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What changed in Butterfly Network, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Butterfly Network, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+288 added−278 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-04)

Top changes in Butterfly Network, Inc.'s 2024 10-K

288 paragraphs added · 278 removed · 229 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

105 edited+18 added−7 removed132 unchanged
Biggest changeDisputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including: ● the scope of rights granted under the license agreement and other interpretation-related issues; ● whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; ● our right to sublicense patent and other rights to third parties under collaborative development relationships; ● our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations; and ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners. ​ If disputes over licensed intellectual property prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product, or the dispute may have an adverse effect on our results of operations. ​ If we or any of our partners are sued for infringing the intellectual property rights of third parties, such litigation would be costly and time consuming, and an unfavorable outcome in any such litigation could have a material adverse effect on our business.
Biggest changeDisputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our right to sublicense patent and other rights to third parties under collaborative development relationships; 34 Table of Contents • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
An interruption in our operations could occur if we encounter delays or difficulties in securing these materials and components, or if the quality of the materials and components supplied do not meet our requirements, or if we cannot then obtain an acceptable substitute.
An interruption in our operations could occur if we encounter delays or difficulties in securing these materials and components, if the quality of the materials and components supplied do not meet our requirements, or if we cannot then obtain an acceptable substitute.
Because medical devices may only be marketed for cleared or approved indications, this could significantly limit the market for that product and may adversely affect our results of operations. Our business is subject to unannounced inspections by FDA to determine our compliance with FDA requirements.
Because medical devices may only be marketed for cleared or approved indications, this could significantly limit the market for that product and may adversely affect our results of operations. Our business is subject to unannounced inspections by the FDA to determine our compliance with FDA requirements.
If we fail to maintain the effectiveness of our internal controls or fail to comply in a timely manner with the requirements of the Sarbanes-Oxley Act, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, this could have a material adverse effect on our business.
If we fail to maintain the effectiveness of our internal controls, fail to comply in a timely manner with the requirements of the Sarbanes-Oxley Act, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, this could have a material adverse effect on our business.
Our certificate of incorporation provides that, unless we consent to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of the Company; (ii) action asserting a claim of breach of a fiduciary duty owed by, or any other wrongdoing by, any current or former director, officer or other employee or stockholder of the Company; (iii) action asserting a claim against the Company arising pursuant to any provision of the DGCL or our certificate of incorporation or our bylaws; (iv) action to interpret, apply, enforce, or determine the validity of any provisions in the certificate of incorporation of bylaws; or (v) action asserting a claim against the company or any director or officer of the Company governed by the internal affairs doctrine, shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.
Our certificate of incorporation provides that, unless we consent to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of the Company; (ii) action asserting a claim of breach of a fiduciary duty owed by, or any other wrongdoing by, any current or former director, officer, or other employee or stockholder of the Company; (iii) action asserting a claim against the Company arising pursuant to any provision of the DGCL, our certificate of incorporation, or our bylaws; (iv) action to interpret, apply, enforce, or determine the validity of any provisions in the certificate of incorporation or bylaws; or (v) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine, shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.
Our ability to compete successfully may be adversely affected by factors such as: ● the introduction of new products or product enhancements by competitors ● the development of new technology or the application of known or unknown technology ● a failure to satisfy local market conditions and regulations, such as mandatory IP transfers, protectionist measures, and other government policies supporting increased local competition; ● the emergence of new market entrants; ● a failure to maintain or expand relationships with existing customers or attract new customers; 30 Table of Contents ● cost of production or delivery, whether due to geographic location, currency fluctuations, taxes, duties, or otherwise, which may enable our competitors to offer greater discounts or lower prices; ● the perception of our brand and image in the market; ● a failure to successfully enter new geographic or adjacent product markets; ● changing regulatory standards, legal requirements, or enforcement rigor; or ● consolidation among customers, suppliers, channel partners, or competitors. ​ Our inability to obtain and maintain regulatory authorizations for and supply commercial quantities of our offerings as quickly and effectively as our competitors could limit market acceptance.
Our ability to compete successfully may be adversely affected by factors such as: • the introduction of new products or product enhancements by competitors; • the development of new technology or the application of known or unknown technology; • a failure to satisfy local market conditions and regulations, such as mandatory IP transfers, protectionist measures, and other government policies supporting increased local competition; • the emergence of new market entrants; • a failure to maintain or expand relationships with existing customers or attract new customers; • cost of production or delivery, whether due to geographic location, currency fluctuations, taxes, duties, or otherwise, which may enable our competitors to offer greater discounts or lower prices; • the perception of our brand and image in the market; • a failure to successfully enter new geographic or adjacent product markets; • changing regulatory standards, legal requirements, or enforcement rigor; or • consolidation among customers, suppliers, channel partners, or competitors. 26 Table of Contents Our inability to obtain and maintain regulatory authorizations for, and supply commercial quantities of, our offerings as quickly and effectively as our competitors are able to could limit market acceptance.
It is possible that, for any of our patents that have granted or that may be granted in the future, others will design alternatives that do not infringe upon our patented technologies.
It is possible that, for any of our patents that have been granted or that may be granted in the future, others will design alternatives that do not infringe upon our patented technologies.
If a third party claims that we or any of our licensors, customers or collaboration partners infringe upon a third party’s intellectual property rights, we may have to: ​ ● seek licenses that may not be available on commercially reasonable terms, if at all; ● abandon any infringing product or redesign our products or processes to avoid infringement; ● pay substantial damages including, in an exceptional case, treble damages and attorneys’ fees, which we may have to pay if a court decides that the product or proprietary technology at issue infringes upon or violates the third-party’s rights; ● pay substantial royalties or fees or grant cross-licenses to our technology; or ● defend litigation or administrative proceedings that may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. ​ Competitors may infringe our patents or the patents that we license.
If a third party claims that we or any of our licensors, customers, or collaboration partners infringe upon a third party’s intellectual property rights, we may have to: • seek licenses that may not be available on commercially reasonable terms, if at all; • abandon any infringing product or redesign our products or processes to avoid infringement; • pay substantial damages including, in an exceptional case, treble damages and attorneys’ fees, which we may have to pay if a court decides that the product or proprietary technology at issue infringes upon or violates the third-party’s rights; • pay substantial royalties or fees or grant cross-licenses to our technology; or • defend litigation or administrative proceedings that may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources.
Rothberg holds all of the issued and outstanding shares of our Class B common stock and holds approximately 77% of the voting power of our capital stock and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions.
Rothberg holds all of the issued and outstanding shares of our Class B common stock and holds approximately 75% of the voting power of our capital stock and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments of our organizational documents, and any merger, consolidation, or sale of all or substantially all of our assets or other major corporate transactions.
These laws are complex and far-reaching in nature, and, as a result, we cannot assure investors that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof. ​ Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition, or results of operations.
These laws are complex and far-reaching in nature, and, as a result, we cannot assure investors that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof. 27 Table of Contents Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition, or results of operations.
For a discussion on the relevant regulatory regime, see , in Item 1, Business – Government Regulation. We cannot assure that any new medical devices or new uses or modifications for our FDA-cleared devices will be cleared or approved in a timely or cost-effective manner, if cleared or approved at all.
For a discussion on the relevant regulatory regime, see , in Item 1, Business – Government Regulation . We cannot assure that any new medical devices or new uses or modifications for our FDA-cleared or CE-marked devices will be cleared or approved in a timely or cost-effective manner, if cleared or approved at all.
Significant changes in our stock price or number of warrants outstanding may adversely affect our net income (loss) in our consolidated statements of operations.
Significant changes in our stock price or number of warrants outstanding may adversely affect our net loss in our consolidated statements of operations.
The alleged class consists of all persons or entities who purchased or otherwise acquired the Company’s stock between February 16, 2021 and November 15, 2021 and/or holders as of the record date for the special meeting of shareholders held on February 12, 2021 in connection with the approval of the Business Combination.
The alleged class consists of all persons or entities who purchased or otherwise acquired the Company’s stock between January 12, 2021 and November 15, 2021 and/or holders as of the record date for the special meeting of shareholders held on February 12, 2021 in connection with the approval of the Business Combination.
In the event we are unable to leverage existing or predicate devices for future products, we may experience delays and additional costs to obtain FDA approval for such future products. Even if such clearances or approvals are received, they may not be for all indications for which we pursue.
In the event we are unable to leverage existing or predicate devices for future products, we may experience delays and additional costs to obtain FDA approval or CE marking for such future products. Even if such clearances or approvals are received, they may not be for all indications for which we pursue.
Such interruptions may occur for several reasons, including as a result of regulatory enforcement actions, tight credit markets or other financial distress, production constraints or difficulties, unscheduled downtimes, war, severe weather and natural disasters, fires and explosions, accidents, mechanical 32 Table of Contents failures, pandemics, civil unrest, strikes, unpermitted releases of toxic or hazardous substances, other EH&S risks, sabotage, cybersecurity attacks, riots, or terrorist attacks.
Such interruptions may occur for several reasons, including as a result of regulatory enforcement actions, tight credit markets or other financial distress, production constraints or difficulties, unscheduled downtimes, war, severe weather and natural disasters, fires and explosions, accidents, mechanical failures, pandemics, civil unrest, strikes, unpermitted releases of toxic or hazardous substances, other EH&S risks, sabotage, cybersecurity attacks, riots, or terrorist attacks.
We have and may continue to experience pricing pressures from contract suppliers or manufacturers on which we rely. Due to supply constraints, we have seen our costs increase in 2022 but we were largely able to offset these costs through manufacturing efficiencies and pricing actions.
We have and may continue to experience pricing pressures from contract suppliers or manufacturers on which we rely. Due to supply constraints, we have seen our costs increase in 2024, but we were largely able to offset these costs through manufacturing efficiencies and pricing actions.
Acquisitions or joint ventures could disrupt our business, cause dilution to our stockholders and otherwise harm our business. We may acquire other businesses, products or technologies as well as pursue strategic alliances, joint ventures, technology licenses or investments in complementary businesses.
Acquisitions, joint ventures, or other strategic transactions could disrupt our business, cause dilution to our stockholders, and otherwise harm our business. We may acquire other businesses, products, or technologies as well as pursue strategic alliances, joint ventures, technology licenses, investments in complementary businesses, or other strategic initiatives.
Our relationships with customers and third-party payors are subject to broadly applicable fraud and abuse and other health care laws and regulations that may constrain Butterfly’s sales, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs and certain customer and product support programs, we may have with hospitals, physicians or other purchasers of medical devices.
Our relationships with customers and third-party payers are subject to broadly applicable fraud and abuse and other health care laws and regulations that may constrain our sales, marketing, and other promotional activities by limiting the kinds of financial arrangements, including sales programs and certain customer and product support programs, we may have with hospitals, physicians, or other purchasers of medical devices.
Many of these providers attempt to impose limitations on their liability for such errors, defects or failures, and if enforceable, we may have additional liability to our customers or third-party providers that could harm our reputation and increase our operating costs. ​ We will need to maintain our relationships with third-party software providers and to obtain software from such providers that does not contain any errors or defects.
Many of these providers attempt to impose limitations on their liability for such errors, defects, or failures, and if enforceable, we may have additional liability to our customers or third-party providers that could harm our reputation and increase our operating costs. 36 Table of Contents We will need to maintain our relationships with third-party software providers and to obtain software from such providers that does not contain any errors or defects.
In February 2020, we initiated a voluntary recall of two software tools after being notified by the FDA that each of them required 5109(k) clearance. The FDA evaluated the recall and subsequently terminated it in June 2020.
In February 2020, we initiated a voluntary recall of two software tools after being notified by the FDA that each of them required 510(k) clearance. The FDA evaluated the recall and subsequently terminated it in June 2020.
These risks apply to our installed base of products, products we currently sell, new products we will introduce in the future, and older technology that we no longer 35 Table of Contents sell or service but remains in use by customers. Additionally, we offer software and cloud products that are developed by, controlled by, or are hosted by third-party providers.
These risks apply to our installed base of products, products we currently sell, new products we will introduce in the future, and older technology that we no longer sell or service but remains in use by customers. Additionally, we offer software and cloud products that are developed by, controlled by, or are hosted by third-party providers.
In addition to FDA implications, the use of comparative claims also presents risk of a lawsuit by the competitor under federal and state false advertising and unfair competition statutes (e.g., the Lanham Act) or unfair and deceptive trade practices law, and possibly also state libel law, or other similar foreign laws.
In addition to FDA implications, the use of comparative claims also presents risk of a lawsuit by the competitor under federal and state false advertising and unfair competition statutes (e.g., the Lanham Act) or unfair and deceptive trade practices law, and possibly also state libel law, or other similar foreign 29 Table of Contents laws.
The objectives of these cyber-attacks vary widely and may include, among other things, unauthorized access to personal, customer, or third-party information, disruptions in operations and the provision of services to customers, or theft of IP or other sensitive assets or information belonging to us, our business partners, or customers.
The objectives of these cyber-attacks vary widely and may include, among other things, unauthorized access to personal, customer, or third-party information, disruptions in operations and the provision of services to customers, or theft of IP or 31 Table of Contents other sensitive assets or information belonging to us, our business partners, or customers.
The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. If we fail to comply with the GDPR, the U.K. GDPR, and the U.K.
The GDPR also confers a private right of 30 Table of Contents action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. If we fail to comply with the GDPR, the U.K. GDPR, and the U.K.
As part of a business 39 Table of Contents strategy to impede our successful commercialization and entry into new markets, competitors may claim that our products and/or services infringe their intellectual property rights and may suggest that we enter into license agreements.
As part of a business strategy to impede our successful commercialization and entry into new markets, competitors may claim that our products and/or services infringe their intellectual property rights and may suggest that we enter into license agreements.
This action may divert management resources, we may incur substantial costs, and any unfavorable outcome may have a material adverse effect on our financial condition, results of operations and cash flows. ​ General Risk Factors The price of our common stock historically has been volatile, which may affect the price at which you could sell any shares of our common stock.
These actions may divert management resources, we may incur substantial costs, and any unfavorable outcome may have a material adverse effect on our financial condition, results of operations, and cash flows. General Risk Factors The price of our common stock historically has been volatile, which may affect the price at which you could sell any shares of our common stock.
As of February 1, 2023, there were 13,799,357 outstanding public warrants to purchase 13,799,357 shares of our Class A common stock at an exercise price of $11.50 per share.
As of February 13, 2025, there were 13,799,357 outstanding public warrants to purchase 13,799,357 shares of our Class A common stock at an exercise price of $11.50 per share.
Further, we cannot assure investors that other parties will not challenge any patents granted to us or that courts or regulatory agencies will hold our patents to be valid or enforceable. We cannot guarantee investors that we will be successful in 37 Table of Contents defending challenges made against our patents and patent applications.
Further, we cannot assure investors that other parties will not challenge any patents granted to us, or that courts or regulatory agencies will hold our patents to be valid or enforceable. We cannot guarantee investors that we will be successful in defending challenges made against our patents and patent applications.
We cannot predict the number, timing or size of future joint ventures or acquisitions, if any, or the effect that any such transactions might have on our operating results.
We cannot predict the number, timing, or size of future joint ventures, acquisitions, or other strategic transactions, or the effect that any such transactions might have on our operating results.
Furthermore, our markets are continually evolving and thus revenues and income are difficult to forecast. Any of these competitive factors could adversely affect our pricing, margins, and market share and have a material adverse effect on our business results, cash flows, financial condition, or prospects.
Furthermore, our markets are continually evolving and thus revenues and income are difficult to forecast. Any of these competitive factors could adversely affect our pricing, margins, and market share and have a material adverse effect on our business results, cash flows, financial condition, or prospects. Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.
The dual class structure of our common stock has the effect of concentrating voting power with the chairman of our board of directors and founder, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.
The dual class structure of our common stock has the effect of concentrating voting power with our founder, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.
If we are able to find a 28 Table of Contents replacement supplier, such replacement supplier would need to be qualified and may require additional regulatory inspection or approval, which could result in further delay.
If we are able to find a replacement supplier, such replacement supplier would need to be qualified and may require additional regulatory inspection or approval, which could result in further delay.
However, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset post-change taxable income.
However, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset post-change taxable income. State NOLs and other tax attributes may be similarly limited.
This volatility may affect the price at which you could sell the shares of our common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock.
This volatility may affect the price at which you could sell the shares of our common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our common 39 Table of Contents stock.
Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including: ​ ● the success of our or competing products or technologies; ● developments or disputes concerning issued patents, patent applications or other intellectual property rights; ● regulatory or legal developments in the U.S. and other countries; ● the recruitment or departure of key personnel; 44 Table of Contents ● the level of expenses related to our products; ● the results of our efforts to discover, develop, manufacture, acquire or in-license our current and additional products; ● actual or anticipated changes in estimates as to financial results, timelines or recommendations by securities analysts; ● variations in our financial results or the financial results of companies that are perceived to be similar to us; ● sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares; ● changes in the structure of healthcare payment systems; ● general economic, industry and market conditions; and ● the other factors summarized and described in this Risk Factors section. ​ Companies trading in the stock market in general have also experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.
Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including: • the success of our or competing products or technologies; • developments or disputes concerning issued patents, patent applications, or other intellectual property rights; • regulatory or legal developments in the U.S. and other countries; • the recruitment or departure of key personnel; • the level of expenses related to our products; • the results of our efforts to discover, develop, manufacture, acquire, or in-license our current and additional products; • actual or anticipated changes in estimates as to financial results, timelines, or recommendations by securities analysts; • variations in our financial results or the financial results of companies that are perceived to be similar to us; • sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares; • changes in the structure of healthcare payment systems; • general economic, industry, and market conditions; and • the other factors summarized and described in this Risk Factors section.
To continue to develop our sales and marketing organization to successfully achieve market awareness and sell our products, we must: ● continue to recruit and retain adequate numbers of effective and experienced sales and marketing personnel; ● effectively train our sales and marketing personnel in the benefits and risks of our products; ● establish and maintain successful sales, marketing, training and education programs that educate health care professionals so they can appropriately inform their patients about our products; ● manage geographically dispersed sales and marketing operations; and ● effectively train our sales and marketing personnel on the applicable fraud and abuse laws that govern interactions with healthcare practitioners as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance. ​ We may not be able to successfully manage our sales force or increase our product sales at acceptable rates.
To continue to develop our sales and marketing organization to successfully achieve market awareness and sell our products, we must: • continue to recruit and retain adequate numbers of effective and experienced sales and marketing personnel; • effectively train our sales and marketing personnel in the benefits and risks of our products; • establish and maintain successful sales, marketing, training, and education programs that educate health care professionals so they can appropriately inform their patients about our products; • manage geographically dispersed sales and marketing operations; and • effectively train our sales and marketing personnel on the applicable fraud and abuse laws that govern interactions with healthcare practitioners as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance.
We must continue to develop and grow our sales and marketing organization and enter into partnerships or other arrangements to market and sell our products and/or collaborate with third parties, including distributors and others, to market and sell our products to maintain the commercial success of Butterfly iQ+ and to achieve commercial success for any of our future products.
We must continue to develop and grow our sales and marketing organization and enter into partnerships or other arrangements to market and sell our products and/or collaborate with third parties, including distributors and others, to market and sell our products to maintain the commercial success of our devices and to achieve commercial success for any 25 Table of Contents of our future products.
A cybersecurity breach of our systems or products, of our customers’ or service providers’ network security and systems, or of other third-party services could disrupt treatment being delivered to patients or interfere with our customers’ operations, and could lead to the loss of, damage to, or public disclosure of our employees’ and customers’ stored information, including personal data, such as individually identifiable health information (“protected health information” or “PHI”).
A cybersecurity breach of our systems or products, of our customers’ or service providers’ network security and systems, or of other third-party services could disrupt treatment being delivered to patients or interfere with our customers’ operations, and could lead to the loss of, damage to, or public disclosure of our employees’ and customers’ stored information, including personal data, such as PHI.
They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could.
They are, therefore, likely to be able to sustain the costs of complex patent litigation longer 35 Table of Contents than we could.
On February 16, 2022, a purported class action lawsuit was filed against us, certain of our executive officers and directors, and certain of Longview’s executive officers and directors prior to the Business Combination, alleging violations of the Exchange Act and Rule 10b-5 and Rule 14a-9 promulgated thereunder.
On February 16, 2022, a purported class action lawsuit was filed against us, certain of our executive officers and directors, and certain of Longview’s executive officers and directors prior to the Business Combination, that, as amended, alleges violations of the Securities Act, Exchange Act, and Rule 10b-5 and Rule 14a-9 promulgated thereunder.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations. ​ Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including changes in inflation, interest rates and overall economic conditions and uncertainties.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including changes in inflation, interest rates, and overall economic conditions and uncertainties.
We rely on limited or sole suppliers for some of the materials and components used in our products, and we may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations and reputation.
Our inability to successfully manufacture our products would have a material adverse effect on our operating results. 24 Table of Contents We rely on limited or sole suppliers for some of the materials and components used in our products, and we may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations, and reputation.
While we intend to vigorously defend against this action, there is no assurance that we will be successful in the defense or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of the action.
While we intend to vigorously defend against these actions, there is no assurance that we will be successful in the defense or that insurance will be available or adequate to fund any settlement or judgment or the litigation and indemnification costs of the actions.
State NOLs and other tax attributes may be similarly limited. Any such limitations may result in increased tax liabilities that could adversely affect our business, results of operations, financial position and cash flows. ​ 31 Table of Contents We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws by us or our agents.
Any such limitations may result in increased tax liabilities that could adversely affect our business, results of operations, financial position and cash flows. We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws by us or our agents.
In addition, as of February 1, 2023, there were 6,853,333 private 41 Table of Contents placement warrants outstanding exercisable for 6,853,333 shares of our Class A common stock at an exercise price of $11.50 per share.
In addition, as of February 13, 2025, there were 6,853,333 private placement warrants outstanding exercisable for 6,853,333 shares of our Class A common stock at an exercise price of $11.50 per share.
We are not currently subject to any product liability claims; however, any future product liability claims against us, regardless of their merit, may result in negative publicity about us that could ultimately harm our reputation and could have a material adverse effect on our business, financial condition, results of operations. ​ We are currently subject to a securities class action lawsuit, the unfavorable outcome of which may have a material adverse effect on our financial condition, results of operations and cash flows.
We are not currently subject to any product liability claims; however, any future product liability claims against us, regardless of their merit, may result in negative publicity about us that could ultimately harm our reputation and could have a material adverse effect on our business, financial condition, and results of operations.
In addition, the uncertainties associated with litigation, or an adverse outcome, could have a material adverse effect on our ability to raise any funds necessary to continue our operations, continue our internal research programs, in-license needed technology, expose us to significant liabilities, or enter into development partnerships that would help us bring our products to market. ​ Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our products.
In addition, the uncertainties associated with litigation, or an adverse outcome, could have a material adverse effect on our ability to raise any funds necessary to continue our operations, continue our internal research programs, in-license needed technology, expose us to significant liabilities, or enter into development partnerships that would help us bring our products to market.
Any failure to do so could adversely impact our ability to deliver reliable products to our customers and could harm our reputation and results of operations. Risks Related to Our Securities and to Being a Public Company The Company’s outstanding warrants became exercisable for the Company’s Class A common stock upon the first anniversary of Longview’s initial public offering.
Any failure to do so could adversely impact our ability to deliver reliable products to our customers and could harm our reputation and results of operations. Risks Related to Our Securities and to Being a Public Company The Company’s outstanding warrants became exercisable for the Company’s Class A common stock on May 26, 2021.
In the event of infringement or unauthorized use, we may file one or more infringement lawsuits, which can also be expensive and time-consuming.
Competitors may infringe our patents or the patents that we license. In the event of infringement or unauthorized use, we may file one or more infringement lawsuits, which can also be expensive and time-consuming.
A substantial reduction in sales could have a material adverse effect on our operating performance. To the extent that we enter into additional arrangements with third parties to perform sales or marketing services in the United States, Europe or other countries, our product margins could be lower than if we directly marketed and sold our products.
To the extent that we enter into additional arrangements with third parties to perform sales or marketing services in the United States, Europe, or other countries, our product margins could be lower than if we directly marketed and sold our products.
Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of unapproved, or off-label, uses.However, if the FDA determines that our promotional materials or training materials promote a 510(k)-cleared or approved medical device in a manner inconsistent with its labeling, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an Untitled Letter, a Warning Letter, injunction, seizure, civil fine or criminal penalties.
However, if the FDA determines that our promotional materials or training materials promote a 510(k)-cleared or approved medical device in a manner inconsistent with its labeling, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an Untitled Letter, a Warning Letter, injunction, seizure, civil fine, or criminal penalties.
While we have undertaken efforts to mitigate cybersecurity risks, these efforts may not prevent all incidents. ​ If we were to experience a significant cybersecurity breach of our information systems or data, the costs associated with the investigation, remediation, and potential notification of the breach to customers, regulators, and counterparties, as well as any related litigation expenses, fines, penalties, or damages, could be material.
If we were to experience a significant cybersecurity breach of our information systems or data, the costs associated with the investigation, remediation, and potential notification of the breach to customers, regulators, and counterparties, as well as any related litigation expenses, fines, penalties, or damages, could be material. In addition, our remediation efforts may not be successful.
Such an event could have serious negative consequences, including alleged customer or patient harm, obligations to notify enforcement authorities or users of our products, voluntary or forced recalls of or modifications to our products, regulatory actions, fines, penalties and damages, reduced demand for or use of our offerings by customers, harm to our reputation, and time-consuming and expensive litigation, any of which could have a material adverse effect on our business results, cash flows, financial condition, or prospects. ​ There are increasingly large volumes of information, including patient data, being generated that need to be securely processed and stored by healthcare organizations.
Such an event could have serious negative consequences, including alleged customer or patient harm, obligations to notify enforcement authorities or users of our products, voluntary or forced recalls of or modifications to our products, regulatory actions, fines, penalties and damages, reduced demand for or use of our offerings by customers, harm to our reputation, and time-consuming and expensive litigation, any of which could have a material adverse effect on our business results, cash flows, financial condition, or prospects.
Any of these transactions could be material to our financial condition and operating results and expose us to many risks, including: ● disruption in our relationships with customers, distributors, manufacturers or suppliers as a result of such a transaction; ● unanticipated liabilities related to acquired companies; ● difficulties integrating acquired personnel, technologies and operations into our existing business; ● diversion of management’s time and focus away from operating our business to acquisition integration challenges; ● increases in our expenses and reductions in our cash available for operations and other uses; and ● possible write-offs or impairment charges relating to acquired businesses. ​ Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to the integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.
Any of these transactions could be material to our financial condition and operating results and expose us to many risks, including: • disruption in our relationships with customers, distributors, manufacturers, or suppliers as a result of such a transaction; • unanticipated liabilities related to acquired companies; • difficulties integrating acquired personnel, technologies, and operations into our existing business; • diversion of management’s time and focus away from operating our business to acquisition integration challenges; • increases in our expenses and reductions in our cash available for operations and other uses; and • possible write-offs or impairment charges relating to acquired businesses.
We are unable to predict what tax reforms may be proposed or enacted in the future or what effect such changes would have on our business; however, such changes could potentially result in higher tax expense and payments, along with increasing the complexity, burden, and cost of compliance. ​ Our ability to use net operating losses and certain other tax assets to offset future income may be subject to certain limitations.
We are unable to predict what tax reforms may be proposed or enacted in the future or what effect such changes would have on our business; however, such changes could potentially result in higher tax expense and payments, along with increasing the complexity, burden, and cost of compliance.
There has been an extension to the Framework to cover U.K. transfers to the United States. The Framework could be challenged like its predecessor frameworks. This complexity and the additional contractual burden increases our overall risk exposure.
There has been an extension to the Framework to cover U.K. transfers to the United States. The Framework could be challenged like its predecessor frameworks. This complexity and the additional contractual burden increases our overall risk exposure. There may be further divergence in the future, including with regard to administrative burdens.
These anti-takeover 42 Table of Contents provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire the Company, even if the third party’s offer may be considered beneficial by many of our stockholders.
These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire the Company, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.
Our wafer bonding technology for use in ultrasound applications is licensed co-exclusively to us from Stanford until the end of December 2023, at which time the license becomes non-exclusive. We also license on a non-exclusive basis 7 active patents from Stanford. We do not own the patents that underlie these licenses.
Our wafer bonding technology for use in ultrasound applications is licensed to us from Stanford on a non-exclusive basis. We also license on a non-exclusive basis 7 active patents from Stanford. We do not own the patents that underlie these licenses.
Shares of our Class B common stock have 20 votes per share, while shares of our Class A common stock have one vote per share. As of February 1, 2023, Dr.
Shares of our Class B common stock have 20 votes per share, while shares of our Class A common stock have one vote per share. As of December 31, 2024, Dr.
Implementation of further legislative or administrative reforms to these reimbursement systems, or adverse decisions relating to coverage of or reimbursement for our products by administrators of these systems, could have an impact on the acceptance of and demand for our products and the prices that our customers are willing to pay for them ​ We are subject to stringent privacy laws and information security policies and regulations.
Implementation of further legislative or administrative reforms to these reimbursement systems, or adverse decisions relating to coverage of or reimbursement for our products by administrators of these systems, could have an impact on the acceptance of and demand for our products and the prices that our customers are willing to pay for them We are subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters.
In addition, the anticipated benefit of any acquisition may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition.
Future acquisitions, dispositions, or other strategic initiatives could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, or write-offs of goodwill, any of which could harm our financial condition.
This concentrated control may have the effect of delaying, preventing or deterring a change in control of the Company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of the Company, and may affect the market price of shares of our Class A common stock.
This concentrated control may have the effect of delaying, preventing or deterring a change in control of the Company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of the Company, and may affect the market price of shares of our Class A common stock. 37 Table of Contents Delaware law and provisions in our certificate of incorporation and bylaws could make a takeover proposal more difficult.
Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects. ​ ​ Item 1B. UNRESOLVED STAFF COMMENTS None. ​ ​ ​
In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations, and growth prospects. Item 1B. UNRESOLVED STAFF COMMENTS None.
In some jurisdictions, we are expected to design our products to include appropriate cybersecurity protections, and regulatory authorities may review such protections when granting marketing authorizations.
Our products often are connected to, and reside within, our customers’ information technology (“IT”) infrastructures. In some jurisdictions, we are expected to design our products to include appropriate cybersecurity protections, and regulatory authorities may review such protections when granting marketing authorizations.
Some open source licenses may contain unfavorable requirements that could allow our competitors to create similar products with less development effort and time and ultimately could result in a loss of product sales. ​ Although we intend to monitor any use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that any such licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products.
Although we intend to monitor any use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that any such licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products.
Termination of our license agreements with Stanford would have a material adverse effect on our business. ​ In addition, we are a party to a number of other agreements that include licenses to intellectual property, including non-exclusive licenses. We may need to enter into additional license agreements in the future.
In addition, we are a party to a number of other agreements that include licenses to intellectual property, including non-exclusive licenses. We may need to enter into additional license agreements in the future.
The laws governing patent prosecution and enforcement are subject to change in unpredictable ways and such changes may be influenced by rulings of courts and other administrative bodies.
The laws governing patent prosecution and enforcement are subject to change in unpredictable ways, and such changes may be influenced by rulings of courts and other administrative bodies. These changes may weaken our ability to obtain new patents and/or enforce the rights of our existing patents.
Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. ​ If we fail to protect our intellectual property, third parties may be able to compete more effectively against us, we may lose our technological or competitive advantage, or we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.
If we fail to protect our intellectual property, third parties may be able to compete more effectively against us, we may lose our technological or competitive advantage, or we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.
Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. ​ Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations and result in a diversion of the time and resources of our management and board of directors.
Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, the coverage may not be adequate to protect us against any future product liability claims.
Although we have insurance at levels that we believe to be appropriate, this insurance is subject to deductibles and coverage limitations. Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, the coverage may not be adequate to protect us against any future product liability claims.
If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, independently or with others, our future revenue may be reduced and our business may be harmed. 29 Table of Contents If we are unable to continue the development of an adequate sales and marketing organization and/or if our direct sales organization is not successful, we may have difficulty achieving market awareness and selling our products in the future.
If we are unable to continue the development of an adequate sales and marketing organization and/or if our direct sales organization is not successful, we may have difficulty achieving market awareness and selling our products in the future.
Our principal obligations under the license agreements with Stanford include the following: ● royalty payments; ● meeting certain milestones pertaining to development, commercialization and sales of products using the licensed technology; ● annual maintenance fees; 38 Table of Contents ● using commercially reasonable efforts to develop and sell a product using the licensed technology and developing a market for such product; and ● providing certain reports. ​ If we breach any of these obligations, Stanford may have the right to terminate the licenses, which could result in us being unable to develop, manufacture and sell products using the licensed technology.
Our principal obligations under the license agreements with Stanford include the following: • royalty payments; • meeting certain milestones pertaining to development, commercialization, and sales of products using the licensed technology; • annual maintenance fees; • using commercially reasonable efforts to develop and sell a product using the licensed technology and developing a market for such product; and • providing certain reports.
Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from competing.
Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties 33 Table of Contents from competing. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.
As a result, our stockholders may be limited in their ability to obtain a premium for their shares. If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial markets, including negative impacts on the price of our common stock.
If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial markets, including negative impacts on the price of our common stock.
We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury. Claims may be made by patients, healthcare providers or others selling our products. The risk of product liability claims may also increase if our products are subject to a product recall, whether voluntary or mandatory, or government seizure.
We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury. Claims may be made by patients, healthcare providers, or others selling our products.
Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.
Thus, the tax treatment of transactions we execute is subject to changes in tax laws or regulations, tax treaties, or positions by the relevant authority regarding the application, administration, or interpretation of these tax laws and regulations.
We are subject to income and other non-income taxes (including sales, excise, and value-added) in the United States and foreign jurisdictions. Thus, the tax treatment of transactions we execute is subject to changes in tax laws or regulations, tax treaties, or positions by the relevant authority regarding the application, administration, or interpretation of these tax laws and regulations.
Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms. ​ We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future products, and we cannot provide any assurances that we would be able to obtain such licenses.
Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.
Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business. ​ Changes in applicable tax laws and regulations could adversely affect our business. ​ We are subject to income and other non-income taxes (including sales, excise, and value-added) in the United States and foreign jurisdictions.
Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business. Changes in applicable tax laws and regulations could adversely affect our business.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by potential partners or customers in our markets of interest.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic, or determined to be infringing on other marks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have limited experience operating internationally, and engaging in international business involves a number of difficulties and risks, including: ​ ● required compliance with foreign regulatory requirements and laws, including regulations and laws relating to patient data and medical devices; ● trade relations among the United States and those foreign countries in which our current or future customers, distributors, manufacturers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements, whether imposed by the United States or such foreign countries, in particular the strained trade relations between United States and China since 2018; ● difficulties protecting, procuring or enforcing intellectual property rights internationally; ● required compliance with anti-bribery laws, such as the FCPA and the UK Bribery Act of 2010, data privacy requirements, labor laws and anti-competition regulations; ● laws regulating the confidentiality of sensitive personal information and the circumstances under which such information may be released and/or collected; ● longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; ● political and economic instability and war or other military conflict, including the ongoing conflict occurring in Ukraine, which could have a material adverse impact on our sales in Europe and elsewhere; and ● potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers. ​ If we dedicate significant resources to our international operations and are unable to manage these risks effectively, our business, operating results and financial condition may be adversely affected.
Biggest changeWe have limited experience operating internationally, and engaging in international business involves a number of difficulties and risks, including: • required compliance with foreign regulatory requirements and laws, including regulations and laws relating to patient data and medical devices; • trade relations among the United States and those foreign countries in which our current or future customers, distributors, manufacturers, and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements, whether imposed by the United States or such foreign countries, in particular the strained trade relations between United States and China since 2018; • difficulties protecting, procuring, or enforcing intellectual property rights internationally; • required compliance with anti-bribery laws, such as the FCPA and the UK Bribery Act of 2010, data privacy requirements, labor laws, and anti-competition regulations; • laws regulating the confidentiality of sensitive personal information and the circumstances under which such information may be released and/or collected; 22 Table of Contents • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • political and economic instability and war or other military conflict, including the ongoing conflict occurring in Ukraine, which could have a material adverse impact on our sales in Europe and elsewhere; and • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements, and other trade barriers.
We have developed, and we are engaged in the development of, ultrasound imaging solutions using our ultrasound-on-a-semiconductor-chip technology. We are commercializing Butterfly iQ+ point-of-care ultrasound imaging devices. Our success will depend on the acceptance of our products and services in the U.S. and international healthcare markets.
We have developed, and we are engaged in the development of, ultrasound imaging solutions using our ultrasound-on-a-semiconductor-chip technology. We are commercializing Butterfly iQ+ and Butterfly iQ3 point-of-care ultrasound imaging devices. Our success will depend on the acceptance of our products and services in the U.S. and international healthcare markets.
Our ability to generate future revenue from product and service sales depends heavily on our success in many areas, including, but not limited to: ​ ● launching and commercializing current and future products and services, either directly or in conjunction with one or more collaborators or distributors; ● obtaining and maintaining marketing authorization with respect to each of our products and maintaining regulatory compliance throughout relevant jurisdictions; ● maintaining clinical and economical value for end-users and customers in changing environments; ● addressing any competing technological and market developments; ● negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; ● establishing and maintaining distribution relationships with third-parties that can provide adequate (in amount and quality) infrastructure to support market demand for our products; and ● maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how. ​ We have incurred significant losses since inception.
Our ability to generate future revenue from product and service sales depends heavily on our success in many areas, including, but not limited to: • launching and commercializing current and future products and services, either directly or in conjunction with one or more collaborators or distributors; • obtaining and maintaining marketing authorization with respect to each of our products and maintaining regulatory compliance throughout relevant jurisdictions; • maintaining clinical and economical value for end-users and customers in changing environments; • addressing any competing technological and market developments; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; • establishing and maintaining distribution relationships with third-parties that can provide adequate (in amount and quality) infrastructure to support market demand for our products; and • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how.
Unless the context otherwise requires, references in this section to “we,” “us,” “our” and the “Company” refer to Butterfly Network, Inc. and its subsidiaries. 22 Table of Contents Risks Related to Our Financial Condition and Capital Requirements We have a limited operating history on which to assess the prospects for our business, we have generated limited revenue from sales of our products, and we have incurred losses since inception.
Unless the context otherwise requires, references in this section to “we,” “us,” “our,” and the “Company” refer to Butterfly Network, Inc. and its subsidiaries. 19 Table of Contents Risks Related to Our Financial Condition and Capital Requirements We have a limited operating history on which to assess the prospects for our business, we have generated limited revenue from sales of our products, and we have incurred losses since inception.
If TSMC is unable to supply components or devices, our business would be harmed. We entered into an FSA with TSMC, under which TSMC agreed to manufacture, and we committed to purchase, a minimum volume of the wafers used for the semiconductor chips in our probes.
If TSMC is unable to supply components or devices, our business would be harmed. 23 Table of Contents We entered into an FSA with TSMC, under which TSMC agreed to manufacture, and we committed to purchase, a minimum volume of the wafers used for the semiconductor chips in our probes.
An interruption 27 Table of Contents in our ability to sell and deliver our products or instruments to customers could occur if we encounter delays or difficulties in securing these components, or if the quality of the components supplied do not meet our specifications, or if we cannot then obtain an acceptable substitute.
An interruption in our ability to sell and deliver our products or instruments to customers could occur if we encounter delays or difficulties in securing these components, if the quality of the components supplied do not meet our specifications, or if we cannot then obtain an acceptable substitute.
To date, utilization of our software has varied across different medical specialties, but usage does not directly correlate to renewal of subscriptions, as different medical specialties interact with the device in different ways depending on their clinical focus and routine.
To date, utilization of our software has varied across different medical specialties, but 21 Table of Contents usage does not directly correlate to renewal of subscriptions, as different medical specialties interact with the device in different ways depending on their clinical focus and routine.
There can be no assurance that we will be successful in retaining existing personnel or recruiting new personnel. 26 Table of Contents From time to time, our efforts to attract, recruit, train, retain, integrate and motivate key personnel may also subject us to litigation or other legal proceedings that may adversely affect our business.
There can be no assurance that we will be successful in retaining existing personnel or recruiting new personnel. From time to time, our efforts to attract, recruit, train, retain, integrate, and motivate key personnel may also subject us to litigation or other legal proceedings that may adversely affect our business.
We are faced with the risk that the marketplace will not be receptive to our products and services over competing products, including traditional cart-based ultrasound devices used in hospitals, imaging centers and physicians’ offices, and that we will be unable to compete effectively.
We are faced with the risk that the marketplace will not be receptive to our products and services over competing products, including traditional cart-based ultrasound devices used in hospitals, imaging centers, and physicians’ offices, 20 Table of Contents and that we will be unable to compete effectively.
In addition, if we were to lose component suppliers such as TSMC, there can be no assurance that we will be able to identify or enter into agreements with alternative suppliers on a timely basis on acceptable terms, if at all.
If we were to lose TSMC as a component supplier, there can be no assurance that we will be able to identify or enter into agreements with alternative suppliers on a timely basis on acceptable terms, if at all.
Our accumulated deficit as of December 31, 2023 was $729.6 million. We do not know whether or when we will become profitable. Our ability to generate revenue and achieve profitability depends upon our ability to accelerate the commercialization of our products and service offerings in line with the demand from current and future customers and our aggressive business strategy.
Our accumulated deficit as of December 31, 2024 was $802.1 million. We do not know whether or when we will become profitable. Our ability to generate revenue and achieve profitability depends upon our ability to accelerate the commercialization of our products and service offerings in line with the demand from current and future customers and our aggressive business strategy.
Since commercialization of the Butterfly iQ, we also engaged in the continued development and sales of our enterprise software. We have financed our operations primarily through the issuance of equity securities and convertible debt. We have incurred net losses of $133.7 million, $168.7 million, and $32.4 million in the years ended December 31, 2023, 2022, and 2021, respectively.
Since commercialization of the Butterfly iQ, we have also engaged in the continued development and sales of our enterprise software. We have financed our operations primarily through the issuance of equity securities and convertible debt. We have incurred net losses of $72.5 million, $133.7 million, and $168.7 million in the years ended December 31, 2024, 2023, and 2022, respectively.
During the years ended December 31, 2023, 2022, and 2021, approximately 21%, 30%, and 31%, respectively, of our product and service revenue was generated from customers located outside of the United States. We believe that a substantial percentage of our future revenue will come from international sources as we expand our sales and marketing opportunities internationally.
During the years ended December 31, 2024, 2023, and 2022, approximately 23%, 21%, and 30%, respectively, of our total revenue was generated from customers located outside of the United States. We believe that a substantial percentage of our future revenue will come from international sources as we expand our sales and marketing opportunities internationally.
Any number of factors could negatively affect customer retention, growth and engagement, including: ● customers increasingly engaging with competing products; ● failure to introduce new and improved products and services; ● inability to continue to develop products for mobile devices that customers find engaging, that work with a variety of mobile operating systems and networks and that achieve a high level of market acceptance; ● changes in customer sentiment about the quality or usefulness of our products and services or concerns related to privacy and data sharing, safety, security or other factors; ● inability to manage and prioritize information to ensure customers are presented with content that is engaging, useful and relevant to them; ● adverse changes in our products that are mandated by legislation or regulatory agencies, both in the United States and internationally; or ● technical or other problems preventing us from delivering products or services in a rapid and reliable manner or otherwise affecting the user experience. ​ 25 Table of Contents Our research and development efforts may not succeed in developing commercially successful products and technologies, which could adversely affect our business.
Any number of factors could negatively affect customer retention, growth, and engagement, including: • customers increasingly engaging with competing products; • failure to introduce new and improved products and services; • inability to continue to develop products for mobile devices that customers find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance; • changes in customer sentiment about the quality or usefulness of our products and services or concerns related to privacy and data sharing, safety, security, or other factors; • inability to manage and prioritize information to ensure customers are presented with content that is engaging, useful, and relevant to them; • adverse changes in our products that are mandated by legislation or regulatory agencies, both in the United States and internationally; or • technical or other problems preventing us from delivering products or services in a rapid and reliable manner or otherwise affecting the user experience.
Factors that could affect our ability to successfully commercialize our current products and services and to commercialize any potential future products and services include: ● challenges of developing (or acquiring externally-developed) technology solutions that are adequate and competitive in meeting the requirements of next-generation design challenges; and ● dependence upon physicians’ and other healthcare practitioners’ acceptance of our products. ​ We cannot assure investors that our current products and services or any future products and services will gain broad market acceptance.
Factors that could affect our ability to successfully commercialize our current products and services and to commercialize any potential future products and services include: • challenges of developing (or acquiring externally-developed) technology solutions that are adequate and competitive in meeting the requirements of next-generation design challenges; and • dependence upon physicians’ and other healthcare practitioners’ acceptance of our products.
We face risks associated with launching such new products. If we encounter development or manufacturing challenges or discover errors during our product development cycle, the product launch dates of new products may be delayed, which will cause delays in our ability to achieve our forecasted results.
If we encounter development or manufacturing challenges or discover errors during our product development cycle, the product launch dates of new products may be delayed, which will cause delays in our ability to achieve our forecasted results.
Item 1A. RISK FACTORS Except for the historical information contained herein, this report contains forward-looking statements that involve risks and uncertainties. These statements include projections about our finances, plans and objectives for the future, future operating and economic performance and other statements regarding future performance. These statements are not guarantees of future performance or events.
Item 1A. RISK FACTORS This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. These statements include projections about our finances, plans and objectives for the future, future operating and economic performance, and other statements regarding future performance. These statements are not guarantees of future performance or events.
As such, you cannot rely upon our historical operating performance to make an investment decision about us. Since our inception, we have engaged in R&D activities and launched our first product, Butterfly iQ, in the fourth quarter of 2018, and our second product, Butterfly iQ+, in 2020.
We have incurred significant losses since inception. As such, you cannot rely upon our historical operating performance to make an investment decision about us. Since our inception, we have engaged in R&D activities and launched our first product, Butterfly iQ, in 2018, our second product, Butterfly iQ+, in 2020, and our third product, Butterfly iQ3, in 2024.
The loss of one or more key employees, our inability to attract or develop additional qualified employees and any delay in hiring key personnel could have a material adverse effect on our business results, cash flows, financial condition, or prospects.
The loss of one or more key employees, our inability to attract or develop additional qualified employees, and any delay in hiring key personnel could have a material adverse effect on our business results, cash flows, financial condition, or prospects. We have chosen to engage a single supplier, TSMC, to supply and manufacture a key component of our products.
A failure to adequately develop or acquire device enhancements or new devices that will address changing technologies and customer requirements adequately, or to introduce such devices on a timely basis, may have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents We might have insufficient financial resources to improve existing devices, advance technologies and develop new devices at competitive prices.
A failure to adequately develop or acquire device enhancements or new devices that will address changing technologies and customer requirements adequately, or to introduce such devices on a timely basis, may have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Business and Operations Our success depends upon market acceptance of our products and services, our ability to develop and commercialize existing and new products and services and generate revenues, and our ability to identify new markets for our technology.
We may be unable to achieve any or all of these goals. Risks Related to Our Business and Operations Our success depends upon market acceptance of our products and services, our ability to develop and commercialize existing and new products and services and generate revenues, and our ability to identify new markets for our technology.
Technological advances by one or more competitors or future entrants into the field may result in our current devices becoming non-competitive or obsolete, which may decrease revenues and profits and adversely affect our business and results of operations.
We might have insufficient financial resources to improve existing devices, advance technologies and develop new devices at competitive prices. Technological advances by one or more competitors or future entrants into the field may result in our current devices becoming non-competitive or obsolete, which may decrease revenues and profits and adversely affect our business and results of operations.
If we are required to buy back from TSMC any unused raw wafers pursuant to the FSA, our cash flows may be adversely impacted.
If we are required to buy back from TSMC any unused raw wafers pursuant to the FSA, our cash flows may be adversely impacted. Geopolitical tensions between Taiwan and China have risen steadily in recent months.
Our technology on a microchip has the potential to allow us to monitor patients in various care settings due to its portability and cost. We expect our development path will be directed at accessing and optimizing our technology for use in various care settings, potentially including home scanning and or wearable patient technology, subject to appropriate regulatory authorization.
We expect our development path will be directed at accessing and optimizing our technology for use in various care settings, potentially including home scanning and or wearable patient technology, subject to appropriate regulatory authorization. We face risks associated with launching such new products.
We also have certain inventory related obligations, including the obligation to purchase excess and obsolete components from Benchmark. In addition, pursuant to the February 2021 amendment, we agreed to provide global production exclusivity to Benchmark for our current products and other hand-held probes which may be manufactured for us, for a specified exclusivity period. See “
We also have certain inventory related obligations, including the obligation to purchase excess and obsolete components from Benchmark. See “
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We may be unable to achieve any or all of these goals. We may need to raise additional funding to expand the commercialization of our products and services and to expand our R&D efforts. This additional financing may not be available on acceptable terms, or at all.
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We cannot assure investors that our current products and services or any future products and services will gain broad market acceptance.
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Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product commercialization or development efforts or other operations. Our operations have consumed substantial amounts of cash since inception. We expect to expend substantial additional amounts to commercialize our products and services and to develop new products and services.
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Our research and development efforts may not succeed in developing commercially successful products and technologies, which could adversely affect our business. Our technology on a microchip has the potential to allow us to monitor patients in various care settings due to its portability and cost.
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We expect to use the funds received in connection with the Business Combination to scale our operations, develop new products and services, expand internationally, and for working capital and general corporate purposes. We may require additional capital to expand the commercialization of our existing products and services and to develop new products and services.
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Furthermore, the new U.S. presidential administration has publicly expressed support for greater restrictions on free trade and the increase of tariffs on goods imported into the United States. If we dedicate significant resources to our international operations and are unable to manage these risks effectively, our business, operating results, and financial condition may be adversely affected.
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In addition, our 23 Table of Contents operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.
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War or other military conflict in or near Taiwan, pandemics, and certain natural disasters, such as earthquakes which are commonplace in Taiwan, may result in the destruction or disruption of TSMC’s ability to supply wafers and have downstream implications for our Company.
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Moreover, the terms of any future financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by the Company, or the possibility of such issuance, may cause the market price of our common stock to decline.
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The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
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We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or products or otherwise agree to terms that are unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
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In addition, raising additional capital through the issuance of equity or convertible debt securities would cause dilution to holders of our equity securities, and may affect the rights of then-existing holders of our equity securities.
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Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
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We have limited experience in marketing and selling our products and related services, and if we are unable to successfully commercialize our products and related services, our business and operating results will be adversely affected. We have limited experience marketing and selling our products and related services.
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We currently sell our products to healthcare practitioners through eCommerce, distributors and enterprise sales. Future sales of our products will depend in large part on our ability to effectively market and sell our products and services, successfully manage and expand our sales force, and increase the scope of our marketing efforts.
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We may also enter into additional distribution arrangements in the future. Because we have limited experience in marketing and selling our products, our ability to forecast demand, the infrastructure required to support such demand and the sales cycle to customers is unproven.
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If we do not build an efficient and effective marketing and sales force, our business and operating results will be adversely affected. We have chosen to engage a single supplier, TSMC, to supply and manufacture a key component of our products.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have implemented a cybersecurity risk management program that is designed to identify, assess, and mitigate risks from cybersecurity threats to this data and our systems. ​ Risk Management Strategy and Governance Under the ultimate direction of our Chief Executive Officer, our Information Security Committee has primary responsibility for overseeing our management of cybersecurity risks.
Biggest changeRisk Management Strategy and Governance Under the ultimate direction of our Chief Executive Officer, our Information Security Committee has primary responsibility for overseeing our management of cybersecurity risks. It is chaired by our Chief Information Security Officer ("CISO") who reports directly to our Chief Technology Officer.
The Risk Assessment consists of: ● Listing the vulnerabilities company assets are exposed to ● Identifying the threats that may exploit such vulnerabilities ● Calculating inherent risk rating based on impact and exploitability ● Calculating residual risk by assessing mitigating controls ​ 46 Table of Contents
The Risk Assessment consists of: • Listing the vulnerabilities company assets are exposed to; • Identifying the threats that may exploit such vulnerabilities; • Calculating inherent risk rating based on impact and exploitability; and • Calculating residual risk by assessing mitigating controls . 41 Table of Contents
As provided in the Audit Committee Charter, the Audit Committee is responsible for reviewing reports on data management and security initiatives and significant existing and emerging cybersecurity risks, including cybersecurity incidents, the impact on the Company and its stakeholders of any significant cybersecurity incident and any disclosure obligations arising from any such incidents. ​ Our CISO meets at least annually with the Audit Committee of the Board of Directors to discuss management’s ongoing cybersecurity risk management programs.
As provided in the Audit Committee Charter, the Audit Committee is responsible for reviewing reports on data management, security initiatives, significant existing and emerging cybersecurity risks, including cybersecurity incidents, the impact on the Company and its stakeholders of any significant cybersecurity incident, and any disclosure obligations arising from any such incidents.
When appropriate, cyber or information security incidents would be escalated by the CISO to our executive leadership team and/or our disclosure committee.
When appropriate, cyber or information security incidents would be escalated by the CISO to our executive leadership team and/or our disclosure committee. On a regular basis, the CISO also updates the executive management team on developments within the cybersecurity sphere.
In turn, the Chair of the Audit Committee provides a readout to the full Board of Directors that includes a summary of the CISO’s presentation to enable discussion of cybersecurity risk management at the full board level. ​ Although risks from cybersecurity threats have to date not materially affected, and we do not believe they are reasonably likely to materially affect, us, our business strategy, results of operations or financial condition, we could, from time to time, experience threats and security incidents relating to our and our third party vendors’ information systems.
Although risks from cybersecurity threats have to date not materially affected, and we do not believe they are reasonably likely to materially affect, us, our business strategy, results of operations, or financial condition, we could, from time to time, experience threats and security incidents relating to our and our third party vendors’ information systems.
To assess the effectiveness of our program, we also have engaged consultants to conduct penetration testing and other vulnerability assessment. ​ Before purchasing third party technology or other solutions that involve exposure to the company’s assets and electronic information, our Information Technology group requires those companies to complete a security review before being approved to work with the company.
Before purchasing third-party technology or other solutions that involve exposure to the Company’s assets and electronic information, our Information Technology group requires those companies to complete a security review before being approved to work with the Company. We utilize an external tool to manage critical vendors. Vendors are assessed to determine inherent and residual risk.
In addition the team has completed several assessments and threat modeling tabletop exercises, based on ”what-if” scenarios. ​ We have an employee education program that is designed to raise awareness of cybersecurity threats to reduce our vulnerability as well as to encourage consideration of cybersecurity risks across functions.
We have a mandatory employee education program that is designed to raise awareness of cybersecurity threats to reduce our vulnerability as well as to encourage consideration of cybersecurity risks across functions. Security training is required upon hire for new employees, and on an annual basis for the rest of the workforce.
Security training is required upon hire for new employees, and on annual basis for the rest of the workforce. ​ As part of the assessment of the protections we have in place to mitigate risks from cybersecurity threats, we engage third parties to conduct vendor risk assessments.
As part of the assessment of the protections we have in place to mitigate risks from cybersecurity threats, we engage third parties to conduct vendor risk assessments. To assess the effectiveness of our program, we also have engaged consultants to conduct penetration testing and other vulnerability assessment.
Item 1C. CYBERSECURITY ​ Butterfly Network, Inc. uses, stores and processes data for and about our customers, employees, partners and suppliers.
Item 1C. CYBERSECURITY Butterfly Network, Inc. uses, stores, and processes data for and about our customers, employees, partners, and suppliers. We have implemented a cybersecurity risk management program that is designed to identify, assess, and mitigate risks from cybersecurity threats to this data and our systems.
The team also regularly monitors our internal network and out customer-facing network to identify security risks.
The team also regularly monitors our internal network and our customer-facing network to identify security risks. In addition, the team has completed several assessments and threat modeling tabletop exercises, based on “what-if” scenarios.
We utilize an external tool to manage critical vendors. Vendors are assessed to determine inherent and residual risk. ​ Annually, the security team conducts a risk assessment that is informed by industry standards.
Annually, the security team conducts a risk assessment that is informed by industry standards.
On a regular basis, the CISO also updates the executive management team on developments within the cybersecurity sphere. ​ 45 Table of Contents The Board of Directors has delegated oversight of the Company’s cybersecurity program to the Audit Committee of the Board of Directors.
The Board of Directors has delegated oversight of the Company’s cybersecurity program to the Audit Committee of the Board of Directors.
The CISO also has a PhD in computer science and engineering and completed his thesis in information security. ​ The Information Security Committee meets periodically and as circumstances warrant to discuss and monitor prevention, detection, and remediation of risks from cybersecurity threats.
The current CISO is an expert in NIST 800-53 (Rev-5), ISO27001, and other national and international security risk management disciplines. 40 Table of Contents The Information Security Committee meets periodically and as circumstances warrant to discuss and monitor prevention, detection, and remediation of risks from cybersecurity threats.
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It is chaired by our Chief Information Security Officer, or CISO, who reports directly to our Chief Executive Officer.
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The current CISO has more than 20 years of experience in building and leading security, risk management, and compliance organizations across several industries, including med-tech, healthcare, and financial services, and many of these companies include highly-regulated Fortune 500 companies.
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The current CISO has more than 25 years of experience in building and leading information systems and security teams and has worked at a variety of institutions to implement and manage cybersecurity programs.
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Our CISO meets at least quarterly with the Audit Committee of the Board of Directors to discuss management’s ongoing cybersecurity risk management programs.
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These entities have included large, publicly-traded companies and smaller startups: The CISO’s experience includes developing and maintaining tools and processes to protect internal networks, customer payment systems and cloud systems used by customers and the Company.
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In turn, the Chair of the Audit Committee provides a readout to the full Board of Directors that includes a summary of the CISO’s presentation to enable discussion of cybersecurity risk management at the full board level.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease expires in 2032. ​ Additionally, we occupy other office space domestically in New York City and Sunnyvale, California. We also occupy office space internationally in Taiwan. We lease the office space under operating leases. We consider our current office space adequate for our current operations. ​
Biggest changeAdditionally, we occupy other office space domestically in New York City. We also occupy office space internationally in Taiwan. We lease the office spaces under operating leases. We consider our current office space adequate for our current operations.
Item 2. PROPERTIES We currently maintain our executive offices in Burlington, Massachusetts under a lease for approximately 60,000 rentable square feet consisting of the entire building. In addition to serving as our corporate headquarters, the office supports our sales, marketing, R&D and other general and administrative functions.
Item 2. PROPERTIES We currently maintain our executive offices in Burlington, Massachusetts under a lease for approximately 60,000 rentable square feet consisting of the entire building. In addition to serving as our corporate headquarters, the office supports our sales, marketing, R&D, and other general and administrative functions. The lease expires in 2033.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe outcome of any such matters, regardless of the merits, is inherently uncertain. ​ For more information about our legal proceedings and this item, see Note 19 “ Commitments and Contingencies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 “ Financial Statements and Supplementary Data ” of this Annual Report on Form 10-K, which is incorporated herein by reference. ​ Item 4.
Biggest changeFor more information about our legal proceedings and this item, see Note 17, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 “ Financial Statements and Supplementary Data ” of this Annual Report on Form 10-K, which is incorporated herein by reference. Item 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Item 3. LEGAL PROCEEDINGS We are currently and may in the future be subject to legal proceedings, claims, and regulatory actions arising in the ordinary course of business.
Item 3. LEGAL PROCEEDINGS We are currently and may in the future be subject to legal proceedings, claims, and regulatory actions arising in the ordinary course of business. The outcome of any such matters, regardless of the merits, is inherently uncertain.
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MINE SAFETY DISCLOSURES Not applicable. ​ PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe do not intend to pay cash dividends to our stockholders in the foreseeable future. ​ Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings ​ Not applicable. ​ 47 Table of Contents Issuer Purchases of Equity Securities ​ Not applicable. ​ Securities Authorized for Issuance Under Equity Compensation Plans ​ Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders (the “Proxy Statement”) and is incorporated herein by reference to Item 12 of Part II of this Annual Report on Form 10-K. ​ Item 6. [RESERVED] ​
Biggest changeIssuer Purchases of Equity Securities Not applicable. 42 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders (the “Proxy Statement”) and is incorporated herein by reference to Item 12 of Part II of this Annual Report on Form 10-K.
As of February 9, 2024, the Company had 13,799,357 public warrants held of record by one holder and 6,853,333 private placement warrants issued in connection with Longview’s initial public offering held of record by six holders, with each warrant exercisable for one share of Class A common stock at a price of $11.50 per share.
As of February 13, 2025, the Company had 13,799,357 public warrants held of record by one holder and 6,853,333 private placement warrants issued in connection with Longview’s initial public offering held of record by six holders, with each warrant exercisable for one share of Class A common stock at a price of $11.50 per share.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock and warrants to purchase Class A common stock are traded on the NYSE under the symbols “BFLY” and “BFLY WS” respectively. ​ Stockholders ​ As of February 9, 2024, the Company had 181,707,275 shares of Class A common stock issued and outstanding held of record by 49 holders, 26,426,937 shares of Class B common stock issued and outstanding held of record by six holders.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock and warrants to purchase Class A common stock are traded on the NYSE under the symbols “BFLY” and “BFLY WS” respectively.
Added
Stockholders As of February 13, 2025, the Company had 216,496,214 shares of Class A common stock issued and outstanding held of record by 54 holders, 26,426,937 shares of Class B common stock issued and outstanding held of record by six holders.
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We do not intend to pay cash dividends to our stockholders in the foreseeable future. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+32 added−24 removed9 unchanged
Biggest changeThe accounting policies are described in Note 2 “Summary of Significant Accounting Policies” in our consolidated financial statements included in this Annual Report on Form 10-K. ​ 51 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of (in thousands) ​ Dollars ​ revenue ​ ​ Dollars ​ revenue ​ Dollars ​ revenue Revenue: Product ​ $ 40,036 60.8 % ​ $ 50,263 68.5 % ​ $ 47,868 76.5 % Software and other services ​ ​ 25,864 39.2 ​ ​ ​ 23,127 31.5 ​ ​ ​ 14,697 23.5 ​ Total revenue ​ ​ 65,900 100.0 ​ ​ ​ 73,390 100.0 ​ ​ ​ 62,565 100.0 ​ Cost of revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ ​ 40,655 61.7 ​ ​ ​ 26,804 36.5 ​ ​ ​ 29,308 46.8 ​ Software and other services ​ ​ 8,389 12.7 ​ ​ ​ 7,126 9.7 ​ ​ ​ 2,238 3.6 ​ Loss on product purchase commitments ​ ​ — ​ — ​ ​ ​ — ​ — ​ ​ ​ 13,965 ​ 22.3 ​ Total cost of revenue ​ ​ 49,044 74.4 ​ ​ ​ 33,930 46.2 ​ ​ ​ 45,511 72.7 ​ Gross profit ​ ​ 16,856 25.6 ​ ​ ​ 39,460 53.8 ​ ​ ​ 17,054 27.3 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ 55,616 84.4 ​ ​ ​ 88,044 120.0 ​ ​ ​ 74,461 119.0 ​ Sales and marketing ​ ​ 39,073 59.3 ​ ​ ​ 59,494 81.1 ​ ​ ​ 49,604 79.3 ​ General and administrative ​ ​ 49,613 75.3 ​ ​ ​ 77,596 105.7 ​ ​ ​ 85,717 137.0 ​ Other ​ ​ 18,164 ​ 27.6 ​ ​ ​ 7,346 ​ 10.0 ​ ​ ​ — — ​ Total operating expenses ​ ​ 162,466 246.5 ​ ​ ​ 232,480 316.8 ​ ​ ​ 209,782 335.3 ​ Loss from operations ​ ​ (145,610) (221.0) ​ ​ ​ (193,020) (263.0) ​ ​ ​ (192,728) (308.0) ​ Interest income ​ ​ 7,450 11.3 ​ ​ ​ 3,384 4.6 ​ ​ ​ 2,573 4.1 ​ Interest expense ​ ​ — — ​ ​ ​ (2) (0.0) ​ ​ ​ (651) (1.0) ​ Change in fair value of warrant liabilities ​ ​ 4,544 ​ 6.9 ​ ​ ​ 20,859 ​ 28.4 ​ ​ ​ 161,095 ​ 257.5 ​ Other income (expense), net ​ ​ (2) (0.0) ​ ​ ​ 98 0.1 ​ ​ ​ (2,577) (4.1) ​ Loss before provision for income taxes ​ ​ (133,618) (202.8) ​ ​ ​ (168,681) (229.8) ​ ​ ​ (32,288) (51.6) ​ Provision for income taxes ​ ​ 82 0.1 ​ ​ ​ 42 0.1 ​ ​ ​ 121 0.2 ​ Net loss and comprehensive loss ​ $ (133,700) (202.9) % ​ $ (168,723) (229.9) % ​ $ (32,409) (51.8) % ​ Comparison of the Years Ended December 31, 2023 and 2022 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 ​ 2022 ​ Change ​ % Change Product $ 40,036 ​ $ 50,263 ​ $ (10,227) (20.3) % Software and other services ​ 25,864 ​ ​ 23,127 ​ ​ 2,737 11.8 ​ ​ ​ $ 65,900 ​ $ 73,390 ​ $ (7,490) (10.2) % ​ Product revenue decreased by $10.2 million, or 20.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Biggest changeYear ended December 31, 2024 2023 2022 (in thousands) Dollars % of revenue Dollars % of revenue Dollars % of revenue Revenue: Product $ 54,200 66.1 % $ 40,036 60.8 % $ 50,263 68.5 % Software and other services 27,856 33.9 25,864 39.2 23,127 31.5 Total revenue 82,056 100.0 65,900 100.0 73,390 100.0 Cost of revenue: Product 24,380 29.7 40,655 61.7 26,804 36.5 Software and other services 8,845 10.8 8,389 12.7 7,126 9.7 Total cost of revenue 33,225 40.5 49,044 74.4 33,930 46.2 Gross profit 48,831 59.5 16,856 25.6 39,460 53.8 Operating expenses: Research and development 37,800 46.1 55,616 84.4 88,044 120.0 Sales and marketing 41,567 50.7 39,073 59.3 59,494 81.1 General and administrative 39,810 48.5 49,613 75.3 77,596 105.7 Other 4,065 5.0 18,164 27.6 7,346 10.0 Total operating expenses 123,242 150.3 162,466 246.6 232,480 316.8 Loss from operations (74,411) (90.8) (145,610) (221.0) (193,020) (263.0) Interest income 5,020 6.1 7,450 11.3 3,384 4.6 Interest expense (1,261) (1.5) — — (2) — Change in fair value of warrant liabilities (1,859) (2.3) 4,544 6.9 20,859 28.4 Other income (expense), net (13) — (2) — 98 0.1 Loss before provision for income taxes (72,524) (88.5) (133,618) (202.8) (168,681) (229.9) Provision (benefit) for income taxes (32) — 82 0.1 42 0.1 Net loss and comprehensive loss $ (72,492) (88.5) $ (133,700) (202.9) $ (168,723) (230.0) Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year ended December 31, (in thousands) 2024 2023 Change % Change Product $ 54,200 $ 40,036 $ 14,164 35.4 % Software and other services 27,856 25,864 1,992 7.7 $ 82,056 $ 65,900 $ 16,156 24.5 % 46 Table of Contents Product revenue increased by $14.2 million, or 35.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Factors that affect the estimate of future warranty costs include historical and current product failure rates, service delivery costs incurred in correcting product failures, warranty policies and business practices. ​ Our contracts with customers include variable consideration in the form of refunds and credits for product returns and price concessions.
Factors that affect the estimate of future warranty costs include historical and current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies and business practices. Our contracts with customers include variable consideration in the form of refunds and credits for product returns and price concessions.
We periodically review the age, condition and turnover of our inventory to determine whether any inventory has become obsolete or has declined in value and incur a charge to operations for known and anticipated inventory obsolescence.
We periodically review the age, condition and turnover of our inventory to determine whether any inventory has become obsolete or has declined in value, and we incur a charge to operations for known and anticipated inventory obsolescence.
Enterprise as percentage of software sales increased 6%. 52 Table of Contents Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 ​ 2022 ​ Change ​ % Change Product $ 40,655 ​ $ 26,804 ​ $ 13,851 51.7 % Software and other services ​ 8,389 ​ ​ 7,126 ​ ​ 1,263 17.7 ​ ​ ​ $ 49,044 ​ $ 33,930 ​ $ 15,114 44.5 % Percentage of revenue ​ 74.4 % 46.2 % ​ ​ Cost of product revenue increased by $13.9 million, or 51.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Enterprise as percentage of software sales increased 6%. 48 Table of Contents Cost of revenue Year ended December 31, (in thousands) 2023 2022 Change % Change Product $ 40,655 $ 26,804 $ 13,851 51.7 % Software and other services 8,389 7,126 1,263 17.7 $ 49,044 $ 33,930 $ 15,114 44.5 % Percentage of revenue 74.4 % 46.2 % Cost of product revenue increased by $13.9 million, or 51.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
These other expenses primarily consist of employee severance and benefits costs related to our reductions in force, litigation costs, and legal settlements. Results of Operations ​ We operate as a single reportable segment to reflect the way our chief operating decision maker reviews and assesses the performance of the business.
These other expenses primarily consist of employee severance and benefits costs related to our reductions in force and business transformation initiative, litigation costs, and legal settlements. Results of Operations We operate as a single reportable segment to reflect the way our chief operating decision maker reviews and assesses the performance of the business.
Because the costs and associated expenses to deliver our SaaS offerings are less than the costs and associated expenses of manufacturing and selling our device, we anticipate an improvement in profitability and margin expansion over time as our revenue mix shifts increasingly towards software and other services.
Because the costs and associated expenses to deliver our SaaS offerings are less than the costs and associated expenses of manufacturing and selling our devices, we anticipate an improvement in profitability and margin expansion over time as our revenue mix shifts increasingly towards software and other services.
We expect to continue to make substantial investments in our product and software development, clinical, and regulatory capabilities. ​ Sales and marketing ​ Sales and marketing expenses primarily consist of personnel costs and benefits, advertising, conferences and events, facilities-related expenses, and software costs. We expect to continue to make substantial investments in our sales capabilities.
We expect to continue to make substantial investments in our product and software development, clinical, and regulatory capabilities. Sales and marketing Sales and marketing expenses primarily consist of personnel costs and benefits, advertising, conferences and events, facilities-related expenses, and software costs. We expect to increase our investments in our commercial capabilities.
SaaS subscriptions and Support are generally related to stand-ready obligations and are recognized ratably over time. ​ Over time as adoption of our devices increases through further market penetration and as practitioners in the Butterfly network continue to use our devices, we expect our annual revenue mix to shift more toward software and other services.
SaaS subscriptions, Support, and term-based SDKs are generally related to stand-ready obligations and are recognized ratably over time. Over time, as adoption of our devices increases through further market penetration and as practitioners in the Butterfly network continue to use our devices, we expect our annual revenue mix to shift more toward software and other services.
GAAP”). The process of preparing financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the period.
The process of preparing financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expense during the period.
General and administrative ​ General and administrative expenses primarily consist of personnel costs and benefits, insurance, patent fees, software costs, facilities costs and outside services. Outside services consist of professional services, legal fees and other professional fees. ​ Other Operating expenses classified as other are expenses which we do not consider representative of our ongoing operations.
General and administrative General and administrative expenses primarily consist of personnel costs and benefits, insurance, patent fees, software costs, facilities-related expenses, and outside services. Outside services consist of professional services, legal fees and other professional fees. 45 Table of Contents Other Operating expenses classified as other are expenses which we do not consider representative of our ongoing operations.
The decrease was driven by a $9.3 million decrease in net working capital cash and $60.9 million decrease in net loss adjusted for certain noncash items, primarily driven by the loss on excess inventory, the change in fair value of warrant liabilities, and net income.
The decrease was driven by a $9.3 million decrease in net working capital cash usage and a $61.0 million decrease in net loss adjusted for certain noncash items, primarily driven by the loss on excess inventory, the change in fair value of warrant liabilities, and net income.
Generally, we have identified the following performance obligations can be promised in our contracts with customers: ​ ● Hardware devices and accessories; ● Software subscriptions, including renewal subscriptions, which represent an obligation to provide the customer with ongoing access to our cloud-hosted software applications on a continuous basis throughout the subscription period; ● Implementation and integration services; and ● Extended warranties.
Generally, we have identified the following performance obligations can be promised in our contracts with customers: • Hardware devices and accessories; • Software subscriptions, including renewal subscriptions, which represent an obligation to provide the customer with ongoing access to our cloud-hosted software applications on a continuous basis throughout the subscription period; • Implementation and integration services; • Extended warranties; and • SDKs, either perpetual or term-based.
Additionally, there was a $12.5 million decrease in purchases of fixed assets. ​ Cash flows provided by financing activities ​ Net cash provided by financing activities decreased by $2.6 million, or 92.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Additionally, there was a $12.5 million decrease in purchases of fixed assets. 51 Table of Contents Cash flows provided by financing activities Net cash provided by financing activities decreased by $2.7 million, or 92.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This decrease was primarily driven by a decline in probe sales in our distribution, global health and ecommerce channels. Additionally, there were a number of large sales in these channels in 2022 that did not reoccur in 2023.
This decrease was primarily driven by a decline in probe sales in our distribution, global health, and eCommerce channels. Additionally, there were a number of large sales in these channels in 2022 that did not reoccur in 2023. Partially offsetting these declines were increases in overall prices.
This increase was primarily driven by $6.7 million of higher employee severance and benefits costs resulting from our reductions in force in 2023 and $4.1 million of higher legal costs due to litigation and other legal matters.
This increase was primarily driven by $6.7 million of higher employee severance and benefits costs resulting from our reductions in force in 2023 and $4.1 million of higher legal costs due to litigation and other legal matters. These costs are not representative of our ongoing operations.
The determination of NRV involves numerous judgments including estimating selling prices, existing customer orders, and estimated costs of completion, disposal, and transportation. If actual market conditions differ from our estimates, future results of operations could be materially affected.
NRV is based upon an estimated average selling price reduced by the estimated costs of completion, disposal, and transportation. The determination of NRV involves numerous judgments including estimating selling prices, existing customer orders, and estimated costs of completion, disposal, and transportation. If actual market conditions differ from our estimates, future results of operations could be materially affected.
We expect cash provided by historical financing activities will continue to be our primary source of funds to support operating needs and capital expenditures for the foreseeable future. ​ Net cash used in operating activities decreased by $20.1 million, or 10.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
We expect cash provided by historical financing activities will continue to be our primary source of funds to support operating needs and capital expenditures for the foreseeable future. Net cash used in operating activities decreased by $57.1 million, or 57.8%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We have started to reinvest in direct sales to drive top-line growth. ​ General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 ​ 2022 ​ Change ​ % Change General and administrative $ 49,613 $ 77,596 $ (27,983) (36.1) % Percentage of revenue ​ 75.3 % 105.7 % ​ ​ General and administrative expenses decreased by $28.0 million, or 36.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
General and administrative Year ended December 31, (in thousands) 2023 2022 Change % Change General and administrative $ 49,613 $ 77,596 $ (27,983) (36.1) % Percentage of revenue 75.3 % 105.7 % General and administrative expenses decreased by $28.0 million, or 36.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our implementation and integration services are a performance obligation satisfied over time, and we use costs incurred as inputs into the measure of progress to recognize revenue for these services. ​ We account for the warranty as an assurance-type warranty.
Our implementation and integration services are a performance obligation satisfied over time, and we use costs incurred as inputs into the measure of progress to recognize revenue for these services. We account for the warranty as an assurance-type warranty. When product revenue is recognized, an estimate of future warranty costs is recognized as cost of product revenue and accrued expenses.
Our software subscriptions and extended warranties are stand-ready obligations that are satisfied over time, and we use the time-elapsed (i.e., straight-line) measure of progress to recognize revenue for these services.
Our software subscriptions and extended warranties are stand-ready obligations that are satisfied over time, and our term-based SDKs are performance obligations satisfied over time through our continued provision of access to the customer. We use the time-elapsed (i.e., straight-line) measure of progress to recognize revenue for these services.
Capitalized costs primarily include management’s best estimate and allocation of the direct labor, materials costs and other overhead costs incurred related to inventory acquired or produced but not sold during the respective period.
We capitalize manufacturing overhead expenditures as part of inventory costs. Capitalized costs primarily include management’s best estimate and allocation of the direct labor, materials costs, and other overhead costs incurred related to 53 Table of Contents inventory acquired or produced but not sold during the respective period.
We estimate variable consideration based on the individual contract characteristics or may apply a portfolio approach depending on the circumstances. ​ 58 Table of Contents Stock-based compensation ​ Our stock-based compensation program includes restricted stock units and stock option grants to our employees, directors and consultants.
We estimate variable consideration based on the individual contract characteristics or may apply a portfolio approach depending on the circumstances. 52 Table of Contents Stock-based compensation Our stock-based compensation program includes stock option grants and restricted stock unit ("RSU") grants to our employees, directors, and consultants as well as an employee stock purchase plan ("ESPP").
This decrease was primarily driven by reductions of $13.6 million in personnel costs resulting from our reductions in force over the past year. Reductions of $3.3 million in marketing expenses and $2.3 million reduction in travel expenses also contributed to the decrease.
This decrease was primarily driven by reductions of $13.6 million in personnel costs resulting from our reductions in force over the past year. Reductions of $3.3 million in marketing expenses and $2.3 million in travel expenses also contributed to the decrease. We have started to reinvest in direct sales to drive top-line growth.
We expect our cost of product revenue to fluctuate over time due to the level of units fulfilled in any given period and fluctuate 50 Table of Contents as a percentage of product revenue over time as our focus on operational efficiencies in our supply chain may be offset by increased prices of certain inventory components. ​ Cost of software and other services revenue consists of personnel costs, cloud hosting costs and payment processing fees.
We expect our cost of product revenue to fluctuate over time due to the level of units fulfilled in any given period and fluctuate as a percentage of product revenue over time as our focus on operational efficiencies in our supply chain may be offset by increased prices of certain inventory components.
The decrease in net working capital cash usage was driven by a $17.7 million reduction in cash used for changes in our inventory and the related vendor advances and accrued purchase commitments, partially offset by a $4.5 million increase in cash used by accrued expenses and other liabilities, $2.9 million increase in cash used by operating lease assets and liabilities, and a $0.8 million increase in cash used by prepaid expenses and other assets. ​ Cash flows used in investing activities ​ Net cash used in investing activities decreased by $164.1 million, or 175.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The decrease in net working capital cash usage was driven by a $17.7 million reduction in cash used for changes in our inventory and the related vendor advances and accrued purchase commitments, partially offset by a $4.5 million increase in cash used by accrued expenses and other liabilities, $2.9 million increase in cash used by operating lease assets and liabilities, and a $0.8 million increase in cash used by prepaid expenses and other assets.
The decreases were partially offset by increased sales from our distributor channel. ​ Software and other services mix ​ We define software and other services mix as a percentage of our total revenue recognized in a reporting period that is based on software subscriptions and other related services, consisting primarily of our software as a service (“SaaS”) offering.
Software and other services mix We define software and other services mix as a percentage of our total revenue recognized in a reporting period that is based on software subscriptions and other related services, consisting primarily of our software as a service (“SaaS”) offering.
This increase was primarily driven by a $21 million loss on excess inventory related to inventory on-hand that was deemed excess due to a shift in our strategy and market conditions.
This increase was primarily driven by a $21 million loss on excess inventory related to inventory on-hand that was deemed excess due to a shift in our strategy and market conditions. This was partially offset by lower probe volume and operating efficiencies in manufacturing Butterfly iQ+.
We view software and other services mix as a key indicator of the profitability of our business, and thus we believe that this measure is useful to investors. ​ 49 Table of Contents ​ Software and other services mix increased by 5.2 percentage points, to 38.5% for the three months ended December 31, 2023 compared to the three months ended December 31, 2022.
We view software and other services mix as a key indicator of the profitability of our business, and thus we believe that this measure is useful to investors. Software and other services mix decreased by 5.3 percentage points, to 33.9% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Butterfly’s solution enables the practical application of ultrasound information into the clinical workflow through affordable hardware that fits in a healthcare professional’s pocket and is paired with cloud-connected software that is easily accessed through a mobile application. ​ Butterfly iQ+ and iQ3 are ultrasound devices that can perform whole-body imaging in a single handheld probe using semiconductor technology.
Butterfly’s solution enables the practical application of ultrasound information into the clinical workflow through affordable hardware that fits in a healthcare professional’s pocket and is paired with cloud-connected software that is easily accessed through a mobile application.
This increase was primarily driven by higher amortization expenses related to newly deployed internally developed software that supports our SaaS offerings. ​ Research and development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 ​ 2022 ​ Change ​ % Change Research and development $ 55,616 $ 88,044 $ (32,428) (36.8) % Percentage of revenue ​ 84.4 % 120.0 % ​ ​ Research and development expenses decreased by $32.4 million, or 36.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Research and development Year ended December 31, (in thousands) 2023 2022 Change % Change Research and development $ 55,616 $ 88,044 $ (32,428) (36.8) % Percentage of revenue 84.4 % 120.0 % Research and development expenses decreased by $32.4 million, or 36.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This was impacted by $8.7 million of employee severance and benefits costs resulting from our reductions in force and $9.5 million of higher legal costs due to litigation and other legal matters. These costs are not representative of our ongoing operations.
This decrease was primarily driven by reductions of $7.4 million of employee severance and benefits costs related to our reductions in force carried out in 2023 and $6.8 million in legal costs due to litigation and other legal matters. These costs are not representative of our ongoing operations.
Manufacturing overhead costs are capitalized to inventory and are recognized as cost of revenues in future periods based on our rate of inventory turnover. ​ 59 Table of Contents Recently Adopted Accounting Pronouncements ​ A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 “Summary of Significant Accounting Policies – Recent Accounting Pronouncements Adopted” to our consolidated financial statements contained in this Annual Report on Form 10-K. ​
Recently Adopted Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 “Summary of Significant Accounting Policies – Recent Accounting Pronouncements Issued but Not Yet Adopted” to our consolidated financial statements contained in this Annual Report on Form 10-K.
Historically, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results. ​ While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies” in our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. ​ Revenue recognition ​ We generate revenue from the sale of products and software and other services.
While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies” in our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
The decrease was primarily due to the non-recurrence of net proceeds from the Business Combination of $548.4 million and an $18.7 million decrease in option exercises, partially offset by the non-recurrence of the $4.4 million repayment of the Paycheck Protection Program loan. ​ Critical Accounting Policies and Estimates ​ Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.
The decrease was primarily due to the non-recurrence of net proceeds from exercise of stock options and warrants of $2.7 million, partially offset by $0.1 million from other financing activities. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
This decrease was primarily driven by reductions of $23.5 million in personnel costs resulting from our reductions in force over the past year, a decrease of $2.6 million in engineering and testing costs, and a decrease of $4.6 million in consulting fees as we developed our internal capabilities to perform previously outsourced functions. ​ Sales and marketing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 ​ 2022 ​ Change ​ % Change Sales and marketing $ 39,073 $ 59,494 $ (20,421) (34.3) % Percentage of revenue ​ 59.3 % 81.1 % ​ ​ Sales and marketing expenses decreased by $20.4 million, or 34.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This decrease was primarily driven by reductions of $23.5 million in personnel costs resulting from our reductions in force over the past year, a decrease of $2.6 million in engineering and testing costs, and a decrease of $4.6 million in consulting fees as we developed our internal capabilities to perform previously outsourced functions.
SaaS subscriptions include licenses for teams and individuals as well as enterprise-level subscriptions. For sales of products, revenue is recognized at a point in time upon transfer of control to the customer.
Our software and related service offerings include SaaS subscriptions, product support and maintenance (“Support”), and software development kits ("SDKs") which may be perpetual or term-based. SaaS subscriptions include licenses for teams and individuals as well as enterprise-level subscriptions. For sales of products and perpetual SDKs, revenue is recognized at a point in time upon transfer of control to the customer.
This decrease was primarily driven by reductions of $22.0 million in personnel costs resulting from our reductions in force over the past year and $4.9 million in professional service fees for legal and other administrative services. 53 Table of Contents ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 ​ 2022 ​ Change ​ % Change Other $ 18,164 $ 7,346 $ 10,818 147.3 % Percentage of revenue ​ 27.6 % 10.0 % ​ ​ Other increased by $10.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This decrease was primarily driven by reductions of $22.0 million in 49 Table of Contents personnel costs resulting from our reductions in force over the past year and $4.9 million in professional service fees for legal and other administrative services.
We consider a variety of factors and data points when determining the existence and scope of a loss for the minimum purchase commitment. The factors and data points include Company-specific forecasts which are reliant on our limited sales history, agreement-specific provisions, macroeconomic factors and market and industry trends. Determining the loss is subjective and requires significant management judgment and estimates.
The factors and data points include Company-specific forecasts which are reliant on our limited sales history, agreement-specific provisions, macroeconomic factors, and market and industry trends. Determining the loss is subjective and requires significant management judgment and estimates. Future events may differ from those assumed in our assessment, and therefore the loss may change in the future.
Market conditions are subject to change and if actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which would have a negative impact on gross margin. ​ Losses expected to arise from firm, non-cancelable and unhedged commitments for the future purchase of inventory items are recognized unless the losses are recoverable through firm sales contracts or other means.
Market conditions are subject to change, and, if actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which would have a negative impact on gross margin.
We believe that this measure is useful to investors because it presents our core growth and performance of our business period over period. ​ ​ Units fulfilled decreased by 1,498, or 26.0%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to decreased device sales volume from our direct sales and eCommerce channels.
We believe that this measure is useful to investors because it presents our core growth and performance of our business period over period. 43 Table of Contents Units fulfilled increased by 3,131, or 19.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Transaction price is allocated to all identified performance obligations based on relative standalone selling prices of the underlying goods or services. Each sale of a hardware device or accessory is a performance obligation satisfied at a point in time when control of the good transfers from us to the customer.
Each sale of a hardware device, accessory, or perpetual SDK is a performance obligation satisfied at a point in time when control of the good transfers from us to the customer or when we provide the SDK to the customer.
In addition, we have restricted cash of $0.2 million as of December 31, 2023 for an agreement with the Gates Foundation. The restriction is expected to lapse as we fulfill our obligations in the agreement with the Gates Foundation. ​ Our material cash requirements include contractual obligations with third parties for office leases, technology licensing agreements, and inventory supply agreements.
We have restricted cash of $4.0 million as of December 31, 2024 to secure a letter of credit for one of our leases, which is expected to be maintained as a security deposit for the duration of the lease. Our material cash requirements include contractual obligations with third parties for office leases, technology licensing agreements, and inventory supply agreements.
Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Annual Report on Form 10-K. ​ Overview ​ We are an innovative digital health business transforming care through a unique combination of portable, semiconductor-based ultrasound technology, intuitive software, services and educational offerings that can make medical imaging more accessible than ever before.
Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Annual Report on Form 10-K.
The decrease was primarily due to the non-recurrence of net proceeds from exercise of stock options and warrants of $2.7 million, partially offset by $0.1 million from other financing activities. ​ Comparison of the period for the years ended December 31, 2022 and 2021 ​ Cash flows used in operating activities ​ Net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities.
Comparison of the period for the years ended December 31, 2023 and 2022 Cash flows used in operating activities Net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities.
This increase was primarily driven by a higher volume of SaaS subscriptions sold in conjunction with new device sales, current year subscription renewals and expanded service offerings. ​ Cost of revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2022 ​ 2021 ​ Change ​ % Change Product $ 26,804 ​ $ 29,308 ​ $ (2,504) (8.5) % Software and other services ​ 7,126 ​ ​ 2,238 ​ ​ 4,888 218.4 ​ Loss on product purchase commitments ​ ​ — ​ ​ 13,965 ​ ​ (13,965) ​ (100.0) ​ ​ ​ $ 33,930 ​ $ 45,511 ​ $ (11,581) (25.4) % Percentage of revenue ​ 46.2 % 72.7 % ​ ​ Cost of product revenue decreased by $2.5 million, or 8.5%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Software and other services revenue increased by $2.7 million, or 11.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily driven by a higher volume of SaaS subscriptions sold in conjunction with new device sales, current year subscription renewals, and expanded service offerings.
Key inputs and assumptions include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, stock price and exercise price.
The grant date fair values of stock option grants and ESPP options are estimated using a Black-Scholes option-pricing model. Key inputs and assumptions include the underlying stock price, the exercise price, the risk-free interest rate, the expected dividend yield, the expected term of the option, and the expected stock price volatility.
Our fixed technology license payment obligations were $15.5 million as of December 31, 2023, with $1.5 million payable within the next 12 months. Our fixed purchase obligations for inventory supply agreements were $14.8 million as of December 31, 2023, with $6.8 million payable within the next 12 months.
Our fixed office lease payment obligations were $28.0 million as of December 31, 2024, with $3.7 million payable within the next 12 months. Our fixed technology license payment obligations were $14.0 million as of December 31, 2024, with $3.5 million payable within the next 12 months.
We saw an increase in our enterprise software sales while our individual licenses where flat.
We saw an increase in enterprise software sales of $2.4 million while individual subscriptions were flat.
As we expand our healthcare system software offerings and develop relationships with larger healthcare systems, we continue to expect a higher proportion of our sales in healthcare systems compared to eCommerce. ​ Cost of revenue ​ Cost of product revenue consists of product costs including manufacturing costs, personnel costs and benefits, inbound freight, packaging, warranty replacement costs, payment processing fees and inventory obsolescence and write-offs.
As we expand our healthcare system software offerings and develop relationships with larger healthcare systems, we continue to expect a higher proportion of our sales in healthcare systems compared to eCommerce.
We expect to pay for approximately 21% of the amount payable within the next 12 months using vendor advances. ​ As of December 31, 2023, we had no obligations, assets or liabilities, which would be considered off-balance sheet arrangements. ​ Cash Flows ​ The following table summarizes our sources and uses of cash for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) ​ 2023 ​ 2022 ​ 2021 Net cash used in operating activities $ (98,820) $ (169,115) $ (189,187) Net cash provided by (used in) investing activities ​ 70,414 ​ (93,779) ​ (9,870) Net cash provided by financing activities ​ 228 ​ 2,881 ​ 565,692 Net decrease in cash, cash equivalents and restricted cash $ (28,178) $ (260,013) $ 366,635 ​ 56 Table of Contents Comparison of the period for the years ended December 31, 2023 and 2022 ​ Cash flows used in operating activities Net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities.
Cash Flows The following table summarizes our sources and uses of cash for the years ended December 31, 2024, 2023 and 2022: Year ended December 31, (in thousands) 2024 2023 2022 Net cash used in operating activities $ (41,707) $ (98,820) $ (169,115) Net cash provided by (used in) investing activities (2,658) 70,414 (93,779) Net cash provided by (used in) financing activities (1,495) 228 2,881 Net decrease in cash, cash equivalents, and restricted cash $ (45,860) $ (28,178) $ (260,013) 50 Table of Contents Comparison of the period for the years ended December 31, 2024 and 2023 Cash flows used in operating activities Net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities.
Stock options are granted at exercise prices not less than the fair market value of our common stock at the dates of grant. For purposes of restricted stock unit grants, the grant date fair value is calculated as the fair market value of the stock on the date of grant.
Stock options are granted at exercise prices not less than the fair market value ("FMV") of our common stock on the grant date. The ESPP sets purchase prices as 85% of the lower of (i) the FMV of the stock on the offering date, or (ii) the FMV of the stock on the purchase date.
We do not adjust this measure for returns as our volume of returns has historically been low. We view units fulfilled as a key indicator of the growth of our business.
We view units fulfilled as a key indicator of the growth of our business.
Engineering costs increased by $1.8 million, primarily due to increased spending on new product design and development. . ​ Sales and marketing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2022 ​ 2021 ​ Change ​ % Change Sales and marketing $ 59,494 $ 49,604 $ 9,890 19.9 % Percentage of revenue ​ 81.1 % 79.3 % ​ ​ Sales and marketing expenses increased by $9.8 million, or 19.9%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Sales and marketing Year ended December 31, (in thousands) 2023 2022 Change % Change Sales and marketing $ 39,073 $ 59,494 $ (20,421) (34.3) % Percentage of revenue 59.3 % 81.1 % Sales and marketing expenses decreased by $20.4 million, or 34.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our future spending on capital resources may vary from those currently planned and will depend on various factors, including our rate of revenue growth and the timing and extent of spending on strategic business initiatives. ​ We have restricted cash of $4.0 million as of December 31, 2023 to secure a letter of credit for one of our leases, which is expected to be maintained as a security deposit for the duration of the lease.
Our future spending on capital resources may vary from those currently planned and will depend on various factors, including our rate of revenue growth and the timing and extent of spending on strategic business initiatives.
We market and sell the Butterfly system, which includes probes, related accessories, and software subscriptions, to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and our eCommerce channel. ​ In 2023 and 2022, we took significant actions to reduce our cost of operations and extend our cash runway.
We aim to enable the delivery of imaging information anywhere at point-of-care to drive earlier detection throughout the body and remote management of health conditions. We market and sell the Butterfly system, which includes probes, related accessories, and software subscriptions, to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and our eCommerce channel.
Expenses classified as “Other” are not representative of ongoing operations. Such expenses were insignificant for the year ended December 31, 2021. ​ Liquidity and Capital Resources ​ Since our inception, our primary sources of liquidity are cash flows from operations, proceeds from the Business Combination and issuances of preferred stock and convertible notes.
Liquidity and Capital Resources Since our inception, our primary sources of liquidity are cash flows from operations and proceeds from stock issuances and the Business Combination. Our primary uses of liquidity are operating expenses, working capital requirements, and capital expenditures. During the year ended December 31, 2024, the Company utilized $45.9 million of cash and cash equivalents.
We routinely evaluate quantities and value of our inventories in light of current market conditions and market trends and record a write-down against the cost of inventories for NRV below cost. NRV is based upon an estimated average selling price reduced by the estimated costs of completion, disposal, and transportation.
Inventory and inventory valuation Inventories are stated at the lower of actual cost, determined using the average cost method, or net realizable value (“NRV”). We routinely evaluate quantities and value of our inventories in light of current market conditions and market trends, and record a write-down against the cost of inventories for NRV below cost.
For the full year 2023 versus 2022 enterprise licenses accounted for 32.9% of licenses versus 26.7% respectively. ​ Description of Certain Components of Financial Data ​ Revenue ​ Revenue consists of revenue from the sale of products, such as medical devices and accessories, and the sale of software related services, classified as software and other services revenue on our consolidated statements of operations and comprehensive loss, which are SaaS subscriptions and product support and maintenance (“Support”).
Although our software and other services revenue increased in the current year, our software and other services mix decreased due to the even larger increase in product revenue realized in the current year. 44 Table of Contents Description of Certain Components of Financial Data Revenue Revenue consists of revenue from the sale of products, such as medical devices and accessories, and the sale of software and related services, classified as software and other services revenue on our consolidated statements of operations and comprehensive loss.
Our key performance measures may fluctuate over time as the adoption of our devices increases which may shift the revenue mix more toward software and other services. The quarterly measures may be impacted by the timing of device sales. ​ Units fulfilled ​ We define units fulfilled as the number of devices whereby control is transferred to a customer.
The quarterly measures may be impacted by the timing of device sales. Units fulfilled We define units fulfilled as the number of devices whereby control is transferred to a customer. We do not adjust this measure for returns as our volume of returns has historically been low.
These costs are not representative of our ongoing operations. ​ Comparison of the Years Ended December 31, 2022 and 2021 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2022 ​ 2021 ​ Change ​ % Change Product $ 50,263 ​ $ 47,868 ​ $ 2,395 5.0 % Software and other services ​ 23,127 ​ ​ 14,697 ​ ​ 8,430 57.4 ​ ​ ​ $ 73,390 ​ $ 62,565 ​ $ 10,825 17.3 % ​ Product revenue increased by $2.4 million, or 5.0%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year ended December 31, (in thousands) 2023 2022 Change % Change Product $ 40,036 $ 50,263 $ (10,227) (20.3) % Software and other services 25,864 23,127 2,737 11.8 $ 65,900 $ 73,390 $ (7,490) (10.2) % Product revenue decreased by $10.2 million, or 20.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Partially offsetting these declines were increases in overall prices. ​ Software and other services revenue increased by $2.7 million, or 11.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Excluding the prior-year large medical school deployments, product revenue increased 44.4% for the year ended December 31, 2024 compared to the year ended December 31, 2023. Software and other services revenue increased by $2.0 million, or 7.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This was partially offset by lower probe volume and operating efficiencies in manufacturing Butterfly iQ+. ​ Cost of subscription revenue increased by $1.3 million, or 17.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cost of subscription revenue increased by $1.3 million, or 17.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily driven by higher amortization expenses related to newly deployed internally developed software that supports our SaaS offerings.
As a result of the Business Combination, we received gross proceeds of approximately $589 million. ​ 48 Table of Contents Key Performance Measures ​ We review the key performance measures discussed below to evaluate the business and measure performance, identify trends, formulate plans and make strategic decisions.
Key Performance Measures We review the key performance measures discussed below to evaluate the business and measure performance, identify trends, formulate plans, and make strategic decisions. Our key performance measures may fluctuate over time as the adoption of our devices increases, which may shift the revenue mix more toward software and other services.
This increase was primarily driven by higher headcount that supports our software and other services and increases in cloud hosting costs and amortization expenses. ​ Loss on product purchase commitments decreased by $14.0 million, or 100.0%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cost of subscription revenue increased by $0.5 million, or 5.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase was primarily driven by higher software amortization expenses but was partially offset by lower cloud hosting costs.
Many of the assumptions require significant judgment and changes in assumptions could have a significant impact in the determination of stock-based compensation expense. ​ No related tax benefits of the stock-based compensation expense have been recognized and no related tax benefits have been realized from the exercise of stock options due to our net operating loss carryforwards. ​ Inventory and inventory valuation ​ Inventories are stated at the lower of actual cost, determined using the average cost method, or net realizable value (“NRV”).
We do not apply a forfeiture rate assumption to our awards. No related tax benefits of the stock-based compensation expense have been recognized, and no related tax benefits have been realized from the exercise of stock options due to our net operating loss carryforwards.
Stock-based compensation expense is recognized over the requisite service periods of awards, which is typically three to four years. We do not apply a forfeiture rate assumption to our awards. ​ The fair values of stock option grants are estimated using a Black-Scholes option-pricing model.
Stock-based compensation expense is generally recognized evenly over the requisite service periods of awards, which is typically three to four years for RSU and stock option grants and typically two years for ESPP options. Stock-based compensation expense for performance-based and market-based RSU grants is generally recognized using the accelerated attribution method.
The increase was primarily due to the purchase of marketable securities in 2022, and the subsequent sale of those securities in 2023.
Cash flows used in investing activities Net cash used in investing activities decreased by $164.2 million, or 175.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to the purchase of marketable securities in 2022, and the subsequent sale of those securities in 2023.
In 2024, due to the launch of our next generation device iQ3, we are expecting our software as a percentage of total revenue to remain flat or decrease. ​ To date, we have invested heavily in building out our direct salesforce, with the ultimate goal of growing adoption at large-scale healthcare systems.
To date, we have invested in building out our commercial footprint, with the ultimate goal of growing adoption at large-scale healthcare systems and driving awareness of the usability of ultrasound.
The increase was primarily due to an increase of $73.5 million in purchases and sales of marketable securities and an increase in purchases of property and equipment of $10.4 million related to the Company’s new office space and additional investments into our software platform. ​ 57 Table of Contents Cash flows provided by financing activities ​ Net cash provided by financing activities decreased by $562.8 million, or 99.5%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cash flows provided by investing activities Net cash provided by investing activities decreased by $73.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to the sale of our marketable securities in 2023.
Our contracts with customers often include multiple performance obligations.
Revenue recognition We generate revenue from the sale of products and software and other services. Our contracts with customers often include multiple performance obligations.
The loss on product purchase commitments did not recur in 2022. ​ 54 Table of Contents Research and development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2022 ​ 2021 ​ Change ​ % Change Research and development $ 88,044 $ 74,461 $ 13,583 18.2 % Percentage of revenue ​ 120.0 % 119.0 % ​ ​ Research and development expenses increased by $13.5 million, or 18.2%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Sales and marketing Year ended December 31, (in thousands) 2024 2023 Change % Change Sales and marketing $ 41,567 $ 39,073 $ 2,494 6.4 % Percentage of revenue 50.7 % 59.3 % 47 Table of Contents Sales and marketing expenses increased by $2.5 million, or 6.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We consider a variety of factors and data points when determining the existence and scope of a loss for the minimum purchase commitment. The factors and data points include Company-specific forecasts which are reliant on our limited sales history, agreement-specific provisions, macroeconomic factors and market and industry trends.
Losses expected to arise from firm, non-cancelable, and unhedged commitments for the future purchase of inventory items are recognized unless the losses are recoverable through firm sales contracts or other means. We consider a variety of factors and data points when determining the existence and scope of a loss on the minimum purchase commitment.
The quarterly revenue mix may be impacted by the timing of device sales.
The quarterly revenue mix may be impacted by the timing of device sales. In 2024, due to the continued success of our next-generation iQ3 probe, our software and other services mix as a percentage of total revenue decreased.
These increases in sales and marketing expenses were partially offset by decreased digital and social marketing expenses of $1.5 million as we shifted our strategic focus from the eCommerce channel to our direct sales channel. ​ General and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2022 ​ 2021 ​ Change ​ % Change General and administrative $ 77,596 $ 85,717 $ (8,121) (9.5) % Percentage of revenue ​ 105.7 % 137.0 % ​ ​ General and administrative expenses decreased by $8.1 million, or 9.5%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
General and administrative Year ended December 31, (in thousands) 2024 2023 Change % Change General and administrative $ 39,810 $ 49,613 $ (9,803) (19.8) % Percentage of revenue 48.5 % 75.3 % General and administrative expenses decreased by $9.8 million, or 19.8%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Over the two years, we reduced our annual cash requirements by approximately $170 million, to approximately $60 million assuming no revenue growth or further reductions in expenses. As such, we conservatively expect our cash to last into 2026. As we look forward, we expect to continue to invest our business in order to grow revenue.
Since 2022, we have taken significant actions to reduce our cost of operations and extend our cash runway and have reduced our annual cash requirements by approximately $180 million, to less than $50 million annually. As we look forward, we expect to continue to invest in our business in order to grow revenue.
We plan to continue to invest additional resources to expand and further develop our SaaS and other service offerings. ​ Also included in cost of revenue are losses on product purchase commitments relating to inventory supply agreements where the expected losses exceed the benefits of the contracts.
We plan to continue to invest additional resources to expand and further develop our SaaS and other service offerings which will be reflected in cost of revenue as amortization expense. Research and development Research and development expenses primarily consist of personnel costs and benefits, professional services, facilities-related expenses and depreciation, fabrication services, and software costs.
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We aim to enable the delivery of imaging information anywhere at point-of-care to drive earlier detection throughout the body and remote management of health conditions.
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Overview We are an innovative digital health business transforming care through a unique combination of portable, semiconductor-based ultrasound technology, intuitive software, services, and educational offerings that can make medical imaging more accessible than ever before.
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Before we reach 2026, we expect to raise capital in order to reach profitability. We expect to first seek nondilutive capital in the form of grants or debt and then potentially in the form of equity securities. ​ Business Combination ​ On February 12, 2021 we completed the Business Combination.
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Butterfly developed ultrasound devices that can perform whole-body imaging in a single handheld probe because it is powered by our proprietary semiconductor technology instead of piezoelectric crystals.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur inability or failure to do so could harm our business, financial condition and results of operations. ​ Foreign Exchange Risk We operate our business primarily within the United States and currently execute the majority of our transactions in U.S. dollars. We have not utilized hedging strategies with respect to our foreign exchange exposure.
Biggest changeForeign Exchange Risk We operate our business primarily within the United States and currently execute the majority of our transactions in U.S. dollars. We have not utilized hedging strategies with respect to our foreign exchange exposure. This limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We did not have any floating rate debt as of December 31, 2023. Our cash and cash equivalents are comprised primarily of bank deposits and money market accounts. The primary objective of our investments is the preservation of capital to fulfill liquidity needs.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We did not have any floating rate debt as of December 31, 2024. Our cash and cash equivalents are comprised primarily of bank deposits and money market accounts. The primary objective of our investments is the preservation of capital to fulfill liquidity needs.
Nonetheless, to the extent our costs are subject to inflationary pressures, we may not be able to fully offset such higher costs through price increases or manufacturing efficiencies.
Nonetheless, to the extent our costs are subject to inflationary pressures, we may not be able to fully offset such higher costs through price increases or manufacturing efficiencies. Our inability or failure to do so could harm our business, financial condition, and results of operations.
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This limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements. ​

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