Butterfly Network (NYSE:BFLY) reported record second-quarter revenue and raised its full-year outlook, citing growth in its Embedded business, enterprise point-of-care ultrasound sales and progress toward commercializing its home and community care offering.
Revenue for the quarter ended June 30 totaled $32.6 million, up 39% from a year earlier, Chief Financial Officer John Doherty said. The company said the result exceeded the high end of its guidance range and was driven primarily by Butterfly Embedded, its program that licenses and supplies its Ultrasound-on-Chip technology to partners developing new imaging applications.
Embedded business drives growth
Embedded revenue rose 439% year over year to $10.8 million in the second quarter, primarily reflecting the company’s partnership with Midjourney, Doherty said. Butterfly’s core business, which includes probe sales, related software, Compass AI and other services, generated $21.9 million, up 2% from the comparable period last year.
Chief Executive Officer Joseph DeVivo said Butterfly added two Embedded partners during the quarter, bringing the total to 11. One partner is a brain-computer-interface company developing a new application, while another is pursuing a wearable device focused on a women’s health use case.
DeVivo said the Embedded model is designed to scale because partners use Butterfly’s existing semiconductor platform rather than requiring the company to develop a separate chip for every customer. Revenue from the segment currently includes non-recurring engineering payments, annual license fees, statement-of-work development revenue and chip sales.
Doherty said the company has previously expected Embedded revenue to run at roughly $7 million to $8 million per quarter, with potential fluctuations. He said new partners and the future commercialization of existing partner programs could add to that level over time.
The company said it has completed the primary design of its Apollo chip platform and has moved into the development phase. DeVivo said Butterfly remains on schedule to deliver Apollo chips to Midjourney by the end of 2027 or the beginning of 2028.
Core sales, medical schools and software
U.S. revenue was $27.6 million, up 57% year over year, as Embedded revenue and core demand contributed to the result. Probe unit sales rose 23%. International revenue declined 14% to $5 million, which management attributed to a difficult comparison with the prior year’s iQ3 launch period and several larger orders shifting into the third quarter.
Butterfly said it recently received regulatory authorization in Brazil, which DeVivo described as the largest medical-device market in Latin America and a significant long-term opportunity for the company.
Sales of the iQ3 and iQ+ probes increased 17% and 33%, respectively, from a year earlier. However, average selling price declined 12%, reflecting a larger mix of iQ+ sales and preferred pricing included in a new agreement with Edward Via College of Osteopathic Medicine, or VCOM.
The VCOM agreement is a four-year arrangement with potential total contract value exceeding $10 million. Under the partnership, VCOM plans to provide incoming students with iQ3 devices, while Butterfly subsidized initial iQ+ distributions to upperclassmen. Doherty said the arrangement is included entirely within the core business rather than Embedded revenue.
Butterfly also signed six enterprise software agreements for Compass AI during the quarter. DeVivo said many of those agreements were paired with probe sales, and the Compass AI pipeline has increased fivefold since last year.
- Butterfly said it has a presence at more than 80% of U.S. medical schools.
- The company placed nearly 1,000 probes across six medical schools in the first quarter and more than doubled that volume through four additional institutional partnerships in the second quarter.
- Butterfly received provisional authorization to sell to the full Department of Veterans Affairs and expects full FedRAMP certification in the third quarter.
Home care launch and product roadmap
Butterfly plans to begin managing its first commercial state for its home and community care business on Oct. 1. The company expects to train participating nurses during the third quarter and begin recognizing revenue from the program in the fourth quarter.
Doherty said home and community care is included in the company’s guidance, though its 2026 contribution will be limited because the launch begins late in the year. He said the business is expected to generate multiple millions of dollars in 2027.
DeVivo said the initial program will focus on congestive heart failure patients in skilled nursing facilities. Butterfly expects its model to include a fee based on the size of the patient population under management and a variable fee tied to the number of scans performed. The company is targeting reductions in admissions and readmissions among those patients.
In Butterfly Garden, the company released its proprietary beam-steering capabilities, including iQ Slice and Fan, to Garden and Embedded partners. Butterfly added a new Garden partner focused on AI-enabled precision needle guidance and expects three existing partner tools to become commercially available by year-end.
Butterfly also said it remains on track to launch a next-generation probe based on its P5.1 chip in the first quarter of 2027. DeVivo said the device is expected to include harmonic imaging and will be followed later in 2027 by the planned iQ Station entry into the ultrasound cart market.
Outlook raised
For the third quarter, Butterfly forecast revenue of $26 million to $30 million, representing 30% year-over-year growth at the midpoint, and an adjusted EBITDA loss of $6 million to $9 million.
For full-year 2026, the company raised its revenue outlook to $119 million to $123 million, representing growth of approximately 22% to 26% over 2025. Butterfly now expects an adjusted EBITDA loss of $19 million to $23 million for the year.
Butterfly ended the quarter with $125 million in cash and cash equivalents, excluding restricted cash. Cash use during the quarter was $13.3 million, compared with $7 million in the prior-year period.
About Butterfly Network (NYSE:BFLY)
Butterfly Network, Inc is a medical technology company focused on democratizing access to diagnostic imaging through its proprietary ultrasound-on-chip platform. The company’s flagship device, the Butterfly iQ, leverages semiconductor technology to deliver whole-body ultrasound imaging in a handheld form factor. This portable system connects to a compatible smart device, enabling point-of-care scanning across a variety of clinical settings.
Beyond its hardware offering, Butterfly Network provides a cloud-based software suite that supports image storage, analysis and remote collaboration.
