An updated version of my Deep Dive into $BFLY (@ButterflyNetInc) after Q2 2021 earnings report.
Below are the highlights from my in-depth research based on my original investing framework (available in my📖 –> 10baggerdan.com/ebook).
🧵1/18
2/18
(new) $BFLY Q2 2021 (1/2)
– Revenue $16.5 (40% YoY growth)
– Product revenue $13M (30.3% YoY growth) and Subscription revenue $3.5M (94.3% YoY growth)
– Gross profit $8.2M ($0.2M in Q2 '20)
– Gross margin 49.8% (1.4% in Q2 '20)
– Net loss $2.9M (loss $23.2M in Q1 '20)
3/18
(new) $BFLY Q2 2021 (2/2)
– Cash ($509.5M)
– R&D expenses grew >50%
– EPS is -$0.02 (beats by $0.22)
No change to prior guidance for 2021.
4/18
$BFLY Investment Thesis (1/4)
2/3 of the world has no access to medical imaging (MRI and ultrasound).
Access to medical imaging is vital (2/3 of diagnostic dilemmas can be addressed through simple imaging).
5/18
$BFLY Investment Thesis (2/4)
Traditional medical imaging devices are expensive (from $10k – $100k), bulky (cart-based), and must be operated by specially trained professionals.
Access to them is limited even in the developed countries (especially in 3rd world countries).
6/18
$BFLY Investment Thesis (3/4)
Company offers a groundbreaking ultrasound solution: hand-held portable ultrasound device + cloud platform to capture, store and share images.
The price of the device is 10x less than the cheapest traditional medical imaging device.
7/18
$BFLY Investment Thesis (4/4)
The company eventually wants to replace every stethoscope in the world with their portable ultrasound device.
8/18
$BFLY Company Background
– Industry medical device, telemedicine
– Founded in 2011 by @JMRothberg
– Not a founder led company anymore, but founder has a significant control
– IPO'd in 2021
– Raised >$600M
– Market cap >$2B
– No debt
– Unprofitabl
– Growing at >65%+ CAGR
9/18
$BFLY Technology (1/5)
Combination of software and hardware.
Hardware is powered by a proprietary Ultrasound-on-Chip™ technology.
It is the only ultrasound device that can perform "whole-body imaging" in a single hand-held probe using semiconductor technology.
10/18
$BFLY Technology (2/5)
The device is empowered by AI.
(new) Today announced a strategic partnership with @CaptionHealth to further improve AI capabilities.
11/18
$BFLY Technology (3/5)
Butterfly continues to develop TeleGuidance – the world's first integrated ultrasound telemedicine platform.
It enables trained practitioners to connect with a bedside scanner and guide directly from their computer.
vimeo.com/418967236
12/18
$BFLY Technology (4/5)
Butterfly also develops a solution for Veterinary.
The device costs the same and can scan animals ranging from companion animals (dogs and cats) to large animals (horses) to exotic animals (from sea turtles to tigers).
13/18
$BFLY Technology (5/5)
The company has an FDA clearance, CE mark, and other necessary approvals in other countries.
The product is already available in 20 countries (USA, Canada, Australia, New Zealand, throughout greater Europe, and in parts of Latin America).
14/18
$BFLY TAM (1/2)
Global ultrasound market – $8B (2020).
It continues to grow double-digit mainly as a result of expanding access to new settings (beyond traditional ones like hospitals, imaging centers, doctor offices).
15/18
$BFLY TAM (2/2)
At the same time, hand-held devices currently account only for 3% (‼️) of the total global ultrasound market.
There are 40M+ global healthcare practitioners. Company estimates that they can target at least 8M (‼️) practitioners worldwide.
16/18
$BFLY MOAT (1/2)
Ultrasound-on-Chip™ technology significantly reduces the cost of manufacturing (2x cheaper than the closest competitor – Vscan from $GE).
The company has an exclusive deal with $TSM to produce semiconductor chips.
17/18
$BFLY MOAT (2/2)
280 patents already granted and 540 (!!!) patents awaiting.
Creating high switching costs (the more customers upload scans to the Butterfly's cloud platform, the stickier they become to the product).
18/18
The rest of the $BFLY highlights cover the following points:
– Business Model
– Team
– Ownership
– Financials
– Valuation + Price Target
– Risks
– Bonus: Optionality
Continue reading here – 10baggerdan.substack.com/p/bfly
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