Carlsmed (NASDAQ:CARL) and Butterfly Network executives outlined growth strategies, product rollouts and reimbursement opportunities during presentations at a Bank of America event, highlighting efforts to expand access to technology intended to lower costs and improve care delivery.
Carlsmed emphasizes personalized spine surgery platform
Mike Cordonnier, co-founder, president and CEO of Carlsmed, said the company was founded in 2018 with a mission to improve clinical outcomes and reduce healthcare costs in spine surgery and beyond. He described Carlsmed’s platform as an AI-enabled system that uses preoperative patient and surgeon data to create a three-dimensional digital model of a patient’s pathology and surgical plan, then 3D prints the devices needed for the procedure.
“When we talk about our mission of improving outcomes, reducing the cost of care, we’re able to really achieve both of those,” Cordonnier said, adding that reducing revisions can save healthcare system dollars.
Reimbursement and product launches seen as growth catalysts
Cordonnier said Carlsmed was “really pleased” with a preliminary inpatient rule from the Centers for Medicare & Medicaid Services, saying it could broaden access and provide hospitals with a simpler path to reimbursement. In response to a question referencing proposed DRG 523-525, he said the new DRG would apply to the aprevo lumbar procedure and could provide favorable reimbursement for inpatient hospital use.
He said Carlsmed’s lumbar patient population is predominantly inpatient, and the company is also focused on inpatient use for cervical procedures. Cordonnier noted that Carlsmed received FDA Breakthrough Device designation for its cervical technology and currently has a New Technology Add-on Payment for inpatient procedures.
Carlsmed is also expanding its platform through corra, which Cordonnier described as the company’s first move into personalized fixation. He said Carlsmed has completed first-in-human procedures and is on track to launch corra in the fourth quarter. The company is also targeting a fourth-quarter launch for a posterior bilateral approach intended for minimally invasive procedures.
Cordonnier said going public and raising just over $100 million in the IPO allowed Carlsmed to reinvest in operational excellence, commercial execution, education and clinical data. He also said the company reduced turnaround time for its technology to six days, compared with eight weeks when it first went to market.
On financial performance, Cordonnier said Carlsmed outpaced its own expectations for new surgeon additions in the first quarter, which was the first full quarter of the cervical launch. He also said technology and infrastructure investments have contributed to more than 200 basis points of year-over-year gross margin improvement, and that the company anticipates reaching cash flow breakeven in the near term on existing capital.
Butterfly Network outlines point-of-care ultrasound strategy
Joe DeVivo, CEO of Butterfly Network, described the company as a point-of-care ultrasound business focused on bringing imaging to where patients are, including hospitals, alternate sites and homes. He said the company’s semiconductor-based ultrasound device can be programmed for different imaging applications through a single probe, rather than requiring different probes for different body parts.
DeVivo said Butterfly has sold more than 150,000 devices to date and is working with large institutions to integrate point-of-care ultrasound into healthcare systems. He said the company’s cloud-based, app-based software architecture connects devices to hospital systems, including electronic medical records, DICOM and revenue cycle management platforms.
He also said artificial intelligence is central to making ultrasound easier to use, particularly for image acquisition and interpretation. DeVivo cited Butterfly’s recent FDA approval for a blind sweep application and said the company is building a home care business that could become a material contributor in 2027.
Butterfly Embedded expands chip licensing opportunity
DeVivo said Butterfly is also pursuing a licensing business through its Butterfly Embedded program, allowing third-party companies that do not compete with Butterfly’s core point-of-care ultrasound business to use its chip technology. He compared the strategy to “Intel Inside” and said the initiative expands the company’s total addressable market from about $30 billion to about $35 billion.
According to DeVivo, Butterfly has four publicly disclosed companies working with it, five additional undisclosed companies and about 40 companies in active discussions to license its chip. He said Embedded revenue is now about 20% to 25% of the company’s revenue and could become a larger share over time.
DeVivo said Butterfly has been in a turnaround, moving from declining revenue and lower gross margins to a company he said is doubling revenue, generating gross margins in the high 60% range and using less cash. He said the company expects to reach breakeven on its current cash position.
About Carlsmed (NASDAQ:CARL)
We are a commercial-stage medical technology company pioneering AI-enabled personalized spine surgery solutions with a mission to improve outcomes and decrease the cost of healthcare for spine surgery and beyond. We are focused on becoming the standard of care for spine fusion surgery. The aprevo Technology Platform consists of artificial intelligence (“AI”)-enabled software solutions, and interbody implants that we custom design for each patient’s unique pathology and vertebral bone topography, and single-use surgical instruments (the “aprevo Technology Platform”).
