Butterfly Network, Inc. Q4 FY2024 Earnings Call

Good morning, and welcome to the Butterfly Network Fourth Quarter and Full Year 2024 Earnings Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Heather Getz, Chief Financial and Operations Officer of Butterfly. Please go ahead.

Good morning, and thank you for joining us. Earlier today, Butterfly released financial results for the fourth quarter ended December 31, 2024, 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 the company's website at ir.butterflynetwork.com. I, Heather Getz, Chief Financial and Operations Officer of Butterfly, alongside Joseph DeVivo, Butterfly's Chairman and Chief Executive 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, and the size and potential growth of current or future markets of our products and services. 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 live and recorded, and we will be referencing a slide presentation in conjunction with our remarks. There may be a short delay between the live audio and the presentation being shown. On the same page, you'll also be able to access the webcast live and as a replay once the call has been completed. I would now like to turn the call over to Joe. Joe?

Thanks, Heather, and thank you all for joining us this morning. I'm very pleased to report that Butterfly is performing well in all areas of our business. In March of 2024, at our Investor Day, we laid out our strategic five-year plan, outlining growth initiatives for our core and new businesses. I'm pleased to say that we've completed the first year of that five-year plan, and we're right on track. In 2024, we delivered $82.1 million in revenue, which represented 25% top-line growth, while improving adjusted EBITDA by 42% to a loss of $38.9 million. What's just as important is we've built the foundations for key initiatives that we believe are essential to reach our overall goals. Butterfly is the leader in point of care ultrasound devices, powered by our proprietary semiconductor technology. Our digital journey that we're on is an exciting exponential growth opportunity to bring digital capabilities to the lowest cost and most accessible medical imaging modality, ultrasound. Our vision is that every doctor and nurse in the world will have a personal Butterfly imaging device, while we bring wearable ultrasound to qualifying chronic care patients who need more frequent real-time care. They will use the most advanced AI tools to locate and identify abnormalities with a secure location for their data throughout their care journey. Butterfly's powerful digital ecosystem will increase access to care, help lower cost, and empower all people to understand the care they need earlier. The building blocks of this opportunity are being set now, and several initiatives are in development that I'm excited to share with you later in '25. In 2024, it was a great year for Butterfly. We got our Mojo back. The launch of iQ3 was nothing less than a resounding commercial success. iQ3 beat out 29 other products from healthcare companies who were considered for the Prix Galien Award, the highest award in healthcare for new Medtech technology. We were a Fierce 50 Award winner as well. Since its launch a year ago, our next-generation imaging technology proved to go toe-to-toe and win against the largest imaging companies in the world. iQ3 represented 50% of our overall 2024 sales in units and 58% of our probe revenue, delivered higher ASPs than our second-generation device and was helped by an all-in hardware and software program that proved very successful. Doctors who once hesitated to choose Butterfly in the past, wanting more from image quality, flocked to iQ3. Existing users upgraded to the new device. New users traded in their competitive devices. New entrants to the POCUS market chose iQ3 to start their journey. And even medical students wanted to start their education with the best, as we saw when rolling out the new student purchase options last year where some of them actually purchased iQ3. To that end, I was very pleased with the impact ScanLab had on our education efforts. ScanLab helped new students of all ages hone their ultrasound skills. It helped new users practice without access to dedicated personnel, where education and confidence in acquiring and interpreting images are a barrier to adoption; ScanLab is now proven to be an education catalyst. Another catalyst in 2024 was the publication of the University of Rochester Medical Center data on scaled health system deployment of Butterfly, demonstrating the clinical and economic ROI. As we look ahead, we are now leveraging these and other ROI findings to meet with hospital administrators to discuss broader implementations. Earlier this month, Butterfly convened its inaugural POCUS Innovators Forum. Sixty thought leaders gathered to discuss topics like adding imaging into everyday diagnosis, the power of lung ultrasound, empowering AI, POCUS in low-resourced countries and a special session on the ROI hospitals are seeing in POCUS. We were excited with all the sessions and especially pleased with the ROI session as URMC was accompanied by several other large institutions who were able to demonstrate similar very positive economic data, further validating our strategy. So moving to international. In 2024, we received EU MDR in Europe for iQ+ which allowed us to up feature the probe with our latest software capabilities and fast followed with iQ3 certification in September, allowing for the European launch of iQ3. We won access to many new markets in Asia for iQ+ and I believe global penetration for iQ3 will power international growth in 2025 in both unit volume and ASP as we will have both products available for sale throughout the entire year. I'd like to give you a brief update on RoHS, the revocation process in Europe. As you know, we formally submitted our application to revoke the lead exemption for piezoelectric handheld ultrasound devices. We believe the industry, of course, is aware and in the process of putting together a response. We also understand the EU Commission is identifying a third-party who will begin the process of researching our petition and the counterarguments following the open comment period. That should take the review to the end of 2025. We hope that by this time next year, we'll learn of the independent reviewers' recommendation to the EU. If a decision is made in our favor, we believe it may take up to 12 to 18 months to implement from then. So wrapping up discussion of our core POCUS business, we're pushing ahead into 2025 with a focus on scaling. We have many software improvements planned to make data management workflows faster and easier, our integrations to be more expansive for all EMRs and our data management to be more valuable, even for smaller customers. We will be focusing on combined software and hardware sales to health systems as we grow customers from departmental installations to multi-departmental and ultimately full enterprise customers. So beyond the core business, our strategic initiatives matured during the year and brought greater clarity to how Butterfly will change in the future. Entering the fourth quarter, Butterfly Garden had 17 partners signed, each developing their applications to work in the Butterfly ecosystem. Well, the team signed four new partners, including our first veterinary AI app in the fourth quarter, bringing a total of 21. In 2025, six of the 21 partners are anticipated to go commercial, five of which expect to win FDA clearance to become the first Garden apps for clinical use. These apps will join the two educational AI applications already deployed in the Garden. We are very excited to welcome these companies and products, and we'll work to amplify their capabilities to our user base. As you know, each AI application will bring new capabilities for users, each making and capturing and interpreting ultrasound easier. Butterfly users will buy these new AI apps, and these companies will grow their business by being in the Butterfly ecosystem. It's just a win-win. So now shifting to Octiv, our wholly-owned subsidiary tasked with commercializing our chip technology through partners in non-competitive markets. So they've also been quite busy. In our second-quarter earnings report, we shared that we signed a term sheet for a third partner. Today, we're excited to announce that partner is Sonic Incytes, a commercial-stage business pioneering a novel approach for liver disease assessment. Sonic Incytes and Octiv are collaborating to develop technology that leverages Ultrasound-on-Chip for fatty liver disease assessment, a market poised for significant multibillion-dollar growth. We are also pleased to share that we've signed two additional partners. Our fourth partner is in the neuroscience space, a burgeoning market where our technology is uniquely suited given its broad powerful imaging capabilities and overall flexibility, including miniaturization. Lastly, our fifth partner is one of the leading companies in the generative AI space, which will be developing new hardware technology. We look forward to sharing more details on these partnerships in the coming months and anticipate all of these new signed partnerships to contribute revenue in 2025. So now let's turn to Butterfly HomeCare. As we highlighted during our last earnings call, we recently signed a pilot agreement with the largest health services organization to deliver lung ultrasound services to the members residing in long-term care and assisted living facilities across two counties in Wisconsin. We've trained their nurse practitioners to capture lung ultrasound images using our probe, AI-guided tools and our Compass software. The pilot officially launched and we're already seeing positive results. We're currently onboarding members with congestive heart failure. The initial participants are patients being discharged from the hospital after a congestive heart failure episode. The goal is to ensure that they receive appropriate follow-up care and to identify any early signs of worsening heart failure. Through the pilot, they've already detected conditions like pneumonia, pleural effusions and other complications, allowing the team to intervene promptly and deliver care according to the established protocols. Although it's still early, both we and our partner are encouraged by the outcome since the pilot launch. Notably, no patients have needed to be transferred out of the facility for scanning, and none have been readmitted to the hospital. We are confident that this pilot will showcase improved care and cost savings for our partner, and we look forward to keeping you updated on our progress. I can't stress enough how important these findings are. We're teaching nurse practitioners who have not been classically trained in ultrasound to perform lung ultrasound using AI to assess patients right where they are. This pilot is not just about the immediate business opportunity ahead of us, which is great. It represents the power of Butterfly. Butterfly has made ultrasound accessible, high quality, mobile and at a low cost. Now we're proving that all healthcare professionals can use it to help patients where they are efficiently and at scale. As this program evolves from pilot to a new care delivery model, we expect to see new AI apps from the Garden to further empower caregivers with low-cost tools delivered on the go, wherever the patient is. This is only possible because of the evolving digital landscape driven by Butterfly. In addition to the pilot, in December, Butterfly HomeCare also executed a proof of concept at myPlace Health. myPlace is a PACE organization, and the acronym stands for Program of All-Inclusive Care for the Elderly. It's to demonstrate that Butterfly Services can identify conditions in previously undiagnosed patients. Our pilot was successful in identifying previously undocumented conditions such as peripheral vascular disease, pleural effusions, diastolic heart failure, and potential cardiac failure, resulting in immediate hospitalization. Our work with myPlace allows them to risk score their members so they receive appropriate reimbursement and care. myPlace is one of the 180 PACE organizations nationwide, and we expect to collaborate with them this year to expand with them as well as to expand to other PACE organizations. So now, I'll turn it over to Heather to go deeper into the quarter. Heather?

Thank you. As Joe noted, in 2024, we accomplished everything we set out to do at the Investor Day in March of 2024. The initiatives we laid out have been driving Butterfly's growth and will continue to do so in the future. So let's dig into the results. We saw continued strength in the fourth quarter of 2024 with revenue of $22.4 million, the highest quarterly result in the company's history. This represents a 35% increase versus the prior year period. The increase was driven by both price and volume across all channels and was positively impacted by continued penetration of the iQ3 and global distribution. Breaking things down between the U.S. and international channels, during the fourth quarter, U.S. revenue was $14.5 million, which was 32% higher than the prior year, driven by higher average selling price and strong demand. Total international revenue increased 19% over the prior year period to $5.5 million driven by higher probe volume. Breaking our revenue down between product and software and other services, product revenue was $14.7 million, an increase of 45% versus the fourth quarter of 2023. This increase was driven by higher average selling price and volume across all channels. Software and other services revenue was $7.6 million in the fourth quarter, up 20% versus the prior year period. The software and other services mix was 34% of revenue decreasing by approximately four percentage points versus Q4 2023. This decrease can be attributed to product revenue growth outpacing software revenue with the launch of our iQ3 in early '24, as well as our geographic expansion. Our total annual recurring revenue, which is reported as part of software and other services, grew slightly versus the prior year period. This was led by an increase in our enterprise software subscription ARR that grew 8%. When looking at the full year 2024 versus 2023, total revenue increased 25% to $82.1 million led by sales of devices where we saw both increased volume and a higher average selling price, driven by the launch of our new generation iQ3 where we increased our MSRP by $1,200. Furthermore, at the end of 2023 and throughout 2024, we made additional investments in our direct sales teams and signed new distributors in new markets internationally. Turning now to gross profit. Gross profit was $13.7 million in Q4 2024, a 45% increase as compared to the prior year adjusted gross profit of $9.4 million. Gross profit margin percentage increased to 61% from an adjusted 57% in the prior year period. While gross margin percentage was positively impacted by higher average selling prices and higher software and services margin, these benefits were offset by higher production costs of iQ3 and warranty costs. Moving to EBITDA and capital resources. For the fourth quarter of 2024, adjusted EBITDA loss was $9.1 million compared with a loss of $15.7 million for the same period in 2023. For the full year 2024, adjusted EBITDA loss was $38.9 million compared to $67.5 million for 2023. The 42% improvement in adjusted EBITDA loss for both the fourth quarter and full year was driven by higher revenue, cost reductions and efficiencies, which led to lower payroll, consulting and other outside services. We saw a 16% reduction in operating expenses for the full year. These reductions are a result of us right-sizing the infrastructure over the past three years, leading to a cash and cash equivalent balance, including restricted cash, at year-end of $92.8 million and a use of cash in 2024 of $4 million to $6 million. These results demonstrate that we are delivering against our priorities set out in our March Investor Day. We launched iQ3 in the U.S. and internationally, launched ScanLab and iQ+ Bladder, reached 21 Butterfly Garden partners and signed two more Octiv partners for a total of five. We also signed our first two pilots to enter home services. Internationally, we received EU MDR for our advanced features of iQ+ and iQ3 while adding additional geographic footprint. We invested in our commercial teams and continue to expand our sales footprint both domestically and internationally, all the while reducing our cash consumption. As we look to 2025, our organization is humming. The plan is working, and we will continue to execute against it by driving adoption of iQ3 and expanding uses across all our channels. We have signed two pilots for home services and continue to develop the market for our Ultrasound-on-Chip technology through our wholly-owned subsidiary, Octiv. Subsequent to year end, we raised $81.7 million from our follow-on offering in late January 25, which provides us with a bridge to cash flow independence. This capital will enable us to maintain our current level of investment to sustain our revenue growth, as well as the option to opportunistically invest in strategic initiatives that can expand our market. To be clear, we do not view this capital raise as an opportunity to regress in the fiscal discipline we have instilled over the past few years. Notwithstanding these exciting and potentially meaningful tailwinds and establishing 2025 guidance, we have not included any new revenue streams or markets in our forecast. As we have in the past, we will take this prudent approach and guide to a full year 2025 revenue of $96 million to $100 million, or approximately 20% growth, with an adjusted EBITDA loss of $37 million to $42 million. To reiterate, this does not include incremental revenue from our investment in Octiv or the home services business, and as the year progresses, we will provide updates and further clarification. Now specifically looking at Q1, we expect approximately $20 million to $23 million in revenue as we ended the fourth quarter slightly higher than expected, and Q1 is typically a slower quarter for closing hospital deals. For Q1 adjusted EBITDA with expenses related to payroll tax and 401 reset, as well as our national sales meeting and POCUS forum, we expect slightly higher expenses and a higher adjusted EBITDA loss in the first quarter relative to the remainder of the year in the range of $9 million to $11 million. To summarize, we had strong results in 2024 and we look forward to continued growth in 2025 and beyond. We have been delivering against our plan and will continue to do so by going deeper and wider in the traditional ultrasound market, expanding the market by going where traditional ultrasound can't go with new users and applications, differentiating ourselves with continued development of Ultrasound-on-Chip technology. And by doing this, we will generate market-leading growth while maintaining our fiscal discipline by balancing investment with return. These objectives will allow us to capitalize on this attractive market opportunity over the long-term. With that, I will turn the call back to Joe. Joe?

Thanks, Heather. Today, Butterfly is in complete control of our destiny. We have revenue momentum, a pipeline to empower growth for many years to come, a successful fundraise allowing us to continue to invest in our growth initiatives, as well as a runway to get cash flow positive with our current balance sheet. Our core business growth will be powered by our efforts to increase health system opportunities, drive the one probe per student model in medical schools, and continue global distribution to both iQ+ and iQ3. In our new business areas, we expect to progress more active opportunities and convert our HomeCare business from a pilot to commercial revenue. This is consistent with the roadmap that we laid out at last year's Investor Day. Butterfly has ended our first era, which had us fixating on image equivalency to other piezo-based handheld probes. So now we're not looking back. We're looking forward to not just being equivalent, but surpassing the market to deliver a new digital experience only Butterfly can offer. While Butterfly is in the POCUS category, we are differentiated as the only company with a true mobility solution. Most POCUS devices are just one-step extensions away from a cart workflow in a hospital. As we see it, Butterfly today is the only mobile solution because it is a single personal imaging device for every doctor, nurse, and qualified chronic care patient in the world, powered by a plethora of new AI tools, cloud connectivity and processing, seamless integration with hospital systems, while working completely independent of them in the most remote places in the world. We will go anywhere a doctor, nurse, or patient braves to go and will carry the best experience for them. So to understand this future, you don't need to look too far away. History does repeat itself, and the power of digital over analog technology has been proven time and again. Just as digital cameras replaced traditional film, chip-based ultrasound is set to dramatically expand the medical imaging world, and Butterfly is the platform to lead this change. Everything we do going forward will be to increase imaging power even further, make in-hospital workflows easier, miniaturize the device to drive mobility further, make the device smarter and easier to use with AI tools, and connect to a very powerful and safe cloud ecosystem. I look forward to updating you throughout the year on new developments and our accomplishments as there are many great things brewing. So with that, operator, please open it up for questions.

The first question comes from Josh Jennings with TD Cowen.

Hi, good morning, Joe and Heather. Thanks for taking the questions. It's been a remarkable path of progress since the Investor Day last year. And at that event, you laid out kind of a long-range target of $500 million in revenue. I mean, I think you already answered this question in your presentation here this morning, but I would love to just kind of get an update just on your confidence level and where you stand today almost one year out from that big investment event in 2024 in terms of the progress and confidence in getting to that $500 million revenue base in the out years?

Well, thank you, Josh. We put a plan together and the plan certainly wasn't guidance, but it was the shape of how we're organizing our investments and where we think our revenue can come. As I said in the beginning of my prepared comments, we had a great year and we're right on plan. I'm really bullish about our growth initiatives. I'm bullish about the continuation of the growth rate of our core business and that's kind of where we're guiding towards right now. I'm also really bullish on the two areas that we've identified that will deliver meaningful growth in the future. I'm very bullish on Octiv. I look forward to letting you know about the new partners that we just signed and the pipeline is just increasing, and it's not only increasing, but the names are getting bigger and bigger, and it's really cool. And so we have our best people in that business, a couple of our executives that we really admire, and they're doing a hell of a job building out that business. And so I think first of all, Octiv, as we get to the second half of the year, we're probably going to see some meaningful revenue, and we may be forced to start pulling it out. Second, the HomeCare business, man, it is just such a delight because we're eating our own dog food. We're using our devices with our training, with our software, and then our wrapped around services to help, first-time ultrasound users scan. And they're scanning in one of the highest cost use cases in healthcare, which is readmissions for congestive heart failure patients. These patients are a revolving door from skilled nursing facilities into a hospital and back, and it is a substantial amount of cost. And if I've mentioned this before, but if we are able to just a small part of this market, it'll double the size of the business. The upside optionality is huge. But we are taking it one step at a time. Aside from informing investors what we are doing, we are not getting ahead of ourselves. We're communicating with you quite transparently about our progress. The best part of that business, as I mentioned in my prepared remarks, is not just the fact that we are able to create a business opportunity from this pilot. It's proving the model. It's proving that the vision that Butterfly has always had by reducing the size, reducing the complexity, and increasing the power, while pulling the AI into the tool, allowing first time ultrasound users to get up to speed quickly and make an immediate low-cost point of care clinical impact. These patients in a skilled nursing facility would historically be put into an ambulance to go to the hospital and then back to the skilled nursing facility after a scan in radiology. You know how much cost that is? It's insane. That's what the healthcare system is paying for today. And so now a nurse pulls this small device out of her bag and does a few scans around the lung, then is able to get a remote expert opinion to make a determination at very low cost and immediately. So we're on the tip of something very big, and I think those two businesses, if you just run out our core business, as it was in that settlement chart and then you start layering on these opportunities. Again, it's hard to predict timing, but the level of excitement that we have is off the charts.

I appreciate that Joe. And I wanted to ask about the HomeCare channel as well. I mean, I think you provided a lot of intel here in that last answer and during your prepared remarks. But is there just maybe help us think through the steps required to go from pilot to a revenue-generating franchise and any timelines you can share? I know it's you haven't baked any Care revenues into 2025 guidance, but maybe just helping us understand just the next steps and what it will take to turn that home care channel into a revenue-generating franchise?

Well, the beautiful part about it is when we were initially looking at services, we thought we'd be hiring our own technicians and our own nurse practitioners. We wanted to force the model, and if you were going to hire people, that would take cost, time, and a learning curve, especially, of course, time to onboard those people. While our partner didn't want people just walking in and out of their facility, they wanted us to train our people. We've been able to do that, and when you realize how good our tools are, you also see how incredible our trainers are. So to train someone up was very quick, and then they have to go through a protocol with ScanLab, so they have to practice and complete that. Once they are trained, it’s really the training of the on-site personnel, which is the time to execution, and that's a 90-day process. Everything else for Butterfly is virtual. The scalability is remarkable; we think we can take on thousands of patients over multi-state and provide this service. So a lot of this is new territory for us. We haven't done this before, and it's hard to just say we can do this by this date. But from the pilot experience so far, we think it's well within our means, and if it does continue the way it has, then the end of this pilot should turn into some commercial opportunity. The benefits to these patients are also extremely promising. We had one patient the other day who was discharged from the hospital, came back to the skilled nursing facility, and was on a high dose of diuretics. When they came in, a baseline scan found the patient had very little to no wetness in the lungs. The clinical team recommended adjusting their diuretic prescription based on the scan results. This immediate confirmation and course correction exemplify the kind of impact we can have on patient care. Constant awareness, having the ability to scan constantly, remains a revolutionary benefit we saw in the Rutgers study. If you have an intensivist in the hospital scanning every day, you're monitoring their progress in real-time. This changes the healthcare paradigm. It’s not just about selling devices; it’s about how we change the game.

Excellent. And just one last follow-up on that home channel. We saw the prototype for wearables at the Investor Day last year and we talked earlier this year about that pipeline development effort, but maybe just give us an update on where that program stands and when you may see approval and then utilization in the field. Thanks for taking all the questions.

No problem, Josh. So this is all progress. If we came out with a wearable today, there wouldn't be a market for it because we have to first create the use case and demand with HomeCare, teaching nurses how to conduct these ultrasounds. Once we create this demand, the second phase is how we automate it. We are actively developing a wearable. It is something that is not far away, but we're not rushing it because we need to build the market first. As we succeed in this HomeCare business and convert it into commercial, we can ease in the wearable into that use case. That’s how we’re building our business—it’s not just about launching a device, but preparing the market and users. So everything is right on plan, and the results we’re seeing are even better than expected.

The next question comes from Benjamin Haynor with Lake Street Capital.

Good morning, guys. Thanks for taking the questions. I appreciate all the commentary that you had so far on the HomeCare opportunity. But I was wondering if you could share maybe a little bit more on how many residents were involved in these long-term care facilities, how many days they've been kind of followed, if you will; how many readmissions might you have anticipated, things of that nature, anything else that you can provide there?

Yeah. So, we trained 18 nurses at two skilled nursing facilities in Wisconsin. So far, we've done the initial training and a follow-up with ScanLab. Our cardiologists not only diagnose the patients but also provide feedback to the scanner, creating a constant process of improving quality. As for the pilot, it is designed for 200 patients who are now being scanned. We have early anecdotal information, but so far, no one has been readmitted from this small sample size.

Sure. Got it. And then, congrats on the capital raise, by the way. I was wondering, you've mentioned some of the software things that you're working on, any hardware kind of developments that you might intend to accelerate? It didn't necessarily sound like it. And then if we could give an update on kind of where you're at on the cart-based iQ station?

Sure. So, consistent with the presentation that we made at JPMorgan, we are active with the P5 chip. We have hardware probes and other developments we're working on for the next generation. These may not just be another probe, but different innovations to expand our market. We are also working on the iQ station, which would move us more into the lower-end cart business. Nothing has changed since our JPMorgan presentation in terms of focus, but with the new funds, we can keep advancing our initiatives. If we hadn’t brought in the capital, we would have had to cut back, reducing our opportunities. Now we can continue progressing our next-generation semiconductor and move into hospital and home markets to expand ultrasound's market potential.

It makes sense. And I'll show the color on that. And lastly for me, just maybe a point of clarification on what the revenue guidance includes. That does not include any new revenue streams. It doesn't include Octiv, Butterfly Garden, HomeCare, anything like that. It's just traditional iQ+, iQ3 and software and services that are existing, correct?

Right. So it includes current Octiv contracts. It does not include any new Octiv contracts or home care or additional add-in businesses. So just that clarification on Octiv. For example, we have Forest Neurotech. That's already in our numbers and guidance, but a new partner that we might sign would not be in there.

Got it. Excellent. Well, congrats on all the progress status and thanks for taking the questions.

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

Joe, a couple of questions from my side and I'll pose them upfront. So in your FY 2025 guide, how should we think about the same-store new store dynamic as iQ3 contribution picks up? And the second part or the second question, Joe, you just made comments about your image quality as good as anyone's. Help us understand what is the most objective evidence that we should take as interpreting the image quality is as good as anyone? Thank you for taking my question.

Great. Regarding the same-store and new store dynamics, Heather can provide more details on the guidance. We are now marking a year since we started selling iQ3, which has seen numerous upgrades and new business opportunities. The market is expansive and continues to grow. We are consistently opening new business channels. Our eCommerce platform is an excellent way to connect with customers, and we are experiencing ongoing business success. We have also entered the hospital channel, where our presence was limited before, particularly with our software products. When it comes to image quality, I’m talking about handheld devices. Other brands, like GE or Philips, have established a reputation over four decades. Our Version 2 was impressive, yet it fell short in cardiac imaging. While evidence can vary, the growth we've seen this year indicates that we’ve made significant progress. An internal survey revealed that most doctors preferred iQ3. Additionally, comparisons in publications have shown favorable outcomes against our competitors. Being part of the conversation is important, and we are excited to be included.

Was there a follow-up, Suraj?

No. Thank you. Got it.

This concludes our question-and-answer session. I would like to turn the conference back over to Joseph DeVivo for any closing remarks.

Thank you all for joining us. We prefer this Friday morning format to allow our analysts time to process the information without conflicting with events from the previous night. We hope this arrangement works for you. We are very pleased with our progress and excited about 2025. We are enthusiastic about our core business and all the new initiatives we have underway. We appreciate the support during our recent fundraising, and we look forward to continuing our various projects. Thank you for your support, and we look forward to providing more updates in the future. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.