Butterfly Network (BFLY) shares surged more than 50% in Thursday trading after Midjourney unveiled a full-body ultrasound scanner that utilizes Butterfly's ultrasound-on-chip technology. The move brought renewed attention to a five-year licensing and co-development agreement that could generate up to $74 million in payments for Butterfly.
Shares of the medical imaging company jumped 52.7% to $8.72, with volume reaching approximately 43.3 million shares. The stock opened at $7.48 and hit an intraday high of $8.73, giving the company a market capitalization of about $2.24 billion.
Midjourney Scanner Details
Midjourney's scanner, still in an early-stage prototype phase, uses 40 Butterfly Ultrasound-on-Chip imaging modules per system. The technology replaces traditional piezoelectric crystal probes with semiconductor-based ultrasound transducer chips. Butterfly CEO Joseph DeVivo described the roadmap as a "potentially meaningful commercial opportunity."
The scanner uses a ring of sensors to capture a full-body scan in about 60 seconds, according to reports. Midjourney plans to deploy 10 units at a San Francisco spa before the end of 2027, with initial applications focused on body-composition mapping rather than medical diagnostics. FDA clearance would be required for any medical use.
Financial Implications
Butterfly's November filings outlined the commercial terms: a $15 million upfront fee, $10 million annually for five years, up to $9 million in milestone payments, and additional revenue sharing or chip purchase arrangements if Midjourney incorporates Butterfly chips into its hardware.
Despite the rally, analysts caution that the deal remains early-stage. Regulatory clearance, commercialization, scaling production, and milestone payments are all unresolved. The scanner is not yet a finished medical device, and the path to widespread adoption faces significant hurdles.
Market Context
Butterfly has been working to diversify beyond its core handheld ultrasound probe business. The Midjourney partnership showcases Butterfly Embedded, its chip-licensing and co-development unit, as a potential growth driver in non-traditional imaging applications.
The company reported first-quarter revenue of $26.5 million, up 25% year-over-year, with gross margins improving to 68.9%. Butterfly maintained its 2026 revenue outlook of $117 million to $121 million and expects a full-year adjusted EBITDA loss of $21 million to $25 million.
Competition remains intense in the broader ultrasound market, dominated by GE HealthCare, Philips, and Siemens Healthineers. Butterfly differentiates through handheld devices, software, AI, and chip licensing rather than traditional systems.
Investor Considerations
Thursday's rally may be pricing in a long-term payoff too quickly. The deal includes milestones and commercialization steps, not just fixed fees. Key risks include regulatory approval, market adoption, clinical utility, data privacy, and Butterfly's ability to scale module production.
Investors will look to management for more concrete financial projections and timelines. While the partnership provides a tangible data point, the end market remains unproven.
