A year (or so) ago, I posted my 1st (of very few) messages on this board about ButterflyIQ, a cell-phone based medical ultrasound device. I was (appropriately) excoriated for discussing a company that was not at that time publicly traded.
Well, now it is (BFLY-NYSE).
I bring it up today because my small, rural hospital just placed its first order for 20 over these devices (about $2,500 each).
I genuinely believe these will replace the ubiquitous stethoscope. Already, there are some medical schools that are giving each student one as they start their clinical rotations.
However, the chart looks horrible, down to under $6 from an IPO price of about $20 a year ago.
I believe much of this is due to the fact that many (most?) hospitals have been under a capital spending freeze as the uncertainty of the Covid pandemic lingers on.
At any rate (FWIW) I’m buying this week.
According to its last quarterly report, the company expected growth of 33 - 35 percent for 2021. I would not call this hyper-growth - yet. I have no idea how to gauge demand for such a device. I’ve put it on my watch list.
What would their competitive advantage be? There must be tons of competition - just a brief Google search finds competing products from many, including giants like Philips. Here you have a device, an industry filled with intense competition from multibillion-dollar giants, regulations to battle with health care, a hospital system under siege with plague and possibly supply chain issues still plaguing the world, driving up costs.
For me this is a hard pass. An order of roughly 50K is meaningless. With the likes of Monday, ZScaler, Cloudflare, etc. all putting up higher growth, and many 50% or more below all-time highs, I would stay far away from this. The last medical device company we had here was Inari which was doing better than this one - almost certainly through aggressive sales, not superior product - and that went nowhere. This has way more competition.
As is often pointed out here, there’s buying companies that are excelling right now vs buying on hope that X will happen (replace the stethoscope). The former is always a better bet. And the bet is not whether or not the technology becomes ubiquitous, but whether or not your pick wins among the many competitors. There were tons of airlines and car companies at one point. And many saw those industries coming. Still to succeed you had to bet the right horse.
Lastly, here, to really succeed a stock must beat the superstars we have, the actual hypergrowers or as some call them hhhypergrowers. I doubt this stock would make the top 100 for most investors here, let alone top ten.
Wish you luck with the pick if you proceed. But I think this is likely a grade-A stinker.
There was a discussion in the Biotechnology board.
User TMFfuma102 has i believe some practical experience too.
He pumped this stock in biotechnology board ( https://discussion.fool.com/butterflyiq-to-go-public-34678792.as… ) and a big thread in NPI board, which i can’t find right now.
It’s as always with a healthcare stock: a one tricky ponny, early nice growth but then fast fading when Adoption slowing down and question about outcomes. There device is a bit better then all competitors but is it really needed? The story was to use it in the second and third world, many hospitals don’t have money for a big ultrasonic device from Philips or GE…
<< What would their competitive advantage be? There must be tons of competition…
We demo’d virtually every competitor; no one else has the image quality/ease of use/price point that the Butterfly has.
<< With the likes of Monday, ZScaler, Cloudflare, etc. all putting up higher growth…
Sure. But these companies have been discussed (almost) endlessly. No interest in something different??
But I get the picture, and I genuinely appreciate your feedback. This wouldn’t be the first “grade-A stinker” I’ve invested in…that’s for sure!
Butterfly offers the best combination of image quality and price. It can offer software upgrades continuously whereas the others cant. There are plenty of handheld competitors, many of whom with better image quality, but the customer service and price reel you in.
The point of care ultrasound market at the price they are offering is small and limited. I wish hyperfine and their MRIs would have been a part of them. I’m not sure what their future growth drivers are. They talk a great game- at home wearables for chf management and a number of other grandiose ideas. I just don’t see them materializing at a fast enough rate to warrant a significant investment right now. And I say this as someone that really likes the company and I own two probes and shares!
An investment in butterfly is a bet on healthcare at home, wearables, and AI. Not certain that explodes in the next ten years. And again, I really like the company and own shares. I’m just not adding more until they deliver on some of these big aspirations.