BFLY - NYSE

Ladies and gentlemen, hello and welcome to the Butterfly Network, Inc. Q1 2023 Earnings Call. My name is Maxin and I will be coordinating the call today. [Operator Instructions] I will now hand you over to Heather Getz, Executive Vice President, Chief Financial Officer to begin. Heather, please go ahead when you're ready.

Good morning and thank you for joining us today. Earlier this morning, Butterfly released financial results for the first quarter ended March 31, 2023, and provided a business update. The release and earnings presentation, which include a reconciliation of management's use of non-GAAP financial measures compared to the most applicable GAAP measures, are currently available on the Investors section of this company's website at ir.butterflynetwork.com. I, Heather Getz, Executive Vice President and Chief Financial Officer of Butterfly; alongside Joe DeVivo, Butterfly's Chairman and CEO; and Darius Shahida, Butterfly's Chief Strategy Officer, will host this morning's call. During today's call, we will be making certain forward-looking statements. These statements may include among other things, expectations with respect to financial results, future performance, development and commercialization of products and services, potential regulatory approvals, the size and potential growth of current or future markets for our products and services, and the impact of the macroeconomic factors on our business. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our filings made with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements. As a reminder, this call is being webcast and recorded and we will be referencing a slide presentation in conjunction with our remarks. There may be a short delay between the live telephone audio and the presentation being shown. To access the webcast, please visit the Events section of the Investors section of our website. And a replay of the event will be available following the call. I would now like to turn the call over to Joe DeVivo. Joe?

Thank you, Heather. Good morning. I feel quite fortunate to join the family at Butterfly Network during such a critical time in its history. I first want to thank Dr. Jonathan Rothberg and the Board for the opportunity, and also the warm welcome I've received from the whole Butterfly team. I've only been here a few weeks, and I've enjoyed meeting the incredible people who've brought so much success to the company and I'm really excited about Butterfly's potential. During my career, I've seen the early days of minimally invasive surgery, surgical robotics, interventional oncology, and most recently, digital health, each with the undisputed disruptors in their respective fields. It's an exciting ride and I'm thrilled to be a part of the disruption that will be caused by the democratization of medical imaging through Butterfly's one-of-a-kind of hardware enabled by AI tools. This technology will empower providers to help treat and diagnose patients where they are. In a moment, Darius will provide a business update on the quarter, and Heather will communicate the financial results. But first, I'd like to share my initial perspective on the opportunities that I see. Over the past couple of years, I served in the AI ultrasound field, actually partnering with Butterfly, and I've seen firsthand how impactful enabling clinicians to capture images at the point-of-care can be. Since the inception of Butterfly, we've spoken about the importance of ease of use in empowering practitioners worldwide with ultrasound. Because nearly two-thirds of the world's population lacks access to medical imaging and the vast majority of healthcare practitioners are not ultrasound trained, ease of use and training are the most critical limiting factors to broaden adoption and true democratization of medical imaging. With our Ultrasound-on-Chip technology, Butterfly has made imaging more accessible to medical professionals worldwide, and frankly, easier to use. This is why we've invested so heavily in the development of novel AI applications to empower practitioners wherever they may be. From our Auto Bladder Volume tool, to our cardiac guidance and interpretation partnership, to our auto gestational age application with the Gates Foundation; and now, most recently, our Auto B-line tool. This newly approved tool makes it easier for medical professionals to capture key pulmonary scans to detect fluid in the lungs at the point of care, giving them a timely diagnosis when they need it. This B-line application is essential for diagnosis confirmation in pneumonia, and many other cardiovascular diseases. In fact, there are more than 1 million diagnoses per year for pneumonia alone in this country, and our B-line application will make it easier. Butterfly is clearly at the forefront of AI development as we seek to make our solution as easy as possible. And while this approach and the importance of AI has garnered a lot of attention, investment and M&A recently, it's been at the core of our DNA and the company strategy since the very beginning of Butterfly. Our secure cloud empowers our AI developers to build applications for our customers by tapping into our database, which represents the largest ultrasound image repository in the world. Importantly, this focus on novel AI tools development in our image repository is not only bearing fruit in the form of FDA approvals, but in driving the commercial adoption of our technology in ways that traditional POCUS is unable to do. Going forward it's our intention to start monetizing our AI algorithms across our large installed base. Over the past three years, Butterfly has deployed more devices in the market than any other company with nearly 100,000 ultrasound probes shipped today. Butterfly has an amazing ability to reach, deploy, and empower users virtually. I view Butterfly as a technology-empowered software company. Our chip based hardware provides us an accessible and growing user base that our software can be sold to, providing incremental software opportunities. A recent FDA clearance has paved the way for other developed tools that are in queue for regulatory submission. Reaching more people, empowering them with intelligent diagnostic tools, and helping them with the business of medicine through enterprise software is the winning formula for our future. Now, being a disrupter is never easy. I've been there many times before. It's always hard to predict the timing of customer and market adoption in the face of the massive opportunity it presents. I fully intend to lead Butterfly through this journey, and capture the market for our employees and our investors. So with that, I'll turn it over to Darius to comment on our commercial and business progress in the quarter. Darius?

Thank you for that introduction, Joe. We are excited to have you on board. In the last quarterly update, we shared a recap of all the progress that was made in 2022 across each of our four pillars: health systems, international expansion, path to home and adjacent value stream on our path to democratize medical imaging. 2023 has kicked off in earnest with progress across each of these four pillars, and with our team driving outcomes against our principles of easy, everywhere and economical. So with that said, let's dive into the progress we made this past quarter in more detail. Starting with our progress in health systems, this quarter kicked off with more large institutions embracing Butterfly and deploying our Blueprint solution at scale. In fact, we are excited to share that this morning we have signed another significant deal. This time with the largest medical school in the country to deploy our Butterfly solution to help facilitate point-of-care ultrasound across the continuum of education. The institution expects to use our QA and credentialing, utilization tracking and Butterfly Academy didactic courses as a complement to its existing point-of-care ultrasound curriculum. This opportunity represents an important partnership to empower and deploy an exemplary medical education program across multiple specialties, and to train hundreds of students, residents and physicians. While we are introducing this meaningful partnership today, the deployment was signed in April. We look forward to sharing more details in the coming months. Another notable partnership was our multiyear rollout with high quality medical education, an internationally recognized emergency airway management and point-of-care ultrasound organization based in Minnesota. This deployment will put Butterfly IQ, probes and Compass software in over 100 rural and critical access hospitals throughout the State of Minnesota. The deployment will be paired with extensive POCUS training as part of the grants awarded to HQ Med Ed by the Helmsley Foundation aiming to boost sonography and POCUS training, and ultimately, improve access to exceptional medical treatment for all Minnesotans. Internationally, as you'll recall, last quarter, we announced deployment with the University Hospital of Bonn in Germany, in which they are deploying Butterfly in a one-to-one model across their entire medical school and Butterfly Blueprint across their health system. Great progress has been made in this area with the implementation now underway. The connectivity is in place, and first students arrived later this month. Moving to our clinical progress and our path to home. Beyond the aforementioned FDA approval we received in Q1, our clinical team continues to make progress with a number of key studies that demonstrate the value of butterfly in a multitude of use cases and clinical settings. Our team is actively working with several institutions that have deployed Butterfly at scale and are compiling and quantifying the meaningful return on investment that Butterfly is driving through encounter based workflow. Expect more updates on this front in the coming months. Another exciting clinical advancement in the first quarter is the release of the ACC cardiovascular point-of-care Ultrasound Workbook. Inspired by an innovation partnership with Butterfly, the ACC put together a team of experts and developed this guidance tool for cardiologists to enhance the adoption and utilization of POCUS by cardiologists. Three key areas are addressed including cardiac, lung and vascular bedside ultrasound, as well as the value POCUS can provide in enhancing routine bedside physical exam. Now the ACC joins a growing list of professional societies acknowledging and supporting the evolution of bedside assessment to include POCUS and we are thrilled to have been the inspiration for this publication. Last but not least, we have signed contracts with large U.S. academic medical centers in the Northeast to initiate clinical projects that are evaluating wide scale deployment for clinical care and training initiatives that explore the use of Butterfly as a new standard of care in hospital patient management. We anticipate initiating this in Q3 and look forward to updating you on our progress on this front later this year as well. Moving to our adjacent markets, our veterinary team is excited to announce that a seminal paper was published in the Journal of Veterinary Medical Education, which demonstrates the feasibility and benefits of implementing a self-driven point-of-care ultrasound program in large animal teaching hospitals using Butterfly iQ+ Vet. This randomized control trial found that by equipping students with Butterfly IQ+ Vet, and providing simple self-guided digital materials for device use in key clinical applications, it is feasible to implement self-motivated POCUS training, even in large animal teaching hospitals amid heavy caseloads and time constraints. Moreover, the self-driven program increased POCUS knowledge in students that have lower test scores. Plus 94% of students found the Butterfly useful in their education and 95% reported they would like a device during all their clinical rotations. This Penn research corroborates our belief that by empowering students with Butterfly's easy-to-use portable POCUS system, academic institutions will greatly enhance training efficiencies and knowledge outcomes in their programs. Encoding ultrasound education and training is core to our veterinary team strategy as it is with our broader company strategy. The Vet team continued to expand existing relationships with academic institutions and strategic partners this past quarter. As you'll recall, in Q3 2022, Butterfly announced and entered into a collaboration with a third-party training platform that connects veterinary hospitals with professional sonographers in real time using the Butterfly IQ+ Vet device. In Q1 of this year, we expanded this relationship, and they now offer a more comprehensive package that includes Butterfly program tablets with educational offerings for all their customers. With all this progress in mind, I will now turn the call over to Heather for the financial results. Heather?

Thank you, Joe and Darius. Revenue for the first quarter of 2023 was $15.5 million, essentially flat compared to the prior year period and within our guidance communicated on the year-end earnings call. Looking at our sales channel, we saw a 15% increase in our U.S. direct business driven by higher subscription revenue and increases in our global health business, which includes our deployment in Africa with the Gates Foundation. This growth was offset by softness across our other channels, including e-commerce, international distribution and vet. Breaking our revenue down between products and software, products revenue was $8.8 million, a decrease of 20% versus Q1 2022. This decrease was driven by lower volume across all segments, with the exception of global health. Software and services revenue was $6.6 million in the first quarter growing by 45% over the prior year period. Software and services mix was 43% of revenue and increased by approximately 15 percentage points versus Q1 2022. This increase was due to a higher installed base of products with the accompanying subscription software, renewals on the existing base of software users and software implementations completed during the quarter. Turning now to gross profit. Gross profit was $9.1 million in Q1 2023, compared to $8.3 million in the prior year period. Gross profit margin was 59% for the first quarter, which compares to 54% in Q1 2022. This increase was primarily due to a higher average selling price, in addition to product mix, reflecting a higher proportion of subscription revenues. Also contributing to the increase margin was improved manufacturing productivity and other efficiencies. Offsetting these benefits was higher amortization of internal used software, which reduced margin by 560 basis points. For the first quarter of 2023, adjusted EBITDA loss was $22.3 million, compared to a loss of $39.7 million for the same period in 2022. The improvement in adjusted EBITDA loss was driven by the increased gross margin dollars, as well as the implemented cost reductions, which led to lower payroll, consulting and other outside services. Moving to our capital resources. As of March 31, 2023, cash and cash equivalents including restricted cash were $198 million. Our monthly use of cash excluding bonus and severance was $11 million in the first quarter of 2023, compared to $18 million per month in the first half of 2022. Before I turn the call back to Joe, I would like to touch on 2023 guidance. It has been less than a month since Joe joined the Butterfly team and we need to give him an opportunity to evaluate the company strategy. As such, we cannot affirm full your guidance at this time. We will revisit our guidance on our second quarter earnings call. That being said, we are committed to providing as much near-term direction as possible. Considering the greater than expected disruption we experienced in the first quarter resulting from the change in leadership and reduction in force as well as the longer than expected launch time with our distribution partners, we're expecting Q2 revenue to increase sequentially, but still be flattish to last year. Breaking it down. We believe our U.S. direct channel will continue to show strength and as we recently signed a deal with one of the largest medical schools in the country and have visibility to another in the near future. We also expect our distribution partners to gain traction as we progress through the quarter. Our vet channel will see expansion albeit at a slower pace than expected. We are, however, expecting continued softness in our international distribution as well as lower global health revenue as we anniversary the Gates Foundation deployment. As for EBITDA, we are expecting some improvement versus the first quarter of this year with higher sequential revenue and the full realization of our reduction in force. To close, while we saw strength in our U.S. direct and global health channels, we experienced higher than expected disruption and softness in our other channels. We believe we can navigate this disruption we are seeing, while still realizing the vision and mission of Butterfly. Under all scenarios, we have a solid cash position, we continue to evaluate and find opportunities for efficiencies and we will continue to invest in our current and future growth, while closely scrutinizing our investments to ensure that we pick the maximum ROI projects and carefully evaluate the tradeoffs. Meanwhile, we will give Joe the opportunity to assess our strategy. And with that, I will turn the call back over to Joe for closing remarks.

Thank you, Heather. My last prepared remark will be on the incredible opportunity Ultrasound-on-Chip technology provides. As I mentioned earlier, I believe we are a technology-enabled software company. We have many opportunities to monetize our broad and growing base of hardware with new software applications. But I don't believe it ends there. I believe the proprietary Butterfly chip can be leveraged in more form factors to empower even more patients to be treated in more automated and intelligent ways. I'm excited to share with you our vision before the end of this year. Thank you. And I'll now turn it over to the operator for questions.

[Operator Instructions] Our first question today comes from Joshua Jennings from Cowen & Co.

Congratulations Joe on joining the Butterfly team. Wanted to just -- maybe just review, I guess the details on the U.S. commercial team. And maybe just to remind us of the U.S. sales infrastructure. Sounds like Joe you may be reevaluating the commercial strategy in the U.S. and globally. But just have a better handle on kind of the combination of direct sales reps and distributors. Anything incremental or sort of detail you can share would just be helpful to understand where that commercial team sits and how that could evolve over the course of 2023?

Yes, hi, Josh. So, if you look at our direct sales force, as we mentioned on the year-end call, when we restructured it, we did reduce some of our direct sales force and focused them specifically on the hospital systems which has been successful in Q1. As I mentioned, we were up 15% year-over-year, which is a great result with that reduction. On the distribution side, we had expected to onboard third-party distributors at a faster rate and that did not occur and you will start to see that benefit in Q2. And as we mentioned, Joe will be evaluating that go-to-market strategy and we will revisit it on the Q2 call.

Understood. Thanks then. And was hoping to also just get an understanding of the hardware and software pipe initiatives, anything you can share to what investors should be expecting in 2023 in terms of new capabilities, features of the software or for the next gen Butterfly IQ System?

This is Joe, Josh. So first of all, historically, when we would sell software, we would sell it in a bundle, in a subscription package. So what we're doing is we're in the process of coming up with different levels of bundles, and being able -- as new capabilities come out to be able to monetize them with a different pricing strategy. So we're working on that today and I'd expect in the year or near the end of the year to start going with new capabilities to customers and be able to monetize them. So when we do that, we'll let you know. I think we are going to be releasing the B-line algorithm sometime in the second quarter. And that'll be an ability to kind of reinvigorate our subscriber base and find ways ultimately to upsell. I think 2024 is the year, where you're going to see a lot of incremental software, and also some hardware come out. And we'll certainly update that more specifically a little bit later. But I have to say, coming in as a new CEO, and learning what's in the pipeline, I feel like a kid in a candy store. There's so much this team has done. And I'm actually stunned. It hasn't come to market yet. And so there are AI applications or software improvements, hardware. So it's going to be a lot of fun.

I wanted to ask about the home opportunity and I know the team has been working on regulatory pathways with the FDA to open up that home indication for your patient self-scanning or even provider scanning in the home. Any progress there and then anything you could share just from the timeline, when do you think that work with the FDA will be done, and you kind of have a defined pathway forward in terms of what's going to be required?

That's a part of things that we are revisiting. I think there may be opportunities to get there sooner, and it may not be as complicated as we thought about in the past. Just give me a little time so I can piece it together for you. The home and offsite is going to be a massive, massive opportunity for us. And I'm just thrilled to update you. I wish, I could tell you what I know right now. What I want right now is dates and deliverables. So when I tell you I can tell you with certainty on timing. But I have a very strong desire -- when I've looked at this business, from the outside in, the hospital business is very important and very strong. It's also filled with some incredible incumbents who are going to fight us tooth and nail to seed market share, although they have been fortunately for Butterfly. There's an even larger opportunity outside the hospital as hospitals -- in my tiny digital health and virtual we've all seen how payers, providers, employers are all trying to find ways to reduce the cost of care and help treat or manage and maintain patients in their home. And given the lens that I'm bringing from my time InTouch and Teladoc, I think there's going to be enormous opportunity. And I don't see it as a science project. I see it as connecting some dots internally, and packaging things in a way that can create value for this company. So it's a little too soon for me to do to connect those dots for you. And I can't wait until I can.

And then last question, just on -- wanted to just ask about the Blueprint software package, enterprise software. The software revenue line is performing very nicely since was introduced, I think last year. Can you just help us understand -- I know part of this strategy is in the facilitating deployment. Also, Blueprint could act as a Trojan horse, and there's some hospital systems that are adopting Blueprint in front of the Butterfly IQ handheld devices and all the capabilities there. Maybe just help us better understand that opportunity in United States just Blueprint as a standalone software solution for hospital systems, exclusive of the devices? And how it's been contributing to the software and other services revenue growth over the last couple of quarters? Thanks for taking the questions.

Sure, Josh, I'll do my best and if I have any holes, I'll let team help me. So our enterprise software is called a Compass. And Compass, plus iQ+, meaning our enterprise software plus our hardware in a wrapped bundle is called Blueprint. And the Compass software has been a pleasant surprise to the team. I think, there -- we do a lot in software. We are using software to tune our chip to get the appropriate images. We're using software to create AI algorithms to make image capture more successful, and then we're using software with Compass to make the business of medicine and the business of ultrasound more efficient. Now, a lot of people take scans, but they're not documenting those scans, and then they're not billing for those scans. And when they don't bill for those scans, that's revenue for health systems that they're foregoing. And there really isn't -- and I get to the team surprise, there really isn't an enterprise management software that ties the scan, the ID and the record of the scan to the EMR and then to the billing process to ensure that these scans are paid for. And so as our team approaches hospitals, regardless of who the incumbent imaging company is, they pretty much all are excited about the fact that Butterfly is solving a pretty major problem for them. And so the early signs are, we're seeing in a few of our early sites then capture simply more reimbursement. So the ROI is very immediate, literally being able to see what the baseline in reimbursement for imaging was the prior month and then after Compass, seeing that go up and go up materially. So it's a big positive for us. And we're going to continue as we market Compass to make Blueprint and the bundling of the entire solution a priority. But I think our team has been -- I think the prior management team, prior leadership, were very visionary and did a great job in this area. And I think, I feel blessed to have a product like that with everything else that's in the pipeline.

The next question comes from Suraj Kalia from Oppenheimer & Company.

Joe, welcome aboard, pleasure to connect with you over the phone today. A lot of commentary you have provided and I appreciate the fact that you're just getting your feet wet. And there are a lot of unknowns out there. I totally understand. One of the things you mentioned is repositioning the company. And I think so I'm paraphrasing here, as a technology-enabled software company or AI enabled something you had said. Moving forward Joe, would you advise us to start looking at the software component of the business, that line item, specifically in terms of the ROI on these strategic initiatives, rather than the handhelds being placed per se, as an ultimate driver of software? How would you advise we'd start looking whether Q2, Q3 onwards in terms of these two line items?

So thank you for the question. It’s incredibly lucid question. And I look forward to when I feel comfortable providing guidance, and I feel we have initiatives in place that are driving revenue. To help at that time, a healthier forecast that see it and peel it out in the right manner. The reason, while I have not been inside the operation long, it's only been a couple of weeks of meeting people. But I have been studying the business from afar. And I have been thinking about the business and I have thesis on the business before I took the job. And in thinking about the business, what I'm seeing is that we are having an ever increasing install base. And our capabilities in our software are becoming more sophisticated. And so the way to look at it simply as every quarter, we're going to increase our install base, we're not in any way shape or form deemphasizing hardware. But I see an opportunity that as new capabilities come out and those capabilities are creating value for customers, instead of just adding them into a package for free, for those customers who will see value in that additional software, they could pay for it. And so that means that we have to create an enterprise system that allows a customer to go to a site and actually increase their package and their capability and buy more software from us. And so A, we want to increase the breadth of our business by placing as much software as possible -- or I'm sorry, placing as much hardware as possible. But then second, as our R&D continues to be productive in creating new solutions, that's not just increasing the ASP on the new sales is going back to the base business, reinvigorating them and selling them software. So it's not really a pivot, but it's a different way to monetize the business. And I think what that'll do, you've seen in the quarter, I think we were 54% gross margin going to 59% or up, that's exactly right. But we've seen an increase in gross margin, and I'd like to see this business with much higher gross margins than we're at. And if we can do -- if we can keep our hardware at an appropriate price to create market access, but we can monetize our software at very high gross margin, I think you'll see the profitability or at least the contribution profile of company increasing over time as we execute on that strategy. So I'm very happy to unpack it for you when we get closer to guidance. But at least that's what I am thinking.

Fair enough. Joe, again, maybe a preemptive question. So please forgive me for that. Our math is, the rough software rents per handheld are like 400-ish. I don't have it in front of me, but somewhere in that ballpark, I guess let's say it's X revenue, software revenues per handheld. Let's assume a metric like that. Joe, as you think about the remapping the company, right, whether it's 12, 18, 24 months hence, how much do you think is the additional leverage you have? Can X go to 1.5x, 2x? Or how do you think about, this is the target where we have to get, basically, to monetize or upsell, like you had said, with all these new apps, the B-line and presumably others coming online shortly?

Well, so thank you for the question. And I'll caution myself not to get ahead of myself. But I think your question is going in the right direction, where, first of all, Butterfly is leaving a lot of price on the table. If you look at our total cost of acquisition from a customer side, and what it costs in its entirety, we're a 1/3 of what the market is charging today, maybe half of what the market is charging today. So even just to get the parity with enhanced features, we have a lot of pricing upside. So the way I look at it, though, is I would like to keep our handhelds hardware price competitive. And I see upside in selling more software. Now, every time we sell more software, we're going to have to cost justify the value of that software. So it's not like, we're just going to be increasing prices on existing customers. That's not what we would do. What we would do is we would launch a new AI algorithm that enables people to capture bills in an entirely different way. And then just as any software does, you calculate what is the net value and ROI of that software, and you make it available, they can buy it or they don't have to buy it. So I think what we'll find is, first of all, we'll probably sub specialize, so we may be doing something in cardiac, then we may be doing something in OB and then when another thing might come out and for bowel, and then those sub specialties will see that opportunity and then we'll increase the capability. So it may not stack up for one customer constantly with the software that comes up. But it allows us to increase the amount of value we are getting per customer. So I think given our current price position, we have a lot of upside. And the only thing that we would be doing is selling something that the customer values. And I think there's headwind.

The next question comes from Neil Chatterji from B. Riley.

Thanks for taking our questions and welcome Joe and congratulations on the new role. First off, just curious with ChatGPT and Generative AI, just curious if you could just talk about how the AI and your platform and with your various tools, maybe reflects any of that and the potential to leverage that on the Butterfly Enterprise software platform, whether it's diagnostically or with ultrasound workloads or billing?

That’s a great question. So first of all, most of the AI focus to date has been on how do we make it easier for a medical professional that is not trained in imaging? How do we make it easier for them? And so that's what we've done historically. But the team has been cycling and we have launching a project now on our entire business reinvention at all levels, whether it's currently -- whether it's in development, or whether it's in customer service, or whether it's in direction. We're looking at all ways to optimize our business with this new level of intelligence. What I've learned in my time in digital health, and I think it's a pretty basic fact in AI is -- and it's actually -- it leads to one of the greatest frustrations I have with healthcare is 80% to 90% of healthcare data is not accessible to AI. It sits in thousands and thousands of small databases across the country, even the largest EMR companies, the customers themselves encapsulate their data. And so there's no mass national database to learn from. And so AI is -- it's not just about the algorithm, it's about the access to the data to be able to learn, and then create the appropriate outputs. And that's where I think, we have a distinct advantage, this company was architected correctly from the beginning, our founder's vision was dead on. In my last company, we had a closed, secure private cloud that all of our transactions went through and we leveraged it extremely well to be able to deliver telehealth across enterprises. And Butterfly was architected in a very visionary way where we capture massive amounts of data. And so it allows us to learn on our customer behaviors. It allows us to learn not just a clinical image interpretation, but it allows us to learn what they're using and how we can serve them better. So our founder personally challenged me to look at business reinventions to ensure that we're on the cutting edge using these tools. And I can assure you we will do it.

And then just on the pilot programs with the large medical centers. Just kind of curious how that compares to past strategies and how that might be a new model to replicate? I think in the past, you've had kind of physician champions that helped to run device pilots in certain departments. But how might this be different with Blueprint versus just the divided deployment?

This is Darius and thank you for the question. If you're referring to the medical school POCUS that we mentioned on the call, that's actually very consistent with the strategy that we prosecuted in the past. And it's just another proof point of how Butterfly is really transforming the way that medicine is being taught from the very get go. The medical schools remain a key focus for us because obviously, strategically, they're empowering the next generation of students with Butterfly. So does it -- is that what you're referring to?

I was talking about the large medical center. I was talking about initiatives and clinical projects.

Yes. So if you're referring to our focus on large health systems, for example, with URMC which we announced in the past, we've continued to make key progress there. In fact, we went live at 15 new departments this past quarter, including ED, anesthesia, the PICU and NICU, adult ICUs and many others. That remains obviously a focus, as Heather and Joe mentioned. And we continue to focus on that area as we deploy Blueprint, which is our Compass software and hardware in more large health systems.

And then just one other follow-up here. Just in terms of the -- I think last quarter, you talked about adding a dozen new Blueprint accounts. Just kind of curious how that tracks in the first quarter and how that activity is kind of going forward, including with the recent Cloud 2.0's launch?

Yes, so directionally, we continue to add new customers. Q1 does tend to be a little bit lighter than Q4. So sequentially, it was lower, but we continue to add more customers.

[Operator Instructions] Our next question comes from Danielle Antalffy from UBS.

Hey, good morning, everyone. Thanks so much for taking the question. Joe, congrats on the role and joining the team there. I'm curious -- so given your background in this industry, as we think about the goal of Butterfly and eventually homecare and things like that, how you think about the competitive barriers to entry here? GE Healthcare did recently by Caption Health. So just curious about how you think about the competitive moats and where Butterfly can sustain a competitive advantage in that regard?

Oh, boy, I wish I can answer that question today. I'll answer it for you in the future. I think the tables are up. First of all, I was with Caption and I'm a big fan of Caption. And big fan of GE, because it's an incredible team of great people, and I consider them friends. I personally believe Butterfly will be able to show some pretty tangible advantages in access to the home market. Personally, I think the big four in imaging have advantages in the hospital market. I think there are contracting, leveraging, they can give away and have some to protect the rest of their business. I don't think that leverage exists in the outside channels and in home and I think some of our software and some of the new capabilities I'll be sharing with you, I think my belief is we have the advantage.

And then just Heather, maybe this is a question for you, just as we think about the models, appreciate pausing giving guidance for now. But just from a capital needs perspective, how we should be thinking about where Butterfly is as you're sort of reevaluating the strategy here?

So, capital refers specifically to fundraising or capital referring to cash it. So we were in great shape from cash perspective. And I figured that's what you mentioned. I just wanted to make sure. We're in a great place from a cash perspective, plenty of runway into 2025. We're continuing to look for additional efficiencies. And so stay tuned on that.

[Operator Instructions] This does conclude our Q&A session for today. So I’ll hand back over to the management team for any additional or closing remarks.

Great. So I want to thank everyone for joining the call this morning. Please give me some grace on my excitement, but it's real. And we have to get through getting the organization back up after what they've been through the last six months, it has been very challenging. And so we're going to focus on getting the organization to where it needs to be. And then I'm telling you these things that we're working on. I'm very excited to share with you, because I believe by the end of this year in '24, it's going to be a lot of fun around here. So thank you for your time.