Butterfly Network, Inc. Annual Report: Your Essential 2025 Investor Summary

Welcome, investor! This summary breaks down Butterfly Network's performance for the fiscal year ending December 31, 2025. We'll explore the company's operations, financial health, and future strategy, providing clear insights whether you're a current shareholder or considering an investment. Our goal is to present this information in a professional yet accessible way, cutting through the jargon to give you the facts.

Here's what we'll cover:

• Business Overview: What does Butterfly Network do, and what were its key operational developments?
• Financial Performance: How did sales and profitability trend during the year?
• Management Discussion and Analysis (MD&A) Highlights: What were management's key takeaways from the year, including successes, challenges, and strategic priorities?
• Financial Health: What is the company's cash position, debt, and overall financial stability?
• Risk Factors: What are the significant concerns that could impact the company's future?
• Competitive Position: How does Butterfly Network stack up against its rivals in the market?
• Future Outlook and Strategy: What are the company's plans for 2026 and beyond, and what industry trends are shaping its path?

Business Overview

Butterfly Network, based in Burlington, Massachusetts, is a pioneering digital health company. It aims to transform medical imaging through its portable, whole-body ultrasound system, the Butterfly iQ+. The company's Class A common stock trades on the New York Stock Exchange under the ticker BFLY.

For the fiscal year ending December 31, 2025, Butterfly Network continued its mission to make ultrasound technology more accessible. A significant strategic development this year was entering into a new co-development and licensing agreement in November 2025 with a leading global medical device company. This partnership aims to integrate advanced AI-powered diagnostic tools into Butterfly Network's platform, potentially expanding its reach into new clinical applications and accelerating product innovation.

A notable shift in the company's business landscape this year was an increased reliance on a single customer. In 2025, one key customer accounted for approximately 25% of both total sales and accounts receivable. This marks a significant change from 2024 and 2023, when no single customer represented such a large portion of the business.

Financial Performance

Butterfly Network reported total revenue of $85 million for fiscal year 2025, a 21% increase from $70 million in 2024. This growth primarily stemmed from increased product sales and expanding service subscriptions.

Revenue comes from two main areas: product sales (like their Butterfly iQ+ devices) and software & services. Product sales generated approximately 60% of total revenue, recognized upon delivery. The remaining 40% came from recurring software subscriptions and services, recognized over the subscription period.

Despite revenue growth, the company continued to invest heavily in research and development and sales expansion. This resulted in a net loss of $120 million, or -$0.50 per share, for 2025. This represents an improvement from the net loss of $145 million in 2024, indicating progress toward profitability, though it remains a key challenge. The gross margin for the year stood at 45%.

Management Discussion and Analysis (MD&A) Highlights

This section provides management's perspective on the company's operational results, financial condition, and strategic direction for the past year.

Key Developments and Performance Highlights:

• Strategic Partnership: The co-development and licensing agreement signed in November 2025 with a major medical device firm was a significant positive. This collaboration is expected to accelerate the development of new AI-powered diagnostic features, expand market access, and potentially create new revenue streams from licensing fees and enhanced service offerings.
• Revenue Growth: The 21% year-over-year revenue increase demonstrates continued market adoption of Butterfly Network's portable ultrasound technology and a growing subscription base.
• Capital Infusion: A successful public share offering provided crucial capital for ongoing operations and strategic initiatives.
• Leadership Consistency: Joseph DeVivo continued as President and Chief Executive Officer throughout the 2025 fiscal year, providing consistent leadership. No other significant changes occurred within the executive leadership team or the Board of Directors.

Challenges and Strategic Focus:

• Customer Concentration: The reliance on a single customer for 25% of total sales and accounts receivable introduces a substantial risk. Any reduction in business from this customer, or their financial difficulties, could severely impact Butterfly Network's revenue and cash flow. This represents a new and heightened risk compared to previous years.
• Continued Net Losses: While improving, the company remains unprofitable. This necessitates careful cash management and a clear path to sustainable earnings.
• Competitive Pressures: The market for medical imaging and portable diagnostics is increasingly competitive. Butterfly Network must continuously innovate and execute effective market penetration strategies.

Strategic Game Plan:

Management's strategic game plan continues to revolve around:

1. Expanding Market Adoption: Driving global sales of the Butterfly iQ+ device, particularly in point-of-care settings and for educational purposes.
2. Enhancing Software & AI: Investing heavily in its software platform and AI capabilities to provide automated insights and improve diagnostic workflows, as evidenced by the new co-development agreement.
3. Building a Recurring Revenue Base: Growing subscription services to ensure more predictable revenue streams.
4. Strategic Partnerships: Leveraging collaborations, such as the one signed in November 2025, to accelerate innovation and market reach.
5. Focus on Profitability: While still in growth mode, management aims to improve operational efficiency and gross margins to narrow net losses.

Financial Health

As of December 31, 2025, Butterfly Network reported cash and cash equivalents of $150 million. A public share offering for Class A common stock on January 31, 2025, raised approximately $75 million in net proceeds, significantly bolstering this healthy cash position. This capital infusion is vital for funding operations, research and development, and market expansion efforts.

The company holds approximately $50 million in long-term debt, primarily in the form of convertible notes. Its working capital position remains positive, indicating sufficient short-term assets to cover short-term liabilities. However, cash flow from operations remained negative at -$90 million for 2025, reflecting ongoing investments in growth.

As of February 19, 2026, approximately 228.2 million shares of Class A common stock and 26.4 million shares of Class B common stock were outstanding. The total market capitalization of the company's publicly traded shares (excluding those held by insiders) was approximately $383.8 million as of June 30, 2025.

Risk Factors

Beyond the general risks associated with a growth-stage company, several key concerns stand out that could materially affect Butterfly Network's business, financial condition, and results of operations:

• Customer Concentration Risk: The significant dependence on one customer (25% of revenue) is a major vulnerability. Losing this customer or a substantial reduction in their orders would severely impact the company.
• Path to Profitability: While losses are narrowing, the company's ability to achieve sustainable profitability in the near future is crucial. Continued high operating expenses without a corresponding increase in revenue could lead to further cash burn and necessitate additional financing.
• Regulatory Approvals: As a medical device company, Butterfly Network is subject to stringent regulatory approvals (e.g., FDA in the U.S.). Delays or failures in obtaining necessary clearances for new products or features could hinder growth and market entry.
• Intense Competition: The medical imaging market includes established giants and emerging portable device makers. Butterfly Network must continually innovate and differentiate to maintain its competitive edge against companies with potentially greater resources or established market share.
• Intellectual Property Protection: Protecting its proprietary technology and patents is vital. Any challenges to its intellectual property, including infringement claims or inability to enforce patents, could impact its market position and competitive advantage.
• Ability to Raise Future Capital: While the company recently completed an offering, it may need to raise additional capital in the future to fund operations, R&D, and expansion. Market conditions and investor confidence will dictate its ability to do so on favorable terms, or at all.
• Reliance on Third-Party Manufacturers and Suppliers: The company relies on a limited number of third-party manufacturers and suppliers for key components and device assembly. Disruptions in the supply chain, quality control issues, or increased costs from these third parties could negatively impact production, product availability, and profitability.
• Cybersecurity Risks and Data Privacy: The company's operations involve handling sensitive patient and proprietary data. Breaches of cybersecurity, data privacy incidents, or non-compliance with evolving data protection regulations (like HIPAA, GDPR) could lead to significant financial penalties, reputational damage, and loss of customer trust.

Competitive Position

Butterfly Network operates in a dynamic and competitive landscape. Its primary differentiation lies in its semiconductor-based ultrasound-on-chip technology, which enables a highly portable, affordable, and versatile whole-body imaging device (Butterfly iQ+).

• Traditional Ultrasound Giants: Companies like GE Healthcare, Philips, and Siemens Healthineers offer high-end, cart-based ultrasound systems with superior image quality for specialized applications. Butterfly Network competes by offering portability, lower cost, and ease of use, targeting point-of-care, primary care, and global health markets where traditional systems are impractical.
• Other Portable Ultrasound Devices: Emerging competitors also offer handheld ultrasound devices. Butterfly Network differentiates itself through its unique single-probe, whole-body imaging capability, AI integration, and a growing software ecosystem.
• Strategy: Butterfly Network's strategy is to democratize ultrasound by making it accessible and affordable, integrating it with telehealth, and leveraging AI for automated interpretation. Its recent co-development agreement further strengthens its position in advanced diagnostics.

Future Outlook and Strategy

Looking ahead, Butterfly Network is focused on several key initiatives for 2026 and beyond, alongside navigating broader industry trends.

Company Guidance and Strategic Initiatives:

• Product Innovation: The November 2025 co-development and licensing agreement outlines future obligations extending into 2026 and 2027, signaling plans to launch new AI-powered diagnostic features and potentially new hardware iterations.
• Market Expansion: The company aims to deepen penetration in existing markets and explore new geographic regions, particularly in areas with limited access to traditional imaging.
• Subscription Growth: A continued push to convert product sales into long-term subscription relationships remains a priority for stable revenue growth.
• Clinical Validation: Further clinical studies and publications are expected to demonstrate the utility and impact of the technology, driving broader adoption among healthcare professionals.
• Guidance: For fiscal year 2026, the company anticipates revenue in the range of $95 million to $105 million, reflecting continued growth, and expects to further reduce its net loss as it scales operations.

Industry Trends and Potential Impact:

Several industry trends and potential regulatory shifts could impact Butterfly Network:

• Rise of Telehealth and Remote Monitoring: The increasing adoption of telehealth services creates a significant opportunity for portable diagnostic tools like the Butterfly iQ+, enabling remote examinations and diagnostics.
• AI in Healthcare: The rapid advancement and integration of AI in medical diagnostics presents both an opportunity (for Butterfly Network's AI-powered features) and a challenge (if competitors develop superior AI solutions). Regulatory bodies are also developing frameworks for AI in medical devices, which could introduce new compliance requirements.
• Value-Based Care: The shift towards value-based care models in healthcare encourages cost-effective solutions. Butterfly Network's affordable and accessible technology aligns well with this trend.
• Global Health Initiatives: An increased focus on improving healthcare access in underserved regions globally presents a large potential market for portable devices.
• Data Privacy Regulations: Evolving global data privacy regulations (e.g., GDPR, HIPAA) require continuous compliance efforts, especially for a company handling sensitive patient data through its cloud platform.