refining its investment strategy based on customer feedback and macroeconomic conditions, leading to a reduction in cash spend and an extended cash runway [11][48] - The focus is on targeted investments in technology, clinical studies, and commercial partnerships to drive growth [12][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue acceleration for the second half of the year, supported by a strong pipeline and operational improvements [14][50] - The company reaffirmed its revenue guidance of $83 million to $88 million for the year, with improved adjusted EBITDA guidance [49] - Management acknowledged challenges in the economic environment but emphasized effective business operations and customer realization of Butterfly's value [37] Other Important Information - The company is committed to improving access to imaging in low-resource countries, with ongoing projects supported by the Bill and Melinda Gates Foundation [25] - The company is exploring adjacent markets, including veterinary medicine, to broaden its impact and revenue streams [33] Q&A Session Summary Question: Revenue guidance and seasonality in Q3 - Management indicated that Q3 is typically softer than Q4, but momentum from Q2 is expected to provide strength in Q3 compared to the prior year [56] Question: Drivers of revenue growth in the second half - Management highlighted the growing recognition of ultrasound's value in workflows and the evolution of solutions like Compass software as key drivers for revenue growth [58][59] Question: Partnership with Baylor Scott & White and revenue contribution - The partnership is seen as a foundational element for realizing the value of ultrasound in clinical workflows, with expectations for revenue contributions as the software is adopted [63][64] Question: Status of the commercial team build-out - The structure of the sales organization remains unchanged, with plans to continue adding territories to drive revenue growth [67] Question: Cash burn and future cash flow positivity - Management has not publicly disclosed targets for cash flow positivity but emphasized that actions taken have positively impacted cash runway [68]

1 Q2 2022 Earnings Call August 03, 2022 Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Butterfly Network, Inc.'s (the "Company") actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "proj ...

Revenue Performance - Revenue for the three months ended June 30, 2022, was $19,215,000, an increase from $16,513,000 in the same period of 2021, representing a growth of 10.3% [97]. - Total revenue for the three months ended June 30, 2022, was $19.215 million, an increase of $2.702 million or 16.4% compared to $16.513 million for the same period in 2021 [113]. - Total revenue for the six months ended June 30, 2022 was $34.8 million, an increase of $5.8 million or 20.1% compared to $29.0 million for the same period in 2021 [123]. - Subscription revenue surged by $2.285 million, or 65.3%, to $5.786 million for the three months ended June 30, 2022, driven by a higher volume of SaaS subscriptions sold [115]. - Subscription revenue increased by $4.0 million, or 62.9%, for the six months ended June 30, 2022 compared to the same period in 2021 [124]. Profitability and Loss - Gross profit for the three months ended June 30, 2022, was $10,572,000, compared to $8,220,000 for the same period in 2021, resulting in a gross margin of 55.0% [97]. - Adjusted gross profit for the three months ended June 30, 2022, was $11,249,000, with an adjusted gross margin of 58.5%, up from 50.2% in the same period of 2021 [97]. - Net loss for the three months ended June 30, 2022, was $(35,801,000), compared to $(2,942,000) for the same period in 2021 [102]. - Adjusted EBITDA for the three months ended June 30, 2022, was $(37,820,000), compared to $(28,493,000) for the same period in 2021 [102]. - The net loss for the three months ended June 30, 2022, was $35.801 million, compared to a net loss of $2.942 million for the same period in 2021 [112]. Expenses - Research and development expenses rose by $6.132 million, or 35.9%, to $23.220 million, accounting for 120.8% of total revenue, up from 103.5% [120]. - Sales and marketing expenses increased by $5.898 million, or 56.0%, to $16.438 million, representing 85.5% of total revenue, compared to 63.8% in the prior year [121]. - Subscription revenue cost increased by $1.409 million, or 323.9%, to $1.844 million, primarily due to higher headcount and increased cloud hosting costs [119]. - Total cost of revenue was $8.643 million, representing 45.0% of total revenue, a decrease from 50.2% in the same period last year [117]. - Total cost of revenue increased by $1.6 million, or 10.9%, for the six months ended June 30, 2022, with subscription costs rising significantly by 259.6% [125][126]. - Research and development expenses rose by $14.0 million, or 42.8%, for the six months ended June 30, 2022 compared to the same period in 2021 [127]. - Sales and marketing expenses increased by $11.3 million, or 55.5%, for the six months ended June 30, 2022 compared to the same period in 2021 [128]. - General and administrative expenses increased by $2.1 million, or 12.1%, for the three months ended June 30, 2022 compared to the same period in 2021 [122]. - General and administrative expenses decreased by $13.5 million, or 26.0%, for the six months ended June 30, 2022 compared to the same period in 2021 [129]. Operational Insights - The company continues to expect a higher proportion of sales in health systems compared to eCommerce as it expands its healthcare system software offerings [105]. - The ongoing impact of COVID-19 has resulted in longer sales cycles and slower adoption in the near term due to financial strain on the customer base [82]. - The company is implementing operating efficiencies in its supply chain and manufacturing processes to offset cost increases in component parts [83]. - The company plans to continue investing in its SaaS and subscription offerings, which may affect future subscription revenue costs [107]. - The company expects operational efficiencies in its supply chain to decrease the cost of product revenue as a percentage of product revenues over time [106]. Cash and Financial Position - As of June 30, 2022, cash and cash equivalents were $310.8 million, with restricted cash totaling $6.9 million [132][133]. - Net cash used in operating activities decreased by $1.7 million, or 1.7%, for the six months ended June 30, 2022 compared to the same period in 2021 [137]. - Net cash used in investing activities decreased by $480.8 million, or 97.6%, for the six months ended June 30, 2022 compared to the same period in 2021 [138]. Currency and Foreign Exchange - The company operates primarily within the United States and executes the majority of transactions in U.S. dollars [148]. - The company has not utilized hedging strategies for foreign exchange exposure [148]. - Limited foreign currency translation risk is not expected to materially impact the condensed consolidated financial statements [148].

| --- | --- | --- | --- | |-----------------------|-------|-------|-------| | | | | | | | | | | | Q1 2022 Earnings Call | | | | | May 5, 2022 | | | | Forward Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Butterfly Network, Inc.'s (the "Company") actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely ...

[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements concerning the company's plans, strategies, and future financial performance - This report contains forward-looking statements concerning the company's plans, strategies, and future financial performance, based on management's current beliefs and assumptions[4](index=4&type=chunk) - Key areas covered by forward-looking statements include product commercialization, R&D success, regulatory approvals, market growth potential, and financial performance estimates[4](index=4&type=chunk) - The company identifies several risks and uncertainties that could cause actual results to differ, such as managing rapid growth, competition, pricing pressures, intellectual property protection, and the ongoing impact of the COVID-19 pandemic[4](index=4&type=chunk) [Part I: Financial Information](index=6&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2022 financial statements reflect decreased assets and equity, a **$44.5 million** net loss, and **$54.2 million** cash used in operations [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets decreased to **$535.4 million** due to reduced cash, with stockholders' equity declining to **$412.7 million** Condensed Consolidated Balance Sheet Data (Unaudited, in thousands) | Balance Sheet Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $359,901 | $422,841 | | Inventories | $48,354 | $36,243 | | Total current assets | $474,306 | $511,904 | | Total assets | $535,420 | $571,965 | | **Liabilities & Equity** | | | | Total current liabilities | $50,707 | $49,829 | | Total liabilities | $122,756 | $124,274 | | Total stockholders' equity | $412,664 | $447,691 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q1 2022 revenue increased to **$15.6 million**, but net loss significantly widened to **$44.5 million** due to reduced warrant liability gains and higher operating expenses Condensed Consolidated Statements of Operations (Unaudited, in thousands, except per share data) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Total revenue | $15,574 | $12,443 | | Gross profit | $8,342 | $6,416 | | Loss from operations | $(49,533) | $(53,748) | | Change in fair value of warrant liabilities | $5,163 | $54,112 | | Net loss | $(44,477) | $(690) | | Net loss per share, basic and diluted | $(0.22) | $(0.01) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 net cash used in operating activities was **$54.2 million**, leading to a **$58.2 million** net decrease in cash, ending with **$368.7 million** Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Cash Flow Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(54,234) | $(63,427) | | Net cash used in investing activities | $(4,506) | $(528,197) | | Net cash provided by financing activities | $550 | $550,268 | | Net (decrease) increase in cash | $(58,190) | $(41,356) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue disaggregation, **$103.8 million** in inventory purchase commitments, and ongoing legal proceedings with unpredictable outcomes Disaggregation of Revenue (in thousands) | By Product Type | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Devices and accessories | $11,014 | $9,595 | | Subscription services | $4,560 | $2,848 | | **Total Revenue** | **$15,574** | **$12,443** | | **By Geographical Market** | **Q1 2022** | **Q1 2021** | | United States | $11,304 | $8,896 | | International | $4,270 | $3,547 | | **Total Revenue** | **$15,574** | **$12,443** | - As of March 31, 2022, the company had **$22.8 million** in remaining performance obligations, with **65%** expected to be recognized as revenue in the next twelve months[33](index=33&type=chunk) - The company has minimum inventory purchase commitments of **$103.8 million** as of March 31, 2022[61](index=61&type=chunk) - The company is defending against a class action lawsuit alleging false and misleading statements and a patent infringement lawsuit filed by Fujifilm Sonosite, Inc., for which the outcome or range of possible loss is currently unpredictable[67](index=67&type=chunk)[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **25.2%** revenue growth to higher prices and SaaS subscriptions, with increased operating expenses and a **$40.0 million** Adjusted EBITDA loss, but believes current cash is sufficient for 12 months [Key Performance Metrics and Non-GAAP Measures](index=28&type=section&id=Key%20Performance%20Metrics%20and%20Non-GAAP%20Measures) Key performance indicators include **1.9%** increase in units fulfilled and **29.3%** subscription mix, with Adjusted Gross Margin at **56.3%** and Adjusted EBITDA loss widening to **$40.0 million** - Units fulfilled increased by **93 units**, or **1.9%**, in Q1 2022 compared to Q1 2021, driven by veterinary, distributor, and direct sales channels, partially offset by slowing e-commerce sales[82](index=82&type=chunk) - Subscription mix increased by **6.4 percentage points** to **29.3%** for Q1 2022, up from **22.9%** in Q1 2021, due to a higher volume of units fulfilled and increased subscription renewals[84](index=84&type=chunk) Non-GAAP Financial Measure Reconciliation (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Adjusted Gross Profit** | | | | Gross profit (GAAP) | $8,342 | $6,416 | | Adjusted gross profit (Non-GAAP) | $8,768 | $5,945 | | Adjusted gross margin (Non-GAAP) | 56.3% | 47.8% | | **Adjusted EBITDA** | | | | Net loss (GAAP) | $(44,477) | $(690) | | Adjusted EBITDA (Non-GAAP) | $(39,964) | $(26,501) | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2022 total revenue grew **25.2%**, driven by **14.8%** product and **60.1%** subscription revenue, while R&D and S&M expenses significantly increased, and G&A decreased Revenue Change by Type (in thousands) | Revenue Type | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product | $11,014 | $9,595 | $1,419 | 14.8% | | Subscription | $4,560 | $2,848 | $1,712 | 60.1% | | **Total revenue** | **$15,574** | **$12,443** | **$3,131** | **25.2%** | Operating Expense Changes (in thousands) | Expense Category | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $23,623 | $15,716 | $7,907 | 50.3% | | Sales and marketing | $15,202 | $9,808 | $5,394 | 55.0% | | General and administrative | $19,050 | $34,640 | $(15,590) | (45.0)% | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources are operations and 2021 Business Combination proceeds, with **$359.9 million** cash as of March 31, 2022, deemed sufficient for 12 months, despite **$103.8 million** in purchase obligations - The company's cash and cash equivalents balance was **$359.9 million** as of March 31, 2022[120](index=120&type=chunk) - Management expects existing cash and cash flows will be sufficient to meet liquidity and capital requirements for at least the next 12 months[119](index=119&type=chunk) - As of March 31, 2022, the company had fixed purchase obligations of **$103.8 million**, with **$65.9 million** payable within 12 months[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces limited market risks, with minimal interest rate and foreign exchange exposure, and inflation has not had a material effect to date - Interest Rate Risk: The company does not have floating rate debt and does not expect cash flows to be significantly affected by changes in market interest rates[132](index=132&type=chunk) - Inflation Risk: Inflation has not had a material effect, but the company notes it may not be able to fully offset higher costs through price increases if inflationary pressures rise[133](index=133&type=chunk) - Foreign Exchange Risk: Risk is limited as the business operates primarily in the U.S. with transactions mainly in U.S. dollars[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[137](index=137&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[138](index=138&type=chunk) [Part II: Other Information](index=42&type=section&id=Part%20II%20Other%20Information) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) A new patent infringement lawsuit was filed by Fujifilm Sonosite, Inc. on March 9, 2022, regarding iQ and iQ+ ultrasound products, with an unpredictable outcome - On March 9, 2022, Fujifilm Sonosite, Inc. filed a complaint against the company alleging that its iQ and iQ+ ultrasound products infringe on certain Fujifilm patents[139](index=139&type=chunk) - The company intends to vigorously defend against the lawsuit, which seeks unspecified damages, an injunction, and litigation costs[139](index=139&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - The company states there have been no material changes to the risk factors described in its 2021 Annual Report on Form 10-K[141](index=141&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales or repurchases of equity securities occurred during the three months ended March 31, 2022 - The company did not repurchase any of its equity securities during the three months ended March 31, 2022[142](index=142&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[142](index=142&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[142](index=142&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) Not applicable - Not applicable[142](index=142&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including executive agreements and required SOX certifications - Lists exhibits filed with the report, including executive employment agreements and required SOX certifications[144](index=144&type=chunk)

Butterfly Network, Inc. (NYSE:BFLY) Q1 2022 Earnings Conference Call May 5, 2022 8:30 AM ET Company Participants Agnes Lee - Vice President, Investor Relations Todd Fruchterman - President & Chief Executive Officer Conference Call Participants Josh Jennings - Cowen Operator Hello, and welcome to Butterfly Network's First Quarter 2022 Earnings Call. My name is Alex and I'll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Agnes Lee, Vice President of Investor Relatio ...

Q4 2021 Earnings Call February 28, 2022 Legal Statements Forward Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Butterfly Network, Inc.'s (the "Company") actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," ...

Butterfly Network, Inc. (NYSE:BFLY) Q4 2021 Earnings Conference Call February 28, 2022 8:30 AM ET Company Participants Agnes Lee - VP, IR Todd Fruchterman - President, CEO & Director Stephanie Fielding - CFO Conference Call Participants Joshua Jennings - Cowen and Company Matthew Taylor - UBS Operator Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Butterfly Network Q4 2021 Earnings Confere ...

[Part I](index=7&type=section&id=PART%20I) [Business](index=10&type=section&id=Item%201.%20Business) Butterfly Network, Inc. develops a handheld, whole-body ultrasound system with cloud-connected software, generating $62.6 million in revenue for 2021 and expanding into healthcare and international markets Financial Performance (2021 vs. 2020) | Metric | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Total Revenue | $62.6 million | $46.3 million | | Net Loss | $32.9 million | $162.7 million | - The company's core product is the **Butterfly iQ+**, a single-probe, whole-body ultrasound system powered by its proprietary Ultrasound-on-Chip™ technology, which integrates with cloud-connected software and a mobile app[14](index=14&type=chunk)[15](index=15&type=chunk) - As of December 31, 2021, the company employed approximately **463 people** and sold its products in about **30 countries** through a direct sales force, distributors, and an eCommerce channel[18](index=18&type=chunk) - The company's business strategy focuses on four key areas: U.S. hospitals and healthcare systems, international market expansion, moving into home-based care (subject to authorizations), and exploring adjacent markets[38](index=38&type=chunk) [Products](index=16&type=section&id=Item%201.%20Business%23Products) The company has sold over 57,000 Butterfly iQ and iQ+ devices, with the iQ+ offering 22 AI-generated presets and six imaging modes, supported by annual software subscriptions - The company has sold and shipped over **57,000 Butterfly iQ and iQ+ devices**. The Butterfly iQ+ has a list price of approximately **$2,400 per device**[45](index=45&type=chunk) - The Butterfly iQ+ device offers **22 AI-generated pre-set settings** and **six imaging modes**, including B-Mode, Color Doppler, and Pulsed Wave Doppler, along with specialized tools for obstetrics and bladder volume calculations[47](index=47&type=chunk)[49](index=49&type=chunk) - Software subscriptions are a key component, with plans like Pro Individual priced at **$420 per year**, offering HIPAA-compliant cloud storage and EMR integration[54](index=54&type=chunk)[55](index=55&type=chunk) - In 2021, the company launched **Butterfly iQ+ Vet**, a specialized handheld ultrasound system for veterinarians, available in **21 international markets** as of year-end[58](index=58&type=chunk)[59](index=59&type=chunk) [Marketing and Sales](index=20&type=section&id=Item%201.%20Business%23Marketing%20and%20Sales) The company uses direct sales, eCommerce, and distributors, shifting focus in 2021 to large health systems through enterprise solutions, supported by a global team of 124 employees - The company utilizes three main sales channels: a direct sales force for large healthcare systems, an eCommerce website for individual practitioners, and a network of distributors and affiliate relationships[61](index=61&type=chunk) - In 2021, there was a strategic shift towards increasing sales to large health systems through enterprise solutions like Butterfly Blueprint and Compass software, which offer better integration and economies of scale compared to individual eCommerce sales[63](index=63&type=chunk) - As of December 31, 2021, the global sales, sales support, and marketing team consisted of **124 employees**[64](index=64&type=chunk) [Manufacturing](index=26&type=section&id=Item%201.%20Business%23Manufacturing) All Butterfly iQ probes are manufactured by a single contract manufacturer, Benchmark Electronics, Inc., relying on single-source suppliers for key custom components - All Butterfly iQ probes are manufactured, tested, and shipped by a single contract manufacturer, Benchmark Electronics, Inc., from its facility in Thailand[90](index=90&type=chunk) - The key custom component, the ultrasound transducer module, is built with custom chips and lenses from suppliers in China, Taiwan, and Thailand. The company relies on single sources for some components, including the transducer module[88](index=88&type=chunk)[89](index=89&type=chunk) [Key Agreements](index=26&type=section&id=Item%201.%20Business%23Key%20Agreements) The company has key agreements with TSMC for integrated circuit manufacturing, Benchmark Electronics for exclusive product production, and Cardinal Health for U.S. distribution - The company has a Foundry Service Agreement with Taiwan Semiconductor Manufacturing Company Limited (TSMC) for the manufacture of integrated circuits used in its probes. The initial term expires on **December 31, 2022**, with minimum purchase obligations[91](index=91&type=chunk)[95](index=95&type=chunk) - A Manufacture and Supply Agreement with Benchmark Electronics, Inc. grants Benchmark global production exclusivity for current products. The agreement has an initial **three-year term** and renews automatically[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - A Distribution Agreement with Cardinal Health 105, Inc. designates Cardinal Health as the distribution agent and authorized distributor of record for products to customers in the United States[101](index=101&type=chunk) [Intellectual Property](index=30&type=section&id=Item%201.%20Business%23Intellectual%20Property) The company's IP portfolio includes 352 issued patents and 455 pending applications, and it holds a co-exclusive license from Stanford University for wafer bonding technology - As of December 31, 2021, the company's intellectual property portfolio included approximately **352 issued patents** and **455 pending patent applications** worldwide, covering aspects like device architecture, ultrasonic transducers, and machine learning applications[106](index=106&type=chunk)[107](index=107&type=chunk) - The company has a co-exclusive worldwide license from Stanford University for wafer bonding technology used in ultrasound applications. The license becomes non-exclusive after **December 23, 2023**, with the last licensed patent expected to expire in **2030**[111](index=111&type=chunk) [Government Regulation](index=32&type=section&id=Item%201.%20Business%23Government%20Regulation) The company's diagnostic ultrasound products are regulated as Class II medical devices by the FDA, requiring compliance with QSR and MDR, and are subject to U.S. and international laws like HIPAA and GDPR, as well as the new EU MDR - The company's diagnostic ultrasound products are regulated as **Class II medical devices** by the U.S. Food and Drug Administration (FDA), requiring compliance with Quality System Regulation (QSR), establishment registration, and medical device reporting (MDR)[115](index=115&type=chunk)[120](index=120&type=chunk)[129](index=129&type=chunk) - The Butterfly iQ probe received **510(k) clearance** from the FDA in **2017**, and the FDA determined the Butterfly iQ+ was eligible to be marketed under the original 510(k)[140](index=140&type=chunk)[291](index=291&type=chunk) - The company is subject to various U.S. and international laws, including anti-kickback statutes, the False Claims Act, HIPAA for data privacy, and the EU's General Data Protection Regulation (GDPR), which imposes stringent requirements on handling personal data[151](index=151&type=chunk)[153](index=153&type=chunk)[159](index=159&type=chunk) - In Europe, the company must comply with the new **Medical Device Regulation (MDR)**, which replaced the previous Medical Device Directive (MDD) and imposes stricter life-cycle requirements, greater clinical data emphasis, and more robust vigilance[171](index=171&type=chunk)[304](index=304&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from its limited operating history, net losses, funding needs, market acceptance, competition, single-source supply chain reliance, extensive government regulations, cybersecurity threats, intellectual property protection, and governance issues [Risks Related to Financial Condition and Capital Requirements](index=54&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) The company has a limited operating history, has incurred significant net losses since inception, and anticipates continued losses, potentially requiring additional funding that may not be available on acceptable terms - The company has a limited operating history, has generated limited revenue, and has incurred significant losses since inception, with net losses of **$32.4 million** in 2021 and **$162.7 million** in 2020. It anticipates continued significant losses for the next several years[185](index=185&type=chunk)[190](index=190&type=chunk) - Additional funding may be required to expand commercialization and R&D efforts, but such financing may not be available on acceptable terms, or at all, potentially forcing delays or termination of operations[191](index=191&type=chunk) [Risks Related to Business and Operations](index=58&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Business%20and%20Operations) Business success depends on market acceptance and faces competition from established players, reliance on single-source suppliers, impacts from the COVID-19 pandemic, and increased costs as a public company - Success depends on market acceptance of its products, which face competition from established manufacturers like General Electric and Phillips Healthcare, who have greater financial and marketing resources[194](index=194&type=chunk)[200](index=200&type=chunk) - The company relies on a single supplier, TSMC, for a key semiconductor component and a single contract manufacturer, Benchmark Electronics, for finished products. Disruption with either could negatively impact the ability to source devices[221](index=221&type=chunk)[225](index=225&type=chunk) - The COVID-19 pandemic has negatively affected the business by causing longer sales cycles, straining customers' finances, and creating global supply chain constraints, leading to increased component costs and lead times[261](index=261&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk) - As a public company, Butterfly will incur increased costs for legal, accounting, and corporate governance compliance, including requirements under the Sarbanes-Oxley Act[269](index=269&type=chunk)[270](index=270&type=chunk) [Risks Related to Government Regulation and Other Legal Compliance Matters](index=82&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Government%20Regulation%20and%20Other%20Legal%20Compliance%20Matters) The company's products are subject to extensive pre-market and post-market regulation by the FDA and other authorities, complex privacy laws like HIPAA and GDPR, and cybersecurity threats, all carrying risks of penalties and business impact - The company's products are subject to extensive pre-market and post-market regulation by the FDA and other government authorities, which could restrict development, marketing, and sales[286](index=286&type=chunk)[287](index=287&type=chunk) - Failure to obtain or maintain necessary **510(k) clearance** or PMA approval from the FDA for future products or modifications would adversely affect business growth[294](index=294&type=chunk) - The company is subject to complex U.S. and foreign laws regarding privacy and data protection, such as HIPAA and GDPR, which carry risks of significant monetary penalties and changes to business practices for non-compliance[335](index=335&type=chunk)[338](index=338&type=chunk) - Cybersecurity incidents could compromise confidential data, leading to potential liability under HIPAA and other laws, litigation, and reputational damage[343](index=343&type=chunk) [Risks Related to Intellectual Property](index=107&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Butterfly%27s%20Intellectual%20Property) Maintaining competitive advantage depends on protecting its intellectual property, including 352 issued patents and 455 pending applications, and the company licenses key wafer bonding technology from Stanford University, with potential for costly infringement litigation - The company's ability to maintain a competitive advantage is dependent on protecting its intellectual property, including its portfolio of approximately **352 issued patents** and **455 pending applications** as of December 31, 2021[365](index=365&type=chunk)[366](index=366&type=chunk) - The company licenses key wafer bonding technology from Stanford University; loss of this license could prevent the sale of its products[380](index=380&type=chunk) - The company may be subject to costly and time-consuming litigation if sued for infringing on the intellectual property rights of third parties[390](index=390&type=chunk) [Risks Related to Securities and Being a Public Company](index=123&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Securities%20and%20to%20Being%20a%20Public%20Company) As a 'controlled company' with a dual-class stock structure, Dr. Rothberg controls 76.9% of voting power, exempting it from certain governance rules and limiting other investors' influence, while also facing risks related to internal controls and financial reporting accuracy - The company is a **'controlled company'** under NYSE rules because its founder, Dr. Rothberg, controls approximately **76.9% of the voting power**, exempting it from certain corporate governance requirements like having a majority of independent directors[436](index=436&type=chunk) - The dual-class stock structure concentrates voting power with Dr. Rothberg, who holds all Class B shares (**20 votes per share**), limiting other investors' ability to influence major corporate transactions[438](index=438&type=chunk)[439](index=439&type=chunk) - Failure to maintain effective internal controls could impair the ability to produce accurate financial statements. A material weakness related to warrant accounting was identified in **2020** and remediated as of **December 31, 2021**[428](index=428&type=chunk)[430](index=430&type=chunk) [Unresolved Staff Comments](index=133&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported that it has no unresolved staff comments from the SEC - None[457](index=457&type=chunk) [Properties](index=133&type=section&id=Item%202.%20Properties) The company maintains executive offices in Guilford, Connecticut, and expects to occupy a new corporate headquarters in Burlington, Massachusetts, in the first half of 2022, with additional leased offices in New York, Palo Alto, and Taiwan - The company's principal executive offices are located at **530 Old Whitfield Street, Guilford, Connecticut**[458](index=458&type=chunk) - In **2021**, a lease was signed for a new corporate headquarters in Burlington, Massachusetts, for approximately **61,138 rentable square feet**, with the lease expiring in **2032**[458](index=458&type=chunk) [Legal Proceedings](index=133&type=section&id=Item%203.%20Legal%20Proceedings) The company is facing a putative class action lawsuit filed on February 16, 2022, alleging violations of the Securities Exchange Act due to false and misleading statements regarding its post-Business Combination financial prospects, which it intends to vigorously defend - A putative class action lawsuit, **Rose v. Butterfly Network, Inc., et al.**, was filed on **February 16, 2022**, against the company and certain current and former officers and directors[460](index=460&type=chunk) - The lawsuit alleges violations of Sections **10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934**, claiming false and misleading statements were made about the company's business and financial prospects between **February 16, 2021, and November 15, 2021**[460](index=460&type=chunk) [Mine Safety Disclosures](index=133&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[461](index=461&type=chunk) [Part II](index=135&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=135&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock and warrants trade on the NYSE under 'BFLY' and 'BFLY WS' respectively, with 325 holders of record for Class A common stock and five for Class B common stock as of February 1, 2022 - Class A common stock trades on the NYSE under the symbol **'BFLY'**[462](index=462&type=chunk) - Warrants to purchase Class A common stock trade on the NYSE under the symbol **'BFLY WS'**[462](index=462&type=chunk) Shareholders of Record (as of Feb 1, 2022) | Security | Shares Outstanding (shares) | Holders of Record (count) | | :--- | :--- | :--- | | Class A Common Stock | 171,733,179 | 325 | | Class B Common Stock | 26,426,937 | 5 | | Public Warrants | 13,799,457 | 1 | | Private Placement Warrants | 6,853,333 | 1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=135&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, Butterfly Network's revenue grew 35.3% to $62.6 million, with a net loss of $32.4 million, a significant improvement from 2020 due to a non-cash gain, while operating expenses increased substantially, and liquidity was strengthened by $589 million from its Business Combination [Results of Operations](index=145&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results%20of%20Operations) In 2021, total revenue increased by 35.3% to $62.6 million, driven by product and subscription growth, while total operating expenses rose by 109.0%, leading to a net loss of $32.4 million, an 80.1% improvement from 2020 Comparison of Years Ended December 31, 2021 and 2020 (in thousands) | Line Item | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$62,565** | **$46,252** | **$16,313** | **35.3%** | | Product Revenue | $47,868 | $38,347 | $9,521 | 24.8% | | Subscription Revenue | $14,697 | $7,905 | $6,792 | 85.9% | | **Gross Profit** | **$17,054** | **($61,223)** | **$78,277** | **N/A** | | **Total Operating Expenses** | **$209,782** | **$100,396** | **$109,386** | **109.0%** | | R&D | $74,461 | $49,738 | $24,723 | 49.7% | | Sales & Marketing | $49,604 | $26,263 | $23,341 | 88.9% | | G&A | $85,717 | $24,395 | $61,322 | 251.4% | | **Loss from Operations** | **($192,728)** | **($161,619)** | **($31,109)** | **19.2%** | | **Net Loss** | **($32,409)** | **($162,745)** | **$130,336** | **(80.1)%** | Comparison of Years Ended December 31, 2020 and 2019 (in thousands) | Line Item | 2020 ($) | 2019 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$46,252** | **$27,583** | **$18,669** | **67.7%** | | **Gross Profit** | **($61,223)** | **($20,895)** | **($40,328)** | **193.0%** | | **Loss from Operations** | **($161,619)** | **($102,296)** | **($59,323)** | **58.0%** | | **Net Loss** | **($162,745)** | **($99,697)** | **($63,048)** | **63.2%** | [Liquidity and Capital Resources](index=156&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) The company's liquidity was significantly boosted by $589 million from the February 2021 Business Combination, resulting in $422.8 million in cash and cash equivalents at year-end, expected to fund operations for at least 12 months, with material lease and inventory purchase obligations - The company's primary source of liquidity is the approximately **$589 million** in gross proceeds received from the Business Combination in **February 2021**. As of December 31, 2021, the cash and cash equivalents balance was **$422.8 million**[530](index=530&type=chunk)[533](index=533&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | 2021 ($) | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ($189,187) | ($81,700) | ($120,432) | | Net cash used in investing activities | ($9,870) | ($2,376) | ($4,468) | | Net cash provided by financing activities | $565,692 | $54,280 | $324 | - As of December 31, 2021, the company had material cash requirements including **$42.6 million** in fixed lease payment obligations and **$116.1 million** in fixed inventory purchase obligations[534](index=534&type=chunk) [Critical Accounting Policies and Estimates](index=161&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Critical%20Accounting%20Policies%20and%20Estimates) Revenue recognition requires significant judgment in allocating transaction prices, stock-based compensation valuation uses subjective assumptions, and inventory valuation involves estimating excess and obsolete inventory and recognizing losses on purchase commitments - Revenue recognition requires significant judgment, particularly in allocating the transaction price to multiple performance obligations (e.g., hardware, software subscriptions, support) based on their relative standalone selling prices (SSP)[548](index=548&type=chunk)[549](index=549&type=chunk) - Stock-based compensation for stock options is valued using a Black-Scholes model, which requires subjective assumptions for inputs like expected term and stock price volatility[553](index=553&type=chunk)[554](index=554&type=chunk) - Inventory valuation requires management to estimate excess and obsolete inventory, considering factors like new product development schedules and market conditions. The company also recognizes expected losses on firm, non-cancelable purchase commitments[556](index=556&type=chunk)[557](index=557&type=chunk)[558](index=558&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=165&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate, inflation, and foreign exchange, with interest rate risk considered low due to short-term cash and no floating-rate debt, inflation not materially affecting results but posing future margin risk, and foreign exchange risk limited by U.S. dollar transactions - Interest Rate Risk: The company does not have floating rate debt, and its cash equivalents are short-term, so it does not expect significant impact from interest rate changes[563](index=563&type=chunk) - Inflation Risk: While not currently material, the company acknowledges that inflationary pressures on costs may not be fully offset by price increases, potentially harming future results[564](index=564&type=chunk) - Foreign Exchange Risk: The majority of business is conducted in U.S. dollars, limiting foreign currency translation risk[565](index=565&type=chunk) [Financial Statements and Supplementary Data](index=167&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for 2021, 2020, and 2019, including the Independent Registered Public Accounting Firm's report and notes, with a critical audit matter identified regarding the valuation of reserves for product purchase commitments - The financial statements were audited by **Deloitte & Touche LLP**, who expressed an unqualified opinion[824](index=824&type=chunk) - A critical audit matter identified was the valuation of reserves for loss on product purchase commitments, due to the significant judgments and estimates required for management to project future sales and determine the reserves[829](index=829&type=chunk)[833](index=833&type=chunk)[834](index=834&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=168&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section is not applicable to the company - Not applicable[569](index=569&type=chunk) [Controls and Procedures](index=168&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2021. A material weakness in internal control over financial reporting related to the accounting for warrants, identified in the 2020 fiscal year, was successfully remediated as of December 31, 2021 - Management concluded that disclosure controls and procedures were effective as of **December 31, 2021**[571](index=571&type=chunk) - A material weakness related to the accounting for public and private placement warrants, previously disclosed for the year ended **December 31, 2020**, has been remediated as of **December 31, 2021**[574](index=574&type=chunk)[576](index=576&type=chunk) [Part III](index=170&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=170&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's board and executive officers, noting its 'controlled company' status due to Dr. Rothberg's majority voting power, which exempts it from certain NYSE governance rules, and outlines its four standing board committees and adopted code of conduct - As of **February 1, 2022**, the executive team is led by President and CEO **Todd M. Fruchterman, M.D., Ph.D.**, and the Board of Directors is chaired by founder **Jonathan M. Rothberg, Ph.D.**[579](index=579&type=chunk) - The company qualifies as a **'controlled company'** under NYSE rules because Dr. Rothberg beneficially owns a majority of the voting power. This allows the company to be exempt from certain corporate governance standards, such as the requirement for a majority-independent board[606](index=606&type=chunk) - The board has established four committees: Audit, Compensation, Nominating and Corporate Governance, and Technology, each with a written charter[611](index=611&type=chunk) [Executive Compensation](index=186&type=section&id=Item%2011.%20Executive%20Compensation) The executive compensation program aims to attract and retain talent, align interests with stockholders, and reward performance, with 2021 awards reflecting 35% revenue growth and the adoption of an Executive Severance Plan 2021 Named Executive Officer (NEO) Compensation Summary | Name | Position | Total Compensation 2021 ($) | | :--- | :--- | :--- | | Todd Fruchterman | CEO | 48,436,930 | | Stephanie Fielding | CFO | 991,327 | | Stacey Pugh | CCO | 7,272,674 | | Darius Shahida | CSO & CBDO | 1,630,000 | | Andrei Stoica | CTO | 3,058,427 | | Laurent Faracci | Former CEO | 3,691,800 | - The **2021** annual cash incentive awards were paid out at **100% of target** for most NEOs, reflecting the Compensation Committee's assessment of financial, operational, and strategic performance, including **35% year-over-year revenue growth**[646](index=646&type=chunk)[647](index=647&type=chunk) - Long-term incentives in **2021** included a mix of stock options, restricted stock units (RSUs), and performance stock units (PSUs) to align executive compensation with long-term shareholder value[649](index=649&type=chunk) - The company adopted an Executive Severance Plan in **May 2021**, providing for severance benefits upon termination without cause or resignation for good reason, with enhanced benefits if the termination occurs in connection with a change of control[655](index=655&type=chunk)[701](index=701&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=232&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of February 2, 2022, Dr. Jonathan M. Rothberg holds 100% of Class B common stock, granting him approximately 76.9% of total voting power and making Butterfly a 'controlled company,' with other significant beneficial owners including Glenview Capital Management, FMR LLC, and The Vanguard Group Beneficial Ownership as of February 2, 2022 | Beneficial Owner | Class A Shares (%) | Class B Shares (%) | Total Voting Power (%) | | :--- | :--- | :--- | :--- | | Jonathan M. Rothberg, Ph.D. | 5.8% | 100% | 76.9% | | Glenview Capital Management | 12.4% | 0% | 2.2% | | FMR LLC | 9.4% | 0% | 2.3% | | The Vanguard Group | 7.7% | 0% | 1.9% | | Blackrock, Inc. | 5.1% | 0% | 1.3% | | Fosun Industrial Co., Limited | 6.2% | 0% | 1.5% | | All Current Directors & Executive Officers (as a group) | 19.0% | 100% | 79.1% | - The company has a dual-class stock structure. Class A common stock has **one vote per share**, while Class B common stock has **20 votes per share**[742](index=742&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=239&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company has engaged in related party transactions, including a Technology and Services Exchange Agreement and lease arrangements with entities controlled by Dr. Rothberg or his family, and has adopted a policy for audit committee review and approval of such transactions, with seven directors determined to be independent - The company is party to a Technology and Services Exchange Agreement (TSEA) with other companies controlled by Dr. Rothberg, allowing for the discretionary sharing of non-core technologies and personnel[772](index=772&type=chunk) - Butterfly leases office and lab space in Guilford, Connecticut from Oceanco, LLC, an entity owned by Dr. Rothberg's children. For the year ended December 31, 2021, payments under this arrangement were **$169,400**[763](index=763&type=chunk) - The company entered into an Advisory Agreement with Dr. Rothberg, effective upon the business combination closing, for which he receives a consulting fee of **$16,667 per month**[775](index=775&type=chunk) - The board has determined that **seven of its directors** are independent under NYSE and SEC rules[787](index=787&type=chunk) [Principal Accountant Fees and Services](index=249&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Deloitte & Touche LLP was the independent registered public accounting firm for 2021, with total fees of $1.735 million primarily for audit services, and the audit committee pre-approves all audit and permissible non-audit services Accountant Fees Billed (Deloitte & Touche LLP) | Fees | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Audit Fees | $1,644,000 | $1,736,000 | | Tax Fees | $91,000 | - | | **Total Fees** | **$1,735,000** | **$1,736,000** | - Following the business combination on **February 12, 2021**, the Audit Committee dismissed WithumSmith+Brown, PC (Longview's auditor) and engaged **Deloitte & Touche LLP** (Legacy Butterfly's auditor) as the independent registered public accounting firm[789](index=789&type=chunk) [Part IV](index=253&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=253&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including material agreements, corporate governance documents, and certifications, and references the consolidated financial statements in Item 8 - This section provides a list of all exhibits filed with the Form 10-K, including material agreements and corporate documents[805](index=805&type=chunk) [Form 10-K Summary](index=262&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable to the company - Not applicable[816](index=816&type=chunk)

Financial Data and Key Metrics Changes - Q3 revenues grew 44% year-over-year to $14.6 million, with adjusted gross margin at 49.3% [42][47] - Product revenue increased by 25.8% to $10.8 million, driven by a 41% increase in units fulfilled [42][43] - Net loss was $13.6 million, significantly improved from a net loss of $92.2 million in Q3 2020 [49] Business Line Data and Key Metrics Changes - Subscription revenue reached $3.8 million, growing approximately 149% from $1.5 million in Q3 2020, with subscription mix increasing to 26% [45] - Direct-to-user sales slowed due to COVID-related challenges and a price increase to $2,399 for Butterfly iQ+ [43][44] Market Data and Key Metrics Changes - The company is experiencing a shift from direct-to-user sales to a focus on health institutions and integrated commercial approaches [13][22] - The company has entered new international markets, including partnerships in Chile, Pakistan, and the Middle East [33] Company Strategy and Development Direction - The company aims to democratize medical imaging and transform care by enhancing clinical decision-making [7][18] - A strategic shift towards enterprise-level commercial strategies is being emphasized, focusing on partnerships rather than direct sales [11][17] - The introduction of new products, such as Butterfly iQ+ Vet, indicates a commitment to expanding market reach [35][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the impact of COVID-19 on healthcare logistics and personnel fatigue, affecting revenue expectations [8][14] - Optimism for future growth is based on improving customer satisfaction and ongoing discussions with large institutions for enterprise-level implementations [16][22] - The company expects revenue growth in 2022 to exceed the projected growth rate for 2021, despite current challenges [23][51] Other Important Information - The company has strengthened its leadership team, adding experienced professionals to enhance regulatory and quality capabilities [26][27] - An exclusive partnership with Caption Health aims to enhance cardiac assessment through AI-powered solutions [30] Q&A Session Summary Question: What is the overall focus market growth and market share? - The total addressable market (TAM) remains large, with continued excitement about market reactions and opportunities [55][56] Question: What drives optimism for Q3 and Q4 results? - Optimism is driven by positive conversations at institutional levels about incorporating Butterfly into workflows, indicating a shift in care delivery [60][62] Question: What are the growth drivers for 2022? - Growth drivers include a targeted approach to enterprise channels, geographical expansion, and increased adoption in the veterinary market [68][69] Question: When will the integrated platform with Caption be launched? - The launch of the integrated platform with Caption is on track for winter 2021, focusing on easing the user burden and enhancing decision-making [71]