Shares of Butterfly Network (BFLY) closed 26.9% higher on September 4th after the company announced the commercial launch of its third-generation handheld point-of-care ultrasound system, Butterfly iQ3, in Europe. This positive market reaction likely stems from the strong uptake of iQ3 in the U.S. market since its February launch.
The Butterfly iQ3, having received EU MDR certification in March and meeting the Restriction of Hazardous Substances Directive, is now available in all European countries and the United Kingdom. It was also launched in Canada during the second quarter, and the company is currently seeking regulatory approval for iQ3 in additional regions.
The Butterfly iQ3, the company’s most advanced portable ultrasound device, utilizes BFLY’s cutting-edge P4.3 chip, boasting double the processing power of its predecessor, the iQ+. This translates to best-in-class image quality, enhanced 3D imaging tools for user-friendliness, and a more compact and ergonomic design. Furthermore, the higher selling price of the iQ3 compared to the iQ+ is expected to accelerate revenue growth.
BFLY’s shares have experienced a remarkable 39.9% gain year-to-date, significantly outpacing the industry’s decline of 13.5%, driven by the increasing adoption of Butterfly iQ3 in the U.S. market. This positive trajectory contrasts with the S&P 500 Index’s 15.9% growth during the same period.
Butterfly Network’s 16% top-line growth in the second quarter was largely fueled by the strong performance of Butterfly iQ3 in the United States and its launch in Canada. A staggering 74% of the company’s online orders during the quarter were for iQ3, representing 89% of sales in Canada across all channels.
The company implemented a competitive device upgrade program in the second quarter, allowing customers to exchange their older non-butterfly devices for new iQ3 models. This initiative generated substantial growth, as the company upgraded over a thousand probes during the quarter. IQ3 sales accounted for 50% of total unit sales in the second quarter, with 75% of units sold in the United States.
The iQ3’s advanced 3D capabilities, including iQ Slice and iQ Fan, significantly enhance image capture. iQ Slice enables the acquisition of up to 46 ultrasound slices simultaneously across a wide angle, facilitating faster and easier acquisition of high-quality images. Meanwhile, iQ Fan, a dedicated lung tool, minimizes the movements required to capture information for informed clinical decisions. These features complement Butterfly’s existing suite of over 20 anatomical presets, six imaging modes, artificial intelligence, advanced imaging tools, and a comprehensive set of calculation tools.
Beyond its feature-rich design, Butterfly iQ3’s smaller and ergonomic form factor has contributed to its strong adoption in the United States and Canada, a trend likely to continue in European markets. The device boasts a 17% smaller probe face and is 7% shorter than the iQ+. Its improved battery life, offering up to 2 hours of continuous scanning and a 2.5 times faster charging time, further enhances its usability. These advancements significantly improve echo image quality and biplane mode for cannulation, proving beneficial for managing patients with challenging IV access.
Butterfly Network currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader medical space include Boston Scientific (BSX), Apyx Medical (APYX), and Universal Health Services (UHS), all carrying a Zacks Rank #2. Boston Scientific, with a long-term estimated growth rate of 12.6%, has exceeded earnings estimates in each of the past four quarters, delivering an average surprise of 7.2%. Its shares have risen 41.4% year-to-date. Apyx Medical boasts an estimated growth rate of 20% for 2025, although its earnings have missed estimates in each of the last four quarters. Despite this, its shares have experienced a 49.3% decline year-to-date. Universal Health Services, with a long-term estimated growth rate of 19%, has consistently surpassed earnings estimates in the past four quarters, delivering an average surprise of 14.58%. Its shares have risen 56.1% year-to-date.
