Tag Archives: Butterfly Network

Signify Premium Insight: Butterfly Network’s Problem with Popularity

The handheld ultrasound market is the fastest growing product segment in ultrasound and among the fastest growing in medical imaging. Solutions have become more refined over recent years, offering better image quality, wireless probes and advanced software, all of which are facilitating their uptake by new and experienced users alike.

Despite the segment’s growth however, one of the market’s most high-profile names, Butterfly Network, is facing a difficult spell. The vendor’s latest financial results were disappointing and its share price is just a fraction of what it was in 2021. The vendor is looking to change its fortunes, and, with the appointment of a new CEO, it hopes to rally, but is it too late?

Signify Premium Insight: Clarius gets a Handle on Ultrasound AI

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Handheld ultrasound vendor Clarius recently announced the launch of an AI marketplace. Clarius says the platform has been established to enable algorithm and software developers to bring their solutions to market more efficiently thanks to integrations with Clarius’ wireless ultrasound systems.

The marketplace is launching with six partners, including ThinkSono, DESKi and Deepecho, and is available to users who have subscribed to Clarius’ Membership programme. As competition hots up in the handheld ultrasound market, will Clarius’ new marketplace enable it to stand out?

The Signify View

The potential AI holds to improve patient care means that it is among the most eagerly watched areas of medical imaging technology. In radiology settings, where many of medical imaging AI’s vendors are focused, algorithms have been used to increase the efficiency of performing imaging procedures and delivering the diagnoses, or as a way to avoid invasive diagnostic procedures, improving  clinical workflows. In ultrasound, however, and particularly handheld ultrasound, there are other more pressing clinical priorities.

Chief among these is enabling less experienced ultrasound users to effectively make use of the growing abundance of handheld ultrasound systems. While there are numerous tools that can fulfil this role, solving the last-mile challenge of making them accessible to ultrasound users is one that is yet to be conclusively solved. Clarius’ platform seeks to make great strides in this regard. While handheld ultrasound vendors have sought to add image guidance capabilities to their products through bespoke AI partnerships, such as that agreed between Butterfly Network and Caption Health, Clarius has sought to offer a more open approach.

There are advantages to the partnership model. There can be more information sharing between partners, and solutions and hardware can be better tailored to one another. However, such advantages come at a cost. Creating such partnerships and ensuring tight-knit integration between the products of two or more companies can require significant resource. What’s more this investment could be for nought if the partner exits the market, or a competitor releases a drastically superior product.

Adopting a broader platform-play approach such as Clarius’ marketplace, however, means that the vendor can more quickly and more flexibly bring a greater range of AI capability to its hardware. It is not only a rapid method but a flexible one too. Its “try before you buy” programme, gives Clarius customers confidence to use AI models within their own imaging environment.

Ultrasound’s Guiding Hand

This is significant. Compared to other ultrasound segments, the price of handheld systems is low. As such Clarius, and other handheld ultrasound vendors require high sales volume to derive significant revenues. To achieve such sales, however, vendors are going to have to entice significant numbers of new customers to purchase systems, many of which are inexperienced or novice ultrasound users. Vendors therefore must facilitate the use of handheld ultrasound to these users, with AI being one of the most promising methods of enabling this use.

Such a requirement means that unlike most radiology AI, which is used after image acquisition on the PACS, handheld ultrasound AI is most useful on the device itself, to guide in real time the capture of images and assist with diagnosis. In offering a platform for AI, Clarius is able to efficiently supply a range of algorithms to assist in this aim. Having this capability will both encourage customers who have not yet purchased a handheld ultrasound system to make the leap with Clarius, but also help persuade users to choose Clarius over one of the increasingly numerous alternatives in the handheld space. Other vendors may have strength in specific applications (e.g., Butterfly Network’s three-way partnership with Caption Guidance and Ultromics), but Clarius’ platform means it can partner with a wider array of AI vendors, enabling its probes to be used across a greater range of clinical applications, making it an arguably more versatile solution.

These benefits, however, may not be realised right away. While Clarius’ platform makes it easier for users of the scanners to find, purchase and utilise AI capability, there must also be a desire from customers to actually use it. This has often been a stumbling block for marketplaces in radiology. While one of the main reasons many radiology AI marketplaces have failed to gain traction, challenges around integration, are less of an issue on handheld ultrasound due to the AI being embedded on the modality, other challenges such as the support needed to fully realise a solution’s potential and a lack of framework to assist providers with algorithm selection could still be barriers to the platform’s success.

There must also be attractive algorithms available. At launch Clarius has secured six partners targeting some important use cases such as teleultrasound or cardiac image capture guidance. However, the partners themselves are not the most established and have limited brand recognition, so may be of limited attractiveness to owners of Clarius’ handheld system. There are also more significant barriers preventing their clinical use. As written about in Premium Insights passim, regulatory approval is a significant milestone for aspirant AI vendors, as well as being an essential commercial step. None of the algorithm developers whose products are featured on Clarius’ marketplace have received regulatory clearance. So, although they can be utilised for some tasks such as training, their clinical diagnostic use is limited.

Variety Counts

This limited clinical utility is a challenge that Clarius will have to face if its AI platform is going to become a significant differentiator for customers. Longer term, Clarius would also do well to host a greater range of algorithms from a greater range of vendors on its platform. Increasing the number and variety of partners available in the marketplace will enable the marketplace to become almost a testing ground for Clarius. Through its platform it will have oversight of which algorithms are popular, which gain traction among users, and which represent opportunities for tighter integration, or more bespoke partnerships.

A greater number of partners will also help increase the visibility of Clarius’ platform. Each individual algorithm vendor is motivated to engage in market education and promote their own solutions. In encouraging potential customers to choose their products on Clarius’ platform, each vendor is also drawing attention to that platform.

Another challenge in the longer term is generating revenue from the AI solutions available on the marketplace. The affordability of Clarius’ scanners, with most models costing $3,400, and the budget limitations of most handheld ultrasound customers, means that the revenues derived from solutions on the marketplace will likely be modest for the algorithm developers themselves. With Clarius taking a slice of these revenues generated for hosting the AI solution on its platform, the actual value of a sale of an algorithm is, for Clarius, slight.

Hands-on Service

The handheld ultrasound vendor will instead derive value via another means. Instead of taking revenues from sales of algorithms, Clarius hopes that the inclusion of an AI platform, and the ready availability of solutions for customers will be enough to encourage customers to take the plunge on a Clarius handheld ultrasound system. As this happens, Clarius will hope to not only benefit from increased sales of ultrasound systems, but the larger customer base, and the restriction that the AI platform is only available to subscribers of Clarius’ ongoing service programme, will mean the handheld vendor will hope to grow its service revenues. Over the long-term, these service and subscription revenues become increasingly important, bringing subscribers onboard into an ecosystem that allows the continual up sale of opportunities of greater amounts, preventing customers from switching to another vendor’s products. What’s more, while hardware sales are crucial in helping establish a user base, sales of software solutions often offer a higher margin.

As such, while Clarius’ launch of its AI platform is notable, what is more important is what it signifies. While the handheld market is growing rapidly, and according to Signify’s upcoming Ultrasound Handheld Market Deep Dive is set to reach $589m by 2026, its full potential in attracting and enabling new users, has not yet been realised. Clarius’ platform isn’t the only answer, and other initiatives from other vendors also indicate the strategies being taken to reach these users. However, the fact that one of the most prominent specialist vendors in the handheld segment has launched a platform, stating its intent to solve the last mile challenges of AI use in handheld ultrasound, while giving algorithm developers a direct route to users’ hands is significant.

Amidst growing competition in the segment and an increasingly discerning customer base, Clarius hopes its platform will help close its fist on the handheld ultrasound market.

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Signify Premium Insight: Exo Focuses on Ultrasound Acquisition with Medo.ai

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Last week, Exo made headlines in the blossoming handheld ultrasound segment by announcing the acquisition of AI specialist, MEDO. The deal seeks to make Exo’s as-yet unreleased handheld ultrasound system easier to use, and therefore accessible to a wider range of professionals.

MEDO’s Sweep AI solution achieves this by automating parts of the ultrasound image capture and interpretation workflows, which, according to the vendor, lowers the level of expertise required to diagnose common and critical conditions.

As well as gaining Sweep AI, Exo will also pick up MEDO’s two US-FDA-approved AI algorithms, one for hip dysplasia screening and one for thyroid imaging, and its library of millions of ultrasound images and longitudinal health data.

The deal will set Exo apart from its competitors, who have so far tended to only partner with AI firms, but will it be enough to elevate it beyond them?

The Signify View

Apocryphal though it is, a quote attributed to iconic IBM CEO and Chairman Thomas J. Watson about there only being a world market for “maybe five computers” would have seemed plausible enough in 1943 when it is alleged to have been said. Not only were these machines vast, fragile and fickle, more akin to a plant room than a modern laptop, but they were also horrendously complicated to operate. While computers got smaller and less temperamental, and sales rose at major corporations and research institutions, they very much remained the preserve of professionals trained in their use. It wasn’t until the 1980s, when graphical user interfaces started to emerge, that more inexperienced users, who could then interact with a computer through icons rather than codes, started to purchase systems en masse. In making devices easier to use, computer manufacturers were able to sell to an entirely new market, the home market, rather than squabbling to take business customers off one another.

This is akin to the opportunity Exo has with its acquisition of MEDO. Exo is looking to sell its as-yet-unreleased handheld ultrasound scanner, a device that will be competing with second and third generation devices from its competitors, so needs to represent a compelling proposition from the outset.

While Exo is not looking to sell ultrasound systems to consumers, it aims to simplify image capture through the use of AI, thereby hoping to avoid a ruthless race to the bottom against the world’s largest ultrasound imaging vendors. Instead, it aims to open new markets, selling a clinician their first hand-held ultrasound device, rather than having to displace a rival. As such, while MEDO does bring with it two US-FDA-cleared algorithms, of greatest appeal to Exo will be its Sweep AI image capture technology.

Buy or Borrow?

Exo isn’t the only vendor to realise this opportunity, with what is likely to become the vendor’s closest competitor, Butterfly Network, also seeking to simplify image capture through a partnership with AI-developer Caption Health. However, while partnering has its own advantages, including the requirement for less investment and less commitment, acquisition could, in the longer term, give Exo the edge.

The instantaneous nature of ultrasound means that many of the modality’s most valuable solutions will be those that are embedded on devices and used during image acquisition rather than being utilised post-acquisition on the PACS. By acquiring MEDO, Exo will gain granular control over its technology, enabling the ultrasound vendor to more effectively integrate its Sweep AI into the upcoming handheld device. Instead of being constrained by the limitations of a partnership, even an exclusive one, Exo can put MEDO’s technology and approach at the heart of its device. It can intertwine hardware and software in such a way that a partnership, where there is always the risk of separation, simply cannot offer.

Acquisition also grants the acquisitor strategic control. Caption Health’s primary focus is cardiac imaging. Through its exclusive partnership, Butterfly Network will likely have some influence over Caption Health’s strategy, but this will fall far short of the absolute control that Exo will command over MEDO. This could prove crucial. Cardiology is a sizeable and significant imaging target, but it is still only one clinical area, a factor that could prove limiting over time.

Bigger is Better

The low cost of handheld ultrasound devices means that, unless sold as part of a particular programme or as an add-on to a larger medical imaging deal, scale is essential for commercial viability. Achieving this volume by selling to existing ultrasound users will be nigh-on impossible, particularly as the segment becomes more competitive and providers become increasingly entrenched in their vendor of choice.

Instead, this scale needs to be attained through new users, such as GPs, nurses and midwives. MEDO’s Sweep, with its universal applicability, as well as Exo’s ability to direct software development into any particularly lucrative burgeoning opportunity could grant it an opportunity to make money where others have been forced to accept losses. This is particularly true as the low cost of the devices themselves means that additional services such as add-on solutions and software subscriptions will be critical. For these opportunities to be leveraged, a critical mass of users must be reached.

In this regard, acquisition could also prove preferable to partnership, albeit at the expense of greater developmental resource. It is likely that Exo will continue to offer MEDO’s hip dysplasia and thyroid applications, although, as niche use cases, they will not be as high priority as its Sweep AI technology, while also continuing to add additional clinical applications over time. It would be both quicker and cheaper to offer additional tools through partnerships. But while boasting about additional capability might entice some customers, taking a modest percentage of a relatively small sum from the sale of a partner’s solution is unlikely to hold much sway for a handheld vendor such as Exo, leaving it a long way off the elevated service revenues it seeks.

Deals to be Done

While there has been collaboration between AI developers and handheld ultrasound vendors before, until now, most of these relationships have taken the form of partnerships. Given the advantages acquisition could offer in terms of tighter integration, the growing competitiveness of the handheld market and the need to target new users to reach the necessary sales volumes, other handheld companies could look to forge similar deals.

Price could be a barrier. Terms of Exo’s deal haven’t been disclosed, but the cost of the relatively modest AI outfit will have been easily absorbed by Exo’s total funding of more than $320m. Other vendors may not be so lucky. If their chosen targets have already had more commercial traction or been able to secure significantly higher funding than MEDO, or if an ultrasound vendor has raised less money, or is taking heavy losses, such a purchase could be well out of reach.

There are other options, with a large international imaging vendor like GE HealthCare currently having the means to pick up an AI specialist. The vendor currently partners with Intelligent Ultrasound, a London-listed ultrasound AI and training simulators specialist. The healthcare giant could be tempted to purchase the AI developer, which has a market capitalisation of around $43m. GE does, after all, pride itself on its global ultrasound market leadership position, has recently refreshed its own handheld offering, and, with its acquisition of BK Medical and its investment in Pulsenmore shown its willingness to invest in ultrasound. However, other ways to formalise the partnership are also possible, with licensing agreements, for example, another way to shore up the use of Intelligent Ultrasound’s technology for the long term.

Whether such deals come to pass remains to be seen. Doubters will continue to see the handheld ultrasound market as a niche, a $200m fragment of a $7.1bn market, in which even the most prodigious player is floundering financially. With such a worldview, the flexibility and affordability of partnerships continue to be the preferred practice. For believers however, Exo has been shrewd. In the same way ‘home computing’ grew out of improvements in affordability and, crucially, usability, MEDO’s technology could help handheld ultrasound find its way into the pockets of countless doctors, nurses, and other clinicians. In such a way a lucrative new customer base could be created, and those vendors that seized an early opportunity to access this base could rally.

In acquiring MEDO, Exo has revealed its hand and quietly raised the stakes. Now it can wait to see if others share its convictions.

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Signify Premium Insight: How Soon Is Now for Butterfly Network?

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Butterfly Network has recently been enduring a turbulent run. The vendor has seen its share price sink from an all-time high of almost $26 in February 2021, to the low ebb it currently finds itself in, languishing around the $5 mark. While the fall itself is intrinsically troubling, in February 2022, it led to a class action lawsuit, in which Butterfly Network has been accused of misleading its investors and ultimately overstating its financial prospects. Further adding to the vendor’s woes is another lawsuit. This second suit, filed in early March 2022 by Fujifilm Sonosite, alleges infringement of several technologies pertaining to the acquisition of ultrasound images at the point of care with handheld systems.

Amidst these challenges, Butterfly also announced its first full-year financial results as a publicly traded company. The vendor revealed that full year revenue increased by 35.3% to $62.5m, up from $46m in 2020. However, despite gross profit for the year of $17.1m, up from negative $61.2m in 2020, the vendor still posted a net loss of $32.4m in 2021.

The Signify View

With the verve and swagger of any ambitious start-up, Butterfly Network proudly released its investor presentation in November 2020. As well as detailing the SPAC merger and public listing that the vendor was set to undergo, the presentation also laid out the milestones that Butterfly Network was looking to hit as it grew.

Unfortunately for the vendor, many of these targets have been missed. After slightly outperforming its revenue target for 2020, bringing in $46m compared to a forecast $44m, the vendor struggled to maintain its momentum in 2021, with the $62.5m it brought in far short of the $78.1m originally expected, representing revenue growth of around 35%, rather than the 78% originally hoped for. This shortcoming has also forced Butterfly to revise its targets going forward, with the vendor now aiming for growth of 33% to 41% to revenues of $83-$88m in 2022, rather than the 77% growth and revenues of $138m originally stated. With such a difference between what was promised and what has been delivered, it is easy to see why the share price has slid and some early investors are feeling aggrieved.

Of course, there are some mitigating factors. Covid-19 for example was cited by CEO Todd Fruchterman in the vendor’s Q3 earnings conference call as one factor in the firm’s decision to revise its guidance, explaining that deploying new technology such as Butterfly’s iQ scanners, was, amidst such circumstances, low on hospitals’ list of priorities. This however is a partial explanation, not an excuse. Another circumstance that Butterfly Network had little control over was the supply chain disruption toward the end of 2021, which affected almost all medical imaging vendors to certain degree, with many publicly traded companies identifying these issues as one of the causes of lower-than-expected performance.

Other hurdles will also have had an impact on Butterfly’s ability to grow, such as the requisite level of market education the vendor had to undertake to make the use of handheld ultrasound more common. However, as highlighted in Insights passim (here, here, here), this investment requirement should have been expected.

Additionally, the handheld ultrasound market has become more competitive since the launch of Butterfly iQ, with several leading vendors having released new products in the last two years and new players have entered, or are close to entering, the market. Many of Butterfly’s initial differentiators have been eroded, especially the low price point with competitors such as GE and Clarius now offering handheld scanners at prices not much more than Butterfly’s but with arguably more capable devices in terms of image quality and advanced features. Butterfly’s once innovative product and business model is no longer remarkable.

Still Ill?

Despite these struggles, there is in fact cause for cautious optimism. Many of the necessary costs Butterfly faced in creating, launching and establishing a new product, in an undeveloped part of a niche market have now been paid. Butterfly Network has spent money on market education, brand promotion, product development and clinical validation, and can now hope to reap the rewards of that investment. Butterfly Network’s growing list of competitors may derive some benefit from Butterfly Network’s investment, but for the younger rivals at least, will now also be shouldering similar costs themselves. This additional activity within the handheld segment, from both established vendors and new entrants, will however add to the work being done by Butterfly and give the collective market a boost. This will help Butterfly to grow, albeit alongside its competitors.

Another factor that may give investors confidence is the fact that Butterfly Network appears to have acknowledged some of its past failings, albeit quietly. Last year the company brought on board a new CEO, while also bringing new faces onto the board of directors. Alongside these personnel changes also came a shift in strategic focus, to what the vendor is dubbing its four ‘strategic pillars’ of health systems, international expansion, the home market, and adjacent value streams. The most profound shift is in health systems, where Butterfly Network is increasingly positioning itself as a digital health company, rather than a handheld ultrasound vendor.

This transition is most clearly embodied by its newly released Blueprint software, which helps integrate Butterfly’s handheld ultrasound hardware into provider’s clinical and administrative infrastructure. The vendor hopes that this system will help differentiate itself from the increasingly crowded ultrasound market. Instead of just acquiring ultrasound images, Blueprint, alongside strategic partner Ambra, which facilitates the storage of Butterfly Network’s images in the cloud, is designed to make the information more usable for health systems. It solves some of the problems associated with deploying handheld ultrasound in hospitals, such as credentialling devices, logging examinations for reimbursement, and sharing data throughout a health network to be accessed and utilised by physicians in different departments.

You Just Haven’t Earned It Yet, Baby

As well as being a competitive differentiator, the real advantage of such a system for Butterfly Network is that it allows the vendor to bag large network-wide deals. There may be potential in the home market and adjacent markets such as veterinary clinics over the long term, but in the here and now, large deals with providers are what will make or break the vendor. Butterfly has, so far, been successful selling directly to end users, but if the vendor is going to reach even its new, revised targets for FY22/23, such a model will be a hindrance given the low price of the systems. Instead, Butterfly needs to secure more enterprise deals of the kind it inked with the University of Rochester Medical Center in January. These large-scale agreements, which could include thousands of devices, as well as subscription services and other add-ons are a far more efficient way to grow. What’s more, while device customers could be easily lost to rival manufacturers, deals with health networks will be more difficult to unpick, helping Butterfly Network establish a more secure customer base on which it can build.

Ultimately, these large enterprise-scale deals sit at the heart of Butterfly’s future. If it is unable to secure such deals, it could once again miss its growth targets, already heavily revised down compared to its original investor deck. Its investors, whose confidence is already low, would likely abandon the languishing vendor. Alternately, if Butterfly Network can strike several large deals over the next year, outperforming its guidance, investors are likely to be rewarded with a bounce in the share price, while the company will continue to have the cash it needs to reinvest in sales activities, additional market education and product development, standing itself in the best position possible to grow over the long term – all while turning a profit. What’s more, while patent infringement and investor lawsuits are beyond the purview of this Insight, such actions can no doubt be faced more robustly by a healthy growing vendor than by one perpetually consumed by a failing ability to meet its own financial targets.

Butterfly Network will not have an easy run. There are reasons for optimism but positive outcomes must be earned and driven by well executed plans. A shaky start can be forgiven if from it a successful business flourishes. Butterfly Network needs to show it can flourish in this, its pivotal second year as a publicly traded company. The vendor needs to overcome supply chain issues, which will have a bigger impact on the market in 2022, lingering disruption from Covid-19 and barriers stemming from a lack of market familiarity and understanding to secure sizeable enterprise deals at major providers. Moreover, it needs to convince these enterprise customers that it is successfully transforming from its beginnings as a hardware company to a more comprehensive digital health vendor and that its new Blueprint platform will unlock the full value of point of care ultrasound.  If it can do this, its early failures will be written off as teething troubles, if not it risks a humiliating retreat from its bravado. In short, Butterfly now needs to produce the goods. The clock is ticking.

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Signify Premium Insight: The Fate of the Disruptors – Bruised Egos and Broken Promises?

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here.

Overall, the medical imaging market is well consolidated, with a handful of vendors dominating large dealmaking opportunities. However, innovations in technology and developments in business strategy have meant that, of late, several hungry, disruptive and above all aggresive, modality vendors have positioned themselves as medical imaging revolutionaries. These vendors aspire to cast off medical imaging’s established hegemony and reimagine how medical imaging can fulfil its potential. While there are many young companies quietly working on new products, targeting existing markets, these disruptive vendors seek to create new markets, and establish a new order, at least in their own spheres. But, how do the most vocal of these new revolutionaries, Butterfly Network, Nanox and Hyperfine stack up?

Butterfly Network

When Butterfly Network was promoting its first iQ scanner in 2017 it was, according to the vendor’s website at the time, “priced to empower”. The vendor had leveraged proprietary solid-state transducer technology to lower the cost of ultrasound devices and entered the market in 2018 with a system that retailed for $2,000. This pricing set it apart from other competitors on the market, and, Butterfly hoped, would enable it to secure considerable device sales, which would in turn lead to large subscription revenues from its service offerings. This growth in service revenue does appear to be happening, with subscription revenue growing 86% year-on-year in 2021 compared to product revenue growth of 25%, to now account for almost a quarter of revenues.

The backdrop to this success is less rosy, with the vendor bringing $62.6m total revenues in 2021, $15.5 million less than the target it set itself just one year earlier. The vendor has also seen its share price plummet since going public, with the shares now trading at little over $4, less than a fifth of what they were a year ago, a fall dramatic enough to spark a lawsuit against the firm.


Since the launch of its first iQ scanner in 2018, the handheld ultrasound market has moved on. While Butterfly Network still offers a price advantage compared to its rivals, the difference has been brought down to be competitively negligible. Clarius’ recently released 3rd generation scanners start at $2,995, compared to Butterfly Network’s current iQ+ which comes in at $2,399 with a subscription. Further the market has become more competitive, with new offerings from established vendors such as GE, as well as new entrants such as Exo poised to offer their own alternatives. While these moves haven’t diminished the capability of the iQ+, they have made it more difficult for the vendor to stand out. The iQ is a whole-body system, but some specialists may choose a specialist system from Clarius, other providers might choose GE or Philips systems that are bundled with broader imaging purchases, Butterfly Network risks being left out in the cold.

This could have a growing impact on the vendor unless it realises its aim of creating new markets. One of the main challenges with these markets is that they target novice users. Butterfly Network has started to address this, with its partnerships with Caption Health and Ultromics aiming to leverage AI to facilitate inexperienced users. However, Butterfly’s own in-house AI developments have been somewhat underwhelming, with rival products offering more AI features than the current iteration of IQ+. Another positive is the vendors’ proactivity. In this year alone it has made a major partnership with Ambra and has most recently launched its own enterprise platform. It is too early to identify their impact, but they are signs the vendor is starting to join the dots, at least for its hospital and health system customers.


Butterfly Network is entering a turbulent time. Next year the group expects to make a loss of $225m-$245m against revenues of $83m-$88m. This is unsustainable and will leave the company needing to dramatically increase revenues from new markets, or raise more cash in order to push on.

Amidst the falling share price, the lawsuits and the competition, there are positives though. The handheld market is among ultrasound’s fastest growing, and Butterfly, has raced to take one of its top spots. Its Butterfly Blueprint platform gives it a stronger value proposition in the established point of care ultrasound markets like emergency medicine and intensive care, but it has yet to make a big play to open-up new market opportunities in outpatient and primary care settings. Moreover, creating new markets is difficult, expensive and time consuming. But, in order to do so, and deliver on its promise, this is what it will need to do. Arguably a new, updated device and a focused approach on a single, choice target is perhaps the most secure way of doing so.


“Existing medical imaging systems are too expensive and complex for mass deployment”, proclaims the website of the Israeli innovator. This fundamentally encapsulates Nanox’s stated aim. The vendor seeks to use its proprietary cold cathode X-ray source to massively reduce the cost of full-body 3D imaging. This, in conjunction with the use of advanced screening and diagnostic AI solutions, a cloud-based image management system and new pay-per-scan pricing models, will help bring medical imaging to parts of the world which have no access to medical imaging, according to the vendor.

At least that’s the plan. Since day one, the vendor has faced considerable headwinds, from short-sellers comparing it to disgraced blood-testing firm Theranos, to questions regarding the legitimacy of its technology, and even lawsuits. Many of these difficulties have not gone away. The vendor is facing a class action case from investors alleging that the vendor made false and misleading statements when hunting for potential investors. Additionally, the vendor has still been unable to secure FDA approval for the multi-source implementation of its X-ray technology, delaying the commercial release of its integral Nanox.ARC 3D scanner. While this has been going on, its share price has tanked, currently trading at around $10, down from a high in 2021 of almost $76.


Even aside from these challenges there are some fundamental questions surrounding Nanox’s strategy. While prioritising a pay-per-scan business model is innovative, and can reduce the initial outlay for providers in what Nanox identifies as ‘the two-thirds of the world with no access to medical imaging’, it seems at odds with the purchasing strategies of those countries. Budgets are often not stable and predictable, which is needed for ongoing operational sales models. Instead, in many cases, there are infrequent and irregular injections of capital, which providers spend on specific pieces of equipment.

Nanox’s business model could be attractive in some more developed markets, perhaps in non-traditional imaging settings but here it would arguably face competition from the established vendors, which can offer pricing flexibility and are increasingly releasing lower cost systems targeting these markets.

If Nanox does sell its scanners in significant volumes it will also face another problem: the shortage of radiologists. The reality is that in many areas without medical imaging capability there aren’t the doctors to interpret images, nor the capacity to treat patients receiving diagnoses. Nanox’s ARC scanner can’t succeed in isolation. There are signs the vendor recognises this. Its somewhat opportunistic acquisitions of Zebra Medical Vision and USARAD bring some AI screening and teleradiology capabilities to the business, and tease a joined-up, resource-efficient medical imaging-as-a-service provider. However, ahead of the acquisition Zebra, which has since re-branded as Nanox.AI, pivoted from developing AI algorithms for diagnosis and triage to focus on AI-powered population health solutions, which seems at odds with Nanox’s strategy.


Ultimately, all of this is moot. While there are the aforementioned causes for concern, there are also causes for optimism, with backing from SK Telecom, FDA approval of Nanox’s single-source prototype, and a claimed 6,500 MSaaS contracts adding weight to the vendors ambitions. However, until it receives FDA approval for its multi-source scanner the vendor’s only option is to tread water, and hope that if and when it gets the go-ahead, providers aren’t overladen with Covid-driven CT purchases and other, larger vendors haven’t smelled opportunity and moved in.


The use of advanced 3D imaging is increasing in hospitals, while some vendors are also looking to promote use of the devices in other care settings. However, use of the modalities in all these cases is reliant on patients being taken to permanently installed systems, often in busy imaging departments. This can be detrimental to patients for cases where time is of the essence. Hyperfine hopes to address this need with its mobile MRI scanner, a device which it says can be used at the point of care and produce viewable images in as little as 30 seconds.

The vendor’s founder, Dr Jonathan Rothberg, also founded Butterfly Networks. There are parallels between the two vendors, with Hyperfine recently following in its older sibling’s steps and going public via a SPAC acquisition. This brought the debt-free company around $375m, standing it in good stead to commercialise its product and fund sales activities. Like Butterfly Network, Hyperfine also seeks to use its price to its advantage, with a very competitive price and a subscription-based model both aimed at getting the device into providers.


Where Hyperfine and its Swoop portable device does have an advantage is that it has few direct competitors, with only a handful of other vendors focused on point of care MRI. This brings entirely new clinical opportunities to providers which can quickly conduct MRI scans in intensive care wards, trauma wards or emergency rooms. It also leaves the device particularly suitable for stroke care, an area on which Hyperfine is rightly focusing.

There are difficulties facing the vendor though. Aside from its share price, which, like the other vendors has fallen spectacularly since listing, down to around $3 from a peak of $16 mere months ago, the vendor also faces the same challenges in market creation as the other vendors. Price is only one barrier to the adoption of MRI, with a lack of technicians and radiologists a problem that adoption of bedside imaging will only exacerbate. Hyperfine also offers its own cloud-based PACS as part of its subscription offering, how effectively that can integrate into providers’ existing systems will be crucial, especially for stroke care where time and post-imaging workflow are critical.

Longer-term continuing to grow the business will likely bring more challenges. While some of the aforementioned use cases make sense, others laid out in Hyperfine’s investor deck, such as in the operating room and home use particularly seem optimistic.


While new ventures are always precarious, Hyperfine does appear to be in a relatively strong position. Its Swoop device offers uncommon clinical capability at an affordable price, and so fundamentally, seems sound. Operating in such a new market however does offer drawbacks as well, though, with the vendor being responsible for promotion of the concept of point of care MRI, itself. Of greater concern is that it will burn through its cash, and successfully create a market, only for an established player to sense the opportunity and, further down the line, swoop in.

Despite those concerns, it looks like the vendor is making good headway, and has identified a real, tangible opportunity. Whether it can seize it, however, depends on the vendor’s ability to convince providers to open their wallets. With an installed base of only 70 systems and approximately $1.5m total revenue in 2021, Hyperfine clearly has a lot of work ahead of it.

The Fate of the Disruptors

Disrupting the medical imaging market is no mean feat. Fundamentally for any of these vendors to be successful in the long term, they need to solve a clear medical problem, and do so profitably. Competing on price alone, in order to bring medical imaging to emerging markets with poorly funded health networks is admirable, but all too often unsustainable, short sighted and naïve. The alternatives, meanwhile, are also difficult; enter into an established product category and compete with other vendors with more tools at their disposal, or create a new category and absorb the associated costs oneself.

These challenges aren’t insurmountable – these vendors have already made impressive progress – but antithetical to the central tenet of a disruptor, require slow, considered and deliberate moves rather than blind ambition and bolshiness. All of these vocal vendors have the potential to solidify their places within the pantheon of successful medical imaging companies, but bruised egos and broken promises are likely to litter their ascents.

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