Hand-held ultrasound developer Butterfly Network will be looking to net itself a new CEO, following the departure of chief Todd Fruchterman, M.D., Ph.D., almost two years into his tenure.
The company and Fruchterman “mutually agreed” that he would leave his positions as president, CEO and member of its board of directors, according to a press release. Fruchterman will stay on through the end of the year to work with the leadership team on the transition. Butterfly’s founder and board chairman, Jonathan Rothberg, will serve as interim CEO during the handover.
Fruchterman took the helm in February 2021, just weeks before Butterfly went public through a $1.5 billion SPAC deal that placed it on the NYSE. He previously served as the president and general manager of 3M’s $4.8 billion medical solutions division, as well as chief medical officer and chief technology officer during his near-decade with that company.
In August, Butterfly laid off about 60 employees, or about 10% of its workforce, as part of a plan to generate cost savings of about $3 million per month. In 2022, the company posted quarterly net losses in the tens of millions of dollars. At the time, the company’s share price spiked, but the value has since dropped 67% to about $2.80.
Though the company’s revenues have been increasing, operating expenses have remained higher. For this year’s third quarter, Butterfly reported a net loss of $54.7 million. Revenues were up 34.2% to $19.6 million, an increase from the $14.6 million it saw during the same three months the year before, including a 71% gain in software subscription sales. That was offset by the $57 million in operating expenses, up 9.9% versus $51.9 million in the third quarter of 2021. The company attributed the expenses primarily to higher payroll and additional investments in its R&D and commercial infrastructure.
“Our path to transformation at scale is on the right track, and while our rate of revenue growth was slower than we anticipated, we are receptive to the learnings in the market and adapting where needed. We are also evolving as a company to bring discipline to both how we generate revenue and manage expense,” Fruchterman said in the company’s early November earnings announcement.
At that time Butterfly also revised its financial guidance for the full year, lowering its revenue forecasts to between $73 million and $76 million, down from the $83 million to $88 million it had predicted the quarter before.
“As many in our industry have noted, intensified labor constraints in the third quarter and associated budget pressures from temporary labor costs have limited client-side implementation capabilities and caused deferrals in adoption of medical technology more broadly,” said the company, which has set a goal of making hand-held ultrasound devices as ubiquitous in patient care as the stethoscope.