0001804176-26-000009
SEC filingRevenue grew 19% to $97.6M, but gross margin fell to 46.9% amid $17.4M excess inventory charge; net loss widened to $77.1M.
Butterfly Network, Inc. is the pioneer of the Ultrasound-on-Chip™ semiconductor platform and a leader in semiconductor-based point-of-care ultrasound (POCUS) technology. The company combines proprietary hardware, intuitive software, services, and educational offerings to make ultrasound more accessible. Its devices are built on a single-chip semiconductor platform, enabling whole-body imaging with a single handheld probe. Butterfly's mission is to democratize healthcare by increasing access to ultrasound information wherever care is delivered.
The filing does not define separate reporting segments. The business consists of core POCUS (device and software sales) and an emerging program, Butterfly Embedded, which licenses the Ultrasound-on-Chip platform for co-development in non-competitive markets such as brain-computer interfaces and surgical robotics. No revenue allocation between these activities is disclosed.
Butterfly offers two handheld ultrasound devices: Butterfly iQ+ (the most affordable whole-body scanner, ~$2,700) and Butterfly iQ3 (advanced model with double processing power, ~$3,900). Both connect to smartphones/tablets, provide over 20 anatomical presets and multiple imaging modes. Specialty products include iQ+ Bladder (bladder scanner) and Butterfly Move (cart-based system). Software subscriptions (Core Technology ~$300/year, Advanced Technology ~$420/year) provide cloud storage and advanced tools. Enterprise platform Compass AI integrates with hospital systems. Educational offerings include ScanLab, Butterfly Academy, and Butterfly Certified. Butterfly Garden is an AI partnership ecosystem using an SDK.
Butterfly sells through three channels: a targeted direct sales force for large healthcare systems, an eCommerce website for individual practitioners, and distributor/veterinary/affiliate relationships. The company also engages in global health partnerships (e.g., Gates Foundation). A substantial majority of revenue comes from the United States. Devices are sold in over 30 countries and used in over 100 countries through various channels. No single customer concentration is disclosed, but Butterfly has sales to or agreements with most of the 100 largest U.S. healthcare systems.
Butterfly faces competition from established manufacturers of conventional cart-based ultrasound systems and other handheld ultrasound devices. Traditional systems typically cost $30,000-$120,000+, while incumbent handhelds average ~$10,000 with multiple probes. Butterfly differentiates via its semiconductor technology (no lead-based piezoelectric crystals), a single-probe whole-body solution, and RoHS compliance without exemptions. The filing notes high regulatory and distribution barriers to entry.
Butterfly's strategic pillars are: (1) nurturing and growing core POCUS capabilities and clinical pathways; (2) capturing new adjacent markets such as home care services (Butterfly HomeCare) and veterinary; (3) leveraging Ultrasound-on-Chip into non-competitive markets through Butterfly Embedded co-development; and (4) maintaining financial discipline. The company is also focused on AI integration and education to drive adoption.
As of January 31, 2026, Butterfly had approximately 220 employees (180 U.S., 40 international). None are unionized. The company supplements with independent contractors and contingent workers. In July 2024, it partnered with a third-party firm to optimize non-specialized technical functions, moving some roles to lower-cost geographies. Total rewards include competitive salaries, cash bonuses, equity incentives, and comprehensive benefits.
For the fiscal year ended December 31, 2025, Butterfly Network reported total revenue of $97.6 million, a 19.0% increase from $82.1 million in 2024. Product revenue grew 17.1% to $63.4 million, driven by higher sales volumes and the premium pricing of the iQ3 probe launched in early 2024, as well as semiconductor chip deliveries to Butterfly Embedded partners. Software and other services revenue rose 22.7% to $34.2 million, primarily due to increased licensing from Butterfly Embedded partnerships. Gross profit declined 6.3% to $45.7 million, resulting in a gross margin of 46.9% versus 59.5% in the prior year. The margin compression was largely attributable to a non-recurring $17.4 million charge for excess and obsolete inventory caused by technological advancements and portfolio changes. Excluding this charge, adjusted gross margin would have been approximately 64.7%. Research and development expenses decreased 4.1% to $36.3 million due to lower personnel and engineering costs, while sales and marketing expenses increased 10.4% to $45.9 million from investments in the sales force. General and administrative expenses fell 1.4% to $39.2 million. Other operating expenses surged 165.1% to $10.8 million, driven by $7.1 million in legal costs including a $3.0 million accrued loss contingency. Loss from operations widened to $86.4 million from $74.4 million as lower gross profit offset revenue growth. Net loss was $77.1 million compared to $72.5 million.
Butterfly operates as a single reportable segment. The revenue mix continues to shift toward software and other services, which accounted for 35.0% of total revenue in 2025, up from 33.9% in 2024. This trend is expected to persist as enterprise software adoption and Butterfly Embedded partnerships expand. Units fulfilled increased 9.1% year-over-year, indicating growing adoption in US and veterinary channels. Product revenue per unit improved due to the higher-priced iQ3 probe.
Management expects existing cash ($150.5 million as of December 31, 2025, bolstered by a $81.0 million public offering in January 2025) to fund operations for at least the next 12 months. The company anticipates continued revenue growth driven by product adoption and software mix, though gross margin may fluctuate due to inventory charges and product cycle transitions. No formal guidance was provided for future periods. Strategic priorities include expanding healthcare system relationships, scaling Butterfly Embedded collaborations, and investing in next-generation technology. The significant inventory charge underscores the risk of product transitions, but the underlying growth in units and software revenue signals improving commercial traction.
As of December 31, 2025, Butterfly Network held $150.5M in cash and cash equivalents, a significant increase from $88.8M at year-end 2024, primarily driven by $81.0M in net proceeds from a January 2025 public offering of 27.6M shares. The company has no short- or long-term debt, with total liabilities of $100.6M consisting mainly of deferred revenue, operating lease liabilities, and accrued expenses. Shareholders' equity stood at $196.0M.
Inventory purchase commitments totaled $4.5M as of December 31, 2025, under a non-cancellable supply agreement. The company also has technology license commitments of $6.4M ($1.3M current, $5.1M non-current). Operating lease obligations amount to $24.3M in gross payments, with a weighted-average remaining lease term of 6.5 years. Additionally, the Midjourney agreement includes a five-year term with annual license fees of $10M and milestone payments up to $9M, but only the $17.5M received upfront and $6.8M recognized revenue are reflected; future commitments are not recorded as liabilities.
Butterfly did not repurchase shares or pay dividends in fiscal 2025. Capital expenditures totaled $3.3M (3.4% of revenue), primarily for capitalized software development and equipment. The company raised $81.0M in net equity proceeds, which strengthened its cash position. There was no debt issuance or repayment.
The company operates as a single reportable segment. Revenue is disaggregated by geography: United States contributed $77.4M (79% of total) and international markets $20.2M (21%). Product revenue accounted for $63.4M (65%) and software/other services $34.2M (35%). The Midjourney agreement contributed $6.8M in software and other services revenue during 2025. Remaining performance obligations totaled $99.6M, with 57% expected to be recognized within 12 months.
Butterfly Network continues to incur significant net losses ($77.1M in 2025, $72.5M in 2024, $133.7M in 2023) with an accumulated deficit of $879.2M. The company expects losses for at least the next several years as it commercializes existing products and develops new ones. Revenue concentration is notable: one customer accounted for 11% of 2025 revenue, increasing vulnerability to customer loss. Additionally, $700.4M in federal NOL carryforwards are subject to potential limitations under Section 382.
The company relies on a single supplier, TSMC, for semiconductor wafers and a single contract manufacturer, Benchmark Electronics, for finished products. Any disruption—whether from geopolitical tensions in Taiwan, natural disasters, or performance issues—could halt production. Minimum purchase commitments with TSMC may adversely affect cash flows. Pricing pressures from suppliers may increase costs without the ability to pass them on.
Butterfly’s products are subject to extensive FDA regulation; failure to maintain clearances could halt sales. A voluntary recall in 2020 highlights ongoing compliance risk. The company faces a securities class action and derivative lawsuits related to pre-merger disclosures, which could result in material costs and management distraction. Product liability claims are an inherent risk, though insurance may be inadequate.
The company’s key wafer bonding technology is exclusively licensed from Stanford; termination would cripple product sales. Butterfly owns ~665 patents but faces risks of infringement claims, patent invalidity, and inability to protect IP internationally. Out-licensing (e.g., Butterfly Embedded™ program) introduces additional complexity and potential disputes.
The point-of-care ultrasound market is competitive, with large incumbents possessing greater resources. Rapid technological change could render products obsolete. Market acceptance of Butterfly’s products depends on demonstrating cost-effectiveness and reliability. International expansion (21% of revenue) exposes the company to tariff risks, currency fluctuations, and varying regulatory environments.
The dual-class structure gives founder Dr. Rothberg ~71% voting power, limiting minority stockholder influence. The company is a ‘smaller reporting company’ with reduced disclosure obligations. Stock price volatility is expected, and additional litigation could arise from market fluctuations.